Indonesia’s q1 GDP growth beats forecasts, but outlook’s uncertain
Indonesia’s economic growth in the first quarter beat expectations, buoyed by high public spending for the country’s elections, but maintaining the strong pace will be challenging due to global developments and tight local monetary conditions.
Southeast Asia’s largest economy grew by 5.11 percent on a yearly basis in the January-March period, the highest growth rate in three quarters. Growth exceeded the 5 percent rate expected by economists polled by Reuters and the 5.04 percent achieved in the fourth quarter.
In the first three months of 2024, campaign expenditure for the Feb. 14 election and higher household spending during the Muslim holy month of Ramadan, which started in March, bolstered economic activity.
That helped offset the hit that Indonesia’s economy has taken from declining commodity exports in the past year. The resource-rich country is the world’s biggest exporter of thermal coal, palm oil and nickel, among other commodities.
Some economists said the election and Ramadan spending gains are one-off factors. Going forward, higher-for-longer U.S. interest rates, Middle East tensions, as well as Indonesia’s own rate hiking cycle – totalling 275 basis points from mid-2022 to April 2024 – are clouding the growth outlook.
Mongolia imports goods and raw materials worth $3.4 bn in 2024
Mongolia has imported goods and raw materials worth $3.4 billion since the beginning of 2024, according to official data published by the country’s Customs General Administration on Tuesday. Mongolia’s commodity exports amounted to $4.9 billion, which is 2.9 percent less than last year. The foreign trade surplus reached $1.5 billion. More than 89.3 percent of Mongolia’s total exports are mining products.
Maldives urges Indians to ‘please be part of its tourism’
Amid a strained bilateral ties following derogatory remarks against India and Prime Minister Narendra Modi, a Maldives’ minister has urged Indians to “be a part of their tourism” as their economy “depends on it”. Emphasizing on the history shared by India and Maldives, Tourism Minister Ibrahim Faisal said the newly elected government wants to work with India. The Maldives’ minister said, “We have a history. Our newly elected government also wants to work together [with India]. We always promote peace and a friendly environment. Our people and the government will give a warm welcome to Indian arrivals. As the Tourism Minister, I want to tell Indians to please be a part of Maldives’ tourism. Our economy depends on tourism.”
China’s overcapacity dilemma solvable with ‘painful’ industrial revamp
China should accept the “painful restructuring” of some industries to ease overcapacity concerns, as inaction may hamper the country’s economic recovery and motivate the US and Europe to ramp up scrutiny of those sectors, advisers to Beijing have said.
Lu Feng, a professor at the National School of Development at Peking University, admitted supply overflows exist – naming petrol cars, petrochemicals, low-end computer chips, batteries and electric vehicles (EVs) as examples – but the rearrangement of the industries involved would ultimately be beneficial.
“Serious excess production will trigger painful restructuring and adjustment, eventually leading to a more mature and stable sector,” Lu said in an interview with the state-backed Economic Observer on Sunday.
Chinese authorities have expressed their own concerns about industrial overcapacity and sought to curb it, but they have also refuted claims from the US and Europe that the country is flooding global markets with cheap goods to crowd out competitors, especially in new energy.
GDP of India
India’s GDP registered a growth of 8.4 percent in the third quarter of FY24, according to the estimates of the Statistics Ministry. The new numbers showed a remarkable 4.1 percent increase in GDP growth compared to the third quarter of FY23 when it was 4.3 percent.
According to the Ministry of Finance, real GDP recorded a growth of 7.6 percent in FY24. The robust demand for residential fueled the growth of the construction sector by double digits in FY24. The manufacturing and service sectors also registered a growth in Q3. However, private consumption growth at 3.6 remains a worry for economists.
The share of exports in GDP stood at 22.2 percent in the third quarter. It has registered a marginal decline, compared to the previous quarter.
In Q1 FY24, GDP growth surged to 7.8 percent, surpassing many major economies of the world, such as the US, UK, and China. This was an impressive achievement compared to the 6.1 percent growth rate in the preceding quarter. Within various sectors of India, the agriculture sector demonstrated a visible growth rate of 3.5 percent, while the manufacturing sector had 4.7 percent growth.
In the Q2 FY24, the GDP growth of 7.6 percent showed a broad-based recovery of India from the pandemic. Especially domestic demand for employment increased in spite of the global risk and unexpected factors. While the agriculture, forestry and fishing industry saw growth of 1.2 percent, the manufacturing sector also saw growth of 13.9 percent compared to Q1 FY24.
Bangladesh, UAE commit to strengthening economic, development cooperation
A high-level delegation from the UAE side is expected to visit Bangladesh in the coming months to explore the investment opportunities in Bangladesh and to identify new areas of engagement for mutual benefit
Bangladesh and the United Arab Emirates (UAE) have reaffirmed their commitment to fostering deeper economic collaboration between the two nations.
The commitment was made at a meeting between Finance Minister Abul Hassan Mahmood Ali and State Minister of Foreign Trade of the UAE Dr Thani bin Ahmed Al Zeyoudi held in Abu Dhabi.
The meeting underscored the shared aspirations of both countries to bolstering trade, investment, and development cooperation for mutual prosperity.
Rethinking the Japanese economy
For much of the 1970s and 1980s, experts predicted that Japan would eventually surpass the United States as global hegemon, and that Japanese society pointed to the future of the industrialized world. Then came the shock of late 1989, when the speculative bubbles on the stock market and in the real estate market burst. Decades of stagnation followed.
Many observers assumed that Japan would keep declining at the same slow but steady rate. However, looking back at the past four decades, it is evident that there were positive developments, too. Large Japanese companies kept their pole position in the domestic market as well as on the global scene even as the Japanese economy stagnated. Now, a few data points indicate that the macroeconomic trend is changing too. Most notably, a recent bull run at the Tokyo stock market has lifted investors’ spirits.
Seizing Malaysia’s economic momentum
The drastic depreciation of the Malaysian ringgit, comparable in magnitude to the 1998 Asian Financial Crisis, has spooked many and triggered debates on the nation’s economic performance. External headwinds such as persistent high inflation in the United States, sluggish economic prospects in China and ongoing geopolitical tensions are significant influencing factors. Still, some see the weaker ringgit as a sign of the nation’s dwindling competitiveness.
That view is overly pessimistic. Key economic indicators are evolving favourably. Headline inflation is declining and unemployment has remained steady at 3.3 percent since November 2023, returning to pre-COVID-19 levels. If the government can address some of the nation’s systemic structural inefficiencies, it could pave the way for a second economic take-off.
Ongoing competition between China and the United States, compounded by the supply chain disruption witnessed during the pandemic, has spurred both Western and Chinese companies to re-evaluate their sourcing and supply strategies. The ‘China+1’ model and ‘Taiwan+1’ model are direct responses and stands to benefit Malaysia. Intense interest from multinational corporations looking to start or expand manufacturing activities that would have been done in China previously, for example foreign semiconductor companies looking to invest in Penang, has risen.
Philippines posts $3.2 bn trade deficit in March
The Philippines posted a trade deficit of $3.2 billion in March, the narrowest since May 2021, preliminary official data showed on Wednesday.
Imports fell 20 percent to $9.3 billion in March from a year earlier, the biggest drop since a 20.8 percent drop in July 2020, while exports fell 7.3 percent to $6.13 billion, the Philippine Statistics Authority said.
Post elections Sri Lanka could risk economic recovery
Sri Lanka’s tentative recovery from its worst economic crisis could be stalled by presidential elections due later this year, the island nation’s central bank chief warned Tuesday.
Months-long shortages of food, fuel and medicines culminated in Sri Lanka defaulting on its foreign debt in 2022 and angry protests that led to the ouster of then-president Gotabaya Rajapaksa.
His successor Ranil Wickremesinghe has introduced austerity measures including sharp tax hikes, and cracked down hard on anti-government demonstrations.
Nandalal Weerasinghe said the crisis-hit economy had stabilised thanks to tough reforms prompted by an International Monetary Fund rescue package, but the country was not completely out of the woods.
“Domestically, what I see as the challenge is to continue the same policies going forward irrespective of the administration,” Weerasinghe said. “That is an important one.”
Wickremesinghe’s party has indicated that he will seek a fresh term at the elections due in September or October.
His two main rivals have said they wants to renegotiate terms of the IMF bailout, reduce taxes and increase food and energy subsidies.
US weighs upgrade for Vietnam to ‘market economy’ status
U.S. President Joe Biden’s bid to draw Vietnam closer as a strategic ally will clash head-on with his desire for union workers’ votes on Wednesday as the Commerce Department hears testimony on whether to designate Vietnam as a “market economy”.
The move, opposed by U.S. steelmakers and Gulf Coast shrimpers but backed by retailers and other business groups, would reduce the punitive anti-dumping duties set on Vietnamese imports because of its current status as a non-market economy with heavy state influence.
“Vietnam is already a market economy,” said Ted Osius, head of the U.S.-ASEAN Business Council, which backs the upgrade. “It has met key criteria such as currency convertibility and is ready for an accurate designation.”
The Commerce Department will hear arguments from both sides during a virtual hearing on Wednesday afternoon in Washington as part of a review due to be completed in late July.
Vietnam has argued to be freed of the non-market label because of recent economic reforms, saying retaining the moniker is bad for increasingly close two-way ties that Washington sees as a counterbalance to China.
During Biden’s visit to Hanoi last year, the two countries elevated ties to a “comprehensive strategic partnership”, lifting Washington’s diplomatic status in Vietnam to match China and Russia.
Last year, Vietnamese Prime Minister Pham Minh Chinh also urged U.S. Treasury Secretary Janet Yellen for an end to the non-market label, befitting Vietnam’s status as a U.S. “friend-shoring” destination to diversify supply chains away from China.