Russia tests digital currency trading, the EU prepares trade policies if Donald Trump wins the US election, China's gold production increases, the world stands firm against many tensions... are the outstanding world economic news of the past week.
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| The EU is developing a two-step trade strategy if candidate Donald Trump wins the 2024 US election. (Source: Atlantic Council) |
World economy
Global economy withstands many stresses
Optimism about global growth prospects for this year and next is rising, but the risk of higher inflation remains elevated despite economists sticking to their forecasts for interest rate cuts, a Reuters poll of hundreds of economists showed.
The global economy is forecast to grow 3.1% this year and next, up from the 2.9% and 3.0% forecasts in the April poll and roughly in line with the latest projections from the International Monetary Fund (IMF).
That optimism contrasts with worries earlier this year about whether the U.S. economy could absorb the impact of a sharp monetary tightening cycle without falling into recession, although concerns remain about the number two economy, China.
The global economy remains resilient to a number of stresses and strains, including the tightening cycle of monetary policy over the past two years, said Douglas Porter, chief economist at financial services firm BMO Capital Markets.
However, even with a brighter economic outlook, many central banks are still expected to cut interest rates at least twice by the end of the year.
Among major central banks, economists expect the US Federal Reserve (Fed) and the Bank of England to cut interest rates twice this year. The European Central Bank (ECB) is expected to cut interest rates three times.
Overall, 56% of respondents to the survey’s inflation question said prices were more likely to rise than fall over the rest of 2024. The same was true for the interest rate outlook.
America
* On July 31 local time, after a two-day policy meeting, the US Federal Reserve (Fed) decided to continue keeping interest rates at the current level, but opened the door to cutting lending costs at the next meeting in September, in the context of positive inflation developments and approaching the 2% target.
In a statement released at the end of the meeting, the Fed decided to keep its benchmark interest rate in the range of 5.25-5.50%, while noting that inflation continued to show some progress toward the agency's 2% target.
China
* China's manufacturing activity continued to decline in July 2024, marking the third consecutive month of decline, according to the National Bureau of Statistics (NBS).
The manufacturing purchasing managers' index (PMI) stood at 49.4 in July 2024, down slightly from 49.5 in June 2024. The latest figure was in line with Bloomberg 's forecast based on a survey of analysts.
Three straight months of decline in the key manufacturing sector is a worrying sign for the country's policymakers and calls for more state support to boost the world's second-largest economy.
* According to data released at the 2024 China International Gold Conference recently held in Shanghai, in the first 6 months of 2024, the world's second largest economy's gold output was 179,634 tons , up 0.58% year-on-year; meanwhile, the amount of gold sold was 523,753 tons, down 5.61% year-on-year.
Europe
* The European Council has placed seven European Union (EU) member states under formal sanctions for breaching the bloc's budget rules, a move that could lead to unprecedented penalties unless the seven countries take corrective measures.
Accordingly, the European Council has adopted decisions determining that the budget deficit in 7 member states has exceeded 3% of Gross Domestic Product (GDP), thereby violating EU financial regulations. These countries include Belgium, France, Italy, Hungary, Malta, Poland and Slovakia.
The seven countries will have to submit their medium-term plans for how they will address the breaches in September, and the European Commission will then assess the plans in November 2024, detailing the roadmap they must follow to restore financial health.
* Passenger traffic at European airports returned to pre-Covid-19 levels in the first half of 2024, as the aviation industry recovers.
According to the announcement of Airports Council International Europe (ACI Europe) on July 31, the number of passengers in the first half of this year increased by 9% compared to the same period in 2023 and increased by 0.4% compared to the first half of 2019 - before the Covid-19 outbreak.
International air traffic is the main driver of growth, rising 10.3% in the first half of 2024 compared to the same period in 2023, while domestic traffic is up 4.2%, ACI Europe said.
* On July 30, the Russian State Duma (Lower House) passed a law allowing cross-border payments and exchanges using digital currencies to be tested from September 1.
The Central Bank promised that the first payments in cryptocurrency in a test mode will be implemented before the end of this year.
The new bill allows to solve many issues related to payments to foreign partners, legalizing a real phenomenon - the so-called mining, that is, the creation of cryptocurrencies, said the head of the Duma Committee on Financial Markets Anatoly Akskov.
* British oil giant BP has announced a sharp drop in profits in the first half of 2024 due to asset depreciation and falling revenue. Specifically, BP's after-tax profit in the first half of this year fell 79% to $2.13 billion, compared to the corresponding level of $10 billion in the first 6 months of last year. The group's revenue also fell 8% to $98 billion in the above period.
Earlier this July, BP warned the market that its profits would be hit hard by capacity cuts at refineries in Germany.
* The EU is developing a two-step trade strategy if candidate Donald Trump wins the 2024 US presidential election.
EU officials see the approach as the best response to Mr Trump’s pledge to impose a minimum 10% tariff, which they estimate could reduce EU exports by around 150 billion euros ($162.5 billion) a year.
“We have to demonstrate that we are partners with the US, not a problem,” said a senior EU official.
* Germany's economic crisis may last longer than many experts feared. According to the German Federal Statistical Office on July 30, the German economy shrank by a minimum of 0.1% in the second quarter compared to the previous quarter. In the first quarter of this year, the German economy grew by only 0.2% after shrinking by 0.4% in the last quarter of 2023.
The reasons for the German economy's lack of vitality continue to be a combination of external influences and internal factors. In particular, the industrial sector, which is the mainstay of the economy, has been weak recently. Weak orders and declining production are mainly due to lower demand from abroad.
Japan and Korea
* The Bank of Japan (BoJ) on July 31 decided to raise its policy interest rate to around 0.25% and reduce the scale of government bond purchases to 3,000 billion Yen (about 20 billion USD), marking a new step in the process of normalizing monetary policy to respond to the weakening Yen.
After a two-day policy meeting, the BoJ decided to raise short-term interest rates from the previous 0-0.1%. The BoJ will also cut the amount of government bonds it buys by 50%, from 6 trillion yen per month until March 2026 to 3 trillion yen per month.
* Private rice inventories in Japan fell to 1.56 million tons in June, the lowest since comparable data began to be collected in 1999 and down about 20 percent from a year earlier, the Ministry of Agriculture, Forestry and Fisheries said on July 30. The decline was due to a surge in tourists boosting demand for rice and last summer's hot weather affecting crops.
With high temperatures expected to continue this summer, there are concerns that inventories could continue to decline and lead to an increase in rice prices.
* According to the Korea Customs Service, the country's automakers exported passenger cars worth $17.8 billion in the second quarter of 2024, up 6.8% year-on-year. This is the highest quarterly increase ever and the ninth consecutive quarter of increase.
In the first 6 months of 2024, auto exports increased by 4.9% compared to the same period last year to 33.6 billion USD, also a record level in 6 months. Meanwhile, auto imports decreased by 25.3% to 3.4 billion USD in the second quarter of 2024, and was the 4th consecutive quarter of decline.
ASEAN and emerging economies
* On July 27, Foreign Ministers of the Association of Southeast Asian Nations (ASEAN) countries, along with Japan, China and South Korea, agreed to strengthen economic and financial cooperation by strengthening the monetary safety net.
ASEAN+3 has increased the operational flexibility of the Chiang Mai Initiative for Multilateralization, which came into effect in 2010, to address short-term liquidity constraints, aiming to prevent a recurrence of the 1997 Asian currency crisis.
Japanese Foreign Minister Yoko Kamikawa stressed the importance of strengthening a free and open international order based on the rule of law to ensure the region's continued stable economic growth.
* The Nusantara Capital Authority (OIKN) has tested a flying taxi prototype at Aji Pangeran Tumenggung Airport in Samarinda, East Kalimantan.
“The unmanned aerial vehicle (AUV) flew for about 10 minutes at an altitude of 50 meters and a speed of 50 kilometers per hour,” said Mohamed Ali Berawi, deputy director of green and digital transformation at OIKN.
He explained that the flying taxi trial in Nusantara is the first step in realizing efficient and environmentally friendly urban air transport in Indonesia. This is a testament to Indonesia's commitment to developing future transportation technology.
* Thailand's Commerce Ministry said on July 30 that the country expects to export 8.2 million tons of rice this year , up from the previous forecast of 7.5 million tons, thanks to demand from major markets, higher expected output and a weak local currency.
In the first half of 2024, Thailand exported 5.08 million tonnes of rice, up 25% from a year earlier.
Rice output is expected to be higher in the last quarter of the year as the impact of the El Nino weather phenomenon has eased, according to Ronnarong Phoolpipat, director-general of the Department of Foreign Trade under the Thai Ministry of Commerce.
* On July 31, the Singapore Carbon Market Alliance (SCMA) - a national platform that helps "connect" carbon credit project developers with potential buyers - was launched in Singapore.
SCMA will help clients source high-quality credits and identify credible projects as the Alliance will process projects that provide credits that are compatible with the Paris Agreement on climate change. Singapore-based companies can purchase these credits to advance their climate goals and partially offset carbon taxes.
Source: https://baoquocte.vn/kinh-te-the-gioi-noi-bat-267-18-nga-thu-nghiem-tien-so-eu-don-duong-neu-ong-trump-thang-bau-cu-my-san-luong-vang-trung-quoc-tang-280887.html
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