Aurelia Butler

The ADB nudged up its 2024 growth forecast for Developing Asia to 4.9% from 4.8% projected in December, but warned of persistent challenges such as rising geopolitical tensions, including in the Middle East, that could disrupt supply chains and reignite inflation. The Manila-based lender’s 2024 growth forecast was slightly weaker than the region’s 5.0% growth in 2023. Growth for 2025 was also forecast at 4.9%.   “Growth in developing Asia will remain robust this year, in spite of uncertainty in the external environment,” ADB Chief Economist Albert Park said in the Asian Development Outlook report. “The end of interest-rate hiking cycles in most economies as well as continued recovery in goods exports from an upturn in the semiconductor cycle will support growth,” Park said. China remains a weight on the regional growth outlook as a protracted property crisis and other challenges keep the world’s No.2 economy from mounting a strong economic revival, the ADB said. ADB Principal Economist John Beirne, in a briefing ahead of the report’s release, said Wednesday’s cut by Fitch of its outlook on China’s sovereign credit rating to negative was concerning for investor sentiment.”It can have additional problems that are already apparent in the property sector, and certainly it’s not helpful when we consider local government debts and sustainability of debt and cost of sovereign borrowing,” Beirne said.The ADB forecast China would grow 4.8% in 2024. That is higher than its 4.5% estimate made in December, but slower than growth of 5.2% in 2023. It expects the Chinese economy to lose more steam next year, with growth seen slowing to 4.5%, “driven by the weak property market and amplified by fading domestic consumption growth after last year’s reopening”, the ADB said. The ADB forecast regional inflation would slow to 3.2% in 2024 from 3.3% in 2023, and ease further to 3.0% in 2025.GDP GROWTH 2022 2023 2024 2024 2024 2025     SEPT DEC APR APR Caucasus and 5.2 5.3 4.7 4.6 4.3 5.0 Central Asia       East Asia 2.9 4.7 4.2 4.2 4.5 4.2 China 3.0 5.2 4.5 4.5 4.8 4.5       South Asia 6.6 6.4 6.0 6.0 6.3 6.6 India 7.0 7.6 6.7 6.7 7.0 7.2       Southeast 5.7 4.1 4.8 4.7 4.6 4.7 Asia Indonesia 5.3 5.0 5.0 5.0 5.0 5.0 Malaysia 8.7 3.7 4.9 4.6 4.5 4.6 Myanmar 2.4 0.8 3.2 n/a 1.2 2.2 Philippines 7.6 5.6 6.2 6.2 6.0 6.2 Singapore 3.8 1.1 2.5 2.5 2.4 2.6 Thailand 2.5 1.9 3.7 3.3 2.6 3.0 Vietnam 8.0 5.0 6.0 6.0 6.0 6.2       The Pacific 7.9 3.5 2.9 2.9 3.3 4.0       Developing 4.3 5.0 4.8 4.8 4.9 4.9 Asia       INFLATION              Caucasus and 12.9 10.5 8.0 8.4 7.9 7.0 Central Asia       East Asia 2.3 0.6 2.1 2.1 1.3 1.6 China 2.0 0.2 2.0 2.0 1.1 1.5       South Asia 8.0 8.4 6.6 6.7 7.0 5.8 India 6.7 5.5 4.2 4.2 4.6 4.5       Southeast 5.3 4.1 3.3 3.5 3.2 3.0 Asia Indonesia 4.1 3.7 3.0 3.0 2.8 2.8 Malaysia 3.4 2.5 2.7 2.7 2.6 2.6 Myanmar 27.2 22.0 8.2 n/a 15.5 10.2 Philippines 5.8 6.0 4.0 4.0 3.8 3.4 Singapore 6.1 4.8 3.0 3.0 3.0 2.2 Thailand 6.1 1.2 2.3 2.3 1.0 1.5 Vietnam 3.2 3.3 4.0 4.0 4.0 4.0 The Pacific 5.2 3.0 4.5 4.5 4.3 4.1 Developing 4.4 3.3 3.5 3.6 3.2 3.0 Asia More

TOKYO (Reuters) -Japanese authorities are facing renewed pressure to combat a sustained depreciation in the yen, as traders drive down the currency on expectations that any further interest rate hikes by the central bank will be slow in forthcoming.Below are details on how yen-buying intervention works:LAST CONFIRMED YEN-BUYING INTERVENTION?Japan bought yen in September 2022, its first foray in the market to boost its currency since 1998, after a Bank of Japan (BOJ) decision to maintain its ultra-loose monetary policy drove the yen as low as 145 per dollar. It intervened again in October after the yen plunged to a 32-year low of 151.94.WHY STEP IN?Yen-buying intervention is rare. Far more often the Ministry of Finance has sold yen to prevent its rise from hurting the export-reliant economy by making Japanese goods less competitive overseas.But yen weakness is now seen as problematic, with Japanese firms having shifted production overseas and the economy heavily reliant on imports for goods ranging from fuel and raw materials to machinery parts.WHAT HAPPENS FIRST?When Japanese authorities escalate their verbal warnings to say they “stand ready to act decisively” against speculative moves, that is a sign intervention may be imminent.Rate checking by the BOJ – when central bank officials call dealers and ask for buying or selling rates for the yen – is seen by traders as a possible precursor to intervention.WHAT HAPPENED SO FAR?Finance Minister Shunichi Suzuki told reporters on March 27 that authorities could take “decisive steps” against yen weakness – language he hasn’t used since the 2022 intervention.Hours later, Japanese authorities held an emergency meeting to discuss the weak yen. The meeting is usually held as a symbolic gesture to markets that authorities are concerned about rapid currency moves.After the meeting, Japan’s top currency diplomat Masato Kanda said recent yen moves were too rapid and out of line with fundamentals, suggesting Tokyo saw enough reason to intervene to arrest further declines in the currency.The warnings have kept the dollar from breaking above the psychologically important 152 yen level until Wednesday, when the release of strong U.S. inflation data pushed the pair up above 153, the highest since 1990.LINE IN THE SAND?Authorities say they look at the speed of yen falls, rather than levels, and whether the moves are driven by speculators, to determine whether to step into the currency market.Japan’s former top currency diplomat Tatsuo Yamazaki has told Reuters authorities will likely intervene if the yen breaks out of a range it has been in for years and falls well below 152 per dollar. Another ex-currency diplomat, Hiroshi Watanabe, put the line-in-the-sand at 155.WHAT’S THE TRIGGER?The decision is highly political. When public anger over the weak yen and a subsequent rise in the cost of living is high, that puts pressure on the administration to respond. This was the case when Tokyo intervened in 2022.If the yen’s slide accelerates and draws the ire of media and public, the chance of intervention would rise again.The decision would not be easy. Intervention is costly and could easily fail, given that even a large burst of yen buying would pale next to the $7.5 trillion that change hands daily in the foreign exchange market.HOW WOULD IT WORK?When Japan intervenes to stem yen rises, the Ministry of Finance issues short-term bills, raising yen it then sells to weaken the Japanese currency.To support the yen, however, the authorities must tap Japan’s foreign reserves for dollars to sell for yen.In either case, the finance minister issues the order to intervene and the BOJ executes the order as the ministry’s agent.CHALLENGES?Japanese authorities consider it important to seek the support of Group of Seven partners, notably the United States if the intervention involves the dollar.Washington gave tacit approval when Japan intervened in 2022, reflecting recent close bilateral relations. There is uncertainty on whether the same will happen when Japan next considers intervention.A looming U.S. presidential election may discourage Japanese authorities from stepping in, given the risk of drawing unwanted attention and criticism from Washington as market meddling.There is no guarantee intervention will effectively shift the weak-yen tide, which is driven largely by expectations of prolonged low interest rates in Japan. BOJ Governor Kazuo Ueda has dropped signs of another rate hike but stressed that the bank will tread cautiously given Japan’s fragile economy. More

The British Chambers of Commerce said 46% of its member companies expected to raise prices over the next 12 months, down only slightly from 47% in its previous quarterly survey published in January.Only 3% of respondents expected to cut prices while 51% saw no change.Staffing costs represented the main pressure on firms as a nearly 10% increase in the minimum wage came into force on April 1.”The recent rise in the national living wage is good news for millions of employees,” Shevaun Haviland, the BCC’s director general, said. “But it comes at a time when labour costs pressures for business are already very high.”David Bharier, head of research at the BCC, said the pricing expectations also reflected conflicts around the world and the costs of Britain’s plan to introduce more post-Brexit checks on imports from the European Union later this month.The BoE has said the surge in wage growth last year is likely to fade only slowly, even with headline price growth now close to its 2% target.The BCC survey showed 56% of respondents expected turnover to grow over the next 12 months, unchanged from the previous survey three months ago.There was no overall improvement in business conditions as measured by investment, sales and cashflow, the BCC said.The BCC survey, Britain’s longest-running private-sector business survey, was based on responses from 4,800 companies – 92% of them with under 250 employees – polled between Feb. 12 and March 12. More

The figures from the Royal Institution of Chartered Surveyors added to recent signs of stabilisation in Britain’s housing market, driven by cooling inflation and falling mortgage costs after their rise hit demand in 2022 and much of 2023.RICS’ gauge of buyer enquiries showed a net balance of +8 in March, the strongest reading since February 2022 and up from +4 in February.Its measure of house prices, while still showing more expectations of price falls than rises, hit its highest since October 2022 at -4, up from -10 in February and a low of 67 in September last year. A Reuters poll of economists had pointed to a reading of -6.”Demand continues to recover gradually across the UK housing market,” said Tarrant Parsons (NYSE:PSN), senior economist at RICS. “This should continue to support the market to a certain degree going forward.” The survey showed a growing share of surveyors expect house prices will rise in the next 12 months, across all parts of the United Kingdom.Bank of England data published last week showed the highest number of mortgage approvals in February since September 2022.House prices, as measured by official statistics, are around 20% above their level before the COVID-19 pandemic – mirroring big rises seen in many other advanced economies – although they have moved in a narrow range since the spring of 2022. More

Taiwan Semiconductor Manufacturing Co and Foxconn are not the only Taiwanese tech companies feeling compelled to expand abroad. Suppliers of chip and electronics tools, materials and plant builders are also venturing internationally as top clients expand.Ming-Kuen Lai, general manager of facility builder Acter, said his company’s south-east Asian business surged 50 per cent last year, outperforming its core markets of Taiwan and China. “This growth is expected to continue in 2024,” Lai said.Acter builds electronics plants and clean rooms for tech companies such as Foxconn, Delta Electronics, Wistron and ASE Technology.While south-east Asia contributes just over 10 per cent of Acter’s revenue, Lai highlighted particularly strong growth in Thailand, Vietnam and Malaysia. “Vietnam is experiencing a boom in electronics assembly, while Thailand is seeing an increase in new printed circuit board plants and Malaysia is attracting semiconductor packaging businesses,” he said.But Lai also acknowledged the complexities of doing business in the region. “[It’s] actually a collection of diverse nations, with all different cultures and languages. Compared to China and Taiwan, operating in south-east Asia requires more effort and patience to generate good results.” This article is from Nikkei Asia, a global publication with a uniquely Asian perspective on politics, the economy, business and international affairs. Our own correspondents and outside commentators from around the world share their views on Asia, while our Asia300 section provides in-depth coverage of 300 of the biggest and fastest-growing listed companies from 11 economies outside Japan. Subscribe | Group subscriptionsTaiwan’s investment in Thailand, Vietnam and Malaysia rose 146 per cent in 2023 over the previous year to more than $2.2bn, according to government data.Geopolitical tensions, combined with a growing focus on supply chain resilience, have triggered a significant shift in the tech industry. After decades of concentrating production in China and Taiwan, electronic assemblers such as Foxconn, Quanta and Wistron, along with major chip suppliers from TSMC to United Microelectronics Corporation, are setting up operations in south-east Asia, Japan and even Europe.China’s lukewarm economy is another motivation for upstream suppliers to venture into new markets. Its slowdown has intensified competition and price wars, according to executives. Expanding outside the country offers the potential for new growth. Frank Liang, general manager of C Sun, said his company was seeking to expand to Thailand and Malaysia, while also considering Japan.C Sun counts some of the world’s top chip packaging and printed circuit board makers as clients, including ASE Technology, Unimicron, and Nan Ya PCB. The company has also supplied machines to TSMC to meet its growing need for advanced chip packaging. C Sun’s focus has historically been on Taiwan and China, where most of its customers are located.Liang said China’s economy had not fully recovered. “So that’s also a reason we equipment and tool vendors need to seek new growth drivers,” he said, adding that there were also new opportunities in chip packaging, an area of the supply chain that was traditionally an afterthought.TSMC, Intel and Samsung, for example, are all investing heavily in advanced packaging, an important technology for connecting different types of chips and enabling more powerful artificial intelligence computing. “The new demand for equipment for high-end advanced packaging provides better profit than traditional business,” Liang said, adding that it had taken a long time to reach this point. “We have invested in this area for more than 10 years, and it finally generates good results amid this massive supply chain and tech shift.”Chip equipment maker C Sun is one of several Taiwanese suppliers expanding in south-east Asia More

LONDON (Reuters) -Staff at the Science Based Targets initiative (SBTi) on Wednesday called for the ouster of the global nonprofit’s chief executive and the reversal of a plan to allow companies to use carbon credits to offset greenhouse gas emissions from their value chain. The staff accused SBTi’s leadership of acting without a sound scientific basis, throwing the group – whose role as the leading arbiter of how companies set climate targets exerts heavy influence over much of the corporate world – into turmoil. In a letter to the SBTi’s board of trustees and CEO seen by Reuters, the staff criticised a decision made a day earlier to allow the use of offsets for so-called Scope 3 emissions, subject to undefined “guardrails and thresholds.”Selling credits from wind farms and other activities to a company so it can offset pollution is seen as a way to help move money to climate-friendly projects. Some critics worry this could let companies off the hook when it comes to reducing emissions, and the SBTi had previously rejected the use of such offsets.”As staff representing SBTi on a daily basis, we demand immediate action to mitigate the grave reputational damage caused by the actions of the Board,” the letter said.Beyond the CEO’s resignation, the letter also called for board members who supported the policy shift on offsets to resign. It also asked for a withdrawal of the new policy. Signed by staff from “the Target Validation Team, Target Operations Team, the Technical Department, Communications, Impact and IT, and multiple department heads”, the group said it stood ready to take “further action,” without elaborating. Members of the board could not immediately be reached for comment after normal business hours. The turnaround had earlier sparked anger among members of the SBTi’s technical advisory group, which was meant to have a say on such issues but which was left blindsided by the news.”None of us were informed. It just came out of the blue,” said Stephan Singer, senior adviser at the nonprofit Climate Action Network, who said he had resigned over the issue.Another, Doreen Stabinksy, professor of global environmental politics at College of the Atlantic, called the posting of the move on the SBTi website “a major shock” that left staff “reeling.” She added: “This isn’t a science-based decision.” Proponents of the move, including some companies, say many find it difficult to align their plans with the world’s climate goals amid weak government action, still-nascent technical fixes and high costs.Letting them use offsets would secure market and investor support for more ambitious action, helping reduce their cost of capital and driving more money into climate-friendly projects, they added.”The voice of business on this issue is clear,” said María Mendiluce, chief executive of the We Mean Business Coalition and a board trustee of SBTi, which by end-2022 had validated 2,079 company targets. A further 2,151 firms had committed to set targets.”Companies value SBTi and are committed to delivering on their emissions reductions targets, but need greater clarity and flexibility in how to navigate Scope 3 emissions. This change empowers companies to bring more innovation and investment into cutting emissions from their value chains.”SBTi said it acknowledged the complexity of the issue and would “consult and strive to reach the necessary cooperation agreements with other relevant initiatives as well as a broader set of stakeholders.”The decision by SBTi brings it into line with a move by the Voluntary Carbon Markets Initiative to expand the use of high-quality carbon credits, and carbon trading association IETA, which plans to launch new guidelines on quality credits.It follows a slide in demand for credits from companies during 2023 – down 6% in the first half, data from BloombergNEF showed – after several cut credit purchases amid concern about the quality of certain projects.Worth around $2 billion in 2021, the market could pass $50 billion by 2030, Boston Consulting Group has said.Teresa Hartmann, chief ratings officer at BeZero Carbon, which rates carbon credits, said SBTi’s move was “a significant step forward in scaling carbon markets and climate action … within the critical next decade”. More

WASHINGTON (Reuters) -The United States is adding four Chinese companies to an export blacklist for seeking to acquire AI chips for China’s military, a U.S. official said on Wednesday.The companies are “involved with providing AI chips to China’s military modernization programs” and military intelligence users, the Commerce Department’s Kevin Kurland, an export enforcement official, said at a U.S. Senate subcommittee hearing on strengthening export control enforcement.The companies are among 11 additions to the Commerce Department Entity List posted by the government on Wednesday. Suppliers need licenses, likely to be denied, to ship goods and technology to companies on the list.According to the posting on the Federal Register, four Chinese entities were added for acquiring and attempting to acquire U.S. items in support of China’s military modernization efforts. The posting did not detail the reason.The companies are LINKZOL (Beijing) Technology Co, Xi’an Like Innovative Information Technology Co, Beijing Anwise Technology Co and SITONHOLY (Tianjin) Co.In the posting, the United States also restricted exports to five companies that it said were helping produce and procure drones for use by Russia in Ukraine and by Iran-backed Houthis in Red Sea shipping attacks. Russia has intensified its drone and missile strikes against Ukrainian energy facilities in recent weeks, causing significant damage and threatening a repeat of the blackouts experienced in the first year after Russia invaded Ukraine in February 2022.The Commerce Department added China’s Jiangxi Xintuo Enterprise Co to the list for supporting Russia’s military through the procurement, development, and proliferation of Russian drones, the posting said.Another Chinese company, Shenzhen Jiasibo Technology Co, was added for being part of a network procuring aerospace components, including drone applications, for an aircraft company in Iran. Three Russian entities – Aerosila JSC SPE, Delta-Aero LLC, and JSC ODK-Star – were added for being part of that network.”These components are used to develop and produce Shahed-series UAVs which have been used by Iran to attack oil tankers in the Middle East and by Russia in Ukraine,” the Federal Register notice said, referring to unmanned aerial vehicles.Attacks on ships including oil tankers by Iranian-backed Houthis have disrupted global shipping through the Red Sea. Yemen’s Houthis say they are retaliating against Israel’s war against Palestinian Hamas militants in Gaza.Companies are added to the U.S. Entity List when Washington deems them a threat to U.S. national security or foreign policy. Two UAE citations, Khalaj Trading LLC and Mahdi Khalaj Amirhosseini, were added for apparently violating Iran sanctions by exporting or trying to export items from the United States to Iran through UAE, according to the posting.The companies could not be reached for comment.U.S.-Chinese military contacts resumed late last year but tensions continue due to fundamental differences over Taiwan and the South China Sea that remain dangerous potential flashpoints. Chinese leader Xi Jinping has pumped billions into buying and developing equipment as part of his modernizing efforts to build a “world-class” military by 2050, with Beijing’s outsized defense budget growing at a faster pace than the economy for some years. More

WASHINGTON (Reuters) – On the eve of a trilateral summit between the United States, Japan and the Philippines, two prominent U.S. senators on Wednesday introduced a bipartisan bill to provide Manila with $2.5 billion to boost its defenses against Chinese pressure.The bill, put forward by Republican Bill Hagerty, a former ambassador to Japan, and Democrat Tim Kaine, authorizes $500 million a year in Foreign Military Financing (FMF) grant assistance to the Philippines over the five fiscal years to 2029.The Philippines, a long term ally of the United States, has become increasingly important strategically in U.S. and Japanese efforts to push back against China and has been in need of funding to modernize its long-neglected armed forces.The bill requires the U.S. secretary of state, in coordination with the Pentagon, to submit an annual spending plan to Congress on how the U.S. government would spend the grant and an annual report on steps taken to enhance the U.S.-Philippines defense relationship.The latter would include a description of the capabilities needed to modernize Philippine defense capabilities.Areas could include coastal defense, long-range fires, integrated air defenses, maritime security, manned and unmanned aerial systems, mechanized ground mobility vehicles, intelligence, surveillance and reconnaissance and defensive cybersecurity, Hagerty’s office said.In a statement shared with Reuters, Hagerty said it was “critical” to deepen cooperation with the Philippines at a time of “Communist China’s growing aggression in the West Philippines Sea and South China Sea.”Kaine echoed this, saying it was “pivotal that the people of the Philippines have the resources and support they need in the face of those threats.”The Philippines and China have had a series of maritime run-ins, including an incident in March when China used water cannons to disrupt a Philippine supply mission to soldiers stationed on a grounded warship in the disputed Second Thomas Shoal.Hagerty said the funds would “profoundly strengthen and modernize the defense and deterrence capabilities” of the U.S.-Philippines alliance.On Thursday, U.S. President Joe Biden will hold a bilateral meeting with Philippines President Ferdinand Marcos, and the two will join Japanese Prime Minister Kishida for a trilateral summit expected to focus on countering Chinese pressure on the Philippines in the disputed South China Sea.In 2022, the United States said it was making $100 million in FMF available to the Philippines, underscoring greatly improved defense ties between the treaty allies under Marcos, whose predecessor, Rodrigo Duterte, had sought warmer ties with China. More