Aurelia Butler

BENGALURU (Reuters) – Thailand’s economy likely lurched back into contraction last quarter, stalling a nascent recovery as tough restrictions to contain the spread of COVID-19 hit consumption and an already ailing tourism sector, a Reuters poll found.After emerging in the second quarter from the worst recession since the Asian financial crisis of 1998, Southeast Asia’s second largest economy shrank 0.8% in July-September from a year earlier, according to the median forecast of 13 economists polled.On a quarterly basis, gross domestic product (GDP) likely contracted a seasonally-adjusted 2.5% during the same period after growing just 0.4% in the previous quarter.The GDP data is due to be released on Nov. 15.Forecasts for the quarterly seasonally adjusted contraction ranged from 1.5% to 4.3%.”Third quarter GDP figures…are likely to make for ugly reading,” noted Gareth Leather, senior Asia economist at Capital Economics. “With the tourism sector still struggling despite the recent reopening of the border, the economy is in for a slow recovery. Our forecast is that GDP will not return to its pre-crisis level until the middle of next year.”To help its vital tourism sector, Thailand earlier this month allowed vaccinated visitors https://www.reuters.com/business/aerospace-defense/bangkok-welcomes-first-tourists-quarantine-free-holiday-2021-11-01/#:~:text=BANGKOK%2C%20Nov%201%20(Reuters),visitors%20vaccinated%20against%20COVID-19 in to Bangkok without quarantine requirements.But with only a fraction of foreign tourists expected this year compared with pre-COVID-19 levels, the economic recovery from the pandemic-driven slump will be slow.Last month the government cut https://www.reuters.com/article/testh-thailand-economy-testh-idUKKBN2HI0I0 its 2021 economic growth forecast to 1.0% from a previously projected 1.3%, making the fourth downward revision this year.Thailand’s central bank https://www.reuters.com/world/asia-pacific/thailand-cbank-sit-tight-rates-awaiting-recovery-hard-hit-tourism-2021-11-08/#:~:text=BENGALURU%2C%20Nov%208%20(Reuters),tourists%2C%20a%20Reuters%20poll%20showed is expected to hold interest rates at a record low of 0.50% until at least 2023, according to a separate Reuters poll published on Monday.”Despite a strong performance from the export sector, the overall economy was severely affected by the lockdown measures and poor sentiment regarding the government’s handling of vaccine procurement,” said Phacharaphot Nuntramas, chief economist at Krung Thai Bank.”The dire situation, however, rallied government action, resulting in vastly improved vaccine availability, the passage of the additional fiscal spending and the opening up of the country to foreign tourists. Whether all these urgencies are enough to prevent technical recession in 2H 2021 is yet to be seen.” More

France has persuaded the EU to postpone signing two new trade agreements until after its presidential elections in April, angering other member states which want the deals to be concluded.The EU had hoped to finalise trade pacts with Chile and New Zealand this year but Paris has convinced the European Commission — which negotiates such deals on behalf of the union’s 27 member states — to delay the deals.EU diplomats said Emmanuel Macron, president of France, feared a surge in imports of chicken from Chile and lamb from New Zealand, which opposition candidates could use to mobilise farmers and groups opposed to globalisation as he campaigns for re-election.French officials confirmed Paris was not ready to accept the two deals as complete, on the grounds that farm export quotas and wording on environmental concerns still needed to be finalised. “We need to fully take into account sustainable development issues and agricultural sensitivities,” said Franck Riester, France’s foreign trade minister. The resistance from France has sparked concern among other EU countries, which will pressure the commission at a meeting of trade ministers in Brussels on Thursday.“We got very positive noises about Chile for the last couple of weeks and then suddenly nothing. We hope for a full update from the commission,” said one EU diplomat. Member states give mandates to commission negotiators to conclude trade deals, which are then ratified by national parliaments. Several member states believe the commission should have rejected the French request, the diplomat said.The deal with Chile would update a looser association agreement, and would give the EU easier access to secure supplies of lithium to boost its electric car industry and reduce dependence on China. One EU official said there was a “small window of opportunity” for a deal with Chile, with talks having started in 2017. “It is a really good deal,” they Said. “But the French are against it over some chicken.”The EU is a net exporter of poultry. It consumed 11.6m tonnes in 2020, with 650,000 tonnes imported. Chile, already the bloc’s fourth biggest source of imports, would get an 18,000 tonne tariff-free quota for chicken. Brussels started trade talks with New Zealand in 2018 and still has outstanding issues including data sharing and the protection of European cheeses. The EU wants New Zealand farmers to stop labelling cheese as feta, Gruyère and other famous marques.Jacinda Ardern, New Zealand prime minister, postponed a trip to Brussels this month because of the lack of progress. Her spokesperson blamed a “range of reasons, including the best timing of negotiations”.The UK concluded a deal with New Zealand last month.The commission said: “We do not comment on the trade negotiations with third countries until they are concluded. We also do not comment on comments or speculation.” More

SYDNEY (Reuters) – The dollar stood at its highest levels of the year against sterling and the euro on Thursday, while the yen was smarting from its sharpest drubbing in a month, after the hottest U.S. inflation reading in a generation fanned bets on rate hikes.The euro was pummelled down 1% and through major support to $1.1476, its lowest since July 2020, after headline U.S. CPI came in at 6.2% overnight. It was pinned at that level early in the Asia session and lacks chart support until around $1.12.Sterling dropped 1.2% to $1.3401, its lowest since December 2020 and the yen reversed a week of gains in a few hours and dropped 0.8% to 114.00 per dollar. [GBP/]Emerging markets currencies also suffered from the dollar’s broad rise, with MSCI’s EM currencies index making its sharpest drop in two months as U.S. Treasury yields surged. The rates moves, especially at the short end, suggest traders believe the Federal Reserve will step in to hike interest rates if prices keep running higher, said National Australia Bank (OTC:NABZY)’s head of FX strategy, Ray Attrill.”The market is still conferring a degree of credibility on the Fed, that they are not going to allow very high inflation to persist indefinitely,” he said. If the dollar index moves higher than 95, investors might start to get out of the way, he said.”It’s quite a big level technically and if we can break up through that then there will be more people throwing in the towel.” The index has climbed as far as 94.905. The U.S. data showed price rises extending into rents, which could drive pressure on wages, both lengthening and broadening the pandemic’s inflationary pulse.In its wake, the difference between five-year U.S. yields and yields at the same tenor in Japan and Germany stand at their widest – in favour of Treasuries – since early 2020. [US/]The Australian and New Zealand dollars fell against the dollar’s broad rise on Wednesday, but have found support at around one-month lows as investors figure that rates are also going up to counter inflation in the Antipodes. [AUD/]The Aussie steadied at $0.7331 in Asia and the kiwi at $0.7065. Australian labour data is due at 0030 GMT but analysts say it will be difficult to interpret as the survey period only partially covers the reopening of major cities from pandemic-imposed restrictions.Further dollar gains likely depend on clues about the Fed’s next moves, and on whether the inflation jump – which also sparked selling in stock markets – puts a broader weight on the mood.”From an FX standpoint we are in a stand-off,” said Deutsche Bank (DE:DBKGn) strategist Alan Ruskin.”On the dollar we have the classic dilemma – if Fed won’t respond to high inflation it is dollar negative; if the Fed brings forward tightening it is USD positive. Right now the dollar is broadly stuck between these two worlds.”British growth data is due later in the day.========================================================Currency bid prices at 0004 GMTDescription RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar $1.1482 $1.1477 +0.04% -6.02% +1.1487 +1.1476 Dollar/Yen 113.9450 113.9000 +0.00% +10.27% +113.9450 +0.0000 Euro/Yen 130.82 130.72 +0.08% +3.07% +130.8500 +130.7200 Dollar/Swiss 0.9181 0.9182 +0.01% +3.79% +0.9182 +0.9180 Sterling/Dollar 1.3408 1.3402 +0.05% -1.85% +1.3413 +1.3405 Dollar/Canadian 1.2489 1.2499 -0.08% -1.92% +1.2495 +1.2472 Aussie/Dollar 0.7331 0.7326 +0.07% -4.70% +0.7334 +0.7325 NZ Dollar/Dollar 0.7059 0.7058 +0.03% -1.69% +0.7068 +0.7060 All spotsTokyo spotsEurope spots Volatilities Tokyo Forex market info from BOJ More

The Royal Institution of Chartered Surveyors said a net balance of 70% of its members reported an increase in house prices last month, up from a revised 69% in September.A Reuters poll of economists had pointed to a reading of 65%.The October survey showed the first increase in the house price balance since May.Other surveys have also pointed to continued house price growth since July when a year-long exemption from the stamp duty tax on house purchases was halved in scale in England and Northern Ireland and expired altogether in Wales. Scotland ended the incentive in April and it expired in its entirety in England and Northern Ireland at the end of September. RICS Chief Economist Simon Rubinsohn said expectations of higher Bank of England interest rates were a sideshow to the lack of supply of homes coming to the market. Last week the BoE refrained from raising rates at its November policy decision, against the expectations of many investors, but top officials at the central bank have said borrowing costs are likely to go up soon.”The inventory on agents’ books appears to have slipped back towards historic lows and this seems to be underpinning both the current price trend and expectations for the next year,” Rubinsohn said. “Meanwhile although there is likely to be some drop in activity in the immediate aftermath of the expiry of the stamp duty break, most activity indicators currently remain solid. Indeed, the main challenge for buyers looking forward may once again be a lack of choice of property on the market.”More than two-thirds of surveyors said they expected house prices to continue rising over the next 12 months, the survey showed. More

Speaking at the Port of Baltimore, Biden said billions of dollars included in a $1 trillion infrastructure bill would help unclog the nation’s ports, ease shortages and combat inflation.Biden spoke Tuesday with the CEOs of Walmart (NYSE:WMT) Inc, United Parcel Service Inc (NYSE:UPS), FedEx Corp (NYSE:FDX) and Target Corp (NYSE:TGT) to discuss speeding up deliveries and lowering prices for consumers, a White House official said. More

TOKYO (Reuters) – Hit by a weaker yen, a slim majority of Japanese firms plan to pass on or have passed on climbing commodity costs to customers, a Reuters poll showed – a sign that inflationary pressures may be increasing in the world’s third-biggest economy.Underscoring Japan Inc’s decades-long struggle to completely shake off a deflationary mindset in which companies have found it difficult to pass on costs to a population worried about low wage rises and financial security, only 14% of firms said they have already passed along those costs.But another 40% plan to sometime in the future, according to the Reuters corporate survey which was conducted Oct. 26-Nov. 5.”Given brisk orders and output and our plan to shift prices on to customers from now on, the impact (of the yen and commodity costs) will be fairly limited,” a manager at a ceramics maker wrote in the comment section of the survey.The survey results suggest inflationary pressures may finally be on the rise, according to Tohru Sasaki, head of Japan Markets Research at JPMorgan (NYSE:JPM).”Many companies are reaching the point where they have no choice but to raise prices as they cannot tolerate higher costs,” he said.Sasaki noted the gap between wholesale and consumer inflation is now at its widest in 40 years, with the consumer price index rising just 0.1% in September compared to 6.3% for the corporate goods price index.The chemicals, autos, and steel industries were among the most willing to pass on costs to consumers, while the food, precision tools and the information/communications sectors were among the least willing.The survey did not ask what proportion of costs companies plan to pass on. According to JPMorgan research, in past cost shocks over the past decades, Japanese companies have generally only passed on 50% of those costs. An exception was 2013-2015 when 15 years of persistent deflation had come to a halt and former prime minister Shinzo Abe sought to eradicate it entirely – prodding companies to pass on almost all costs.The Reuters poll also showed nearly eight out of 10 companies felt their profits could be squeezed by rising raw material and energy costs in the current financial year.”Our subsidiary is being hit hard by surging energy costs,” wrote a manager at a metals firm.Many commodity and energy prices have climbed globally, hit by pandemic-induced supply chain disruptions and the ensuing increased competition to secure supplies. Resource-poor Japan has, however, also had to contend with a weakening yen which increases the costs of imports.The currency has been trading at around 113-114 yen to the dollar for about a month, marking a four-year low in October and sharply weaker than the 103 level seen at the start of 2021.A third of Japanese companies said they expect their profits to decrease if current yen weakness persists.Just under a quarter said they expect profits to increase. A weaker yen also inflates the value of profits earned abroad and can over the long-term make exports more competitive. The rest said they did not expect an impact.The survey, conducted for Reuters by Nikkei Research, canvassed some 500 big and mid-sized non-financial firms who take part on condition of anonymity. More than 240 firms answered questions on the impact of the weaker yen and rising prices of energy and raw materials.The survey also showed that for the current financial year, 44% of Japanese companies are raising pay with most of them offering hikes of between 1% and 3%. Another 42% of firms plan to keep wages flat while the rest plan cuts. More

WASHINGTON (Reuters) -The World Bank plans to unveil in about two years a replacement for its flagship “Doing Business” report on countries’ business climate, which was canceled after a data-rigging scandal, the bank’s chief economist, Carmen Reinhart, told Reuters.Reinhart, who was elevated to senior management as part of the bank’s bid to rebuild its credibility after the ethics concerns, said some key concepts for the new product were already clear.These included a mandate for more transparency about the underlying methodology, greater reliance on survey data from companies and less focus on ranking countries.”The underlying nuts and bolts will be in the public domain,” Reinhart said. “Public disclosure is an important pillar in restoring credibility.”The bank would also emphasize survey data to reduce the role of judgment and eliminate the “beauty contest” aspect of the rankings that incentivized countries to “game the system.”In September, the bank’s board scrapped publication https://www.reuters.com/business/sustainable-business/world-bank-kills-business-climate-report-after-ethics-probe-cites-undue-pressure-2021-09-16 of the annual “Doing Business” rankings after an external review of data irregularities in the 2018 and 2020 versions claimed senior bank officials – including then-chief executive Kristalina Georgieva, who now heads the IMF – pressured staff to make changes.The law firm WilmerHale is still working on a second report on possible staff misconduct about the data changes, which benefited China, Saudi Arabia and other countries.The IMF’s board backed Georgieva https://www.reuters.com/business/imf-board-resume-debate-over-georgievas-future-later-monday-2021-10-11 after a lengthy review of the allegations, but she could still be implicated in the second review.Reinhart said the saga has dented the credibility of the World Bank and that it would take time and effort to rebuild trust.”It’s important that the metrics of credibility are not personality-based, that they’re systems based,” she said, adding that the bank had instituted “a lot of safeguards” over the past year after reviewing several external reports.”Nothing in life is failsafe but it reduces … the capacity for misuse and abuse,” she said. “Hopefully credibility will follow. You know, credibility is one thing that is difficult to establish and easy to lose. But time will tell.”Reinhart commissioned a major review of the Doing Business methodology by an external advisory panel after concerns were raised internally about data manipulation involving the reports.The resulting scathing 84-page review https://www.reuters.com/business/external-review-finds-deeper-rot-world-bank-doing-business-rankings-2021-09-20 called for a series of remedial actions and reforms, citing a pattern of government efforts to interfere with the scoring.It faulted the bank for a lack of transparency about the underlying data and said it should stop selling consulting services to governments aimed at improving their scores.Reinhart said the practice was halted in her development economics unit in 2020 and 2021 and that the bank had begun terminating Doing Business-related advisory services across the board after cancellation of the report.Reinhart said the bank would take a broader look at the consequences of the scandal and what other measures were required once the second WilmerHale report was completed.”That is a bridge we will have to cross once the full report is in,” she said. More