Views differ on level of risk faced by Malaysia’s economy
Experts agree that challenges – both internal and external – will continue to plague the Malaysian economy. However, views differ on how high such risks will be or whether or not they will take the country into another recession.
A Singapore-based economist agreed with the assertion by Bursa Malaysia chairman Abdul Wahid Omar that Malaysia is unlikely to go into recession. On the other hand, a Malaysian economist sees a stagflation on the horizon.
Senior fellow at Singapore’s ISEAS-Yusof Ishak Institute Lee Hwok Aun expressed confidence that Malaysia could avoid a recession based on the healthy growth of the country’s gross domestic product (GDP).
In its quarterly report released on Aug 12, Bank Negara Malaysia said the GDP registered an 8.9 percent growth in the second quarter of 2022, up from 5 percent in the first quarter.
However Nazari Ismail, an economist at Universiti Malaya, said a stagflation was more likely to occur.
Wahid had, in his presentation at the Invest Malaysia forum on Sept 14, said that while the US-China trade tension, the Ukraine crisis, and the tightening monetary policies by various central banks could cause an economic slowdown, Malaysia’s well diversified economy would withstand the pressure.
Bangladesh economy continue to grow despite global economic slowdown: ADB
Bangladesh’s gross domestic product (GDP) is expected to grow by 6.6 percent in fiscal year (FY) 2023, according to the Asian Development Bank (ADB).
The moderately lower growth forecast reflects slower domestic demand and weaker export prospects due to slower growth in advanced economies, ADB said in its Asian Development Outlook (ADO) 2022 Update, released on Wednesday (21 September).
Inflation is projected to rise from 6.2 percent in FY2022 to 6.7 percent in FY2023. The current account deficit is expected to narrow from 4.1 percent of GDP in FY2022 to 3.6 percent of GDP in FY2023 as imports slacken and remittances increase, the ADB report said.
The main risk to this growth projection is a slowdown in exports caused by global uncertainty over the prolonged war in Ukraine, it added.
India would be $25 trn economy in 25 years: Nabfid Chairman
National Bank for Financing Infrastructure and Development chairman KV Kamath said on Tuesday that India is expected to be a $25-trillion economy in 25 years. NaBFID was set up by the government last year to support the development of long-term infrastructure financing in the country.
KV Kamath has also said that all the necessary policies and framework related to NaBFID have been done. “We are on schedule (that) the government has in mind,” KC Kamath said. The NaBFID chairman added that at least 12 board meetings of the bank have already taken place.
The Indian economy is growing at a compound annual growth rate of 8-10 percent, KV Kamath said.
“The policies, processes and the framework are done. The CEO is in place…We have to start lending now,” Kamath was quoted as saying.
The Indian economy is expected to grow by 7.5 percent this year and it will be the highest among the world’s largest economies, Prime Minister Narendra Modi said at the annual summit of the Shanghai Cooperation Organisation (SCO).
Young Chinese cutting spending as economy falling
Before the COVID-19 pandemic, Doris Fu imagined a different future for herself and her family. She imagined buying a new car and a bigger apartment, eating at nice restaurants on weekends and traveling to tropical islands.
But today, the 39-year-old Shanghai marketing professional is saving her money as much as she can.
Fu and many other Chinese in their 20s and 30s are worried about China’s pandemic lockdowns, the high unemployment rates among young people and a weakening property market. As a result, young Chinese citizens are focused on saving instead of spending.
This frugal way of life has been made more popular by social media. Influencers across social media are sharing their money-saving tips and tricks.
This rise of low-cost living, however, may harm the world’s second-largest economy. Consumer spending makes up more than half of China’s gross domestic product, or GDP.
GT voice: Japan’s faltering economy can’t afford to follow us decoupling
Due to the Japanese yen’s sharp depreciation, Japan’s nominal GDP denominated in US dollar terms is likely to shrink significantly to below $4 trillion this year, falling back to a level last seen 30 years ago, the Nikkei reported on Monday.
Over the past three decades, great changes have taken place across the global economic landscape. In dollar terms, the Chinese economy has grown 20-fold, the US has recorded a threefold increase, but the Japanese economy is falling back to where it was 30 years ago. The severe challenges and difficulties faced by the Japanese economy pose a serious question for Japan’s political elites as to how long they will allow an economic and trade agenda rife with “Cold War” mentality continue to drag down the economy.
EU hopes for trade pact with Indonesia within two years
The European Union hopes to strike a free-trade agreement with Indonesia within two years despite disputes with the country over palm oil and nickel, the bloc’s trade commissioner said Tuesday. “We think it is feasible by mid-2024” to conclude a comprehensive economic partnership agreement, Valdis Dombrovskis told reporters in Jakarta. “We see there is some renewed momentum and we hope to build on that.”
The two sides opened bilateral negotiations on a trade deal in 2016 but progress has been stalled over EU restrictions on the use of palm oil-based biofuels and an Indonesian embargo on nickel exports. Dombrovskis said the disputes needed to be resolved through negotiation and the World Trade Organization. Indonesia and Malaysia have filed appeals at the WTO over the biofuels dispute. As part of its “Red II” directive, the EU has decided that biofuels based on palm oil will not count towards its targets for the use of renewable energy by 2030 and it is looking to phase out their use.
Maldives: closing in on an economic crisis
Even as the World Bank and the International Monetary Fund (IMF) have cautioned the Maldivian government on the economic front, the voter mood has sobered owing to the continuing economic and forex crisis in neighbouring Sri Lanka, with whom many Maldivians share familial connections. However, steep increases in prices and considerable fall in family incomes, coupled with unclear predictions about mainstay tourism sector recovery, have forced them to look up to the government for more subsidies and tax cuts, which remains a halfway street—that is more subsidies but also more taxes.
In its report, ‘Maldives Public Expenditure Review’, the World Bank has said that the nation did not face the risk of immediate economic crisis, but was spending beyond its limits even before the pandemic. As the report pointed out, the country had run more extreme budget deficits than sustainable ones and also borrowed heavily, leading to a debt of US$ 6.1 billion by the end of 2021, or close to MVR 100 billion, an estimated 125 percent of the GDP. Of this, local debts accounted for 65 percent and international market debts, 60 percent.
Before Nepal graduates to a developing country
At the 40th plenary of the 76th session of the United Nations in February 2021, the UN General Assembly recommended graduating Nepal from Least Developed Country (LDC) status to Developing Country (DC) in 2026. Though Nepal originally planned to graduate in 2022 and consecutively met the UN review criteria in 2015 and 2018, development faltered following the 2015 earthquake and COVID-19 pandemic.
Nepal is once again close to achieving this major recognition, marking the country as self-reliant and demonstrating its development progress. At the same time, graduating from DC may endanger Nepal’s economy by removing certain safeguards attached to LDC states, such as financial assistance, interest-free loans, and loan adjustment programs from the United Nations, World Bank, International Monetary Fund, and other international organizations. For instance, Nepal enjoys duty-free markets in the developed world due to the Generalized System of Preference (GSP)—under the aegis of the United Nations Conference on Trade and Development (UNCTAD), which it may also lose with graduation. As Nepal prepares to sacrifice international protections for DC status, it must address weaknesses in its economy.
| Nepal Economic Indicators | ||||
|---|---|---|---|---|
| Details | Last | Previous | Value | Reference |
| GDP Annual Growth Rate | 5.8 | 4.25 | percent | Dec/21 |
| Unemployment Rate | 4.44 | 2.85 | percent | Dec/20 |
| Inflation Rate | 8.08 | 8.56 | percent | Jul/22 |
| Interest Rate | 8.5 | 7 | percent | Jul/22 |
| Balance of Trade | -145004 | -167318 | NPR Million | Dec/21 |
| Current Account | -333672 | -207408 | NPR Million | Mar/21 |
| Current Account to GDP | -0.9 | -6.9 | percent of GDP | Dec/20 |
| Government Debt to GDP | 37.7 | 30.2 | percent of GDP | Dec/20 |
Thai tourism sector has turned a corner, senior officials say
In recent days, senior government officials in Thailand have expressed confidence that the country’s economy has entered its recovery phase, after more than two years of anemic growth due to the COVID-19 pandemic. The primary driver of this recovery is tourism, which has rebounded strongly after the devastation wrought by pandemic-induced travel bans and quarantines.
According to a report by Reuters, government spokesperson Anucha Burapachaisri told local media yesterday that the government expects to earn 2.38 trillion baht (around $64.5 billion) in tourism revenue next year. It is hoping that tourism arrivals jump back up to 32 million, or around 80 percent of their level in 2019, the last full year before the pandemic.
| Thailand Economic Indicators | ||||
|---|---|---|---|---|
| Details | Last | Previous | Value | Reference |
| GDP Growth Rate | 0.7 | 1.2 | percent | Jun/22 |
| GDP Annual Growth Rate | 2.5 | 2.3 | percent | Jun/22 |
| Unemployment Rate | 1.37 | 1.53 | percent | Jun/22 |
| Inflation Rate | 7.86 | 7.61 | percent | Aug/22 |
| Inflation Rate MoM | 0.05 | -0.16 | percent | Aug/22 |
| Interest Rate | 0.75 | 0.5 | percent | Aug/22 |
| Balance of Trade | -3660 | -1529 | USD Million | Jul/22 |
| Current Account | -4068 | -1873 | USD Million | Jul/22 |