Japan’s economy performed better than expected in last quarter
The world’s third-largest economy grew by an annualised 12.7 percent in October-December compared with the previous three months, government data showed on Monday, marking the second-straight quarter of expansion and exceeding a median market forecast for a 9.5 percent gain.
The growth rate was a marked slowdown from a revised 22.7 percent surge in the previous quarter, when the economy got a lift from pent-up demand after a previous state of emergency was lifted in May.
For a straight quarter-on-quarter comparison, gross domestic product (GDP) increased by 3.0 percent, the Cabinet Office data showed.
And over the full coronavirus-stricken year, Japan’s economy contracted by 4.8 percent, marking the first annual fall since 2009.
External demand, or exports minus imports, added 1.0 percentage point to the fourth-quarter GDP growth rate, matching a median market forecast.
Private consumption, which makes up more than half of Japan’s economy, rose by 2.2 percent after a 5.1 percent increase in the previous quarter. That compared with market forecasts for a 1.8 percent gain.
Capital expenditure grew by 4.5 percent, marking the first increase in three quarters, the data showed.
Japan’s economy has gradually emerged from last year’s initial state of emergency curbs thanks to a rebound in exports.
But the government’s decision to roll out new restrictions from January has heightened the chance of another recession, clouding the outlook for a fragile recovery.
What happened to the China-Pakistan economic corridor?
The China-Pakistan Economic Corridor (CPEC), one of the most ambitious components of Beijing’s Belt and Road Initiative, was announced to great fanfare in 2015. Since then it has consistently been held up as a “gamechanger” for Pakistan’s economy. But the road to completion has proved long and winding. Reports indicate that the pace of CPEC projects has been slowing down in Pakistan in recent years.
At the same time, China is the only country that is heavily investing in Pakistan. The slowdown of CPEC thus does not augur well for a cash-strapped country like Pakistan, which is plagued by countless issues, some due to its own conceived policies.
In Pakistan’s case, CPEC has continually been discussed ever since its announcement back in 2015, despite the fact that there has not been a major development in years. The lack of progress has led to numerous reports about CPEC being at a near standstill in the country. A case in point is a recent Bloomberg video report on CPEC as an example of “how China’s flagship Belt and Road project stalled out.”
The Bloomberg video discusses CPEC in general, with a particular focus on the port city of Gwadar. It is interesting to note that Gwadar, despite being the epicenter of multibillion dollar projects, lacks basic necessities like reliable access to water and electricity, let alone other facilities. Official circles in Beijing and Islamabad may dub the report as yet another example of “Western propaganda,” as they often do when a foreign media report is not in their favor, but it points out to several factors that have gone wrong, ultimately pushing the CPEC projects in Pakistan onto the backburner.
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India’s economy set to expand by 10pc in fiscal 2022: S&P
The Indian economy is set to recover and expand by 10 percent in fiscal 2022, after shrinking 7.7 percent in fiscal 2021, ratings agency S&P Global Ratings said Tuesday, exceeding similar growth forecasts for other major economies.
In January, India lauched a program to inoculate up to 300 million people – the world’s biggest mass vaccination scheme. “We view Covid vaccinations as critical to India’s recovery over the next few years, and as key to normalizing demand,” S&P said, but cautioned that the emergence of new, more contagious variants able to potentially evade vaccines, could threaten the recovery. Also, the pace of recovery will vary by sector, S&P added. For example, airlines continue to struggle as most flights remain grounded, while automobiles are doing better as more people prefer using personal cars over public transport due to health fears. S&P’s projected economic recovery compared favorably with the anticipated growth rate of some other major economies. In late January, the International Monetary Fund estimated the global economy will grow by 5.5 percent in 2021 and 4.2 percent in 2022. The IMF projected that China, India’s principal rival in Asia, will see its economy expand by 8.1 percent this year and by 5.6 percent next year. IMF expects emerging and developing Asia as a whole to grow by 8.3 percent this year and by 5.9 percent in 2022.
“The emergence of yet more contagious Covid-19 variants with the potential to evade vaccine-derived immunity present a major risk to this recovery,” said S&P.
New Covid infections, which peaked at 100,000 daily cases last year, started to plunge in September and now are running at about 11,000 cases per day. But this sudden drop has puzzled health experts – some suggest parts of the country have reached herd immunity (where a sufficient portion of a local population has developed immunity to the virus) while the government claims enforcement of mask-wearing rules has brought down infections. On the whole, India has reported about 11 million cases (a tiny fraction of its 1.4 billion population) and 155,000 deaths. In contrast, the U.S. (which has only one-fourth of India’s population) has recorded nearly 490,000 deaths, according to Johns Hopkins.
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Singapore minister: closing borders to India, Indonesia will impact economy
If Singapore closes its borders to travellers from India and Indonesia over COVID-19 fears, there will be widespread social and economic impact for Singaporeans, parliament was told Tuesday.
Dr Koh Poh Koon, the Senior Minister of State for Health, told parliamentarians the repercussions could mean that many Singaporeans would not receive the keys to the housing units they bought, and families will have to consider finding alternative care arrangements for their loved ones because they will face delays in hiring foreign domestic workers as caregivers.
India and Indonesia are among the main source countries for the construction sector, and domestic workers for helping aged as well as children of working Singaporeans.
“Our economy will also slow down and the lives and livelihoods of many will be impacted. Some of the travellers (from these two countries) are our citizens, permanent residents or their close relatives (who come) here to visit them,” TODAY newspaper had Dr Koh as responding to a parliamentary question on why the government is not closing the nation’s borders to India and Indonesia, given the “disproportionately large number of imported cases from these two countries”.
Dr Koh explained that Singapore needs a continued inflow of migrant workers to support key sectors of the economy, including construction workers to build housing projects and critical infrastructure, and foreign domestic workers to support the caregiving needs of families.
Dr Koh said that less than one percent of Singapore’s total foreign arrivals since April 1 last year has tested positive for COVID-19.
In recent months, most COVID-19 cases have been foreigners arriving here to work. Most of the arrivals since then were from mainland China, Indonesia, India and Malaysia.
Meanwhile, according to a report by TODAY, the Ministry of Manpower had approved around 25,000 requests for foreign domestic workers to enter Singapore between April last year, a starting period of sharp increase in the number of COVID-19 cases, and January this year.
A 34-year-old foreign domestic worker from Indonesia is Singapore’s sole imported COVID-19 case on Tuesday (Feb 16). This is the lowest number for imported cases reported here since November 2, which recorded one infection then, reported TODAY.
The Ministry of Health (MOH) said that the work permit holder had already been placed on stay-home notice upon her arrival here on February 2.
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Bangladesh eyes investment gain as Japanese firms exit China
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Japan incentivizing its companies to shift manufacturing facilities out of China and adding Bangladesh to a list of preferred destinations for relocating the factories may give the South Asian nation’s economy a boost.
“As the pandemic started in China, Japanese companies needed to diversify” their supply chains further, Naoki Ito, the Japanese ambassador to Bangladesh, said in an interview. “This will provide an opportunity for Bangladesh.”
The island nation’s nudge to relocate companies comes at a time when a Special Economic Zone is in the making in Bangladesh to lure Japanese firms’ production facilities. The industrial zone sprawling on 1,000 acres in the Araihazar subdistrict, 32 kilometers away (about 20 miles) from the nation’s capital Dhaka, is expected to bring in $20 billion in Japanese investments, according to the Bangladesh Economic Zones Authority.
Japanese manufacturers have already been seeking lower labor costs and supply-chain diversification by moving some output out of China for years as wages rose and infrastructure in countries like Vietnam and Bangladesh improved. Over the last 10 years, the number of Japanese companies operating in Bangladesh has tripled to about 300, according to Ito.
Japan has allocated $350 million in special loans to develop the $1 billion industrial zone, Ito said, making it the largest such assistance for an SEZ in Asia.
The Araihazar industrial park, which will be operational by 2022, is seeking to draw new investments from automakers, such as Suzuki Motor Corp. and Mitsubishi Corp., according to Ito. Japan Tobacco Inc. and Honda Motor Co. are among the largest Japanese investors in the South Asian nation so far.
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Russia’s strong economic position among OPEC + members
In early 2021 Russia secured an increase to its oil output quota under the OPEC+ agreement for February and March, the latest sign that Russia’s comparatively strong economic position is allowing it to push for better terms under the deal.
Economics are set to underpin future negotiations in 2021, with Russia likely to continue to push to increase output volumes, despite uncertainty over demand.
Moscow-based analysts welcomed the latest OPEC+ decision, which allowed Russia to increase output by 65,000 b/d in February, and a further 65,000 b/d in March. Russia’s crude output was 9.10 million b/d in December according to the S&P Global Platts OPEC+ production survey.
In contrast, most other members of the group will maintain output at January levels, with Saudi Arabia announcing that it would add an extra 1 million b/d cut. Russia’s close ally Kazakhstan also secured a small increase to its quota from February.
Russia is better able to absorb oil shocks than many of its OPEC+ allies, primarily because of its flexible exchange rate to the US dollar, the currency used to price its crude. The ruble’s value tends to fall against the US dollar when oil prices drop. This allows Russian producers, whose costs are primarily in rubles, to minimize the impact of low prices on their operations.
On March 6, 2020 when Russia temporarily walked away from the OPEC + agreement, one dollar was worth 66.2 rubles. By February 16, 2021 the ruble had weakened to 73.31 against the US dollar, according to data from Russia’s Central Bank.