The reasons for the global oil refining industry's declining profits, the EU suing China at the WTO, BRICS could bring many opportunities to Malaysia, Germany's lowest growth in the Eurozone... are the outstanding world economic news of the past week.
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| The European Commission has filed a complaint with the World Trade Organization (WTO) over China's investigation into European Union (EU) dairy products, which was launched after the bloc imposed import duties on electric vehicles from the Asian country. (Source: Shutterstock) |
World economy
Global refineries face sharp drop in profits
* Oil refineries in Asia, Europe and the US are facing their lowest profit margins in years, marking a downturn for an industry that had enjoyed a surge in profits after the pandemic.
The decline is a further sign of weak consumer and industrial demand, particularly in China, as economic growth slows and electric vehicles become more popular. New refineries coming online in Africa, the Middle East and Asia have also added to the pressure.
Refiners such as TotalEnergies and trading companies such as Glencore have seen huge profits in 2022 and 2023, benefiting from supply shortages caused by Russia-Ukraine tensions, shipping disruptions in the Red Sea and a recovery in demand after the pandemic.
It appears that the refining industry's super-profit cycle of the past few years may be ending, with supply from new refineries almost meeting fuel demand, said analyst Rory Johnston at Commodity Context.
Refining margins in Singapore, a benchmark for the Asian region, fell to $1.63 a barrel on September 17, a seasonal low since the same time in 2020, according to LSEG data.
Gulf Coast gasoline margins, which exclude gains related to renewable blending obligations, averaged $4.65 a barrel on Sept. 13, down from $15.78 a barrel a year ago, and diesel margins were just over $11, compared with more than $40 in 2023, according to data from the Oil Price Information Service.
Global diesel surplus due to weak demand is one of the main reasons for weak margins.
America
* The US Commerce Department will announce a proposal next week to ban Chinese software and hardware from connected and self-driving vehicles on US roads. The new rule, if approved, would block the import, sale or purchase of software, hardware or systems critical to autonomous driving in cars and similar vehicles.
In recent times, the US government has repeatedly expressed concerns about the risk of Chinese companies collecting data on drivers and infrastructure in the US, as well as the ability to remotely interfere with Internet-connected vehicles and navigation systems.
Industry experts say the move is an increase in US control and restrictions on Chinese vehicles, software and components. The US has also imposed steep tariffs on imports from China. The US Department of Commerce plans to allow 30 days for public comment before finalizing the regulation.
China
* On September 24, Chinese officials said that the country plans to increase core capital for six major commercial banks to strengthen and enhance the stable operation and development of major commercial banks, but the amount of additional capital was not disclosed.
The six commercial banks include: Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC), Bank of China (BoC), China Construction Bank (CCB), Bank of Communications (BCM) and Postal Savings Bank of China (PSBC).
* Sales of foreign-branded smartphones, including Apple Inc., in the world's second-largest economy fell 12.7 percent year-on-year in August to 1.87 million units from 2.142 million, according to data from the China Academy of Information and Communications Technology (CAICT).
According to CAICT, total mobile phone sales in China in August 2024 increased 26.7% year-on-year to 24.05 million units.
Europe
* On September 23, the European Commission (EC) complained to the World Trade Organization (WTO) about China's investigation into European Union (EU) dairy products, which was conducted after the union imposed import duties on electric vehicles from the Asian country.
This is the first time the EU has taken such action as soon as an investigation has begun, rather than waiting until the investigation has led to trade measures against the bloc.
The EC said it would ask the WTO to set up a dispute settlement panel if consultations failed to produce a satisfactory solution. WTO dispute settlement panels typically take more than a year to issue a ruling.
* The new Economic Outlook report of the Organization for Economic Cooperation and Development (OECD) shows that, in the context of the world economy gradually stabilizing, major economies in the Eurozone such as France, Italy and Spain are all performing better than Germany.
Germany remains one of the slowest-growing industrial nations – expected to grow just 0.1% this year, down from the 0.2% forecast by the OECD in May.
Germany will remain at the bottom of the table in 2025, with Europe's largest economy forecast to grow by 1%, down from the 1.1% forecast in May, according to the OECD.
* According to data released by the Italian National Statistics Agency (ISTAT) on September 24, the country's Gross Domestic Product (GDP) has finally returned to its peak before the 2008 financial crisis.
Specifically, in 2023, Italy's GDP grew by 0.7%, 0.2% lower than the previous estimate. However, in 2022, the country's economy grew by 4.7%, up 0.7% from the previous estimate. And in 2021, the economy grew by 8.9%, up 0.6% from the previous data.
The figures show that Italy's GDP in 2023 will be higher for the first time than its pre-financial crisis peak in 2008, ISTAT said. According to the new data, Italy's GDP is now 0.2% higher than its peak in 2007.
Japan and Korea
* Bank of Japan (BoJ) Governor Kazuo Ueda said the bank may take time to carefully consider markets and economic conditions overseas when setting monetary policy, a comment that suggests the BoJ is in no rush to raise interest rates .
Mr. Ueda reiterated that the BoJ will raise interest rates if core inflation moves toward its 2% target as expected.
However, he warned of risks to the outlook, such as financial market volatility and uncertainty over whether the U.S. economy could achieve a soft landing. He said the BoJ needed to take time to carefully consider market movements and overseas economic conditions when setting monetary policy.
* South Korean commercial banks are struggling with falling profits overseas , largely due to a tough business environment in Southeast Asia, where they are trying to expand their presence.
The four largest South Korean lenders in Southeast Asia, KB Kookmin, Shinhan, Hana and Woori, reported a combined overseas net profit of 337.9 billion won ($253.07 million) in the first half of 2024. This was down 38.1% from 545.6 billion won in the same period last year.
* The Asian Development Bank (ADB) on September 25 announced the "Asian Economic Outlook September 2024", in which it forecasts that the Korean economic growth rate in 2024 will remain at 2.5% thanks to increased exports, mainly from the semiconductor and automobile industries.
This figure is higher than the 2.4% forecast by the Bank of Korea (BoK), but is similar to the forecast made in July 2024 by the International Monetary Fund (IMF) and the Korea Development Institute (KDI). The ADB had raised its growth forecast for Korea by 0.3% in July 2024.
Compared to the July 2024 forecast, ADB kept the economic growth outlook for Korea in 2025 unchanged at 2.3%, while maintaining its inflation forecast at 2.5% this year and 2.0% next year.
ASEAN and emerging economies
* ADB has approved a $500 million policy-based loan to support Indonesia's energy transition efforts.
Resource-rich Indonesia, which aims to achieve net zero carbon emissions by 2060, has been trying to reduce coal use in the energy sector with financial support from the Just Energy Transition Partnership (JETP), but disbursement has been slow.
Speaking at a recent press conference, ADB Country Director for Indonesia Jiro Tominaga said that Indonesia is at a critical juncture in its energy transition journey , and this loan supports Indonesia's efforts "to accelerate the transition to clean and sustainable energy".
* Malaysia's push to join the BRICS group of leading emerging economies could open up many opportunities for the country in emerging markets, paving the way for growth in sectors such as aerospace, electric vehicles and finance, economists say.
Economist Rajah Rasiah, University of Malaya, said that joining BRICS will help Malaysia gain easier access to the markets of member countries such as Brazil, Russia, India, China, South Africa, etc., and also stated that Malaysia has the conditions to borrow capital for infrastructure development from the bloc's New Development Bank. In addition, using its own currency in trade transactions will help Malaysia reduce its dependence on the US dollar.
* On September 25, the Thai government launched the first phase of a 145 billion baht ($4.3 billion) economic stimulus program , aiming to support 10,000 baht ($300) per person for about 45 million Thai citizens.
The first phase of the program, which starts today and is expected to be completed by the end of September, will distribute 10,000 baht in cash per person to 14.5 million welfare card holders and people with disabilities.
Banks in Thailand participating in the program began transferring money to people early this morning. For example, Kasikorn Bank is said to have started transferring money at 1:12 a.m. and Government Savings Bank at 1:50 a.m.
Source: https://baoquocte.vn/kinh-te-the-gioi-noi-bat-20-279-cang-thang-eu-trung-quoc-brics-co-the-mo-ra-nhieu-co-hoi-cho-quoc-gia-dong-nam-a-nay-duc-doi-so-eurozone-287788.html
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