The IMF and Sri Lanka are partners in delusion
The International Monetary Fund (IMF) is in command of Sri Lanka’s economy, barking orders and making demands in an effort to restore macroeconomic stability. The pattern is a familiar one. Back in April 2022, Sri Lanka’s currency collapsed, having depreciated by 44 percent against the U.S. dollar since President Gotabaya Rajapaksa took office in 2019, and, according to our measure, inflation reached a stunning 74.5 percent per year. Sri Lanka even suspended payments on its external debt. Then the IMF fire brigade arrived.
On September 1, 2022, the IMF reached a staff-level agreement to support Sri Lanka’s economy with a 48-month lending arrangement of roughly $2.9 billion. Now, the IMF is withholding the cash until Sri Lanka raises corporate-income and value-added taxes, cuts government spending, and reaches a debt-restructuring agreement with two of its largest creditors, China and India.
Why China’s reopening will mean both risk and reward for Singapore’s economy
After several years of one of the most severe lockdowns in history, China is finally reopening up to the world.
During the past three years, China has ruthlessly clamped down on Covid-19. Lockdowns, mass testing, travel restrictions and long quarantines were enforced, and became routine for many Chinese citizens.
These efforts were rewarded with some success. For the better part of three years, China reported less than a hundred new cases per day.
But in many other aspects, the impact has been less than ideal. China’s GDP recorded its lowest growth in decades, and as other countries began opening up, China’s zero-Covid policy began to draw ridicule as outdated and impractical.
At long last, however, the government has indicated a policy reversal — travel restrictions have been lifted, and infected personnel will be allowed to self-isolate at home instead of having to go to a hospital.
The policy reversal has received mixed reactions from Chinese citizens, but it’s not just them that have something to think about.
China’s economy will be ‘on fire’ in the second half of 2023: Chairman
China’s economy will be “on fire” in the second half of 2023 as the economic performance of East and West diverges, according to Standard Chartered Chairman José Viñals.
The reopening of the Chinese economy following several years of strict “zero-Covid” measures has buoyed sentiment among economists that the global growth and inflation picture may be less bleak than initially feared this year.
OECD Secretary-General Mathias Cormann earlier this week said the reopening was “overwhelmingly positive” in the global fight to tackle sky-high inflation.
Chinese GDP grew by just 3 percent in 2022, official figures revealed earlier this week, its second-slowest growth rate since 1976 and well below the government’s target of around 5.5 percent. However, shorter-term data indicated a quicker-than-expected recovery as pandemic-era measures are wound down.
The reopening has proven tricky, with China reporting a huge rise in Covid cases and deaths in recent weeks.
India to be $26 trillion economy by 2047-48: EY
India’s GDP will be $26 trillion in market exchange rate terms by 2047-48, and India’s per capita income would exceed $15,000, putting it among the ranks of developed economies according to EY.
In a report released on Wednesday, EY noted that even while maintaining a stable yet modest growth rate of 6 percent per annum, India would become a $26 trillion economy, in nominal terms by 2047-48 with the per capita income at six times the current levels.
The recent accelerated pace of economic reforms of the last few years in the domains of fiscal, digital, physical infrastructure and social inclusion, has positioned India for higher and sustainable growth, the report noted.
This, together with the largest, broadest and deepest labour pool, with a relatively inelastic labour market, provides a long runway for improving productivity at a pace faster than growth in wages. This enhances the global competitiveness of enterprises doing business in India.
Among the key enablers is the services exports which have grown by 14 percent over the last two decades to $254.5 billion in 2021-22. A large part of services exports is from the Information.
When will Bangladesh’s economy reach the $1tn milestone?
In the post-Covid era, while many developed countries are weighed down by the global economic crisis triggered by the Ukraine war, Bangladesh has maintained an average growth of 6.4 percent despite facing challenges.
Thanks to different austerity measures and effective policies to overcome the hurdles, Bangladesh is regarded as one of the fastest-growing economies in the world for more than a decade.
The country is moving ahead to become a strong economy in the next decade, with its Gross Domestic Product (GDP) reaching the $465-billion mark in 2022.
Bangladesh was the second largest economy in South Asia after India and ranked 35th among the largest economies of the world, according to the latest report by the Canadian firm Visual Capitalist based on the work of the International Monetary Fund (IMF).
Meanwhile, the London-based think tank Centre for Economics and Business Research (CEBR) predicts that Bangladesh is likely to become the 20th largest economy in the world out of 191 countries by the year 2037.
According to CEBR, Bangladesh is currently the second largest economy in the region and will continue to maintain the pace till 2037 with a GDP size of $1,628 billion at current prices.
The Indonesian economy in turbulent times
The year 2022 got off to a relatively optimistic start for Indonesia. To be sure, Covid had left serious scars — the Economist’s central estimate for ‘excess deaths’ through to December 2022 was about 740,000 fatalities — while the lost education and employment opportunities, especially for poorer communities, will be long-lasting. But Indonesia’s economic contraction and the resultant increase in poverty were less than those of most comparable middle-income economies. From late 2021 the country’s economic momentum had been regained.
The year also ended well for Indonesia. It received well-deserved praise for its adroit hosting of the November G20 summit in Bali and for keeping alive the flickering spirit of multilateral cooperation and collaboration in an otherwise deeply divided world.
But for much of 2022 Indonesian policymakers had to grapple with unprecedented, and largely unanticipated, global economic and geostrategic volatility: the war in Ukraine and the subsequent rise in energy and food prices; rapidly rising global inflation and subsiding economic growth; the possibility of debt defaults in many developing countries; sharply slowing growth and rising uncertainty in China, the region’s economic locomotive; ongoing disruption to global supply chains; and rising geostrategic tension and rivalry between China and the United States.
What is Indonesia’s scorecard to date? The good news is that the country has weathered most of these recent shocks. Thanks to its macroeconomic prudence, it is not a member of the large ‘debt distress’ club. The emergency fiscal and monetary policy measures introduced in the first half of 2020 have been wound back quickly. The government is now returning to the provisions of its 2003 Fiscal Law, whereby fiscal deficits are capped at 3 percent of GDP. It is emerging with public debt (narrowly defined) at less than 40 percent of GDP. The economy is on track to return to its long-term average of around 5 percent GDP growth.
Japan debates economic policy
Japan’s top economic policy panel met Monday for what will be the first of several sessions to debate the future of Japan’s fiscal and economic policies—including what came to be known as “Abenomics.”
Under former Prime Minister Shinzo Abe, Japan, to use Reuters’s phrase, “pursued a reflationary policy led by monetary stimulus.” But Abe, who set out these policies over a decade ago, was assassinated in July of last year. And given inflation increases, markets are now watching whether the country’s central bank will rein the monetary stimulus in. Last month, inflation in Japan hit a 41-year high. Some economists have predicted Japan will enter a recession in 2023.
Japan’s economy minister, Shigeyuki Goto, said he would be in Davos at the World Economic Forum this week to stress that Japan’s priority is short-term recovery. Goto, the country’s former health minister, was appointed to the post in October of last year.
The policy debates were announced last month by Japan’s current prime minister, Fumio Kishida, who hopes they will lead to a “virtuous cycle of growth and distribution of wealth” and a “new capitalism.” Eight economists were invited to the session, and several more sessions are expected between now and June, when the government’s yearly economic plan is due to be published.
Malaysia’s economic growth poses biggest influence on ringgit performance: Tengku Zafrul
Malaysia’s economic expansion will have the biggest influence over how the ringgit fares this year, International Trade and Industry Minister Tengku Datuk Seri Zafrul Aziz said.
“We have to look at the growth of the economy. Malaysia’s growth will have a bearing on the strength on the ringgit this year, I think. That will be the key determinant,” he told Bloomberg Television’s Haslinda Amin at the World Economic Forum in Davos on Wednesday.
Tengku Zafrul cited a forecast for gross domestic product (GDP) expansion of four to 5 percent this year as projected by Bank Negara Malaysia.
That would come after a rapid, reopening-driven rebound last year, which saw gross domestic product jump by 14.2 percent in the September quarter from a year earlier, the fastest pace in more than a year.
Maldives fastest growing South Asian economy
The Maldives is expected to remain the fastest-growing economy in the South Asian region in 2023, but it faces significant dangers rising debt, reports the World Bank.
In their recent “Global Economic Prospectus” the World Bank revealed that the Maldives’ economic growth would moderate to 8.2 percent this year, which is lower than previous forecasts.
The report also indicated that the Maldives’ economic growth is the fastest in the region owing to the tourism industry. It highlighted the strong rebound of Maldives tourism in 2022, which returned the Gross Domestic Product (GDP) to pre-pandemic levels, and it is expected to reach 12.4 percent this year.
India was listed as the second fastest recovering economy in the South Asian region with a growth rate of 6 percent in 2023.
The overall South Asian region’s economic growth rate for the current year is reported to slow down to 5.5 percent.
Nepal: strengthening national economy
he country’s economy is not fine. The general sector expenditure is higher than the domestic revenue received by the government. The government is compelled to raise the deficit amount in the budget through debts. The country’s debt burden is also increasing alarmingly.
If the trend of taking debts will continue, very soon, the country will fall into a debt trap.
The country’s development sector expenditure is very nominal. Economic observers are putting pressure on the government for increasing capital expenditure by reducing the general sector expenditure, which is not an easy task for the government.
Of late, there has been seen some progress on the side of remittance revenue and also the balance of payments has seen positive, however, they are not satisfactory. The decline in imports was witnessed due to the government ban on luxury items. Since the government has lifted such a ban, again, imports will increase and they will put pressure on the foreign currency reserve. We don’t have any items to export which would contribute to balancing foreign trade and importing foreign currency.