World Bank, HSBC positive about Vietnam’s economy
Vietnam’s economy should get back to a gross domestic product (GDP) growth of 6.8 percent next year, driven by a return of strong foreign direct investment (FDI), primarily in manufacturing, according to Tim Evans, chief executive officer (CEO) of HSBC Vietnam. The country’s economic conditions continued to improve, with both industrial production and retail sales registering a third month of growth, the World Bank recently said.
The GDP growth would benefit the country’s exports, especially as free trade agreements that have been signed over the past two years start to bear fruit, Evans said.
The continued expansion of the middle class and in particular the rising affluent sector will lead to changes in consumption as Vietnamese start spending more and more on leisure and travel, a Vietnamese newspaper reported.
The World Bank said in the December edition of its Vietnam Macro Monitoring that Vietnam’s economic conditions continued to improve, with both industrial production and retail sales registering a third month of growth.
Merchandise exports hit a record high of $31.9 billion, helping maintain a second consecutive month of trade surplus while FDI commitment recovered after a brief dip in October, according to the report.
Inflation ticked up due to fuel price hikes, recovering non-food domestic demand and rising logistic costs while credit growth remained stable, providing amble liquidity to support the economy recovery. After two months of decrease, the consumer price index (CPI) increased by 0.3 percent month-on-month in November.
Compared to a year ago, the CPI rose by 2.1 percent year on year, slightly higher than in October, but well below the 4 percent target set by the State Bank of Vietnam.
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Indonesia’s $6bn airport bid to rival Singapore raises eyebrows
A $6bn proposal to turn an Indonesia airport into a regional hub rivalling Singapore and Kuala Lumpur has sparked concern among local tour operators who question the transparency and feasibility of the project.
Indonesia’s state-owned airport operator and an Indian-led consortium propose transforming Kualanamu International Airport in North Sumatra province into one of the region’s busiest airports with 50 million passengers every year.
Under the plan announced earlier this month by Angkasa Pura II and GMR Airports Consortium, the airport would see passenger numbers rise five-fold compared with pre-pandemic levels to rival Kuala Lumpur International Airport and Changi.
GMR Airports Consortium, which is made up of Indian-owned GMR Group and French Aeroports de Paris group, has pledged an initial investment of IDR 56 trillion investment ($3.9bn) as part of a 25-year contract to develop the airport, with the remainder to come from the Indonesian side.
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Japan OKS record $317 billion extra budget for covid, economy
Japan’s parliament on Monday approved a record extra budget of nearly 36 trillion yen ($317 billion) for the fiscal year through March to help out pandemic-hit households and businesses.
The budget largely is to fund COVID-19 measures, including booster shot vaccines and oral medicines. It also includes cash payouts for families with children and a promotion campaign for the hard-hit tourism industry, which critics said are pork barrel giveaways.
Prime Minister Kishida Fumio said the supplementary budget is meant to revive an economy not yet fully recovered from the pandemic and to achieve stronger growth and a more equitable distribution of wealth under his “new capitalism” policy.
Under Kishida, the government has tightened border restrictions to help keep at bay cases of the fast-spreading Omicron variant of the coronavirus, after managing to bring infection levels down sharply in the past few months.
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What South Korea can learn from India on diplomatic balancing
One of South Korea’s major strategic challenges today is maintaining a diplomatic balance between its two major foreign partners, the United States and China. While its alliance with the U.S. is vital to South Korea’s strategic security, China is South Korea’s largest trade partner. With the increase in geopolitical competition between the two global powers, the South Korean government has walked a tight rope, emphasizing the importance of the ROK-U.S. alliance and the pragmatic necessity of maintaining cooperative economic relations with China.
Despite the careful balancing act, South Korea could face pressure from either side. From the United States, South Korea could face pressure to participate in the U.S.-led Quad or to join international efforts condemning China’s domestic human rights records and military exercises against Taiwan. From China, South Korea has already faced warnings not to participate in the U.S.-led missile defense program or establish a trilateral security framework with the U.S. and Japan.
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China’s economic growth will slow sharply in 2022: WB
The World Bank has cut its forecasts for China’s economic growth this year and next, as the world’s second largest economy faces mounting headwinds from the new Omicron variant to a severe property sector downturn.
The bank now expects China’s GDP to expand 8 percent in 2021 compared with a year ago — that’s lower than its previous forecasts. (In October, the World Bank expected China to grow 8.1 percent this year. In June, it projected a growth of 8.5 percent.)
It also cut its 2022 forecast from 5.4 percent to 5.1 percent, which would mark the second slowest pace of growth for China since 1990 — when the country’s economy increased 3.9 percent following international sanctions related to the 1989 Tiananmen Square massacre. China’s economy grew 2.2 percent in 2020.
“Downside risks to China’s economic outlook have increased,” the World Bank said Wednesday in its latest report on China’s economy.
Renewed domestic Covid outbreaks, including of the Omicron variant, could lead to more “broad-based and longer-lasting” restrictions and cause further disruptions to economic activity, it said.