Economy

In an update to its Asian Development Outlook report, the ADB left most growth projections for economies in the region unchanged from its July report, maintaining its growth outlook for developing Asia at 5.0% this year and 4.9% next year. It revised down its inflation forecasts for developing Asia, which groups 46 countries in the Asia-Pacific, to 2.8% for this year and 2.9% for next year from previous forecasts of 2.9% and 3.0%, respectively. The Manila-based lender highlighted some downside risks to its outlook, including rising protectionism, escalating geopolitical tensions, adverse weather conditions, and a deterioration in China’s property market.China, the world’s second-largest economy, is battling deflationary pressures, and struggling to lift growth despite a series of policy measures aimed at spurring domestic spending.On Tuesday, China’s central bank announced broad monetary stimulus and property market support measures as authorities look to restore confidence in the economy.”Whether that will work remains to be seen because a lot of the structural problems in the property sector remain persistent,” ADB Chief Economist Albert Park said at a briefing.”It may take more effort and work by their government” to alleviate concerns of consumers and investors, Park said, adding “more proactive government policy would be helpful.” Park also said the ADB was not so concerned about deflation in China as it sees prices recovering. Last week, the U.S. Federal Reserve kicked off its own easing cycle with a hefty half-percentage-point rate cut.”With the Fed’s 50 basis point rate cut, central banks have more space to ease, and we expect more of them to do so,” Park said.The ADB kept its 2024 growth forecast for China at 4.8%, below the government’s official target of about 5%. Growth for 2025 is still forecast at 4.5%.”The PRC (People’s Republic of China) growth forecast is retained despite the prolonged downturn in the property sector, on the assumption that further fiscal and monetary easing will help sustain the economy,” Park said.GDP GROWTH 2023 2024 2024 2024 2025 2025 2025     APR JULY SEPT APR JULY SEPT Caucasus and 5.3 4.3 4.5 4.7 5.0 5.1 5.2 Central Asia   East Asia 4.7 4.5 4.6 4.6 4.2 4.2 4.2 China 5.2 4.8 4.8 4.8 4.5 4.5 4.5   South Asia 6.3 6.3 6.3 6.6 6.5 6.5 6.9 India 8.2 7.0 7.0 7.0 7.2 7.2 7.2   Southeast 4.1 4.6 4.6 4.5 4.7 4.7 4.7 Asia Indonesia 5.0 5.0 5.0 5.0 5.0 5.0 5.0 Malaysia 3.7 4.5 4.5 4.5 4.6 4.6 4.6 Myanmar 0.8 1.2 n/a 0.8 2.2 n/a 1.7 Philippines 6.0 6.0 6.0 6.2 6.2 6.2 5.5 Singapore 1.1 2.4 2.4 2.6 2.6 2.6 2.6 Thailand 1.9 2.6 2.6 2.3 3.0 3.0 2.7 Vietnam 6.0 6.0 6.0 6.2 6.2 6.2 5.1   The Pacific 3.5 3.3 3.3 3.4 4.0 4.0 4.1   Developing 4.9 5.0 5.0 4.9 4.9 4.9 Asia 5.1   INFLATION      Caucasus and 7.9 7.6 6.9 7.0 6.8 6.2 Central Asia 10.2   East Asia 0.6 1.3 0.8 0.8 1.6 1.6 1.3 China 0.2 1.1 0.5 0.5 1.5 1.5 1.2   South Asia 8.4 7.0 7.1 7.0 5.8 5.8 6.1 India 4.6 4.6 4.7 4.5 4.5 4.5 5.4   Southeast 4.1 3.2 3.2 3.3 3.0 3.0 3.2 Asia Indonesia 3.7 2.8 2.8 2.8 2.8 2.8 2.8 Malaysia 2.5 2.6 2.6 2.4 2.6 2.6 2.7 Myanmar 22.0 15.5 n/a 20.7 10.2 n/a` 15.0 Philippines 6.0 3.8 3.8 3.6 3.4 3.4 3.2 Singapore 4.8 3.0 3.0 2.6 2.2 2.2 2.2 Thailand 1.2 1.0 0.7 0.7 1.5 1.3 1.3 Vietnam 3.3 4.0 4.0 4.0 4.0 4.0 4.0 The Pacific 3.0 4.3 4.3 3.6 4.1 4.1 4.1 Developing 3.3 3.2 2.9 2.8 3.0 3.0 2.9 Asia More

TOKYO (Reuters) – The prices Japanese companies charge each other for services rose 2.7% in August from a year earlier, steady from the previous month, central bank data showed on Wednesday.Service-sector inflation is closely watched by the Bank of Japan (BOJ) for clues on whether prospects of rising wages are prodding firms to hike prices and leading to broader-based inflation, a prerequisite for raising interest rates. More

NEW YORK (Reuters) – The central bank official responsible for implementing monetary policy at the New York Federal Reserve said on Tuesday financial markets were prepared to properly interpret a bigger-than-expected interest rate cut as something other than a sign of trouble. While futures markets did not fully price in the half percentage point rate cut delivered by the Fed last week, market intelligence collected by the New York Fed indicated investors “were likely to interpret a 50-basis-point cut exactly for what it was – a recalibration of the FOMC (Federal Open Market Committee) policy toward a more neutral stance that will help maintain the strength of the economy and the labor market while continuing to enable further progress on inflation,” said Roberto Perli, manager of the Fed’s System Open Market Account, in a speech text.Last week, the Fed, confronted with falling inflation pressures and rising risks to the job market, lowered its overnight target rate range by half a percentage point to between 4.75% and 5.5%, and penciled in 50 basis points’ worth of additional cuts into the end of the year. Going into the Fed meeting, some had worried a larger-than-expected Fed rate cut might signal central bank worry about the outlook, rather than what it turned out to be: a move to withdraw unneeded policy restrictiveness from the economy. The Fed also said last week it was pressing forward with plans to shrink its balance sheet. Perli said in his speech “market intelligence had been indicating clearly for many months that market participants understood well that there is no mechanical link between interest-rate and balance-sheet decisions.” More

(Reuters) – A look at the day ahead in Asian markets.Sugar high or shot in the arm? That’s the question for Chinese stocks and investor sentiment which soared on Tuesday after Beijing, led by the central bank, unveiled a package of coordinated monetary and liquidity stimulus that packed a far more powerful punch than previous piecemeal efforts. It was China’s biggest stimulus since the pandemic, and domestic and regional markets reacted accordingly – Shanghai’s composite index jumped 4.2% for its best day since July 2020, the MSCI Asia ex-Japan index hit its highest since April 2022, and the MSCI emerging market currency index leapt to a new high. All well and good. But can this short-term relief morph into longer-term optimism that China’s authorities are back in the driving seat and steering the property sector, asset prices and the economy towards sustainable recovery?”Bigger guns but still no bazooka,” is how Barclays economists neatly summed up authorities’ steps on Tuesday, adding that the central bank may fire more salvos in the coming months through interest rate and reserve requirement cuts. Some analysts were quick to raise their 2024 GDP growth forecasts closer to the government’s 5% target, but most agree that large-scale fiscal stimulus is needed to really change the outlook beyond this year.In the near term, however, the Chinese market rebound may have more legs. Not only had Chinese stocks slumped to their lowest in over a year, they have performed poorly in relative terms against regional and global rivals.Analysts at Barclays are tactically bullish on Chinese stocks over Indian equities, while the divergence between the S&P 500 and Shanghai CSI 300 index in recent years has been frankly jaw-dropping.The yuan climbed to a fresh 16-month high on Tuesday, and is now within touching distance of breaking the 7.00 per dollar barrier. For a currency as tightly controlled as the yuan, its 3.5% appreciation in just two months is remarkable.Investor sentiment across Asia on Wednesday should also be boosted by the S&P 500 hitting another new high on Tuesday, albeit it only just, and a softer dollar and lower Treasury yields. Japanese stock futures point to the benchmark Nikkei 225 index opening 0.7% higher on Wednesday. That said, global growth concerns – particularly over Germany – are percolating, which could legitimately counter any sense of bullishness across Asia. The regional economic data calendar on Wednesday sees the release of Australian consumer inflation, which is expected to cool significantly to 2.7% in August from 3.5% in July, service sector producer price inflation from Japan and industrial production from Taiwan.Among the regional policymakers scheduled to speak are South Korea’s finance minister Choi Sang-mok and Philippine central bank governor Eli Remolona. Here are key developments that could provide more direction to Asian markets on Wednesday:- Australia CPI inflation (August)- Japan services PPI (August)- Taiwan industrial production (August) More

“I would expect us to continue to gradually reduce interest rates in the coming time, also in the first half of 2025,” Knot said in an interview with Dutch TV programme Nieuwsuur.”I don’t expect rates to return to the extremely low levels we saw before the pandemic. They will likely end up on a somewhat more natural level. I don’t know where exactly, but somewhere starting with a 2,” he added.The ECB lowered its deposit rate by 25 basis points to 3.50% earlier this month, following up on a similar cut in June. More

LONDON/RIO DE JANEIRO (Reuters) -OPEC raised its forecasts for world oil demand for the medium and long term in an annual outlook, citing growth led by India, Africa and the Middle East and a slower shift to electric vehicles and cleaner fuels.The Organization of the Petroleum Exporting Countries, in its 2024 World Oil Outlook published on Tuesday, sees demand growing for a longer period than other forecasters like BP (NYSE:BP) and the International Energy Agency, which expect oil use to peak this decade.”Future energy demand is found in the developing world due to increasing populations, middle class and urbanization,” said OPEC Secretary General Haitham Al Ghais during the report’s launch in Brazil, a country with which the group is seeking to form closer ties.Al Ghais’ speech in Rio de Janeiro was briefly disturbed by a protester from Greenpeace.A longer period of rising consumption would be a boost for OPEC, whose 12 members depend on oil income. In support of its view, OPEC said it expected more push back on “ambitious” clean energy targets, and cited plans by several global carmakers to scale down electrification goals. “There is no peak oil demand on the horizon,” Al Ghais wrote in the foreword to the report. “Over the past year, there has been further recognition that the world can only phase in new energy sources at scale when they are genuinely ready.”OPEC expects world oil demand to reach 118.9 million barrels per day (bpd) by 2045, around 2.9 million bpd higher than expected in last year’s report. The report rolled out its timeline to 2050 and expects demand to hit 120.1 million bpd by then.That is far above other 2050 forecasts from the industry. BP projects oil use will peak in 2025 and decline to 75 million bpd in 2050. Exxon Mobil (NYSE:XOM) expects oil demand to stay above 100 million bpd through 2050, similar to today’s level.OPEC has been calling for more oil industry investment and said the sector needs $17.4 trillion to be spent to 2050, compared with $14 trillion needed by 2045 estimated last year.”All policymakers and stakeholders need to work together to ensure a long-term investment-friendly climate,” Al Ghais wrote. HIGHER 2029 FORECAST THAN IEA OPEC also raised its medium term demand forecasts, citing a stronger economic backdrop than last year as inflation pressure wanes and central banks start to lower interest rates.World demand in 2028 will reach 111 million bpd, OPEC said, and 112.3 million bpd in 2029. The 2028 figure is up 800,000 bpd from last year’s prediction. OPEC’s 2029 forecast is more than 6 million bpd higher than that of the IEA, which said in June demand will plateau in 2029 at 105.6 million bpd. The gap is larger than the combined output of OPEC members Kuwait and the United Arab Emirates. In 2020, OPEC made a shift when the pandemic hit oil demand, saying consumption would plateau in the late 2030s. It has begun raising forecasts again as oil use has recovered.By 2050, there will be 2.9 billion vehicles on the road, up 1.2 billion from 2023, OPEC forecast. Despite electric vehicle growth, vehicles powered by a combustion engine will account for more than 70% of the global fleet in 2050, the report said.”Electric vehicles are poised for a larger market share, but obstacles remain, such as electricity grids, battery manufacturing capacity and access to critical minerals,” it said.OPEC and its allies, known as OPEC+, are cutting supply to support the market. The report sees OPEC+’s share of the oil market rising to 52% in 2050 from 49% in 2023 as U.S. output peaks in 2030 and non-OPEC+ output does so in the early 2030s. More

NEW YORK (Reuters) – Republican presidential candidate Donald Trump has made tariffs and tax cuts the key elements of his economic pitch to voters, the majority of whom view the economy as the biggest campaign issue of the 2024 presidential election.Several prominent budget forecasters have estimated that Trump’s tax cut plans would add some $3.6 trillion to $6.6 trillion to federal deficits over a decade, depending on which proposals are included. The same forecasters show Harris’ spending and tax break plans would add far less to deficits and possibly may reduce them, with a range of a $400 billion reduction over a decade to a $1.4 trillion increase, depending on which proposals are included. Here are the tariff and tax proposals Trump has made so far in his campaign:TARIFFS ON IMPORTSTrump has floated plans for blanket tariffs of 10% to 20% on virtually all imports as well as tariffs of 60% or more on goods from China, in a bid to boost U.S. manufacturing. On Sept. 23 Trump said he would slap a 200% tariff on John Deere (NYSE:DE)’s imports into the United States if the company moved production to Mexico as planned, comments that hit the agricultural equipment manufacturer’s share price. Trump has frequently said he would hit automakers that move their production to Mexico with a 200% tariff, but his Sept. 23 remarks appeared to be the first time he has extended that threat to an agricultural equipment company. The duties would likely violate the U.S.-Mexico-Canada Agreement on trade that he signed into law in 2020. During a Sept. 24 speech in Georgia, Trump said he would put 100% tariffs on every car coming across the U.S.-Mexico border. He also said he would reward U.S.-based manufacturers with R&D tax credits.The National Retail Federation, which represents Walmart (NYSE:WMT) and other companies that account for almost half of container shipping volume, is among the industry groups opposed to Trump’s proposed tariffs, and economists say they would reignite inflation.A narrow majority of U.S. voters support Trump’s campaign vow to increase tariffs on imported goods, particularly from China, according to a Sept. 11-12 Reuters/Ipsos poll. TAX CUTS FOR DOMESTIC PRODUCERSIn early September Trump pledged to reduce the corporate tax rate from 21% to 15% for companies that make their products in the U.S.While he had previously said he wanted to cut the corporate tax rate to 15%, he had not tied that lower rate to keeping manufacturing inside the country.Trump slashed the corporate tax rate to 21% from 35% during his 2017-2021 presidency.NO TAX ON OVERTIME PAY, TIPS OR SOCIAL SECURITY INCOME Trump said on Sept. 12 that if he is elected he will end all taxes on overtime pay as part of a wider tax cut package.Trump has also said he would seek legislation to end the taxation of tips. Harris has made a similar pledge. Current law requires employees to report their tips as income.Trump has also vowed to exempt Social Security income from taxes. EXTEND TAX CUTS Trump wants to extend all individual tax cuts he pushed through Congress in 2017, including for the wealthiest Americans, which tax and budget experts estimate would reduce revenue over a decade by about $3.3 trillion to $4 trillion.UNCLEAR PROPOSAL ON ‘SALT’ DEDUCTIONIn a Sept. 17 Truth Social post, Trump vowed to “get SALT back” – a reference to the state and local tax (SALT) deduction available to federal taxpayers. At a rally the next day, Trump said he would be “restoring the SALT deduction” if re-elected. Trump’s 2017 tax cuts imposed a $10,000 cap on the amount of state and local tax that taxpayers can deduct. It was unclear whether Trump was suggesting that he would remove the $10,000 cap, which predominantly affects high-tax, Democratic-leaning states such as New York. OTHER ECONOMIC PROPOSALSBeyond tax cuts and tariffs, Trump has promised he would support the oil and gas industry by backing new pipelines and restoring fracking on federal land in a bid to boost the economy. On Sept. 24 he said he would put Alaska’s Arctic National Wildlife Refuge – where the Biden administration canceled oil and gas drilling leases – “back into play” if he wins the election.He has also said he would consider ending a $7,500 tax credit for electric-vehicle purchases. While president, Trump sought to repeal the EV tax credit which was later expanded by President Joe Biden in 2022. During a Sept. 18 campaign rally in New York, Trump pledged to put a temporary cap on credit card interest rates of “around 10%.” More