DOSM expects Malaysia’s economic recovery to continue
The Department of Statistics Malaysia (DOSM) expects the country’s economy to continue its recovery trend based on the smoothed growth rate of leading index (LI), a predictive tool to anticipate upturns and downturns in the economy.
Chief statistician Datuk Seri Dr Mohd Uzir Mahidin said the LI registered 108.5 points in August 2020 from 100.8 points in August 2019, maintaining an annual growth of 7.6 percent.
However, he said the LI slipped to -0.5 percent, dragged by the number of new companies registered (-0.6 percent), real imports of semi conductors (-0.4 percent), and the number of housing units approved (-0.1 percent),” he said.
“Despite the softening LI for the reference month, the growth rate of smoothed LI is consistently above trend and moving upwards,” he said in a statement.
Mohd Uzir said this implied that the Malaysian economy is expected to continue its recovery trend in the months ahead.
Nevertheless, he said the downside risk to growth remained amid the recent spike in new Covid-19 cases.
Meanwhile, he said Coincident Index (CI), which measure the current economic performance, anticipated a better year-on-year growth to register -2.3 percent in August 2020 from -2.4 percent in July 2020.
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China has a few things to teach the U.S. economy
Ever since China’s spectacular economic growth became apparent in the 2000s, people have wondered whether that country’s brand of authoritarian state capitalism has proven superior to the more liberal American model. Until recently, it was possible to dismiss those concerns, but Chinese successes and U.S. failures keep piling up. If the U.S. wants to maintain both its relative power and its prestige as a model for the world, it needs to make some big adjustments.
China’s rapid growth, by itself, was not an argument for the superiority of the Chinese system. Any country can grow briskly from a very low starting point, if it has the right policies. Whereas developed nations have to invent new technologies to grow, developing countries can copy existing ideas and build up their capital stock. Even after decades of hypergrowth, and despite having a huge economy in terms of total size, China was and is still much poorer than the U.S. on a per capita basis. The typical Chinese family has a smaller house, fewer cars and less opportunity for travel and entertainment than its American counterpart.
But in recent years, China has shown that it can compete at the leading edge of technology — something most middle-income countries are unable to do. The nation is now a peer competitor with the U.S. in the field of artificial intelligence, and is dominating the global race to build fifth-generation wireless networks. China is home to the world
’s leading drone manufacturer, is building the world’s fastest trains, and is becoming a leader in genetic engineering. It even has a mission to Mars. With innovation like this, it’s hard to argue that China deserves exclusion from the rank of leading nations, despite its still-modest living standards.
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Recovery on Indian economy ‘strengthened, broadened’ in September: ICRA
India’s economic recovery has “broadened and strengthened” in September from the pandemic-induced lows seen in April 2020, ratings agency ICRA said on Tuesday.
ICRA said that as many as nine of the tracked 15 non-financial high frequency indicators recorded growth in September 2020, while five posted a narrower year-on-year (YoY) contraction in that month.
However, the agency cautioned that the sustainability of the upturn is unlikely to be universal, and that while fatigue may drive festive season sales, the momentum may subsequently subside.
Aditi Nayar, Principal Economist, ICRA, said: “The recovery in GST e-way bills, electricity, petrol and diesel in September 2020 provides a meaningful signal of a broader economic revival. The improvement in some of the other indicators, such as auto output, reflects a combination of pent-up demand, healthy rural sentiment, and inventory build-up, ahead of the upcoming festive season.”
“This trend may persist in the coming one-to-two months, before settling at more sedate levels after the festive season is over. Sharp favourable base effects have contributed to the high performance of some outliers, such as the output of Coal India Ltd (CIL), which are likely to be unsustainable.”
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Rebooting Indonesia’s economy in post-pandemic world
In every crisis, new opportunities emerge. The global COVID-19 pandemic has had a strong impact on global trade networks and shipping routes with logistics suppliers grappling with disruptions and economic slowdowns. The pre-COVID-19 globalized world has come to a halt. The question facing governments and corporations alike is what comes next? How will global supply chains shift and reform? How can Indonesia boost its manufacturing capacity? How can we harness the potential of the digital revolution to strengthen the economy, and lastly, how can we make these advances sustainable? Coordinating Economic Minister Airlangga Hartarto recently said the government is working hard to attract international investors looking to relocate their factories from mainland China. If successful, this could position Indonesia as a major manufacturing powerhouse. The ongoing disruption to global supply chains is fundamentally reshaping how companies think about shifting products from manufacture to consumers. This might mean a requirement for greater warehousing space closer to their consumer markets, so they can keep greater inventory on hand to guard against possible shortages. Manufacturers worried about the risk of disruption may also start shifting production bases to diversify their investments. The disruption of global trade and supply chains offers a silver lining in terms of investment prospects for a large number of countries, including Indonesia. Companies looking to diversify beyond mainland China will need to set up a new base for their operations, and Indonesia is an attractive choice. Indonesia has several strategic advantages over its competitors in the region. It is rich in natural resources; has a large domestic market; and a ready pool of productive workers. President Joko “Jokowi” Widodo and his administration is working on multifaceted reform policies, which aim to further strengthen the country’s competitive advantages. In addition, the pandemic has forced those companies that were more conservative with their digital adoption to be more open to adapting to new operational models. HSBC’s latest report “Navigator: Building Back Better” shows that almost two-thirds (64 percent) of businesses in Indonesia strongly agree that periods of adversity can accelerate the adoption of transformational technology as they look to enhance or improve how they work. This is significantly higher than the other global markets surveyed (44 percent). Greater adoption of digital technologies could potentially help Indonesia attract greater foreign direct investment (FDI) as well as move up the manufacturing value chain. Indonesia already has a vibrant e-commerce sector, which in 2019 was valued at US$21 billion in gross market value (GMV), making the country the largest e-commerce market in Southeast Asia. A recent report by HSBC Global Research pointed out that 50 percent of goods consumption could be made online in developed countries by 2030. As the millennial generation is currently dominating the workforce, by 2030, some 40 percent of consumers globally will be “digital natives”. The forces driving the digital economy include demographics, culture, consumer patterns and readiness.
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How will a second wave affect Russia’s economy?
Russia’s economy should be able to weather the ravages of a second wave of the coronavirus better than the first, economists say, but uncertainty and volatility will remain for the foreseeable future.
As Russia records a sharp spike in new infections and Moscow starts to roll out new restrictions— advising businesses to close their offices again and introducing extended school holidays — the economy has already started to slow down, and fears are growing among businesses of a second, potentially devastating, protracted shutdown.
However, authorities insist a tough quarantine is not on the cards, and economists are also not expecting Russia to issue wide stay-at-home orders or shutter shops, factories, construction sites and restaurants.
“There is broad perception that lockdown downsides outweigh the upsides, hence we believe that a recurrence is unlikely,” said Sofya Donets, an economist at Renaissance Capital.
Since stricter mobility restrictions mean a deeper economic hit, the measures Russia chooses to roll out to contain the spread of the virus are the main factor that will affect the economic trajectory over the next few months.
“The restrictions are unlikely to be as severe as in the spring,” Dmitry Babin, market analyst at BCS Broker told The Moscow Times, adding that “the impact on the economy will not be as strong as during the first wave.”
Analysts expect Russia to follow a so-called “Swedish model” as it deals with the second wave — imposing social restrictions on mass gatherings alongside warnings from politicians to observe social distancing and mask requirements or face tougher restrictions.
That could avoid the need for mass shutdowns, although commentators routinely point to a high degree of distrust and disregard in society for official diktats, meaning a more widespread lockdown could yet be an option.
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Japan to ease entry for foreign business travelers on 3-day stays
The Japanese government will allow business travelers who plan to stay no more than 72 hours to enter the country without quarantining, Nikkei has learned, as it eases up on COVID-19 restrictions in an effort to revive the economy.
The quarantine-free entry procedure could begin next month.
The required 14 days of self-isolation for business travelers will be waived for those who carry negative certification and submit an itinerary for their stay.
Target embarkation points to be included in the program are still being considered, but the main partner territories are Asia-Pacific regions such as Thailand, Taiwan, Australia and New Zealand.
The government will ask the short-term business travelers accepted into the program not to use public transportation and to restrict their movements to limited areas, such as their workplaces and hotels.
Japan has negotiated with 16 countries and regions to take part in a wider framework targeting business travelers staying in the country for up to 90 days; Japanese business travelers going to these other countries would also be exempted from quarantine measures.
As of now, Singapore and South Korea are the only countries using this framework. Vietnam is expected to join soon. In addition, Japan is aiming to reach an agreement with China.
Japanese companies traditionally do a lot of business with partners in India and the U.S., but the virus is far from contained in those countries, and the Japanese government intends to carefully monitor those nations’ infection rates before deciding whether to include them in the program.
Japan has gradually eased entry restrictions put in place in the early weeks of the pandemic. In September, it began allowing foreign nationals with medium or long-term residential status to reenter the country. This month, it extended the measure to new foreign residents.
The government will also ease restrictions on Japanese nationals returning from overseas, exempting those who return from an overseas business trip from having to quarantine for 14 days.