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Asian Economy: Overview, Growth & Development

Asian Economy: Overview, Growth & Development
Japan says economy in modest recovery

Japan kept its assessment of the economy unchanged in February as consumer spending remained on a recovery trend despite soft exports and factory output due to the global economic slowdown.

The government also retained its caution over the impact of global monetary tightening, price hikes and supply constraint in its monthly report. It will continue to closely monitor financial market fluctuations and China’s COVID-19 situation, the report said.

The new economic assessment comes after data last week showed Japan’s economy averted recession but rebounded much less than expected in the fourth quarter last year as business investment slumped.

“The economy is picking up moderately, although some weakness is seen recently,” the Cabinet Office said in its monthly economic assessment, which was unchanged from January.

Consumer spending, which accounts for more than half of Japan’s gross domestic product (GDP), was “recovering moderately” as people spent on eating at restaurants and travelling as well as purchasing autos, according to the report.


China’s economic support for Russia could elicit more sanctions

President Biden and his top officials vowed this week to introduce additional sanctions aimed at impeding Russia’s war efforts against Ukraine. But the administration’s focus is increasingly shifting to the role that China has played in supplying Russia with goods that have both civilian and military uses.

As one of the world’s biggest manufacturers of products like electronics, drones and vehicle parts, China has proved to be a particularly crucial economic partner for Russia.

Beijing has remained officially unaligned in the war. Yet China, along with countries like Turkey and some former Soviet republics, has stepped in to supply Russia with large volumes of products that either civilians or armed forces could use, including raw materials, smartphones, vehicles and computer chips, trade data shows.

Administration officials are now expressing concern that China could further aid Russia’s incursion by providing Moscow with lethal weapons. While there is no clear evidence that China has given weapons and ammunition to Russia, Secretary of State Antony J. Blinken warned in recent days that China may be preparing to do so.


India at a crossroads: reduce the risks of economic concentration

India is poised to become the world’s most important country in the medium term. It has the largest population (which is still growing), and with a per capita GDP that is just one-quarter that of China’s, its economy has enormous scope for productivity gains. Moreover, India’s military and geopolitical importance will only grow, and it is a vibrant democracy whose cultural diversity will generate soft power to rival the US and the UK.

One must credit Prime Minister Narendra Modi for implementing policies that have modernized India and supported its growth. Specifically, Modi has made massive investments in the single market (including through demonetization and a major tax reform) and infrastructure (not just roads, electricity, education, and sanitation, but also digital capacity). These investments—together with industrial policies to accelerate domestic manufacturing, a comparative advantage in tech and IT in particular, and a customized digital-based welfare system—have led to robust economic performance following the covid slump.


Indonesia says it’s working to become more resilient to inflation shocks from the U.S.

Indonesia is taking steps to make its economy more resilient so it can withstand global shocks like inflation, especially from the United States, said Finance Minister Sri Mulyani Indrawati.

As the world’s largest economy, what the U.S. does has strong implications worldwide, including Indonesia, said the minister.

To fight inflation, the U.S. has hiked interest rates, which has affected capital outflows because of the strengthening of the dollar, Sri Mulyani told CNBC’s “Street Signs Asia” on Thursday.

In light of that, the finance minister said, Indonesia is putting more effort to “increase our resiliency.”

That includes “making sure first that the financial sector is healthy and strong for this interest rate movement. Second, that the real sector economy is going to be also resilient in order for them to absorb this shock,” said Sri Mulyani, who is attending the Group of 20 meeting of finance ministers and central bank chiefs in India this week.

In early February, the U.S. Federal Reserve raised its benchmark interest rate by a quarter percentage point and gave little indication it is nearing the end of this hiking cycle.


‘A place of healing’: comfort for young cancer patients amid Sri Lanka’s economic crisis

Despite a combined economic crisis and drug shortage, Sri Lanka is poised to open its first children’s palliative care centre – and also hopes to vastly improve the country’s poor survival rates for child cancer.

The centre will offer end-of-life care as well as a place to stay for families who have to travel long distances to the country’s only paediatric oncology ward in the capital, Colombo.

The new centre is called Suwa Arana (place of healing) and is due to open in June amid a national strategy to more than double Sri Lanka’s survival rates for children with cancer to 60 percent, as part of a World Health Organization global initiative.

Eight-year-old Lochana Lahiru Athauda is one of the children set to benefit from Suwa Arana. He was two when he became one of the 828 Sri Lankan children diagnosed with cancer each year. In the six years since, he has grown used to the 160km (100-mile) return journey from his village in Warakapola, Kegalle district, to Apeksha hospital in Colombo.

“The travel costs are unbearable,” says Lochana’s mother, Enoka Chandani Wijesinghe, who had to quit her job as a computer operator after her son’s diagnosis with acute lymphocytic leukaemia. She tells of the ruinous cost of food and lodging in Colombo: “It’s exhausting and very expensive for a low-income family like ours. In the three years following Lochana’s diagnosis, we spent all our earnings and sometimes borrowed to ensure his treatment was uninterrupted.”


Singapore budget 2023: impact for businesses

On February 14, 2023, the government of Singapore unveiled the 2023 national budget with the theme focused on building the capabilities of Singaporeans and seizing new opportunities amid heightened global uncertainty.

Government spending is expected to reach S$104.2 billion (US$78.1 billion) with the overall budget deficit for 2023 at S$400 million (US$299 million) or 0.1 percent of GDP. The economy is expected to see positive but slower growth, ranging between 0.5 and 2.5 percent. However, external factors, such as the prolonged Russia-Ukraine conflict and the decline of the US and European economies, will greatly impact global trade. As such, inflation in Singapore is expected to remain high at least for the first half of 2023.

Budget 2023 issues support for Singapore businesses as they transition to a post-COVID-19 world and combat elevated inflation and growth slowdown. These include tax deductions for research and development (R&D) as well as for innovation, among others.

Budget 2023 announced that Singapore will introduce a 15 percent minimum effective tax rate for large multinational enterprises (MNEs) based in Singapore from January 1, 2025.

These changes are part of the Base Erosion and Profit Shifting initiative, or BEPS 2.0, a global framework that aims to ensure a fairer distribution of tax rights on large MNEs through a set global minimum tax rate. Base erosion is a practice where companies use tax strategies to exploit gaps in tax rules and shift profits to artificial locations where the tax rates are low or non-existent.


Building Bangladeshi–Australian ties for regional prosperity and security

Australia’s economic opportunities in South Asia extend far beyond India. While the tariff reductions and other measures under the new economic cooperation and trade agreement will support the Australia–India economic relationship, Bangladesh is another country offering opportunities for growth.

Bangladesh is South Asia’s largest economy after India, thanks to impressive growth in recent decades and resilience to economic shock. While many economies contracted during the height of the Covid-19 pandemic, the Bangladesh’s economy rose by 5.2 percent in 2020, though in the past year it has felt the effects of high inflation, a fuel-price crisis that is hitting the average Bangladeshi hard and weak foreign exchange reserves. In January, the International Monetary Fund approved a support package for Bangladesh, which has generally been seen as a sensible precautionary measure to achieve economic stabilisation and structural reform.

However, despite the volatility of the past year or so, the long-term trajectory of Bangladesh’s economy is good. In line with the country’s economic growth, Bangladesh’s population, estimated at nearly 170 million, is increasingly becoming middle-class and urbanised, and the United Nations has projected that Bangladesh will graduate from its status as a ‘least developed country’ by 2026. For Australian investors, this means that there is a vibrant and emergent market to tap into.


Malaysia to rebound strongly with progressive economic factor

Malaysia is expected to rebound strongly from the global slowdown, underpinned by progressive local economic growth as well as promising global economic performance forecast post-pandemic, according to a fund manager.

Principal Malaysia chief executive officer and country head Munirah Khairuddin said the past three years have seen many changes to the global landscape, including geopolitical tensions, changing world governments and volatile financial markets that caused financial distress to many, and Malaysians were not spared.

“While we are optimistic of the economic growth, we remain cautious over existing global conflicts and the probability of escalation such as in the Russia-Ukraine war as well as inflation rate in the country,” she said in an interview with Bernama.

She added that while recession fears are still looming, the worst is over for many as the majority of markets have shown strong signs of economic rebound, driven by China’s economic reopening after a long closure due to its zero-Covid policy.

“The reopening of China will reignite the recovery of the largest economy in Asia and second largest globally.

“Opportunities await in Asia, particularly within the renewables and tourism sectors, so long as the country continues to empower the small and medium enterprise and business sector to attract more foreign direct investments (FDIs).

“While Malaysia will continue to experience a volatile market especially for equities due to global circumstances, it will continue to gain traction as the market has been undervalued,” she said.


Assessment of India’s approach to Nepal

As per International Monetary Fund, India is fastest growing economy in the world. Indian economy is crossing Chinese economy that will grow just by 5.2 percent in 2023. Economy and security are the two faces of the same coin. In other words, both affect each other, and most importantly both have the potential to transform the regional and international polity and economy. Economic growth and military might both determine any country’s stature in international system of states.

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