Aurelia Butler

SEOUL (Reuters) – South Korea’s exports rose for a third month in December but at a slower pace as weaker demand for Korean goods in China offset robust global sales for semiconductors, data showed on Monday.Exports by Asia’s fourth largest economy gained 5.1% to $57.66 billion in December, slowing from a rise of 7.7% in November and also below 6.6% gain seen in Reuters poll of economists. Export data out of Asia’s fourth largest economy is a closely watched indicator to gauge momentum for global trade.Policymakers are pinning hope on recovering exports for an estimated 2.1% of economic expansion in 2024 as high borrowing costs and sticky inflation keep consumer spending sluggish. Chip exports turned a corner in November, rising for the first time in 16 months as slump in semiconductor demand began to ease. In December, chip exports surged 21.8% year-on-year after a jump of 12.9% a month earlier. Exports to China declined 2.9% on year.Imports declined 10.8% in December on-year, better than a 11.4% of drop seen in the poll and easing after a 11.6% of drop in November.That took the preliminary trade surplus for December to $4.48 billion.For the whole 2023, exports declined 7.4% as restrictive monetary policies in many countries and a slowing Chinese economy weakened demand for Korean goods, trade ministry said. More

Leading central banks are expected to begin cutting interest rates over the coming year as falling inflation fuels predictions among investors and economists that prices are under control.After entering 2023 in the midst of aggressive interest rate increases, the Federal Reserve, European Central Bank and Bank of England put their tightening programmes on hold in the second half of the year.Now, with headline inflation rates retreating in large parts of the G7 group of industrialised nations and economies slowing, the pressure for policymakers to cut borrowing costs is set to gather strength.“We expect inflation to fall further than central banks expect,” said Neil Shearing, group chief economist at UK-based Capital Economics. He noted that growth was weakening just as distortions caused by the Covid-19 pandemic and global energy crisis were unwinding.“Policy is now quite restrictive, meaning central banks can loosen without [it] necessarily becoming supportive [of growth]. Think of it as pressing less hard on the brake rather than pushing on the accelerator,” he said.Investors are betting the Fed will cut for the first time in March, with five quarter-point cuts to follow during the year, according to market pricing. The ECB and the BoE are also expected to lower rates six times in 2024, with the former starting in March or April and the latter in May.Financial markets ended 2023 sharply higher as investors became increasingly confident that the Fed was ready to start easing policy in the wake of its December 14 decision to hold rates. The rally put the MSCI World index, a gauge of global equities, on track for its best annual performance since 2019.The key moment came at the Fed’s December meeting, as it released projections showing officials expected its benchmark federal funds rate — currently at a 22-year high of between 5.25 per cent and 5.5 per cent — to be cut by 75 basis points over the coming 12 months.Speaking at the meeting, Fed chair Jay Powell failed to rebut market expectations of steep rate cuts in 2024, saying the central bank was “aware of the risk that we would hang on too long” by keeping policy too tight. “We know that’s a risk and we’re very focused on not making that mistake,” he said.Fed chair Jay Powell said the central bank was ‘aware of the risk that we would hang on too long’ by keeping policy too tight More

The measures are part of President Luiz Inacio Lula da Silva’s plan to “re-industrialize” Latin America’s largest economy, where industrial output still lags behind pre-pandemic levels and is more than 18% below its 2011 high.The Lula administration has pledged to boost industrialization by incentivizing “green” projects including flex-fuel and electric vehicles, renewable power and biofuels.Alckmin told a press conference that the first measure was an executive order establishing the “Mover” program, which lowers income taxes levied on transportation companies for them to invest in new technologies, research and development.The program is set to provide benefits totaling 3.5 billion reais ($721.34 million) next year but will gradually increase until reaching 4.1 billion in 2028, said Alckmin, who is also Lula’s minister of Development and Industry.”This will attract investments to Brazil,” he said. “Our problem is low investment and low productivity. We need to act to increase both.”An executive order means the program takes effect immediately but is required to receive Congress approval within four months.Lula’s second measure, Alckmin said, was a bill sent to Congress suggesting 3.4 billion reais in income tax benefits for companies to renew their machinery, which he dubbed the “accelerated depreciation project”.”We will stimulate the renewal of Brazil’s industry. Equipment depreciation normally happens within 20 years, we’re aiming to speed it up so it can happen in two years,” the vice president said.He added the program would have a “second phase” in the future but did not provide further details.Revenue losses linked to the tax benefits would be offset by import taxes, Alckmin said, including those levied on electric vehicles brought from abroad.($1 = 4.8521 reais) More

(Reuters) – Higher consumer spending over the holiday season, real wage gains over the last nine months and a jump in consumer confidence point to a good start for 2024, said Jared Bernstein, chair of the White House Council of Economic Advisers on Sunday.Bernstein told “Fox News Sunday” that President Joe Biden would continue to focus on lowering costs for Americans if he won a second term in the November 2024 presidential election. “If you actually look at the trend in the economy … I think you see some real momentum getting us in a good start for the new year,” Bernstein said.U.S. consumer confidence increased to a five-month high in December, the Conference Board reported on Dec. 20, mirroring a nearly 14% increase in the University of Michigan’s benchmark Consumer Sentiment Index, its biggest jump in more than three decades. For most of Biden’s term, the Michigan index has reflected widespread pessimism among households about the economy, but the new data showed Americans’ growing confidence that inflation was finally trending lower.Michigan survey director Joanne Hsu noted the upswing in December reversed “all declines from the previous four months. These trends are rooted in substantial improvements in how consumers view the trajectory of inflation.”Indeed, inflation has eased substantially over the course of 2023. The Labor Department’s Consumer Price Index began the year with annual price increases averaging 6.4%. By November, that was down to 3.1%. Bernstein noted that gasoline was below $3 a gallon in more than half the states.The U.S. national average retail gasoline price could drop by 13 cents next year to $3.38 a gallon, a second straight year of dropping fuel costs, according to price tracker GasBuddy.com’s annual outlook.”This has been a very strong Christmas season,” Bernstein said, adding that spending at restaurants rose 8% from Nov. 1 to Christmas Eve, with spending on online sales up 6%, with overall retail spending rising 3%.Despite the growing optimism, the Biden administration says it remains alert to geopolitical risks, including Russia’s ongoing war in Ukraine, which has the potential to disrupt grain markets and push up inflation again.In the Middle East, Israel predicts its war with Hamas militants will last for months, increasing the risk of regional escalation. In the Red Sea, attacks by Iranian-backed Houthi militants in Yemen have disrupted world trade. Maersk, one of the world’s major cargo shippers, on Sunday said it would pause all sailing through the Red Sea for 48 hours after a Houthi attack on one of its container vessels. Bernstein also cited big gains in the startup of new businesses, especially by people of color, which he said reflected more optimism and confidence about the U.S. economy.Bernstein said the Biden administration was keeping an eye on rising credit card debt but saw it as a return to normal levels of delinquencies or debt levels. Record increases in wealth among Americans of all income levels and among people of color would also help offset the increases, he said. More

In a televised speech to mark the New Year, Xi said China would deepen reforms to shore up confidence in the economy.Xi said China will “consolidate and enhance the positive trend of economic recovery, and achieve stable and long-term economic development,” Xi said.”We must comprehensively deepen reform and opening up, further boost confidence in development, enhance economic vitality, and make greater efforts to promote education, promote science and technology, and cultivate talents.”Xi voiced his concerns over difficulties facing some firms’ operations and the hardship facing some people in employment and their daily lives, and the impact of natural disasters such as floods and earthquakes in some regions.China will promote high-quality development and balance development and security in a well-coordinated way, Xi added.The government has in recent months announced a series of measures to shore up China’s feeble post-pandemic economic recovery, which is being held back by a property slump, local government debt risks and slow global growth.Analysts expect China’s economic growth to hit the official target of around 5% this year, and Beijing is expected to maintain the same target next year.Earlier this month, top Chinese leaders met and laid out economic plans for 2024, pledging to take more steps to support the recovery. The central bank has pledged to step up policy adjustments to support the economy and promote a rebound in prices, amid signs of rising deflationary pressures. More