Indonesia’s fastest expansion in 9-year faces new risks
Just as the pace of Indonesia’s economic growth returned to pre-pandemic levels, a slowing global economy has emerged as the biggest threat to sustaining that performance. Data on Monday showed gross domestic product growth accelerated 5.31 percent last year, bringing Southeast Asia’s largest economy back to its pre-pandemic trajectory of about 5 percent annual growth. That was also the fastest pace since 2013 and was in line with the 5.3 percent median estimate in a Bloomberg survey. The “impressive” pace of growth in 2022 was largely supported by domestic consumption, as Indonesia saw a rebound in mobility and tourism, Margo Yuwono, who heads the nation’s statistics agency, said in a briefing on Monday. This was further bolstered by exports, as the global commodity rally lifted prices of the key shipments like coal, palm oil, iron and steel, he said.
Bangladesh GDP growth recorded at 7.10pc in fy 2022
The GDP growth rate of Bangladesh was recorded at 7.10 percent for the Financial Year (FY) 2022 which marks an increase from 6.94 percent in FY 2021 and 3.45 percent in FY 2020. The Bangladesh Bureau of Statistics (BBS) in its latest report released on Sunday calculated the per capita income of Bangladesh at USD 2793. The per capita income for FY 2021 was USD 2591 and USD 2326 for FY 2020. However, the GDP growth rate is lower than the provisional estimate of 7.25 percent caused by the depreciation of the Bangladesh Taka against the US Dollar. The service sector in the Bangladesh economy was the biggest chunk of the economy commanding a share of 51.48 percent, followed by Industry at 36.92 percent and agriculture at 11.61 percent. In terms of growth rate, the Industrial sector recorded a growth rate of 9.86 percent in the FY 2022, while services grew at 6.26 percent and agriculture at 3.05 percent.
US-China trade hits record high despite rising tensions
Trade between the US and China hit a record high last year even as their diplomatic relations reach new lows. Imports and exports between the two countries totalled $690.6bn (£572.6bn) in 2022, official figures show. Tensions rose between Washington and Beijing in recent days after a Chinese balloon travelled across the US. The world’s two biggest economies have been locked in a bitter trade war since 2018 when then-President Donald Trump started imposing tariffs on China. The new figures show that US imports from China increased to $536.8bn last year as American shoppers spent more on Chinese-made goods, including toys and mobile phones. In the same period, US exports to China increased to $153.8bn. While some of the increase in trade between the two countries is a result of the rising cost of living, the figures also point to how reliant the US and China still are on each other even after years of trade conflict between them. “I think it’s an important indication of the difficulties of actually decoupling,” Deborah Elms, the founder of Asian Trade Centre, told the BBC.
India’s economy – and emissions – primed for big jumps in 2023
India is set to become the world’s fastest-growing major economy in 2023, with an investment boom likely to spark sharp increases in factory output, bank lending and consumer purchases, according to a recent survey by the Indian central bank. Climate trackers will be alarmed by such a robust outlook, as India’s power sector already spewed out near record emissions in 2022 when its economy was stuck in a lower gear, and will likely elevate pollution totals further as momentum builds. Overall economic and industrial activity was curtailed in 2022 by a mix of parts shortages for producers, rising interest rates that slowed consumer demand, and a record weak rupee against the dollar, which made imports more expensive. But following rapid corporate deleveraging that helped improve bank balance sheets in 2022, “the private sector is poised to increase spending, which can boost capex as and when the investment cycle picks up,” according to consultancy Deloitte in its 2023 India economic outlook.
Japan’s fourth quarter economic growth likely rebounded on tourism reopening
Japan’s economy likely returned to growth in the last quarter of 2022 as the country reopened to tourists, offsetting weakening corporate activity and exports amid darkening global conditions, a Reuters poll showed. Signs of stronger momentum heading into 2023 could influence major companies and workers in Japan as they head into annual labor talks. Solid wage hikes are seen as essential to the economy’s post-pandemic recovery and the Bank of Japan’s exit from its decadelong ultraloose monetary policy. The world’s third-largest economy likely grew at an annualized 2 percent pace in October-December, following a 0.8 percent contraction in July-September, according to the median forecast of 18 economists.
Malaysia’s ‘great transition’
At the end of November, just after the election, we wrote that the most urgent and delicate problem for the government is how to manage the transition from a booming but unsustainable economy, to to a more moderate and realistic rate of growth. The final 4Q GDP data will be released on Friday and we expect to see a slowdown of the economy after four quarters of skyrocketing performance. Unless the data is revised, which is a real possibility, average growth for 2022 will be around 9 percent. This is the type of growth experienced in the 1990s and almost touched in 2000. Since then, the underlying potential rate of growth has decreased to around 4.5 percent due to the structural changes caused by the lockdowns. Simply put, the exceptional economic growth last year was double the actual potential growth of the economy. So the GDP data on Friday will help us to understand the next phase of economic growth and the transition we will experience. We expect negative growth of 1 percent in Q4 compared to Q3 and annual growth of 8.4 percent compared to last year. This will give overall growth of around 8.1 percent for the full year.
3.5 million tourists will be welcomed annually by 2028
Mohamed Solih has stated that the Maldives will be welcoming 3.5 million tourists, annually, by 2028. The President made the statement in his Presidential Address on Monday. In his address, President Solih described the past three years as the most challenging years the Maldivian economy has faced. As such, he noted that the Covid-19 pandemic brought a complete halt to the Maldivian economy. The President stated that the administration can show results based on mathematical results on the work done and what remains to be done. He said that data demonstrate how well the Maldivian economy is doing. Stating that the Maldives will be welcoming 3.5 million tourists annually, by 2028, President Solih stated that this will be the result of all of the commenced, ongoing and completed developmental projects of the administration. He said that the developmental projects of his administration will take the Maldivian tourism industry to new heights. The President said that this will double the country’s economic growth. As such, he noted that the total productivity of the country, which was at MVR 81 billion in 2018, can be doubled and increased to MVR 177 billion in 10 years. President Solih added that the government will be able to double its revenue to MVR 45 billion by 2028.
Analysing Nepal’s economic crisis
Never in known history has the economic crisis been as severe in Nepal as it is today. The value of the Nepalese currency in terms of the US dollar, foreign exchange reserves, liquidity of the banking and financial institutions, government revenue, and employment opportunities have all shrunk to an unprecedented level, while the gap in the balance of trade and prices of consumer goods have skyrocketed. All these factors have created an economic crisis, which is aggravating day by day. But nothing concrete has been done so far by the government and other agencies in the country to address some of these issues. Between 16 July and 17 October in the current fiscal year 2022-23, the exchange rate with the dollar shot up from INR 128.11 to INR 132.07. Due to this fluctuation in the exchange rate, Nepal incurred a loss of INR 5.52 billion in the first quarter of the current fiscal year 2022-23 for repaying external debts. Nepal’s banking and financial institutions have been facing a severe liquidity crisis. They have an acute shortage of loanable funds. Interest on loans worth more than INR 13 billion is yet to be recovered. Because of the lack of loanable funds, they could extend loans only up to INR 3 billion since mid-October.
Philippine economy: much work has to be done
President Ferdinand Marcos Jr. is one chief executive who does not sit back and rest on his laurels. The Philippine economy may have grown by 7.6 percent in 2022, the fastest in nearly four decades, but with the still high inflation rate across the nation, President Marcos knows too well that not everybody is enjoying the benefits of the economic recovery. Just like his predecessor, former President Rodrigo Duterte, President Marcos is aware of the gut issues of the day. Every political leader must be sensitive to the plight of the hard working common man. The high inflation rate is one factor that hits the pocket of every consumer. High prices erode their purchasing power. A confluence of global and local supply shocks has driven food prices higher. Rising petroleum prices also led to significant increases in fertilizer and farming costs.
Singapore sees ‘tech ecosystem’
The key to keeping the green economy growing will be an ecosystem that encourages innovation, a senior executive of Singapore’s investment promotion agency said on Wednesday. “We are, on the one hand, extremely vulnerable to the impacts of climate change,” said Jacqueline Poh, managing director of Singapore’s Economic Development Board (EDB). “And on the other hand, a place that uses technology very intensively in order to overcome all our natural disadvantages.” Poh was speaking at the Asia Green Tech Summit, hosted by Nikkei and the Financial Times. The inaugural event has brought together investors and business leaders from around the globe to discuss how finance and technologies can be deployed at scale to support Asia’s transition to a net-zero world. As part of its transition to a low-carbon economy, Singapore has committed to reaching net zero by 2050. Net zero refers to a balance in which no more greenhouse gas is added than the amount taken away. Singapore, which for long has been Asia’s preeminent finance hub, now endeavors to become a regional center for green technology.
Sri Lanka may return to growth by yearend: president
Sri Lanka’s economy is expected to grow again from the end of this year and the government wants the country to exit bankruptcy by 2026, President Ranil Wickremesinghe has told Parliament. The Indian Ocean island of 22 million people has been struggling with its worst economic crisis since its independence from Britain in 1948, which has forced it to default on loans and seek a $2.9bn bailout from the International Monetary Fund. Wickremesinghe on Wednesday said the government could turn around the economy if Sri Lankans tolerated high direct taxes for another six months. He said last month that the economy for the full year could contract by 3.5 percent or 4 percent after shrinking 11 percent last year. Recent hikes in income taxes have hit salaried workers hard, with trade unions and private sector professionals staging protests in Colombo, the country’s largest city. Wickremesinghe said the aim was to reduce inflation to single digits by the end of the year. Sri Lanka’s key inflation rate, the Colombo Consumer Price Index, eased to 54.2 percent in January from 57.2 percent in December.