Indonesia sees economy contracting for first time since 1998
Indonesia’s economy is set to contract for the first time since the Asian financial crisis more than two decades ago as the country struggles to get virus cases under control.
Gross domestic product is forecast to decline 0.6 percent to 1.7 percent this year, Finance Minister Sri Mulyani Indrawati said Tuesday at a briefing in Jakarta. The government previously had estimated the economy could grow 0.2 percent or shrink by as much as 1.1 percent.
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Taiwan’s economy, trade break-off from mainland a dream: experts
The Chinese foreign ministry said China will take legitimate countermeasures, including targeting individuals, after US Undersecretary of State Keith Krach ended his visit to the island of Taiwan, adding that the US must bear full responsibility for violating the one-China principle.
Wang’s remarks came after Krach left the island on Saturday with only an illusory promise to the island about an economic and business dialogue between the two sides.
At a press briefing Sunday, Taiwan’s economic affairs authority said they have reached a consensus on holding a dialogue, the agenda of which remains unsettled, as Taiwan will see “if it is at the US’ convenience.”
Taiwan economic affairs authority head Wang Mei-hua said on Sunday that the island and the US delegation took the opportunity to exchange views on economic cooperation, including a 5G network, industrial supply chain restructuring, the Indo-Pacific strategy and energy issues.
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Vietnam sets 2021 economic growth target of 6.5pc, a Pre-Covid normal
Vietnam’s cabinet has targeted economic growth of 6.5 percent next year, signaling a return to the same growth pattern experienced before Covid-19, as the manufacturing-led economy emerges from its current slowdown.
The Southeast Asian country’s government expects to rebound next year from the economic slowdown it finds itself now due to the global slump brought on by the pandemic. Vietnam’s authorities call the recovery a top goal, according to statements made Thursday and cited in domestic media.
Vietnam, population 97 million, has managed to keep its reported Covid-19 cases down to 1,068, allowing work, in-country tourism and basic services to keep moving after shutdown orders in April. The country, billed as a global factory alternate to China, also kept manufacturing goods for export, even though it was facing weak demand due to stay-home orders in major import nations such as the U.S.
The economy had surged ahead since 2012, posting 6 percent growth or higher every year largely on the strength of its manufacturing sector along with the increasing spending power of its population. It stood at about $260 billion at the end of last year.
Officials asked the central bank this month to sustain a monetary policy that controls inflation and promotes economic stability, VnExpress International reports. Other ministries were directed to bring in more foreign capital, increase exports and stimulate domestic consumption, the report says.
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With trade wars & conflicts, fabled China economy at risk
Chinese President Xi Jinping has been forced to acknowledge that his country’s economic growth is facing a rising external risk and the export-driven model that established China as the factory for the world has run into rough weather.
Addressing a meeting on China’s five-year development plan for 2021-2025 on Saturday, Xi put great emphasis on his “dual circulation” strategy to cut the country’s dependence on overseas markets and technology amidst a widening rift with the United States, Europe and Japan.
“China has strong manufacturing capacity, very large domestic markets and huge investment potentials,” the official Xinhua news agency quoted Xi as saying in a report from Beijing.
Xi put up a brave face saying “China’s economy remains resilient and there are ample policy tools at Beijing’s disposal to ensure growth as globalization slows and unilateralism and protectionism are rising. We must seek our development in a more unstable and uncertain world.”
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Malaysia’s GDP to shrink 6pc this year, rebound next year
Malaysia’s economy is forecast to shrink by 6 percent this year due to the impact of the Covid-19 pandemic, but it will rebound 6.6 percent next year, according to the Global Economic Outlook report from Oxford Economics.
The report issued on Monday said although the nationwide movement control order in Malaysia compounded the economic damage in 2Q, the payoff has been apparent, with the pandemic situation currently in hand, which will aid the economy in regaining its footing.
“Malaysia’s exports would benefit from improving Chinese import demand and the electronics cycle. Nonetheless, the speed of its recovery will likely slow given current sluggish global demand, high unemployment and weak investment, and its economy is forecast to shrink by 6 percent this year, followed by growth of 6.6 percent in 2021, ” it said.
The report, commissioned by chartered accountancy body, the Institute of Chartered Accountants in England and Wales (ICAEW) said although the Recovery Movement Control Order has been extended to Dec 31,2020, almost all sectors have been allowed to operate.
However, only a small number of sectors are still restricted such as night clubs and entertainment centres.
“The entry of foreign tourists has also been restricted. The tourism sector contributes to 15.2 percent of Malaysia’s national economy with 194 industries involved in the sector’s chain, including service exports, ” it said.
Overall, on its assessment and outlook for the region, the report said the Covid-19 pandemic delivered the largest growth shock South-East Asia has seen since the Asian financial crisis in 1997, and regional growth is forecast to contract by 4.2 percent in 2020, according to a new report.
It also pointed out while economic activities are picking up again and growth is expected to eventually rebound to 6.4 percent in 2021, the pace of recovery over the second half of 2020 will vary across the region, depending on the easing of lockdown restrictions and improved export demand.
The Covid-19 outbreak reduced global GDP by around 9 percent in the first half of 2020, at least three times the size of the 2007-2009 global financial crisis. Despite a very strong rebound in the third quarter of 6.4 percent, the report suggests that world GDP will contract overall by 4.4 percent in 2020.
However, there is momentum building in the second half of 2020 (H2), which will drive growth to 5.8 percent in 2021, and lead the global economy to recover to its pre-crisis peak by the midpoint of next year, a similar time frame as the post-2008 financial crisis recovery.
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Indian economy heads for double-digit plunge as virus spikes
India’s economic recovery prospects have gone from bad to worse after the nation emerged as a new global hotspot for the coronavirus pandemic with more than 5 million infections.
Economists and global institutions like the Asian Development Bank have recently cut India’s growth projections from already historic lows as the virus continues to spread. Goldman Sachs Group Inc. now estimates a 14.8 percent contraction in gross domestic product for the year through March 2021, while the ADB is forecasting -9 percent. The Organisation for Economic Co-operation and Development sees the economy shrinking by 10.2 percent.
The failure to get infections under control will set back business activity and consumption — the bedrock of the economy — which had been slowly picking up after India began easing one of the world’s strictest and biggest lockdowns that started late March. Local virus cases topped the 5 million mark this week, with the death toll surpassed only by the U.S. and Brazil.
“While a second wave of infections is being witnessed globally, India still has not been able to flatten the first wave of infection curve,” said Sunil Kumar Sinha, principal economist at India Ratings and Research Ltd., a unit of Fitch Ratings Ltd. He now sees India’s economy contracting 11.8 percent in the fiscal year, far worse than his earlier projection of -5.8 percent.
Goldman Sachs’s latest growth forecast came last week after data showed gross domestic product plunged 23.9 percent in the April-June quarter from a year ago, the biggest decline since records began in 1996 and the worst performance of major economies tracked by Bloomberg.
“By all indications, the recovery is likely to be gradual as efforts toward reopening of the economy are confronted with rising infections,” Reserve Bank of India Governor Shaktikanta Das told a group of industrialists Wednesday.
The central bank will likely release its own growth forecast on Oct. 1 when the monetary policy committee announces its interest rate decision. In August, the RBI said private spending on discretionary items had taken a knock, especially on transport services, hospitality, recreation and cultural activities.
The plunge in GDP, as well as ongoing stress in the banking sector and among households, will curb India’s medium-term growth potential. Tanvee Gupta Jain, an economist at UBS Group AG in Mumbai, estimates potential growth will slow to 6 percent from 7.1 percent year-on-year estimated in 2017.
India is “likely to see a shallow and delayed recovery in corporate sector profitability over the next several quarters,” said Kaushik Das, chief economist at Deutsche Bank AG in Mumbai, who has downgraded his fiscal year growth forecast to -8 percent from -6.2 percent. That will “reduce the incentive and ability for fresh investments, which in turn will be a drag on credit growth and overall real GDP growth,” he said.
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4 Million jobs added to Nepal’s economy in the past decade -report
Nepal’s economy added nearly four million jobs over the past decade, and average job quality increased significantly, according to the World Bank’s recent Nepal Jobs Diagnostic report. But continued job creation, especially of wage jobs, is needed to absorb underutilized workers into better-quality, stable, and well-paid jobs. The economic disruption caused by the COVID-19 pandemic – while not addressed in this report – highlights the importance of increasing stable and secure employment in the post-pandemic recovery period.
Nepal’s economy has been gradually shifting from largely subsistence agriculture to more modern industry and services, and this structural transition is bringing better work opportunities for the labor force. Despite great strides, not all job seekers are able to access quality jobs, especially women. In the last decade, large numbers of men have entered jobs in construction, manufacturing, commerce and transportation, or have migrated abroad. Even though many of these are informal jobs or temporary wage jobs, they are nevertheless more productive and provide improved livelihoods compared to traditional low-productivity farm work. Women, on the other hand, have not transitioned in significant numbers. The share of wage work in Nepal jumped from 17 percent to 24 percent of total employment between 2008 and 2018, as nearly half of the jobs added since 2008 were wage jobs.
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Australia central bank assessing various monetary policy options, a $ slips
Australia’s central bank is assessing various monetary policy options including currency market intervention and negative rates to meet its inflation and employment goals, Deputy Governor Guy Debelle said on Tuesday.
The Reserve Bank of Australia (RBA) had slashed interest rates to a record low 0.25 percent in an emergency meeting in mid-March to backstop the economy from the coronavirus crisis.
It also launched an “unlimited” government bond buying programme and a cheap funding facility for banks. It has held rates since then, saying it would maintain its “highly accommodative settings” as long as required to support the flagging economy.
On Tuesday, Debelle said the board was assessing other policy options “given the outlook for inflation and employment is not consistent with the Bank’s objectives over the period ahead.