China’s GDP grows 5.3pc in h1
Defying all predictions, China’s economy grew by 5.3 percent year-on-year in the first half of 2025, according to preliminary data released by the National Bureau of Statistics (NBS), as Beijing rejigged its trade strategy in the wake of US President Donald Trump’s tariff offensive.
Beijing stayed ahead of the curve and outmanoeuvred the trade assault by reconfiguring supply chains, broadening its export footprint beyond US markets and shoring up domestic demand to keep growth on track.
The overall size of GDP reached 66,053.6 billion yuan ($9.1 trillion), demonstrating China’s resilience despite global economic headwinds. The 5.3 percent GDP growth was higher than the average prediction of 5.1 percent made by 40 economists interviewed by Reuters.
“This is a hard-won achievement, particularly considering the sharp fluctuations in the international situation and heightened external pressures since the second quarter,” said NBS Deputy Commissioner Sheng Laiyun. He credited the “highly valuable” numbers to stable progress in the implementation of macro-policy, industrial growth topped by high-tech industries and 68.8 percent from domestic demand.
The breakdown shows that the primary industry contributed 3,117.2 billion yuan, with a YoY increase of 3.7 percent, driven mainly by stable production in agriculture. The secondary industry accounted for 23,905 billion yuan, up 5.3 percent, and the services sector witnessed the highest growth, contributing 39,031.4 billion yuan, up 5.5 percent.
BOJ sees trade deal
Japan’s trade deal with the U.S. has reduced uncertainty surrounding the economy, the central bank’s deputy governor Shinichi Uchida said, signaling optimism that conditions for resuming interest rate hikes may start to fall in place.
Uchida’s remark came hours after U.S. President Donald Trump announced a trade deal with Tokyo that cuts tariffs on Japan’s mainstay automobile imports and spares Tokyo punishing new levies on some other goods.
“It’s a very big progress that reduces uncertainty for Japan’s economy,” Uchida said on Wednesday, adding that the BOJ will incorporate the deal in its quarterly growth and price projections due at the next policy meeting on July 30-31.
“Given the receding uncertainty, by definition it can be said that the likelihood of Japan durably achieving 2 percent inflation has heightened,” Uchida told a news conference.
BOJ policymakers have repeatedly said they need to be more convinced that inflation will sustainably hit its 2 percent target before raising interest rates further.
While there was still some uncertainty on how the tariffs could affect domestic and overseas economies, the BOJ was looking at both upside and downside risks to economic activity and prices, Uchida said.
“The BOJ needs to adjust monetary policy to best balance upside and downside risks from the perspective of maintaining economic and price stability,” Uchida said in an earlier speech to business leaders in the southern west city of Kochi.
He reiterated the BOJ’s resolve to continue raising interest rates if the economy and prices move in line with its forecasts.
Sources have told Reuters the BOJ’s next quarterly report will warn of uncertainty over the impact of U.S. tariffs, but may offer a less gloomy view on the near-term hit to the economy than three months ago when market volatility was at its peak.
Uchida said the trade deal would hugely reduce uncertainty for companies and, coupled with intensifying labour shortages, prod them to continue to hike wages.
The BOJ expects underlying inflation, or price rises driven by strength in domestic demand, to reach its 2 percent target around the latter half of fiscal 2026 through 2027, he added.
While media reports that Prime Minister Shigeru Ishiba may step down could add to political uncertainty, receding worries about a U.S.-Japan trade deal led some analysts to predict the chance of another rate hike by the end of this year.
Indonesia to cut tariffs
Indonesia has agreed to eliminate tariffs on more than 99 percent of US goods and scrap all non-tariff barriers facing American firms, while the US will drop threatened tariffs on Indonesian products to 19 percent from 32 percent, the two countries said on Tuesday. Trump hailed the deal, which he first announced on July 15, in a posting on his Truth Social media platform, calling it a “huge win for our Automakers, Tech Companies, Workers, Farmers, Ranchers and Manufacturers.” Details of a framework for the accord were released in a joint statement by both countries, and a fact sheet issued by the White House. They said negotiators for both countries would finalize the actual agreement in coming weeks. “Presently, the United States of America and the Republic of Indonesia agreed to a framework for negotiating an agreement on reciprocal trade to strengthen our bilateral economic relationship, which will provide both countries’ exporters unprecedented access to each other’s markets,” the statement said. The Indonesia deal is among only a handful reached so far by the Trump administration ahead of an August 1 deadline when higher tariffs are due to kick in.
The US tariff rate on Indonesia, Southeast Asia’s largest economy, matches the 19 percent announced for the Philippines earlier on Tuesday. Vietnam’s tariff rate has been set at 20 percent.
Under the agreement, Indonesia will immediately drop its plans to levy tariffs on internet data flows and it agreed to support renewal of a longstanding World Trade Organization moratorium on e-commerce duties, a senior Trump administration official told reporters on a conference call. Indonesia also will remove recently enacted pre-shipment inspections and verifications of US exports that have posed problems for US agricultural exports and contributed to a growing US farm trade deficit, the official said.
Sri Lanka’s central bank leaves key rate unchanged
Sri Lanka’s central bank left its benchmark rate unchanged as policymakers gauge the progress of trade negotiations with the US before delivering additional stimulus.
The Central Bank of Sri Lanka kept the overnight policy rate at 7.75 percent on Wednesday. Seven of 10 economists surveyed by Bloomberg expected the single policy rate to be left unchanged, while the rest saw a 25 basis point cut for a second consecutive meeting. The bank in May unexpectedly cut the benchmark rate, resuming its policy easing cycle to bolster economic recovery in a turbulent global environment.
“Globally, policy uncertainty has intensified due to the evolving trade landscape and recurring geopolitical conflicts,” the central bank said in a statement. The monetary authority will “carefully monitor any realization of the global uncertainties and assess incoming data on domestic developments,” it added.
The bank’s board is prepared to take appropriate policy measures to ensure that inflation stabilizes around the target, while supporting the economy to reach its potential, it added.
The latest policy decision comes after the US flagged a 30 percent tariff for Sri Lanka effective Aug. 1. The island nation is negotiating for a lower levy before the deadline.
Sri Lanka’s economy is heavily reliant on the US market for exports, with $3 billion worth of goods — mostly garments — shipped last year.
The International Monetary Fund recently warned that trade risks can hit the country’s growth by as much as 1.5 percent.
The South Asian nation, recovering from a historic debt default and economic crisis, surpassed growth projections in 2024, supported by an IMF bailout.
India overnight borrowing cost tops key rate
India’s overnight rates have risen above the central bank’s key policy rate, driven by monthly tax outflows, which could result in weakened participation at the central bank’s next liquidity absorption auction. The weighted average call rate — a key gauge the Reserve Bank of India uses to guide monetary policy — climbed to 5.81 percent on Wednesday, surging above the policy rate of 5.5 percent. Rates in the se
“It seems that banks tendered very aggressively at the last variable rate reverse repurchase operation and once the GST outflows hit the system, they were left with a situation they did not envisage,” said Abhishek Upadhyay, an economist at ICICI Securities Primary Dealership Ltd. “Banks will be much more circumspect about parking money at the next VRRR auction,” he said, referring to the RBI’s ca
The latest spike adds to several instances in recent years where funding rates have diverged from the RBI’s policy rate. These fluctuations often stem from temporary shortages or surpluses of cash, which are harder to manage in the age of digital banking where customers can move funds around the clock. The central bank is crafting a new model for managing banking system cash, as it aims to ensure stability in funding markets.
Malaysia’s Anwar announces cash handouts in bid
Malaysian Prime Minister Anwar Ibrahim has announced a package of measures aimed at easing the cost of living, including a 100 ringgit ($24) cash handout for all adult citizens.
In a televised address on Wednesday, Anwar said the assistance would benefit 22 million Malaysians and be redeemable at more than 4,000 stores from August 31 to December 31.
Anwar said the government would also reduce the price of subsidised petrol from 2.05 ringgit per liter (2.6 gallons) to 1.99 ringgit per liter for citizens, and freeze planned hikes in toll rates on 10 highways.
An extra public holiday will also be scheduled for 15 September this year to coincide with Malaysia Day, the holiday marking federation, Anwar said.
“Malaysian households, especially those in the low and middle-income groups, will welcome the cost-of-living relief provided by the measures,” Yeah Kim Leng, an economics professor at Sunway University in Kuala Lumpur, told Al Jazeera.
Lavanya Venkateswaran, senior economist at Oversea-Chinese Banking Corp, said the measures were line with government efforts to support growth, which she said is forecast to slow from an annualised 4.4 percent in the first half of 2025 to 3.5 percent in the second half.
Modi embarks on 4-day visit to UK, Maldives
Prime Minister Narendra Modi on Wednesday left on a four-day visit to the UK and the Maldives, expressing confidence that this will boost India’s ties with the two countries. In his departure statement, Modi said India and the United Kingdom share a comprehensive strategic partnership that has witnessed significant progress in recent years. He noted that the collaboration between the two countri
The prime minister will also meet King Charles III during the visit. Modi will then travel to the Maldives at the invitation of President Mohamed Muizzu in what is being seen as a breakthrough in the ties between the two countries following a spell of frostiness under Muizzu. Modi will join the celebrations marking the 60th anniversary of the independence of the Maldives.
“This year also marks the 60th anniversary of the establishment of diplomatic relations between our two countries. I look forward to my meetings with President Muizzu and other political leadership, to advance our joint vision of a Comprehensive Economic and Maritime Security Partnership, and to strengthen our cooperation for peace, prosperity and stability in the Indian Ocean Region,” He said.