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| Liquefied natural gas (LNG) project in Russia's Arctic. (Source: Novatek) |
World economy
Global economy 2024 growth exceeds forecast
Investment bank Goldman Sachs said the global economy will grow more than expected in 2024, thanks to strong income growth and confidence that the worst effects from sharp interest rate hikes are over.
The global economy is expected to grow 2.6% next year, according to Goldman Sachs, above the 2.1% forecast by analysts surveyed by Bloomberg. The US economy is expected to continue to outpace other developed markets, with growth of 2.1%.
Goldman Sachs also said that tight monetary and fiscal policies are unlikely to pose any headwinds, with policymakers in developed markets unlikely to cut interest rates before the second half of 2024 unless economic growth slows more than expected.
The bank stressed that inflation continued to cool in emerging market economies and the Group of 10 (G10) advanced economies, and is expected to decline further.
The bank's economists forecast that the decline in inflation this year will continue next year, with core inflation falling from 3% currently to an average of 2-2.5% in the G10 (excluding Japan).
US economy
* According to the International Monetary Fund (IMF), major economies such as the US and China have shown many signs of recovery, but there are still many risks .
In the United States, consumer inflation expectations have rebounded to their highest level since 2021, driven by continued increases in gas prices. Data from the U.S. Census Bureau shows that inflation continues to cause significant financial strain for many Americans.
U.S. households used more credit cards in the third quarter of 2023. Strong spending helps boost economic growth. But paying down credit is becoming less effective among younger groups like Millennials.
Chinese Economy
* China's imports of semiconductor (chip) manufacturing equipment increased more than 90% in October 2023 compared to the same period last year, showing that the world's second-largest economy's chip production capacity is improving , as the supply of chips from outside China is affected by trade controls imposed by the US and its allies.
Imports of machinery and equipment used to produce semiconductors, or integrated circuits, rose 93% in the three months through September 2023 to 63.4 billion yuan ($8.7 billion), according to Chinese customs data.
Notably, imports of lithographic equipment increased fourfold during the same period.
* China's industrial output and retail sales both posted stronger-than-expected growth in October 2023. But the world's second-largest economy remains weak, with the property sector still struggling to find a way to recover.
Industrial output rose 4.6% in October from a year earlier, data from the National Bureau of Statistics (NBS) showed, up from a 4.5% gain in September and above the 4.4% forecast by analysts polled by Reuters . It was also the strongest increase since April 2023.
Meanwhile, China's retail sales rose 7.6% in October, much higher than the 5.5% increase in September and the fastest increase since May. Analysts had predicted a 7% increase in retail sales.
European Economy
* The European Union (EU) on November 13 agreed on the Essential Raw Materials Act , aiming to ensure supply and reduce dependence on other countries.
The EU is particularly concerned about the risk of falling behind in the transition to clean technology, an area where China has made great strides, thanks to its access to raw materials, while the US has spent billions of dollars supporting this sector.
Essential raw materials such as cobalt, lithium and tungsten are used in most of today's electronic products such as smartphones. China is gaining an edge in many clean technology areas such as chips, critical minerals, batteries and solar panels.
* According to the IMF, the European economy is likely to avoid recession and have a "soft landing" soon. However, the continent will still need several more years to bring inflation back to the 2% target.
Specifically, the IMF analyzed that the European economy is unlikely to collapse even though the European Central Bank (ECB) has continuously raised interest rates for over a year to curb high inflation.
* Russia recently announced that it will not abandon its plan to increase liquefied natural gas (LNG) production to 100 million tons per year despite US sanctions.
In a new package of sanctions announced this month, the US targeted a major Russian entity involved in the development, operation and ownership of a major project in Siberia called Arctic LNG-2. Developing LNG infrastructure is a top priority for Moscow’s energy sector, and Russian companies have found ways to overcome such obstacles.
* The German economy continues to face many difficulties . According to preliminary data from the German Federal Statistical Office (Destatis), the rate of businesses filing for bankruptcy in October 2023 increased by 22.4% compared to the same period last year. The increase was 19.5% in the previous September. Since June, the rate of businesses filing for bankruptcy has increased steadily and has always been in double digits compared to the same period last year.
On the other hand, Germany as an industrial hub is losing its appeal to investors. A survey by consulting firm Deloitte found that two-thirds of companies surveyed said they had already moved some production abroad. Meanwhile, 45% predicted that Germany would continue to fall behind other industrial hubs.
* Official data released on November 10 showed that the UK economy slowed down in the third quarter of 2023 due to rising inflation and interest rate hikes.
The UK's gross domestic product (GDP) did not grow in the last quarter, the Office for National Statistics (ONS) said, better than the 0.2% decline that markets had previously forecast, but worse than the 0.2% increase in the second quarter.
* In a recent exchange with his Indonesian counterpart Joko Widodo, Ukrainian President Volodymyr Zelensky said that Kiev plans to resume grain exports to this Southeast Asian country .
Zelensky said Ukraine was exporting grain through alternative routes and was ready to continue exporting to Indonesia. Kiev also tried to persuade Jakarta to join the “Grain from Ukraine” initiative.
Economy of Japan and South Korea
* Several of Japan's largest banks have revealed plans to increase shareholder returns, after posting record profits in the first half of this year.
Specifically, on November 14, Mitsubishi UFJ Financial Group announced a $2.6 billion share buyback program, after reporting that its second-quarter 2023 profit for the fiscal year (ending March 31) tripled compared to the same period last year.
Sumitomo Mitsui raised its full-year net income forecast to 920 billion yen from 820 billion yen and said it was preparing a plan to spend 150 billion yen ($989 million) on share buybacks. A day earlier, Mizuho Group announced an upward revision to its annual dividend forecast and earnings target, but did not announce a share buyback.
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| Amazon expands operations in Japan. (Source: National World News) |
* Amazon.com Inc. has invested more than 1.2 trillion yen ($8 billion) in Japan in 2022, up 20% from a year earlier, to boost the expansion of its logistics network and data centers.
Amazon Japan has opened large fulfillment centers in Hyogo Prefecture, near Osaka, as well as Kanagawa and Saitama Prefectures, near Tokyo, by 2022. Eighteen delivery stations that handle last-mile deliveries to customers have also been built.
The company's investment from 2010 to 2022 has reached over 6 trillion yen. More than 7 million items can now be delivered the next day nationwide, except for the northernmost main island of Hokkaido, and the areas eligible for contactless delivery have also expanded.
* According to Statistics Korea, the country's rice output reached 3.7 million tons in 2023 , down from 3.76 million tons the previous year.
The decline this year came as the total area of rice fields fell 2.6 percent year-on-year to a record low of 708,012 hectares.
The South Korean government has been taking measures to balance rice supply and demand, such as subsidizing farmers who grow “strategic crops” such as wheat, beans and rice.
Annual per capita rice consumption fell to an all-time low of 56.7 kg in 2022, from a record high of 136.4 kg in 1970.
ASEAN Economy and Emerging Economies
* The Lao government is focusing on developing renewable energy, not only to meet domestic demand but also to export with the goal of becoming a green energy supplier in Southeast Asia.
To realize this goal, on the evening of November 13, representatives of the Lao government and Naseng Wayo Renewable Resources and Investment Company Limited signed a Memorandum of Understanding (MoU) on the feasibility study of developing wind power plants in Savannakhet province and the project of a 500kV substation and transmission line connecting renewable energy power plants in Savannakhet province in central Laos with neighboring countries.
Accordingly, Naseng-Wayo and UPC Renewables companies will be approved by the Lao government to study and explore the possibility of developing wind power projects in Phin, Vilabouly and Atsaphone districts of Savannakhet province and develop 500 kV transformer stations, along with transmission lines connecting to neighboring countries for the purpose of buying and selling electricity.
* Indonesian Agriculture Minister Amran Sulaiman said on November 13 that the world's fourth most populous country may need to import up to 5 million tons of rice by 2024 due to the impact of the El Niño climate phenomenon on rice production. The 5 million tons of rice include 3.5 million tons imported this year and 2 million tons in 2024.
According to Mr. Amran, Indonesia's shift from being a self-sufficient rice producer to an importer was inevitable, stemming from the decline in domestic rice production due to the impact of El Niño.
* Malaysia plans to further strengthen its participation in China's Belt and Road Initiative (BRI) and explore broader economic partnerships with the world's second-largest economy in emerging growth areas such as sustainable development and green trade, Deputy Prime Minister Fadillah Yusof said on November 14.
According to Deputy Prime Minister Fadillah, Malaysia has proactively implemented key measures towards sustainable palm oil production and management. Currently, about 90% of the oil palm area is planted, amounting to 5.26 million hectares, with an impressive annual production capacity of up to 18 million tonnes.
Mr. Fadillah called on palm oil stakeholders to seize the expansion opportunities brought about by the growing economic and trade links between Malaysia and China. Malaysia believes that palm oil has great potential to become more prominent in the Chinese oils and fats market in a short period of time.
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