Russian agriculture is stable, Southeast Asian country discovers 'super large' gas field, good signal from US-China

More shipping lines return to the Red Sea region, Russia's agricultural exports grow positively, the US once again extends tax exemptions for hundreds of Chinese products, a Southeast Asian country discovers the world's largest gas field... are the world's outstanding economic news of the past week.

Nga sẵn sàng cung cấp mặt hàng ngũ cốc cho Cuba. (Nguồn: Reuters)

In 2023, Russia's agricultural exports will grow positively, with traditional cereals accounting for the largest share of export goods, about 38%. (Source: Reuters)

World economy

Shipping lines prepare to return to the Red Sea region

France’s CMA CGM said on December 26 it was increasing the number of ships passing through the Suez Canal. It is the latest container shipping company after Maersk to resume operations in the Red Sea following a US-led effort to prevent attacks by Yemen’s Houthi rebels on commercial vessels.

Shipping companies are assessing whether it is safe to return to the route after the US announced a multinational maritime security initiative in the Red Sea. CMA CGM said in a statement that it had conducted an “in-depth assessment of the security situation” in the area.

“We are currently developing plans to gradually increase the number of vessels transiting the Suez Canal. We are constantly monitoring the situation and are ready to reassess immediately and adjust our plans if necessary,” the company said.

In a statement on its website on December 26, CMA CGM listed 28 ships diverted around South Africa's Cape of Good Hope, up from 22 on the previously published list.

CMA CGM is among the shipping lines that have added surcharges for ship diversions, increasing shipping costs since Houthi forces attacked commercial vessels.

Many of the world’s top shipping companies, including Maersk and Hapag-Lloyd, have stopped using the Red Sea route after Houthi forces began targeting commercial vessels this month, disrupting global trade through the Suez Canal. Instead, they are switching to a longer, more expensive route around southern Africa. The Suez Canal is the shortest sea route between Asia and Europe.

US economy

* According to the third and final report released on December 21 by the US Department of Commerce, the country's Gross Domestic Product (GDP) growth in the third quarter of 2023 was revised down to 4.9%.

The latest report showed that the US GDP grew by 4.9% compared to the 5.2% increase in the second report. According to the report, the US economy could have a soft landing in 2024.

However, even if a recession is avoided, real US GDP growth in the coming quarters could be hampered by tight monetary policy.

*US trade officials announced on December 26 that the country has once again extended tariff exemptions for hundreds of Chinese products that were previously subject to punitive tariffs. Accordingly, exemptions previously extended until December 31, 2023 will be extended until May 31, 2024.

The extension will allow for “an orderly lifting of exemptions,” while there will be cases where further extensions could be made to “allow for a shift in sourcing to the United States or third countries.”

Chinese Economy

*On December 25, the National Development and Reform Commission of China (NDRC) released the “Three-Year Action Plan on Building an Internationally Leading Business Environment in the Guangdong-Hong Kong (China)-Macao (China) Greater Bay Area” (Action Plan).

The plan proposes to optimize the market access environment , study the removal or relaxation of restrictions such as qualification requirements, shareholding ratio, industry access... for Hong Kong and Macao investors.

*A study by the travel planning service Aviasale shows that the number of air tickets booked to China from Russia in 2023 has increased 20-fold. According to the study, China is among the 15 most popular countries for Russian tourists. The average cost of a round-trip ticket from Russia to China in 2023 is 66,700 rubles ($725).

In general, Russians are starting to travel abroad more often. If in 2022, the share of domestic flights accounted for 81% of all bookings, this year this figure has dropped to 77%. In just one year, passengers spent 3.2 billion flight hours. Russians visited 163 countries and flew more than 30 billion kilometers.

European Economy

* The German Federal Statistical Office (Destatis) said on December 22 that housing prices in the country in the third quarter of 2023 fell by an average of 10.2% compared to the same period last year, the sharpest decline since these data were collected in 2000.

The biggest price falls were recorded in major cities such as Berlin, Hamburg, Munich, Cologne, Frankfurt am Main, Stuttgart and Dusseldorf. In these cities, prices for detached and duplex houses fell by 12.7%, while prices for apartments fell by 9.1%.

Falling demand due to high interest rates and financing costs has caused real estate prices to fall in the first half of this year. In the first and second quarters of 2023, residential real estate prices fell by 6.8% and 9.6%, respectively.

*Of the world's 10 most traded currencies, the British pound is the best performing currency in 2023. Every £100 taken abroad was worth nearly $121 at the start of the year, but now it's worth more than $125. That's not a bad performance considering the greenback has gained against most major currencies this year.

The strength of the pound has not only benefited tourism, it has also helped to curb inflation in the country by reducing the cost of goods and services bought from abroad. Of the top 10 most traded currencies, only the pound and the Swiss franc have performed well this year.

*Russian Agriculture Minister Dmitry Patrushev recently said that this year, the country's agricultural exports are growing positively, with traditional grains accounting for the largest proportion of export goods (about 38%). Russia is still the world's leading wheat supplier . It is forecast that by the end of 2023, agricultural exports will reach more than 45 billion USD.

Mr. Patrushev commented that this will be a record figure for Russia. In 2024, with a bumper harvest and positive production dynamics in key areas, Russia is expected to maintain the current high level of exports.

*The Business newspaper reported on December 25 about the significant depletion of the reserves of Russia's National Welfare Fund (NWF), which was originally intended for re-registering aircraft from foreign lessors.

Of the 300 billion rubles ($3.2 billion) earmarked for these purposes, only 3.5 billion rubles remain. Most of this money was spent on payments for 86 Aeroflot planes, 45 S7 planes and 19 Ural Airlines planes.

The purchase of the aircraft from a foreign owner was made amid Western sanctions imposed in February 2022. The National Welfare Fund provided the funds in the form of a concessional loan with an interest rate of 1.5% for 15 years. The new owner of the aircraft is the leasing company NLK-Finance, controlled by the Federal Air Transport Authority of Russia.

Economy of Japan and South Korea

*According to the national wealth estimate released by the Japanese Cabinet Office on December 25, the country's nominal GDP per capita in 2022 is 34,064 USD. This is the first time in 14 years that this figure is the lowest among the Group of Seven (G7) countries due to the impact of the Yen's devaluation.

Japan's nominal GDP per capita fell from $40,034 in 2021 to 34,064 yen, dropping Japan one place among the Organization for Economic Cooperation and Development (OECD) member countries, from 20th out of 38 in 2021 to 21st out of 38 in 2022, for the first time since 1980.

*According to Nikkei Asia , the Japanese government will establish an umbrella organization for the fusion power industry by March 2024. The move aims to accelerate the commercialization of an energy source that is important for Japan in its decarbonization process and ensuring future energy security.

The new organization, tentatively called the “Fusion Energy Forum,” will bring together companies from the private sector, government and academia to develop technology and sales channels to commercialize the product.

*South Korea will tighten export controls on Russia and Belarus by significantly expanding the list of restricted items to include excavators, batteries and larger vehicles, related to the conflict in Ukraine, officials said on December 26.

Under the revised Strategic Goods Trade Regulation, South Korea has added 682 items related to heavy construction equipment, rechargeable batteries, aircraft parts, machinery and other items to the list of banned exports to Russia and Belarus. The new regulation will bring the total number of items on the list to 1,159 from the current 798.

The amendment is expected to come into effect in early 2024 following completion of due administrative procedures and issuance of Government guidance to exporters.

* The South Korean Ministry of Trade, Industry and Energy (MOTIE) said on February 25 that the government has decided to increase the 2024 research and development (R&D) budget for chips, batteries, displays, biotechnology, future cars and robots by 5.8% compared to this year to 2,000 billion won (1.5 billion USD) to enhance competitiveness in key industries.

The largest portion of the budget is for future cars at 355 billion won, up 10%. The budget will be used to support the development of micro-gap technologies for the green transition to electric and hydrogen vehicles, information and communications technology, artificial intelligence (AI) and autonomous vehicles.

ASEAN Economy and Emerging Economies

*Indonesia's upstream oil and gas agency (SKK Migas) has just announced the discovery of an additional gas field in the South Andaman Sea with reserves that are among the "largest in the world".

Mubadala Energy of the United Arab Emirates (UAE) has discovered additional reserves through the Layaran-1 exploration well in the South Andaman Block, located about 100 km north of Sumatra. Mubadala said the discovery could contain more than 6,000 billion cubic feet (bcf).

*The Malaysian economy posted a trade surplus of 12.41 billion Ringgit (RM; equivalent to 2.68 billion USD) in November 2023 , maintaining the surplus momentum of the last 43 consecutive months.

According to a report by the Malaysian Ministry of Investment, Trade and Industry (MITI), in November 2023, the country's exports reached RM122.10 billion, down 5.9% year-on-year. Meanwhile, imports increased by 1.7% to RM109.69 billion. Compared to October 2023, exports decreased by 3.2%, imports decreased by 3.1% and the trade surplus decreased by 3.8%.

Overall, during the January-November 2023 period, trade is expected to decline by 7.5% year-on-year to RM2.413 billion.

* Thai Prime Minister Srettha Thavisin said on December 26 that the country's Cabinet has approved the Budget Bill for fiscal year 2024 after many months of delay.

The bill seeks 3.48 trillion baht (about $100 billion) in funding for fiscal year 2024, which began on October 1, 2023. The bill was not passed in time for the start of the fiscal year due to delays in forming a new government after a general election in May 2023.

According to Mr. Srettha, the budget for fiscal year 2024 is expected to increase by 295 billion baht (about 8.5 billion USD) compared to fiscal year 2023, equivalent to an increase of 9.3%.

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