Economy

KUALA LUMPUR (Reuters) – Malaysian political leaders began their election campaigning on Saturday for what is set to be a close race, with incumbent Prime Minister Ismail Sabri facing off with veterans Anwar Ibrahim and Muhyiddin Yassin. Polls and analysts say no single party or coalition will win a simple majority in the 222-seat parliament, and that opposing alliances will have to come together to form the next government.Around 21 million Malaysians are eligible to vote in the Nov. 19 election, with inflation and recent political instability on the top of their minds in the backdrop of a slowing economy. Malaysia has had three premiers since the last election in 2018.Rival coalitions are headed by Ismail, former premier Muhyiddin and long-time opposition leader Anwar. There are several other parties in the running, including one founded by another former prime minister Mahathir Mohamad, a factor that is expected to split the votes more than ever before.”This is the first time we are seeing three equally strong coalitions with experienced leaders contesting,” said Adib Zalkapli, a director with political consultancy Bower Group Asia.He said there was a high possibility that there won’t be a clear winner in the polls, and that coalitions will have to negotiate to form a government. Prime Minister Ismail, who is from the Barisan Nasional coalition, said there were no easy wins in any parliamentary seats in this election, state news agency Bernama reported. He and other leaders filed nominations on Saturday, officially kicking off the two-week campaigning period. The election comes as the Malaysian economy is expected to ease due to a global slowdown, impeding a recovery from a pandemic-induced slump. Inflation is also rising, with the Malaysian central bank increasing interest rates this week for the fourth straight time.POLITICAL INFIGHTINGIn the last election in 2018, Malaysia’s opposition came together to defeat Barisan, which had governed the country uninterrupted for 60 years since independence from British rule. Barisan, then lead by Najib Razak, was facing widespread anger over the multi-billion-dollar 1MDB scandal and other corruption allegations. Najib began a 12-year jail term this year for graft.The opposition then included Anwar, Muhyiddin and Mahathir, but their alliance collapsed after just 22 months in power due to infighting. The leaders are not working together in this election.Graft-tainted Barisan came back to power as part of another alliance after the opposition alliance collapsed. A poll by independent pollster Merdeka Center showed on Friday that no single coalition will be able a win a majority, and that three or more coalitions will have to come together to form a new government.The poll also showed that among the three major coalitions, Anwar’s was the most favoured by voters – at 26%, though nearly 31% of the voters were yet to decide who to vote for. Barisan came in second at 24%. More

The net loss of $2.69 billion, or $1,832 per Class A share, compared with a profit of $10.34 billion, or $6,882 per share, a year earlier.Operating profit rose 20% to $7.76 billion, or about $5,294 per Class A share, from $6.47 billion, or about $4,331 per share, a year earlier, helped by foreign currency gains and improvement in several businesses.Berkshire also repurchased $1.05 billion of its own stock in the quarter, and has repurchased $5.25 billion this year. More

HANOI (Reuters) – Vietnam will stick to its target to keep inflation under control and ensure macroeconomic stability, Prime Minister Pham Minh Chinh said on Saturday, as the economy faces fresh challenges.The Southeast Asian economy has rebounded from the COVID-19 pandemic, but has recently faced numerous challenges, with weakening global demand and a strengthening U.S. dollar. The central bank has this year raised its policy rates by a combined 200 basis points and allowed the dong currency to weaken against dollar.Vietnam’s stock market has fallen by more than 20% while the dong currency has lost 6% against dollar over the past three months.”It’s getting more difficult to manage the macro economy,” Chinh said. “We need to stay vigilant (against risks) but we won’t get panic.”Vietnam’s gross domestic product is expected to grow 8% this year, faster than an expansion of 2.58% last year. The country targets to cap inflation at 4% this year.Chinh said the country will continue to “pursue an active, prudent, flexible and sturdy monetary policy in harmony coordination with fiscal policy and other policies, without abrupt changes”.”The bond and stock markets now bear risks after a period of strong growth, with businesses having high demand for capital for production while banks’ credit is tight,” Chinh told parliament, adding that the real estate market is facing liquidity problems. Vietnam’s central bank held emergency meetings this week with commercial banks to discuss liquidity in the system, as lenders face pressure from tightening credit conditions and higher interest rates.Chinh said the government will take measures to ensure that the financial and real estate markets operate in a more transparent and effective manner.”The government will propose amendments to securities and enterprise laws and related regulations,” Chinh said. Chinh said the authorities have been slow in responding to a fuel supply crunch that has left hundreds of petrol stations having shut or limited sales in recent weeks, citing financial difficulties and tight domestic supplies.He said Vietnam will consider raising the national fuel storage capacity and domestic fuel production to avoid future fuel shortages. More

Global warming will worsen inequalities in health around the world and increase death rates faster in poorer countries than in wealthier ones, according to a coalition of scientists, economists and climate experts.New research from the Climate Impact Lab concludes that low-income countries were disproportionately affected by extreme heat, as the negative health effects were exacerbated by restricted access to air conditioning and less developed healthcare systems, based on the historical data.The study, which indicates greater climate-related mortality rates in developing countries than in wealthier ones, comes as world leaders land in Sharm el-Sheikh in Egypt for the UN climate summit.The conference is expected to be dominated by fraught debate among nations over who pays for the costs of climate change, with the smaller, less wealthy nations most affected by a warming planet arguing that richer countries with higher emissions should help foot the bill.In a scenario where countries meet their greenhouse gas emissions reduction pledges under the Paris Agreement, Faisalabad, Pakistan, could expect annual all-cause death rates to increase by 67 deaths per 100,000 people compared to a future with no climate change, the study’s authors found. By comparison, in Riyadh, Saudi Arabia, more widespread access to electricity and healthcare would cause an increase of a comparably lower 35 extra deaths per 100,000 people, despite similar patterns of extreme heat being forecast.

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“Just looking at this data you can think about the fact that this could have real impacts on human migration in even just the next 30 or 40 years,” said Hannah Hess, associate director at the independent Rhodium Group, a part of the climate lab. As well as studying death rates, the group partnered with the UN Development Programme to project the effects of climate change on energy use and the labour force for countries and regions across the world.Global warming will also drive small increases in electricity use around the world as people install more air conditioning, the data set found, although the biggest rises in consumption were concentrated among the richest 10 per cent of the global population. Middle-income populous countries including China, India, Indonesia and Mexico were all forecast to increase electricity consumption partly as a result of expanded access to electricity.The data project also tries to capture the productivity lost per worker per year in weather exposed sectors, such as construction, mining and agriculture. It accounts for the existing country trends of people moving from work in climate-exposed sectors and into lower-risk sectors. In countries that already face extreme heat, such as Cameroon and Malaysia, workers in high risk sectors could face interruptions of more than 15 hours annually compared to a world with no climate change, the researchers found. Hess said workers would need to adapt to rising temperatures. “A really illustrative example is the World Cup Stadium being built in Qatar” said Hess. “If you look at the construction workers — what they’re wearing to work in this hot sun is huge helmets, they have suits and they’re constantly taking breaks”. The World Bank released a report on the threat of climate change to development objectives this week that showed the investment needed to lower carbon emissions are much higher in the low income countries that are most vulnerable to climate change. The World Bank found that an average annual investment of 1.4 per cent of GDP between 2022 and 2030 could lower emissions in developing countries by as much as 70 per cent by 2050. But for lower income countries, financing equivalent to 5 to 8 per cent of their GDP annually between 2022 and 2030 would be required.The Bank’s review covers 20 countries that account for around a third of the world’s greenhouse gas emissions. The report mainly covers African and Asian countries, including China.Methodology for data used in map and charts More

The writer is an FT contributing editorEvery Federal Reserve press conference follows the same pattern — in growth and stagnation, in low and high inflation. Reporters ask when the Fed will be satisfied that its tools are working. The poor Fed chair does not really have an answer and says that the central bank is watching carefully, reminding the media that monetary policy has a “long and variable lag” or words to that effect.This was the format this week when chair Jay Powell talked to the press after another 0.75 percentage point rate rise as the Fed waits for inflation to drop. But it could have just as easily been Janet Yellen or Ben Bernanke. That exquisite phrase “long and variable lag” is a technical-sounding way of saying “we don’t know and we don’t know when we will know”.Monetary policymakers have been saying this for so long that we have allowed them to launder it into a kind of privilege. They do not have to adapt. They do not have to be creative. Their tools do not have to work. Central bankers remain forever in lag. It is not working now — but it could.The phrase itself derives from one of the founding documents of the current central banking regime, Milton Friedman’s 1959 A Program for Monetary Stability. Friedman pointed out that the Fed could use its balance sheet to increase or decrease the total supply of money in the economy, but peaks in inflation tended to follow peaks in the supply of money with a “considerable lag” which was also “rather variable”. This is a monetarist argument, one that has fallen out of favour among macroeconomists. But the language stuck.In that same book, Friedman offered a full list of central bank tools. The Fed could supervise or regulate banks. It could conduct specific credit policy, encouraging or discouraging different kinds of loans. Or it could encourage or discourage credit overall, in particular by buying and selling securities on the open market. Friedman was not the only 20th-century influence on monetary policy. But it is hard to overstate his power to define what was and was not the proper job of a central bank. In his Program, he swept supervision and specific credit policy off the table, and stated that open market operations were monetary policy.Ben Bernanke won his Nobel this year for his historical work on the way bank collapses lead to economic collapses, as the remaining healthy banks have trouble figuring out who gets credit. It is indeed a happy coincidence that he was the Fed chair during the financial crisis, as he worked with Congress and the White House to find creative ways to keep banks from collapsing. But Bernanke was also chair for several years after the crisis. He wrote the plans for how the Fed would think and react, not just in a crisis but in the course of its normal work. When the Fed conducted its policy review in 2019 and 2020, it did not really change anything. Jay Powell is the one speaking to the press, but it is still today Ben Bernanke’s Fed.Bernanke increased the pace at which the Fed published its internal projections, reasoning that it was bad to surprise markets and that, in fact, it might be useful to guide them more regularly and clearly on what was coming. As other central bankers were doing, he adopted an inflation target. But Bernanke, who as a grad student had studied Friedman’s monetary history closely, also stayed within the lines that Friedman had drawn so clearly in 1959. Regulation and specific credit remained off the table as monetary policy tools. The Fed’s one tool was the desk on Liberty Street in New York where it bought and sold Treasuries and the securities of federal agencies on the open market.The problem now is not that Friedman and Bernanke were wrong. You can be right for a time, and then when things change you do something different. But there does not seem to be any urgency at the Fed over tools. For years, the Fed failed to reach its inflation target and, well, there is a lag. These things happen. Now, using the same framework, it is not clear that the Fed is bringing inflation back down to target, leaving Powell behind the podium talking about recent research on lags.Even Bernanke himself, in his most recent work, 21st century Monetary Policy, closes by considering tools that other central banks have tried — buying stocks and corporate bonds, offering funding for specific kinds of bank loans. He even briefly mentions buying bank loans, as the Fed did during the pandemic. But he doesn’t see the Fed pressing Congress for the regular use of these tools anytime soon, or Congress granting them. The Fed is pulling up and down on a lever that may not be attached to anything, hoping it gets lucky. Who knows? It might. The lags are long and variable. More

The remarks by Xuan Changneng, deputy governor of the People’s Bank of China (PBOC), come as COVID-19 disruptions have snarled global logistics chains and pressured the world’s second-largest economy.”In recent years, protectionism, geopolitical tensions and COVID have continued to affect the stability of the global industrial supply chain, disrupting the global economic order, dragging down economic growth and exacerbating inflationary pressure,” Xuan was quoted by state-owned Shanghai Securities News as saying.He added that China’s central bank would continue to push forward the development of supply chain financing, support key areas and COVID-hit industries through structural monetary policy tools, and improve financing efficiency.The deputy PBOC governor also reiterated that the yuan exchange rate expectations have been generally stable so far this year and played a role of macroeconomic stabiliser. More

The action will bring the aggregate balance – the key gauge of cash in the banking system – below HK$100 billion. It will decrease to HK$96.977 billion on Tuesday, a Hong Kong Monetary Authority (HKMA) spokeswoman said on Saturday.The Hong Kong dollar is pegged to a tight band of between 7.75 and 7.85 versus the U.S. dollar. While analysts and other market participants have been watching the balance approach the HKD$100 billion mark with a view on potential market stresses, the immediate impact seems to be on interest rates.The HKMA has bought Hong Kong dollars worth about US$30.7 billion from the market through 40 rounds of intervention since the Federal Reserve began raising rates in March. Its intervention has boosted local yields alongside those on U.S. dollar assets.($1 = 7.8493 Hong Kong dollars) More

TOKYO (Reuters) – The Japanese government warned on Saturday that new electric vehicle tax credits in the United States could ultimately deter further investment by the Japanese and hit employment in the world’s biggest economy.In a statement, the government raised a number of concerns about the tax credits in the Inflation Reduction Act (IRA), which are designed to build more resilient supply chains as the United States aims to reduce exposure to China. More