Singapore economy likely to grow in 2022
Singapore’s baseline assumption is that its economy is still able to grow this year, but adverse situations such as a recession or stagflation cannot be ruled out, owing to uncertainties arising from the deepening crisis in Ukraine, said Finance Minister Lawrence Wong on Tuesday (Mar 22). “It may well be that we can still continue to grow, which is still our assumption today, that our baseline assumption and projection is still that we are able to continue growing as an economy this year,” he told more than 3,000 business leaders and government officials during a luncheon plenary at the Singapore Apex Business Summit 2022. The economy is expected to grow 3 to 5 percent in 2022, according to official forecasts. Things could stabilise if the Russia-led invasion into Ukraine de-escalates, he said. “But there is also the likelihood that things may escalate or that this could be a prolonged war, in which case, there will certainly be an impact on supply chains, on inflation and on global growth, all of which will then impact Singapore,” he said. If the global economy stagnates amid high inflation, resulting in what is known as stagflation, Singapore would be affected too, even if its direct links with Russia and Ukraine are limited, he said.
Indonesia’s unusual pitch raises eyebrows
Indonesia has suggested crowdfunding the relocation of the country’s capital after a major investor declined to back the $32bn project, prompting ridicule from critics and questions about ownership of the planned city.
The unorthodox proposal came to light on Monday when the head of the government agency behind the plan told local media the option is being explored after Japan’s SoftBank Group Corp opted not to invest in the project.
Pradarma Rupang, head of the Mining Advocacy Network in East Kalimantan, the proposed location of the new capital, expressed concern that any crowdfunding effort would be dominated by businesses hoping to make a profit.
“As a result, I don’t know if there will be any reciprocity for these donors. Will they be shareholders?” Rupang told Al Jazeera. “What will be the compensation for these donors?” Rupang said it would also be unreasonable to expect the general public to foot the bill. “The community has been burdened with taxes, high education and other costs and the government has revoked fuel subsidies,” he said. “People are also paying for their own healthcare, particularly as the government has lost control of the COVID-19 pandemic.”
Nepal’s economy suffers as it fails to import electricity
Nepal has failed to import electricity from India as electricity prices in the neighbouring country have been rising lately. Nepal’s most bids for power from the India have failed recently because other buyers outbid the Nepal Electricity Authority (NEA). On Wednesday, Nepal was forced to cut power to its industries for several hours, Xinhua news agency reported. “The electricity prices in India have been rising because of growing input costs for thermal power plants to produce electricity amid high fuel prices globally,” Suresh Bahadur Bhattarai, the NEA’s Spokesman, told Xinhua.
Nepal is facing ripple effects of the current Russia-Ukraine tensions, “as it is being forced to pay higher prices for electricity than the usual market prices,” he added.
The NEA, the sole power utility body in Nepal, buys electricity from India in the dry season when Nepali hydropower plants produce insufficient power because of reduced water levels in the rivers.
In Nepal, the peak hour demand for power is around 1,600 megawatts (MW), while the power plants are producing around 650MW of electricity currently. In the monsoon season, it produces more power than it needs and sells the surplus energy to India.
As the NEA is now paying a higher amount for power purchases than it charges customers, Bhattarai fears a serious consequence for the financial health of the power utility body.
Worse is the financial situation facing the Nepal Oil Corporation (NOC), the only importer of petroleum products in Nepal, which is suffering massive losses due to rising prices of petrol, diesel, cooking gas and other fuels.
While hiking the petroleum prices at home to offset rising import prices, the NOC has continuously been subsidising diesel, petrol and cooking gas as well. As per the latest price adjustment on March 17, its estimated fortnightly losses stand as high as 4.66 billion Nepali rupees ($38 million).
Omicron is dealing a big blow to China’s economy
OMICRON MOVES fast. That makes it difficult to contain—even for China, which tries to stomp promptly on any outbreak. A cluster of infections in Shanghai, for example, has shattered the city’s reputation for deft handling of the pandemic, forcing the government to impose a staggered lockdown, of uncertain duration, for which it seems surprisingly ill prepared.
The variant’s speed also means that China’s economic prospects are unusually hard to track. A lot can happen in the time between a data point’s release and its reference period. The most recent hard numbers on China’s economy refer to the two months of January and February. Those (surprisingly good) figures already look dated, even quaint. For much of that period, there was no war in Europe. And new covid-19 cases in mainland China averaged fewer than 200 per day, compared with the 13,267 infections reported on April 4th. Relying on these official economic figures is like using a rear-view mirror to steer through a chicane.
World bank sees Malaysia’s economy growing 5.5pc this year
Malaysia’s economy is expected grow 5.5 percent this year, driven by recovery in domestic demand, expansion in exports, and reopening of borders, according to a World Bank report.
It said the external sector will continue to lend its support, especially that of electrical and electronics (E&E) goods and medical rubber gloves.
However, it cautioned that the growth could slow to 4.8 percent if the global condition worsens amid the Russia-Ukraine conflict, financial tightening in the United States, and structural slowdown in China.
Other risks include a worsening in supply chain disruptions and the emergence of more severe Covid-19 variants.
“While the economy is projected to be on a recovery path, Covid-19, food inflation and floods are expected to weigh down progress on wellbeing of the poor and vulnerable,” according to the World Bank’s East Asia and Pacific (EAP) Economic Update April 2022 titled “Braving the Storm”.
Last year, the World Bank projected Malaysia’s economy to grow 5.8 percent this year compared to 3.1 percent in 2021.
The World Bank said a monetary policy shock in the US, assumed to increase interest rates by at least 25 basis points, is likely to hurt growth by as much as −0.4 percentage points in Malaysia.
“The earlier-than-expected monetary tightening in response could make recovery even harder in other countries. Financial conditions in the US are of particular significance for developing EAP countries, especially those like Malaysia, which rely more on short-term capital flows.
“The risk of capital outflows, which could put pressure on their currencies, could induce premature financial tightening,” it said.
On the one hand, the financial shock from the war in Ukraine may lead to a slower-than-planned tightening of US monetary policy despite the stronger inflationary pressures.
As for the EAP region, GDP is expected to expand 5.0 percent this year and could slow to 4.0 percent, down from earlier projection of 5.4 percent in October last year.
India’s GDP to grow 7.4pc in 2022-23
The country’s gross domestic product (GDP) is expected to grow 7.4 percent in the current financial year 2022-23, according to the FICCI Economic Outlook Survey. It forecasts the growth for agriculture and allied activities at 3.3 percent, while for industry and services sectors at 5.9 percent and 8.5 percent, respectively, during the fiscal year.
However, it said downside risks to economic growth remain escalated.
“While the threat from the pandemic remains on fore, the continuation of Russia-Ukraine conflict is posing a significant challenge to global recovery.”
Industry body FICCI in a statement on Sunday also said that according to estimates provided by the Survey participants, global growth could slow by 50-75 basis points due to the conflict, further moderating the prospects of the post-COVID-19 recovery.
“The latest round of FICCI’s Economic Outlook Survey puts forth an annual median GDP growth forecast for 2022-23 at 7.4 percent — with a minimum and maximum growth estimate of 6.0 percent and 7.8 percent, respectively,” the industry body stated.
The FICCI’s Economic Outlook Survey was conducted in March 2022 and drew responses from leading economists representing industry, banking and financial services sector. The economists were asked to provide forecast for key macroeconomic variables for the year 2022-23 and for January-March 2022 and April-June 2022 quarters.
The current Russia-Ukraine conflict is expected to further aggravate the price rise through imported commodities. The estimate for average Wholesale Price Index-based inflation in the March 2022 quarter has been put at 12.6 percent, it said.
FICCI said, “The economists were of the view that the Reserve Bank of India will look at reversing its stance in the second half of the current year (2022) and one can expect a rate hike between 50-75 bps by end of this fiscal year.”
The industry body said retail inflation has also been treading above the targeted range of the RBI in January and February 2022 and should see some respite in the forthcoming fiscal year.
“The unsustainably high international commodity prices are expected to level off going forward.”
China’s covid-19 policy, yuan’s rise vs yen may beset Japan’s economy
Japan’s economy, which has already been facing downward pressure against a backdrop of the Ukraine crisis and the yen’s depreciation, may also be plagued by China’s radical “zero COVID” policy and the yuan’s rising trend.
With energy and commodity prices increasing globally in the wake of the full-fledged attack on Ukraine by Russia, a major oil and gas producer and exporter, resource-poor Japan might experience “bad inflation” — a combination of an economic downturn and higher costs.
The yen is certain to extend losses against other key counterparts including the U.S. dollar and the euro as the Bank of Japan has kept up its ultraloose monetary easing, probably driving up import prices and accelerating inflation at home.
Under such circumstances, China’s business environment, often swayed by the Communist-led government’s anti-epidemic restrictions, and the strength of the yuan known as the renminbi, are expected to deal a further blow to Japan’s economy, the world’s third largest.
Even following the end of the 2022 Beijing Winter Olympics and Paralympics, China has pledged to continue taking drastic steps to tackle the novel coronavirus spread, such as imposing lockdowns on cities when outbreaks occur and quarantine on travelers from abroad.
In late March, Chinese authorities decided to lock down Shanghai, which has a population of about 25 million, with each half of the city shut down in turns for nine days through next Tuesday.
Speculation has also been rife that China, Japan’s biggest trading partner, would shy away from implementing actions to push down the yuan to curb a surge in domestic prices, as the prolonged pandemic has severely undermined consumer and corporate sentiment.
The yuan spiked 6.4 percent from the beginning of this year to 19.26 yen as of Thursday, while the dollar soared 6.0 percent to 122.41 yen during the same period, according to Mizuho Bank, the main banking arm of Mizuho Financial Group Inc.