Economy

BENGALURU (Reuters) – Indonesia’s economic growth likely slowed in the fourth quarter as declining commodity and energy prices hit exports, and a widely expected global recession could accelerate the slowdown this year, a Reuters poll found.Southeast Asia’s largest economy exported a record $292 billion in 2022, driven by high global commodity prices that boosted the value of the rupiah and improved the country’s current account.But export growth slowed in the latter part of the year as prices moderated.After reporting its strongest annual growth in more than a year in the third quarter, the resource-rich economy expanded a weaker 4.84% in October-December compared with the same three-month period a year earlier, according to the median forecast of 21 economists in the poll. If realised, it would be the slowest growth rate in over a year.Forecasts for gross domestic product (GDP) growth, due to be released on Feb. 6, ranged from 4.00% to 6.20%.On a quarterly basis, growth was expected to have eased to 0.33%, down from 1.81% in the third quarter. That was based on a smaller sample of forecasts.”Indonesia’s economic growth is going to slow in line with the ongoing global slowdown. The ongoing global recession has dampened prices and demand for commodities,” Suryaputra Wijaksana, an economist at Bank Central Asia, said.”Global decoupling also … disrupted demand for Indonesia’s exports. It contributed to slowing growth by reducing investment and domestic consumption as commodity-related sectors impacted negatively.”Economists in the poll expected a bleaker outlook as tightening monetary policy and elevated inflation globally risk derailing the world economy.Growth was forecast to have averaged 5.3% last year, but a separate Reuters poll said that rate would slow to 4.8% this year, still well within the range of Bank Indonesia’s projection of 4.50% to 5.30%.”With commodity prices set to drop back, weaker global demand likely to weigh on exports, and tighter monetary policy dragging on the domestic economy, we think the risks are firmly to the downside,” Gareth Leather, senior Asia economist at Capital Economics, said.But some economists were hopeful China’s reopening would boost the country’s exports of resources such as palm oil, coal, nickel and iron.”We are quite optimistic about 2023 growth, having robust domestic consumption recovery, and the potential of China’s full reopening this year,” Irman Faiz, an economist at Bank Danamon, wrote. More

(Reuters) -Alphabet Inc on Thursday posted fourth-quarter profit and sales short of Wall Street expectations as Google’s advertising clients pulled back spending from a period of pandemic-led excess.Executives of the search and advertising giant adopted a subdued tone on a call with investors, promising an extended period of belt-tightening, particularly on hiring, real estate costs and experimental projects that can take years to reach fruition. Shares of Alphabet (NASDAQ:GOOGL) were down nearly 5% in after-hours trading, after losing about 40% of their value in 2022. “We are committed to investing responsibly with great discipline and defining areas where we can operate more cost- effectively,” Chief Executive Sundar Pichai told analysts on a call to discuss the company’s results. That echoed comments from Meta Platforms Inc (NASDAQ:META) boss Mark Zuckerberg the previous day on cost efficiencies. Shares of other tech companies Apple Inc (NASDAQ:AAPL) and Amazon.com Inc (NASDAQ:AMZN) also fell after they posted disappointing results on Thursday, wiping off gains after Facebook parent Meta on Wednesday boosted tech shares with news on cost cuts and a large buyback.Gone was some of the exuberance of the pandemic when consumers flocked to the internet amid lockdowns and heightened interest in e-commerce and touchless deliveries. Alphabet’s chief financial officer, Ruth Porat, promised a more measured approach for 2023 and a focus on “delivering sustainable financial value,” not necessarily a hallmark of Silicon Valley firms. “We’re focused on revenue upside as well as durable changes to the expense base.” Advertisers, who contribute the bulk of Alphabet’s sales, have cut their budgets as rising inflation and interest rates fueled concern over consumer spending. Pichai pointed to advertisers’ more modest spending and the impact of foreign exchange rates abroad as drags on Alphabet’s overall results. He said artificial intelligence (AI) software will be an important focus for the company and that it plans to make its LaMDA chatbot software publicly available in the coming weeks.LID ON COSTSMountain View, California-based Alphabet decided to cut 12,000 jobs last month, representing about 6% of its overall workforce, and said it was doubling down on AI. Across the company, Alphabet will “meaningfully” slow its pace of hiring this year, said Porat.Alphabet, long a leader in AI, is facing competition from Microsoft Corp (NASDAQ:MSFT), which is reportedly looking to boost its stake in ChatGPT – a promising chatbot that answers queries with human-like responses.”Despite being seen as one of the most insulated companies in the advertising space relative to peers, Alphabet’s poor quarter is the latest sign that worsening fundamentals and a tough macroeconomic environment are prompting advertisers to cut back on spending,” said Jesse Cohen, senior analyst at Investing.com. Net income fell to $13.62 billion, or $1.05 per share, from $20.64 billion, or $1.53 per share, a year earlier. That was the sharpest decline for Alphabet in four quarters.Adjusted profit of $1.05 per share fell short of an expected $1.18 per share, according to Refinitiv.Revenue from Google advertising, which includes Search and YouTube, fell 3.6% to $59.04 billion. Total revenue rose 1% to $76.05 billion, its slowest growth ever barring a small decline in the second quarter of 2020. Analysts were expecting $76.53 billion.Google is the world’s largest digital ad platform by market share, making it uniquely susceptible to fluctuations in online marketing spending. Its YouTube division has faced a surge in rival platforms, particularly TikTok, whose endless scroll of short video is drawing younger users away.Alphabet’s Porat said the company’s total capital expenses this year will be in line with last year. As more of its employees work remotely and it consolidates staff, Alphabet expects to pare back its real estate expenses, which Porat said would result in a charge of roughly a half-billion dollars in this year’s first three months.Revenue from YouTube ads, one of Alphabet’s most consistent money-makers, fell nearly 8% to $7.96 billion, well below the estimate of $8.25 billion, according to FactSet.Cloud was a bright spot, however, with revenue growing 32% to $7.32 billion, but at its slowest pace since the company began disclosing the segment’s revenue numbers.But there may be more pain ahead for Alphabet. Late last month, the Justice Department and eight states sued Google over what they said were anticompetitive practices in its digital ad sales. The company is facing multiple lawsuits, which, if successful, could cause it to be broken up. More

SINGAPORE (Reuters) – The euro and sterling slipped against the dollar on Friday as markets took a dovish cue from policymakers at the European Central Bank and the Bank of England, who said inflationary pressures in their economies have become more manageable.Elsewhere, the greenback broadly advanced on the back of its Atlantic counterparts’ decline, reversing its losses earlier in the week.The pound slid 0.15% to a more than two-week low of $1.2206 in early Asia trade, after falling 1.2% in the previous session, its largest daily decline in a month.The euro was last 0.16% lower at $1.0893, after tumbling 0.7% on Thursday to move further away from its 10-month peak of $1.1034.On Thursday, the ECB and BoE each raised interest rates by 50 basis points as expected, with the latter signalling the tide was turning in its battle against high inflation.While the ECB explicitly alluded to at least one more hike of the same magnitude next month and reaffirmed its commitment in battling high inflation, President Christine Lagarde acknowledged the euro zone outlook had become less worrisome for growth and inflation.”The ECB was a little bit more dovish than markets had previously expected … (while) the Bank of England has given a small hint that they might be close to finishing their tightening cycle,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:CMWAY) (CBA).Remarks from the ECB and the BoE came a day after Federal Reserve Chair Jerome Powell similarly said in a news conference following the Fed’s 25bp rate hike that the “disinflationary” process in the United States appeared to be underway.The dollar on Friday recovered from a heavy selloff in the aftermath of Powell’s speech, and against a basket of currencies, the U.S. dollar index rose 0.03% to 101.82, away from Wednesday’s nine-month low of 100.80.Friday’s nonfarm payrolls report will be the next major test of the Fed’s fight against inflation. Signs are still pointing to a tight labour market, with the number of Americans filing new claims for unemployment benefits dropping to a nine-month low last week.In other currencies, the Aussie fell 0.11% to $0.7068, having lost 0.86% on Thursday, while the kiwi was little changed at $0.6475.The comments from policymakers following a slew of central bank meetings this week have markets seizing on signs that interest rates could be close to peaking in most major economies.”We’re starting to see central banks converging to a pattern now … the major central banks are definitely approaching the end of their tightening cycles,” said CBA’s Kong.An imminent peak in U.S. rates has provided some relief for the Japanese yen, which last year crumbled under pressure from rising interest rate differentials against Japan’s low interest rate environment.The yen was last marginally higher at 128.66 per dollar and was headed for a weekly gain of nearly 1%, reversing two straight weeks of decline. More

BRASILIA (Reuters) -Brazilian President Luiz Inacio Lula da Silva on Thursday issued his latest threat to the autonomy of the country’s central bank a day after it floated the possibility of keeping interest rates at a six-year high for a longer-than-expected period.Lula, who had previously described central bank independence as “nonsense,” said he could review its autonomy by the end of the term of the current central bank governor, Roberto Campos Neto.Selected by right-wing former President Jair Bolsonaro, Campos Neto had his mandate extended to the end of 2024 under a new law established in 2021 granting the central bank formal autonomy.The central bank’s policy statement issued late on Wednesday specifically said it could keep its benchmark Selic rate at its current 13.75% for longer than markets expected due to fiscal risks under Lula.”So I want to know what independence was for,” Lula said during an interview with local channel Rede Tv. “I’m going to wait for this citizen to finish his mandate so that we can make an assessment of what the independent central bank meant.” “What is on the agenda is the interest rate issue,” he added, suggesting that the central bank should seek a “Brazilian standard” for inflation rather than a European one.The comments were in line with previous comments by Lula suggesting that the current inflation target hinders economic growth.Campos Neto has insisted that the central bank plans to act independently, adding that its formal autonomy gives it the capacity to stabilize markets. More

WASHINGTON (Reuters) – U.S. President Joe Biden on Thursday credited Brian Deese, his outgoing top White House economic adviser, for helping achieve the administration’s economic vision for the country.Biden said Deese’s work as director of the National Economic Council (NEC) was critical to ensuring passage of a series of major laws, including the American Rescue Plan, the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act, that have bolstered the U.S. economy.”Brian has … helped steer my economic vision into reality, and managed the transition of our historic economic recovery to steady and stable growth,” Biden said.Deese, who is expected to step down in mid-February, told MSNBC that Biden had not made any decision on his replacement.Officials familiar with the process told Reuters on Wednesday that no final decision on a replacement was expected before the Democratic president gives his State of the Union speech to Congress next Tuesday.Biden is focused on that speech and had not made a decision on the top jobs at the NEC or the Council of Economic Advisers (CEA), officials said.Biden aides have considered candidates including Federal Reserve Vice Chair Lael Brainard for the NEC director’s position, and long-time Biden confidant Jared Bernstein to head the CEA, according to people familiar with the process.Brainard is a Harvard-educated Democrat who has been at the Fed for nearly a decade and served as Treasury’s top international affairs expert under President Barack Obama.Biden is making over his top economic team as the Fed continues to hike interest rates but the U.S. labor market remains tight, raising the prospect of an unusual recession without significant job losses.The next NEC director and CEA chair will help shape the White House’s economic policy, from executive orders to congressional spending bills and raising the debt limit, in the face of a more hostile U.S. House of Representatives, now controlled by Republicans.Other candidates for the NEC job include Deputy Treasury Secretary Wally Adeyemo and Commerce Secretary Gina Raimondo, Reuters reported last week.Only the CEA job requires Senate confirmation.Deese plans to return to his wife and two children, who had remained in Maine over the past two years, officials said. More

WASHINGTON (Reuters) -U.S. President Joe Biden on Thursday joined former President Bill Clinton to mark the 30th anniversary of the 1993 law that allows Americans to take unpaid medical leave, and vowed to keep fighting for paid leave for all Americans.The Family and Medical Leave Act, the first Clinton signed after taking office, guarantees that certain workers may take up to 12 weeks of unpaid leave without losing their jobs or health insurance benefits. The law applies to public agencies, schools and private sector employers with at least 49 employees.”It’s about being a country where women and all people can both work and raise a family,” Biden told a packed event at the White House. “How can we compete in a global economy if millions of American parents, especially moms, can’t join the workforce?”Biden’s legislation ensuring paid family and medical leave for Americans has been thwarted by Republicans who argue it is too costly – and some Democrats – in Congress. On Thursday, he signed a presidential memorandum urging federal agencies provide leave without pay for federal workers, including during their first year of service.He said he would continue to push for a national program of paid family and medical leave to bring the United States in line with “every single other major economy in the world.” The United States is the only wealthy country where women are not routinely entitled to paid maternity leave.”I call on Congress to act and I’ll continue fighting as I know you will as well,” he said. “No American should ever … have to choose between a paycheck and taking care of a family member or taking care of themselves.”Biden’s memorandum is aimed at ensuring that federal workers can get leave for caring for a new child, dealing with their own or a family member’s serious health condition, managing family affairs when a family member is called to active duty, or grieving the death of a family member, the White House said.The Defense Department this month expanded its paid parental leave program to allow both active-duty parents to take 12 weeks off after the birth, adoption or placement into long-term foster care of a child.Biden’s memo directs agencies to use their discretion to aid workers, especially during their first year of service before they qualify for family and medical leave or paid parental leave. It directs the Office of Personnel Management to provide recommendations on paid and unpaid “safe leave” for federal workers affected by domestic or dating violence, sexual assault or stalking, according to a White House fact sheet.Jen Klein, who heads the White House Gender Policy Council, told reporters the Biden administration would “do whatever we can do by executive action” to advance protections for workers while continuing to push for national legislation ensuring paid family and medical leave. Heather Boushey, a member of the White House Council of Economic Advisers, said such changes would buttress the strength of the U.S. economy. Increased women’s workforce participation had added about 10% – or $2.14 trillion – to the U.S. economy since the 1970s, she said.Boushey said a recent study estimated that about 56% of U.S. workers – or 90 million people – had care responsibilities outside of their full-time jobs, and the situation was growing more dire given the aging population. More

NEW YORK (Reuters) – Sam Bankman-Fried is in talks with U.S. prosecutors to resolve a dispute over the FTX cryptocurrency exchange founder’s bail conditions, his lawyer said on Thursday. The judge overseeing Bankman-Fried’s criminal fraud case in federal court in Manhattan on Wednesday temporarily barred the 30-year-old former billionaire from contacting employees of FTX or his Alameda Research hedge fund, after prosecutors raised concerns he might tamper with witnesses. His lawyers had previously countered that he had contacted current executives at the now-bankrupt exchange to offer “assistance” and not to interfere, and so the additional bail condition was not needed.Bankman-Fried has pleaded not guilty and is under house arrest at his parents’ California home.In a court filing, defense lawyer Mark Cohen asked U.S. District Judge Lewis Kaplan to postpone a Feb. 7 hearing on the matter, as well as a Feb. 2 deadline to explain why he should be able to access and transfer cryptocurrency before trial.”The parties would like to continue these discussions, which we are optimistic will lead to an agreement between the parties in the next few days and eliminate the need for further litigation,” Cohen wrote, noting that prosecutors consented to the request. A spokesperson for the U.S. Attorney’s Office in Manhattan declined to comment. Once worth an estimated $26 billion, Bankman-Fried was arrested in December after FTX collapsed.Prosecutors have said he looted billions of dollars in FTX customer funds to plug losses at Alameda. Two former colleagues have pleaded guilty and are cooperating with prosecutors. Bankman-Fried has acknowledged risk management failures, but said FTX collapsed because of a liquidity crunch and that he did not steal funds. A trial is scheduled for Oct. 2. More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.The Fed, ECB, and BoE have spoken, and the market’s message is: We hear you, but we don’t believe you.All three raised interest rates as expected this week, said they will act again at upcoming meetings, and with varying degrees of guidance and conviction said they stand ready to tighten even further if inflation conditions warrant it.But investors aren’t buying it. Wall Street and world stocks have jumped, bond yields are tumbling, and economists and rates futures markets are scaling back central bank hiking expectations.Contrary to what policymakers are surely aiming for, financial conditions are easing. Look how Germany’s 10-year bond yield reacted on Thursday to ECB president Lagarde’s press conference – down 20 basis points, one of the biggest falls since the euro was launched in 1999. According to Goldman Sachs (NYSE:GS), U.S. financial conditions are the loosest since August and have eased 150 basis points since mid-October. That’s despite 225 bps of rate hikes since September.The falling dollar and lower Treasury yields have helped loosen financial conditions across most of emerging Asia in recent weeks too. Regional risk appetite remains firm, even though a pause in the equity rally may be overdue.The MSCI Asia ex-Japan index only has to rise around 0.7% on Friday – not an insurmountable challenge on the back of Wall Street’s latest bounce – to post its sixth consecutive weekly gain. That would mark 12 increases out of the last 14 weeks, while the MSCI World index has had only one down day in the last 10. Remarkable runs. (Hang Seng tech index https://fingfx.thomsonreuters.com/gfx/mkt/byvrlkkyqve/HST.png)Watch for outsized moves in Asian tech stocks on Friday following the 23% surge in Meta Platforms Inc (NASDAQ:META) shares. Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Google parent Alphabet (NASDAQ:GOOGL) also reported results after the U.S. close.On the economic data front, a batch of PMI reports will give the latest insight into the health of several key economies in Asia, including China and India, while December retail sales figures from Hong Kong and Singapore will also be released.Here are three key developments that could provide more direction to markets on Friday:- China Caixin services PMI (January)- India S&P Global (NYSE:SPGI) Services PMI (January)- U.S. non-farm payrolls (January) (By Jamie McGeever; Editing by Deepa Babington) More