In Southeast Asia PH to be one of faster-growing economies
The Philippines is expected to be the second fastest-growing economy among the Southeast Asia (SEA) 6 countries, seen to expand by more than 6 percent in the next 10 years.
In the Southeast Asia Outlook 2024-2034 report released on Thursday, the Angsana Council, US consultancy Bain & Co., and DBS Bank said the Philippines is projected to grow at an average of 6.1 percent, next to Vietnam, which is forecast to grow by 6.6 percent.
“Vietnam, Indonesia, and the Philippines are expected to be the faster-growing countries, with Vietnam continuing to stay ahead,” the report said.
The projected Philippine economic growth will surpass the forecast expansion of Indonesia (5.7 percent), Malaysia (4.5 percent), Thailand (2.8 percent), and Singapore (2.5 percent).
The report said positive drivers of growth include the pro-growth administration, prioritized infrastructure investments, with renewable projects garnering interest from foreign direct investment (FDI) investors, and the growing population and workforce.
It added that the Philippines and other countries, such as Vietnam and Indonesia, also increased per capita spending on education.
“SEA countries, in particular Singapore, Thailand, Malaysia, and the Philippines, saw improvements in their infrastructure quality and have made investments in public infrastructure over the years,” the report said.
Shutdowns may cost Bangladesh’s economy $10 bn
Bangladesh’s worst political violence since Prime Minister Sheikh Hasina extended her grip in power in January elections could cost the economy $10 billion, a major setback for the nation looking to shore up its foreign exchange reserves.
The curfews and internet shutdown to quell a student protest over a government jobs quota is estimated to have a $10 billion impact on the economy and costs are expected to climb further, according to Zaved Akhtar, president of the Foreign Investors’ Chamber of Commerce and Industry.
“While the country is slowly recovering with limited online and physical connectivity, full operations are yet to come back, and we are at best 50 percent of the economic potential,” Akhtar said in a statement. The FCCI represents investors from 35 countries.
While the current estimated costs represent a tiny fraction of the $455 billion economy, Bangladesh is in a precarious position with its dwindling foreign exchange reserves. This means the negotiations between Hasina’s government and creditors and the International Monetary Fund for more money will take a renewed urgency since the reserves have fallen to $21.8 billion last month and the garments sector, a key earner of dollars, struggles to fully reopen.
Bangladesh unblocked the mobile internet Sunday after 11 days of near-complete blackout and the authorities eased the curfew with longer daytime breaks to help businesses. But at the same time, security forces have arrested about 10,000 people in the past 12 days, according to the Prothom Alo newspaper, raising concerns the crackdown will widen after the protests died down.
China’s role in the worldwide economy
Battered by the last four years of pandemic, record inflation, long-drawn-out wars and high interest rates, the global economic outlook continues to be lacklustre. In its latest World Economic Outlook update, the International Monetary Fund (IMF) forecasts that the global economy will grow 3.2 percent this year, down a tick from 3.3pc growth last year.
From 2000 through 2019, before the pandemic upended economic activity, global growth had averaged 3.8pc a year. Even this modest global expansion, the IMF notes, is being powered by stronger growth in China. The Fund expects the Chinese economy to grow by 5pc this year, an upgrade from the 4.6pc it had predicted in January but slower than the 5.2pc expansion the previous year.
China alone accounts for nearly a third of global growth. According to IMF analysis, a one percentage point increase in China’s GDP growth would result in an average of 0.3 percentage point increase in growth for other economies. In China, the IMF said, the resurgent domestic consumption propelled the positive upside aided by what looked to be a surge in exports belatedly reconnecting with last year’s rise in global demand.
India ratings raises India’s GDP growth outlook
India Ratings and Research (Ind-Ra) on Wednesday revised upward India’s economic growth projection for the current financial year to 7.5 percent from its earlier estimate of 7.1 percent citing uptick in consumption demand led by continued focus on the government capital expenditure in the Union Budget and deleveraged balance sheets of banks and corporates.
The revised growth projection by India Ratings is higher than most other estimates including the Reserve Bank of India (7.2 percent), Economic Survey (6.5 to 7 percent), the International Monetary Fund (7 percent) and the Asian Development Bank (7 percent).
The ongoing growth momentum led by government capex, deleveraged balance sheets of corporates/banks, and incipient private corporate capex cycle has now found support from the union government budget, India Ratings and Research said in a note.
The budget promises to bolster agricultural/rural spending, improve credit delivery to MSMEs and incentivise employment creation in the economy.
Ind-Ra believes these measures would help in broad basing the consumption demand which if not addressed can constrain the ongoing growth momentum.
According to the ratings agency, growth in private final consumption expenditure is likely to accelerate from 4 percent in 2023-24 to 7.4 percent in the current financial year, the highest in three years.
In Japan’s economy Yen is important
Rejoicing in its busiest ever year of visitors, Japan has begun to fret about overtourism. It is tangled on whether two-tier pricing, with one price for foreign visitors and a lower one for locals, is desirable, discriminatory or self-destructive. Rather than escaping it all, a once-footloose nation is opting to stay put, anchoring Japanese overseas travel at a mere 60 percent of pre-Covid levels.
But somewhere in all this, the right crisis — one of negative terms of trade and currency vulnerability — has at last been identified. The run-up to this week’s Bank of Japan monetary policy meeting was messy; but the message the central bank transmitted on the yen was clearer and more honest than it has been for a long time. For all the BoJ’s reference to an intensifying virtuous cycle between wages and prices and its previous commitment to moving only if the data justified it, the decision to raise the benchmark interest rate to 0.25 percent was hardly a no-brainer.
Pakistan’s long-term credit rating sustained at CCC+
International rating agency Standard & Poor’s (S&P) has maintained Pakistan’s long-term credit rating at Triple C Plus (CCC+), according to its latest report. The agency cited political instability and chaos as significant threats to the country’s economic stability.
The S&P report indicates that Pakistan’s long-term rating outlook is stable, noting improvements in the country’s economic situation over the past year. The risk of Pakistan defaulting in the near future has decreased, with the nation expected to receive funds from the International Monetary Fund (IMF) under a new $7 billion loan program.
Additionally, there is a possibility of loan rollovers with Saudi Arabia, the UAE, and China, which will aid Pakistan in meeting its external financial needs for the next six to 12 months.
“Political uncertainty can affect economic performance and policy making,” the report highlights.
Despite these positive developments, the report highlights ongoing challenges, including high inflation and tight financial conditions. S&P warns that more than 50 percent of the government’s income will be allocated to debt repayment in the current fiscal year, adding pressure to the financial system.
While foreign exchange reserves have increased, they remain low, and financial stabilization efforts are expected to suffer due to persistent inflation. “Pakistan’s rating may improve if the foreign exchange reserves increase and the financial situation improves,” the agency observes.
Foreign domestic workers contributed $11.1bn to Singapore’s economy in 2018
Foreign domestic workers (FDWs) contributed US$8.2 billion (S$11.1 billion) last year to the Singapore economy, or 2.4 percent of the country’s gross domestic product, a study has found.
The study, commissioned by information services company Experian and Hong Kong charity Enrich, calculated the total economic contribution of 250,000 FDWs by combining their personal expenditure, real value of “paid” domestic work and value of freed-up time.
For instance, freeing mothers to re-enter the labour force added S$3.5 billion to the Singapore economy, including savings of S$675 in monthly childcare costs per household.
The study also found that FDWs contributed to the economies in their home countries through remittances. Singapore-based FDWs remitted a total of S$1.3 billion last year.
Domestic work has been “historically undervalued” and the research shows that it is a “key contributor to economic growth, and should be valued accordingly”, it stressed.
The significant economic contribution from FDWs to the Republic was partly reflected in the high proportion of such workers in Singapore households, with one in five hiring one FDW last year.
Singapore’s dependency on FDWs – higher than Malaysia and Hong Kong – has been increasing since 2010, the study noted.
After economic collapse Sri Lanka to hold first presidential election
Sri Lanka will hold its first presidential election since the country sank into a deep economic crisis two years ago. The vote to be held September 21, will be a referendum on the reforms that have helped stabilize the economy but also led to hardship for millions in the island nation.
After the Election Commission announced the polls on Friday, President Ranil Wickremesinghe filed as an independent candidate. He had taken charge in 2022, after widespread protests forced his predecessor, Gotabaya Rajapaksa, to resign.
His rise to the top job had disappointed the protesters, analysts say. “This is an election that people are really looking forward to because it will restore a government with the mandate of the people which was lost two years ago following the popular uprising against the government led by Rajapaksa, who was blamed for massive economic mismanagement and corruption,” Jehan Perera, a political analyst in Colombo told VOA.
Wickremesinghe had been elected as president by Parliament, largely with the support of lawmakers from Rajapaksa’s party.
Economic issues will dominate the five-week campaign in a country that was ranked as a middle-income nation before it faced virtual bankruptcy and defaulted on its foreign debt.
Wickremesinghe is credited with putting the economy on the path to recovery with the help of a $2.9 billion bailout package from the International Monetary Fund. The economy is expected to grow 3 percent this year after shrinking by 7.3 percent two years ago. The severe shortages of fuel, cooking gas, food and medicines that the country witnessed two years ago have eased and the hourslong daily power cuts have ended.
But austerity measures imposed by his government to rescue the economy have been deeply unpopular. Taxes have been hiked on businesses and professionals and massive subsidies for electricity and other utilities have been slashed.