Asian Economy: Overview, Growth & Development

Kuroda: Japan’s labour practices keep wage pressures under control

Japanese firms have no pressing need to raise wages because they retained jobs during last year’s pandemic-induced economic slump, and thus do not need to fill job vacancies as quickly as U.S. companies, Bank of Japan Governor Haruhiko Kuroda said.

The surge in demand triggered by the re-opening of the U.S. economy, and layoffs by U.S. firms to deal with the pandemic’s initial hit, have recently caused serious bottlenecks and labour shortages in the country, Kuroda said on Wednesday.

That has prompted U.S. firms to raise wages to secure staff, and hike prices of goods and services to curb excess demand.

“In contrast, demand in Japan has not recovered as rapidly as that in the U.S.,” Kuroda told an online meeting of the Japan-U.S. Business Conference.

China’s economic coercion is more bark than bite

Economic warfare has been part of statecraft for centuries, so it’s no surprise Beijing is leveraging its growing economic clout for political ends. But what might be unusual is how ineffective the tactic is becoming. China has been increasingly obsessed with deploying coercive economic measures against countries that have supposedly offended it, such as Australia, Canada, and Lithuania. Last week, China suspended imports of sugar apples and wax apples from Taiwan over supposed pest concerns—but actually in retaliation for Taiwan’s plans to rename its representative office in Washington. Earlier this year, it imposed a similar ban on pineapples from Taiwan amid deteriorating ties.

Moody’s upgrades India’s rating outlook

Moody’s Investors Service on Tuesday changed its outlook on India’s sovereign ratings to stable from negative. However, it retained the ratings, both on foreign and domestic currencies, at the lowest investment grade. Experts said this would have a beneficial impact on debt allocations by foreign portfolio investors (FPIs) to Indian papers.

“The decision to change the outlook to stable reflects Moody’s view that the downside risks from negative feedback between the real economy and financial system are receding,” said the ratings agency.

Now, Moody’s and Standard & Poor’s have a stable outlook on their ratings on India, while Fitch still has a negative outlook. All three rating agencies have given India the lowest investment grade.

Indonesia’s Bali to reopen to some foreign tourists from mid-Oct

Indonesia will reopen its tourist island Bali for some international travellers, including those from China, New Zealand, and Japan, among others, from Oct. 14, senior cabinet minister Luhut Pandjaitan said on Monday.

Bali’s Ngurah Rai international airport will be open to foreign tourists from that date, with visitors required to quarantine for eight days at their own expense, Luhut told reporters.

The country’s reopening and easing of social restrictions is being conducted in stages, he said, because Indonesia “doesn’t want the unexpected to happen”.

Indonesia has been among the countries worst hit by COVID-19 in Asia, officially recording more than 4 million cases and 142,000 deaths, although public health experts believe the true toll is far higher.

However, daily cases have plummeted from more than 56,000 at the peak of the second wave in mid-July this year to 1,100 cases on Oct. 3.

Saudi Arabia-Bangladesh relations: development, assistance and economic ties

Bangladesh-Saudi Arabia relations officially began in 1976 when Saudi Arabia recognized Bangladesh as an independent and sovereign country, which gained independence in 1971. At present, the relations between the two countries are fraternal, strong and evolving. Although the Saudi government supported Pakistan during the Great War of Liberation in 1971, that attitude changed over time and Saudi Arabia became a close friend of independent Bangladesh by standing by the side of the people in various crises. In independent Bangladesh, diplomatic relations were first established between Bangladesh and Saudi Arabia centered on the Hajj.

World bank ups Russia’s 2021 GDP forecast

Russia’s economic recovery will be stronger than expected this year but U.S. sanctions, a poor vaccination rate and the central bank’s monetary tightening will all weigh on the growth outlook, the World Bank said on Wednesday.

Russia’s economic rebound will outpace its neighbour Belarus, hit by Western sanctions amid a political crisis, but will be less pronounced than in other former Soviet republics such as Armenia, Georgia and Uzbekistan.

After shrinking by 3 percent in 2020, its sharpest contraction in 11 years, the Russian economy has recovered to pre-pandemic levels but is expected to lose momentum in the next few years without extra investment that could come from state spending.

The World Bank said it now expects Russia’s gross domestic product to grow by 4.3 percent in 2021 and 2.8 percent in 2022 versus 3.2 percent and 3.2 percent, respectively, that it forecast in June.

Vietnam urban rail projects fall years late as payments lag

Vietnam’s first urban rail projects have fallen years behind schedule as payments to contractors are held up by risk-averse political decision-making.

Construction began in 2012 on the first section of Ho Chi Minh City’s planned rapid transit network, with service originally slated to start in 2018. But the opening of the Japanese-funded Line 1 eventually was pushed to the end of 2021, and further delays to late 2023 or 2024 are now expected.

Two lines in Hanoi — one funded by China — were expected to open in 2015 but have not begun service. One may open this year, while the other is expected to debut in 2023 or later.

Japanese contractors that saw the Ho Chi Minh City project as a can’t-miss opportunity have contended with repeated delays.

“We hope to overcome the various problems and complete it as soon as possible,” said a manager at civil engineering company Nippon Koei, which heads the consulting consortium for the rail project.

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