World economy
 |
| IMF predicts world economic growth will reach 3.1% in 2024. (Source: Bloomberg) |
IMF raises global economic growth forecast
On January 30, the International Monetary Fund (IMF) raised its global growth forecast, citing the unexpected strength of the US economy and financial support measures in China.
Specifically, the IMF predicts global growth in 2024 will reach 3.1%, up 0.2 percentage points from the previous October forecast, followed by growth of 3.2% in 2025.
Major emerging market economies including Brazil, India and Russia also performed better than previously forecast.
The IMF believes that the likelihood of a recession after a period of strong growth has decreased, despite new risks from soaring commodity prices and supply chain problems due to geopolitical turmoil in the Middle East.
The fund also forecasts growth this year of 2.1% in the US, 0.9% in both the euro zone and Japan, and 0.6% in the UK.
“What we saw is that the global economy was very resilient in the second half of last year and that will continue into 2024,” said IMF chief economist Pierre-Olivier Gourinchas.
The latest official figures show the US economy beat economists' expectations in the fourth quarter of 2023, with growth of 3.3%.
The IMF now forecasts China will grow 4.6% this year, up from 4.2% in its October forecast but down from 5.2% growth in 2023.
On the other hand, the IMF's global economic growth forecast is still lower than the average global growth from 2000 to 2019 of 3.8.
US economy
* According to Bloomberg news agency on January 29, the US Treasury Department reduced its estimate of the amount of money it needs to borrow in the first quarter of 2024. Accordingly, it is estimated that the Treasury Department will borrow about 760 billion USD from January to March 2024, down from the 816 billion USD forecast given in October 2023. The agency's cash balance at the end of March is estimated to remain at 750 billion USD.
Borrowing demand was lower due to higher expected net financing flows and more cash available at the start of the quarter than expected, the ministry said.
* The number of layoffs in the US technology sector increased significantly in January 2024. According to Layoffs.fyi , since the beginning of 2024, about 23,670 people have been laid off from 85 technology companies. This is the highest level of layoffs since March 2023, when nearly 38,000 people in the technology sector were laid off.
The reason for this wave of layoffs is said to be because companies need to balance their budgets for next year and increase work efficiency. The development of artificial intelligence (AI) also causes companies to cut staff to invest more in developing AI products.
* Chinese and US officials resumed stalled talks on January 30 on halting production of ingredients in the powerful painkiller fentanyl, which can also be abused as a drug more potent than heroin. The US hopes the discussions will provide a platform for continued coordination to tackle the production, financing and distribution of illicit drugs.
Chinese Economy
* China’s luxury sales are recovering, though they have not yet returned to 2021 levels. Industry analysts and financial reports from major brands are signaling new growth opportunities compared to pre-pandemic levels.
Luxury giant LVMH said its fashion and leather goods sales in China grew more than 30% in December 2023.
According to consultancy Bain & Company, the personal luxury goods market in mainland China grew by about 12% last year to more than 400 billion yuan ($56.43 billion). Although it has yet to return to 2021 levels due to weak consumer sentiment and a return to overseas luxury purchases, Bain & Company still expects the domestic luxury market to grow in the coming years.
* Recently, the Ministry of Housing and Urban-Rural Development of China said that the country will provide more support loans for the struggling real estate sector in the coming time. A national agency will be established to monitor the loans.
China has issued several rounds of support for its struggling property sector, with Beijing saying this week that domestic banks provided nearly 10 trillion yuan ($1.4 trillion) in loans to the sector last year.
European Economy
* In 2023, Russia's oil exports to the Asia-Pacific region will reach 193 million tons, while in December 2023, Russian Deputy Prime Minister Aleksander Novak said that total oil exports for the year could reach 247 million tons.
Last year, Russia also collected 30,000 billion rubles (about over 330 billion USD) into the budget from OPEC+ contracts accumulated over the past 8 years. For comparison, the Russian budget revenue in 2023 is about over 26,000 billion rubles, spending over 29,000 billion and the amount of Russian assets currently frozen abroad due to the conflict in Ukraine is worth 300 billion USD.
Russia's oil exports to 26 Asia-Pacific countries reached 87 million tons in 2020 and 25 million tons in 2013. This year, Russia increased investments in the oil industry to 2,700 billion rubles.
* The European Commission (EC) announced that the European Union (EU) and the United States held the fifth meeting of the EU-US Trade and Technology Council (TTC) in Washington DC on January 30. The meeting is an opportunity for ministers to grasp the progress of the TTC's work and provide political guidance on key priorities for the next ministerial TTC conference to take place in Belgium in the spring.
Both sides expressed a common and strong desire to continue to increase bilateral trade and investment, cooperate on economic security and emerging technologies, as well as promote common interests in the digital environment.
On the sidelines of the TTC meeting, both the EU and the US agreed to continue exploring ways to facilitate trade in goods and technologies critical to the green transition, including by strengthening cooperation on conformity assessment.
* Figures released by the German Federal Statistical Office (Destatis) on January 30 showed that the German economy decreased by 0.3% in the fourth quarter of 2023 compared to the previous quarter .
In addition to the weak GDP figures for the final quarter of last year, the economy has shown many negative aspects. The Ifo Institute's business climate index also fell surprisingly sharply in January. The institute predicts that the economy will shrink by another 0.2% in the first quarter of this year. If there are two consecutive quarters of negative growth, the German economy will fall into a technical recession.
Economists in Munich have just cut their overall growth forecast for the German economy in 2024 to 0.7%.
* The number of companies going bust in the UK has risen to a 30-year high due to the impact of high borrowing costs, rising inflation and weak consumer demand.
According to quarterly data released by the UK Insolvency Service, 25,158 companies were declared bankrupt across England and Wales in 2023, the highest level since 1993.
Thousands of businesses have been pushed into insolvency by interest rates at levels not seen in more than a decade, inflation, weak consumer confidence and rising input costs. Businesses may receive some support in the coming months as markets expect the Bank of England to cut interest rates.
Economy of Japan and South Korea
* The Japanese government is planning to spend 3 trillion yen (about $20.3 billion) over the next 15 years to subsidize the production of "clean" hydrogen. The move aims to strengthen cooperation with the private sector to develop a domestic supply chain for the energy source.
Hydrogen fuel, which emits only water as a byproduct, is seen as a next-generation energy source as countries pursue decarbonization. But the price of hydrogen, including production through supply, is estimated to be 10 times higher than natural gas. To spur decarbonization, Tokyo is looking to subsidize the cost difference for companies producing “clean” hydrogen, known as “blue” or “green” hydrogen.
* South Korean exports to China fell to a 30-year low in 2023 amid intensifying US-China rivalry and Seoul's strategic pivot, data from the Korea International Trade Association (KITA) showed on January 28.
According to KITA, South Korea accounted for 6.3% of China's imports in 2023, down from 7.4% in 2022. In 2022, South Korea ranked second on the list of China's top imports, after Taiwan (China). However, in 2023, South Korea was surpassed by Taiwan and the United States, accounting for 7.8% and 6.5% of China's total imports, respectively.
* The Ministry of Trade, Industry and Energy of South Korea announced on January 30 that online platforms will account for more than 50% of total retail sales in the country for the first time in 2023 thanks to services and technologies that enable fast and convenient ordering and delivery.
The combined revenue of 25 major online and offline retailers rose 6.3 percent in 2023 to 177.4 trillion won ($133.35 billion), according to the ministry.
Revenue from traditional retailers increased by only 3%, while revenue from online stores increased by 9%. Of the total revenue, online sales accounted for 50.5%, and for the first time, online sales revenue exceeded traditional sales revenue .
ASEAN Economy and Emerging Economies
* According to data released by the Australian Bureau of Statistics (ABS) on January 30, retail sales in the country in December 2023 increased only slightly by 0.8% compared to the same period last year, in the context of the pressure on the cost of living that significantly impacted spending activities during the past Christmas. ABS figures show that consumers nationwide spent 35.1 billion AUD (23.16 billion USD) in December 2023.
*The Indonesian government aims to attract at least 1,000 individual investors through the implementation of a “golden visa” policy, a type of document that allows foreigners to stay in the country for a long time. The program allows investors to stay in Indonesia for a period of five to 10 years, depending on the amount of money they invest in the country.
Individual investors planning to set up a company in Indonesia with an investment of at least USD 2.5 million will be eligible for a five-year stay. This stay is extended to 10 years if the investment exceeds USD 5 million.
* On January 29, the Peruvian Ministry of Foreign Affairs affirmed that the South American country's achievement of the status of "Development Partner" of the Association of Southeast Asian Nations (ASEAN) will open a new stage of development in bilateral relations.
In a statement, the ministry said Peru was granted “Development Partner” status by ASEAN at the recent ASEAN Foreign Ministers’ Retreat in Luang Prabang (Laos), thereby becoming the sixth country in the world, after Germany, France, Italy, the Netherlands and Chile, to receive this partnership status.
The Peruvian Ministry of Foreign Affairs stated that by becoming a “Development Partner” of ASEAN, this South American country will increase its presence in Southeast Asia, while opening up opportunities to increase trade between Peru and the Association’s member countries.
Source
Comment (0)