Drought hurts China’s economy as central bank cuts rates
Record-high temperatures and a severe drought in west-central China have crippled hydropower generation and prompted the shutdown of many factories there, in the latest blow to a Chinese economy that already has stagnant consumer spending and a deeply troubled real estate market. Sichuan Province in west-central China, one of China’s most populous and a fast-growing industrial base in recent years, normally generates more than three-quarters of its electricity from huge dams. The summer rainy season usually brings so much water that Sichuan sends much of its hydropower to cities and provinces as far away as Shanghai. But an almost complete failure of summer rains this year, coupled with daytime highs that have regularly approached or exceeded 100 degrees Fahrenheit, has left rivers and reservoirs with fractions of their former water. The large province’s many dams cannot generate enough electricity even for Sichuan’s own needs, forcing factories there to close for up to a week at a time. As troubles accumulate in the Chinese economy, the country’s central bank announced on Monday that it was cutting its five-year interest rate by 0.15 percentage points, to 4.3 percent, in a move that might bring a little relief to the country’s huge construction and real estate sector. The five-year rate strongly influences the interest rate on many mortgages.
Bangladesh cuts school, office hours to save electricity
Schools in Bangladesh will close an additional day each week and government offices and banks will shorten their work days by an hour to reduce electricity usage amid concerns over rising fuel prices and the impact of the Ukraine war. The reduced hours take effect Wednesday. In Bangladesh, most schools are closed on Fridays, but now will also close on Saturdays, Cabinet Secretary Khandker Anwarul Islam said Monday. He said government offices and banks will cut their work days to seven hours from the previous eight hours, but that private offices will be allowed to set their own schedules. Supply disruptions caused by the Ukraine war have led to soaring world prices for energy and food. Bangladesh has been taking measures in recent weeks to ease pressure on its declining foreign currency reserves. Last month, fuel prices were raised by more than 50 percent. The government says it is exploring options to get cheaper fuel from Russia under a special arrangement. The decision has drawn criticism, but the government said it is necessary to cut losses amid rising international fuel prices. Small street protests against the higher prices have taken place in recent weeks, and the government said domestic prices will be adjusted after international prices ease. The country has been suffering more frequent power cuts after the government suspended operations of all diesel-run power plants, reducing daily electricity production by 1,000 megawatts.
Japan may scrap covid tests for travellers: Nikkei
Japan is considering scrapping pre-departure COVID-19 tests for travellers to the country, according to local media. Japan is one of the last remaining countries using border restrictions to control the virus, with arrivals required to present a negative coronavirus test taken within 72 hours of departure. Tokyo, however, may remove the test requirement for vaccinated passengers within the next few weeks, the Nikkei newspaper reported late on Monday. Chief Cabinet Secretary Hirokazu Matsuno on Tuesday declined to comment on the timing of any border easing, except to say it would depend on COVID-19 numbers in Japan and overseas. “Along with taking every measure to prevent contagion, we’ll also promote economic activity — and with border control measures, we’ll relax them in stages while keeping these two things in balance,” Matsuno told reporters. Prime Minister Fumio Kishida, who has cancelled a number of overseas trips after testing positive for COVID-19 over the weekend, said in May that he wanted to bring Japan’s border measures more in line with other major economies.
Malaysia PM reckons economic risks may spur election this year
Global economic pressures could accelerate the timeline for Malaysia’s next election, Prime Minister Ismail Sabri Yaakob suggested in an interview on Monday, a year after he took the reins of government. “If the economy is not going to be good, we cannot drag [the election] until next year or it would backfire on the government,” he told Nikkei Asia and other selected international media outlets. Over the weekend, Ismail Sabri marked the anniversary of his rise to the top job, which made him the country’s third prime minister since the May 2018 general election. Technically, parliament’s term runs until July 2023, but he warned that the combination of the Ukraine war, China’s strict border rules due to its zero-COVID policy, and the risk of a U.S. recession do not bode well for Malaysia. “China is our largest trading partner, while the U.S. is one of our largest foreign investors, so when their economy slows down, it will directly impact Malaysia’s growth,” he said. Ismail Sabri noted that Malaysia’s economy is among the best performers in the Association of Southeast Asian Nations, after the country posted an 8.9 percent year-on-year growth rate for the second quarter. This brought its gross domestic product growth average to 6.9 percent for the first half. Still, although the prime minister hinted at the possibility of dissolving parliament for an election while the economy is relatively strong, he conceded that not everything would be rosy for the ruling coalition if a vote were called soon.
What’s in Indonesia’s proposed 2023 budget?
Last week Indonesian President Joko “Jokowi” Widodo unveiled the country’s proposed budget for 2023. We knew that it was probably going to be smaller than in previous years when the government had to run big deficits to stimulate the economy and shore up the healthcare system. The question was, with the pandemic receding and inflation on the rise, how much smaller? And the answer is, not that much. At IDR 3,042 trillion (roughly $204 billion), overall spending is set to decrease by just 4 percent from the previous year’s record high. The government plans to spend nearly 32 percent more than it did in 2019 which was the last full year before the pandemic. And yet, even with expectations that the price of oil will remain near $100 a barrel, planners believe the budget deficit – which exceeded 6 percent of GDP in 2020 – will fall to below 3 percent for the first time since the pandemic. If everything goes according to plan, this is going to be accomplished mainly on the revenue side, as the economy is expected to grow by 5 percent or more in 2023. With businesses finding their feet and consumers spending more, in tandem with improved collection, tax revenue is projected to increase by 30 percent from pre-pandemic levels. Recent bumps in the consumption tax and the excise tax on cigarettes should help out here as well.
Sri Lanka widens import ban as economic crisis persists
Sri Lanka tightened import restrictions Wednesday with a ban on more than 300 additional items, as an economic crisis that has created months of shortages and toppled a president refuses to abate. President Ranil Wickremesinghe, who replaced Gotabaya Rajapaksa after his ouster in July, slapped a ban on goods including home appliances, tools and sports gear. The South Asian island nation of 22 million people has been suffering dire shortages of many essentials due to a lack of foreign currency. The new bans come despite the central bank announcing last week that the foreign exchange shortage was easing thanks to better inflows. However, Sri Lanka’s economy is projected to contract this year by a worse-than-expected 8 percent, according to the bank, with inflation forecast to peak at a record 65 percent by September.
Tightening risks loom as Singapore posts headline inflation of 7pc
Singapore’s key consumer price gauge in July rose again at its fastest pace in more than 13 years, official data showed on Tuesday, mounting pressure on the central bank to consider another policy tightening move later this year. The pick-up in inflation was mainly driven by stronger increases in the prices of food, electricity and gas, the Monetary Authority of Singapore (MAS)and the Ministry of Trade and Industry said in a statement. The core inflation rate — the central bank’s favored price measure – rose to 4.8 percent in July on a year-on-year basis. A Reuters poll of economists had forecast a 4.7 percent increase. Headline inflation rose to 7 percent, matching economists’ forecast. The core and headline inflation rates were 4.4 percent and 6.7 percent respectively in June. Following July’s inflation data, three economists said they expect MAS to tighten monetary policy in their scheduled statement in October, but added the likelihood of another off-cycle tightening before then is low. Singapore’s central bank has tightened its monetary policy three times this year, twice in surprise moves in January and July. It typically publishes two scheduled monetary policy statements a year, in April and October. “My baseline case is still for another tightening at the scheduled October statement as inflation has not yet peaked and shown signs of stabilization,” said Selena Ling, head of treasury research and strategy at OCBC.
| Singapore GDP Growth Rate In Statistics | ||||
|---|---|---|---|---|
| Details | Last | Previous | Unit | Reference |
| GDP Growth Rate | -0.20 | 0.80 | percent | Jun 2022 |
| GDP Annual Growth Rate | 4.40 | 3.80 | percent | Jun 2022 |
| GDP Constant Prices | 127484.70 | 127705.40 | SGD Million | Jun 2022 |
| Gross National Product | 469088.30 | 411756.60 | SGD Million | Dec 2021 |
| Gross Fixed Capital Formation | 30233.30 | 30412.90 | SGD Million | Jun 2022 |
| Full Year GDP Growth | 7.61 | -4.14 | percent | Dec 2021 |
| GDP from Manufacturing | 29193.90 | 29524.80 | SGD Million | Jun 2022 |
| GDP from Construction | 3737.20 | 3694.60 | SGD Million | Jun 2022 |
| GDP Growth Annualized | 0.10 | 1.40 | percent | Jun 2022 |
| GDP from Utilities | 1546.40 | 1549.00 | SGD Million | Jun 2022 |
| GDP from Transport | 7202.80 | 7200.60 | SGD Million | Jun 2022 |
| GDP from Services | 17974.50 | 17880.10 | SGD Million | Jun 2022 |
| GDP from Mining | 80716.80 | 79378.30 | SGD Million | Mar 2022 |