Tag: GDP

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Health

Goldman cuts Southeast Asia GDP forecasts as delta variant spreads

Goldman cuts Southeast Asia GDP forecasts as delta variant spreads

Students, wearing face masks amid the Covid-19 pandemic, sit by a mural depicting the Indonesian flag at an Islamic junior high school in Banda Aceh on June 10, 2020.

Chaideer Mahyuddin | AFP | Getty Images

SINGAPORE — Covid-19 infections are surging in several major Southeast Asian economies, and that has led Goldman Sachs to cut its 2021 growth forecasts for most of the region.

The spread of the more transmissible delta variant has pushed daily Covid cases to record highs in Indonesia, Malaysia and Thailand in recent weeks. That has led to more stringent restrictions in Indonesia and Thailand, and an extension of restrictions in Malaysia, Goldman economists wrote in a Thursday note.

In the Philippines, the coronavirus spread has made loosening of social-distancing measures “more unlikely” this year, the economists added.

Renewed virus surges and tighter restrictions are likely to “weigh significantly more” on growth in the second half of 2021 than previously thought, the economists said.

Goldman slashed its growth forecasts by more than 100 basis points for Indonesia, Malaysia and Philippines. Singapore and Thailand saw a smaller cut by the bank.

Slow vaccination pace

The rapid climb in Covid infections across Southeast Asia has come as vaccination progress in the region — except for Singapore — has lagged many countries such as the U.S. and the U.K.

Singapore has one of the fastest vaccination rates globally, with over 41% of its population fully inoculated, according to the latest data compiled by online statistics portal Our World in Data.

But the rest of the region is much slower: Malaysia has fully vaccinated 12.4% of its population while Indonesia has inoculated 5.7% of its people fully, the data showed. Less than 5% of the populations in Thailand and the Philippines have been fully inoculated against Covid.   

Singapore, which tightened social-distancing measures in early May, started to ease restrictions last month. Goldman economists predicted that Malaysia will be the next to follow suit in the fourth quarter, while the other Southeast Asian economies will only do so in the first half of 2022.

Goldman said stronger global growth will benefit trade-oriented economies such as Singapore and Malaysia the most. Malaysia, which is a net commodity exporter, is also likely to gain from higher commodity prices, the bank said.

Meanwhile, “larger exposures to sectors like tourism, lower exposures to global trade, and limited policy buffers, are likely to push sequential growth lower in Indonesia and Thailand, and keep the sequential growth rebound more muted in the Philippines than our prior expectations,” it added.

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World News

Biden infrastructure plan would minimize U.S. debt, add to GDP: Wharton research

Biden infrastructure plan would cut U.S. debt, add to GDP: Wharton study

U.S. President Joe Biden stops at La Crosse Municipal Transit Utility in La Crosse, Wisconsin, the United States, on Jan.

Kevin Lemarque | Reuters

A bipartisan infrastructure deal by President Joe Biden and a group of senators would not only help economic growth but also reduce national debt, according to a new study by the University of Pennsylvania’s Wharton School.

Wharton School researchers said the additional $ 579 billion in new infrastructure spending would increase domestic production by 0.1% and reduce US debt by 0.9% by 2050.

“Over time, as new spending declines, IRS enforcement continues, and revenue increases from increased production, national debt will decrease 0.4 percent from baseline, and 0.9 percent in 2040 and 2050, respectively “Wrote the Wharton team.

Speaking to CNBC Tuesday, Wharton’s chief economist Jon Huntley said that improvements in public capital (roads, bridges, and other physical infrastructure) make private capital (trucks and trains moving goods for businesses) more productive over time .

CNBC policy

Read more about CNBC’s political coverage:

Fewer potholes and disruptions in rail traffic add up to US economic activity over the years and encourage further private sector investment.

The projected increase in GDP and the simultaneous reduction in national debt, albeit modest, is likely welcome news for the Democrats and Republicans who brokered the deal with the White House.

The entire package, approved by the bipartisan senatorial group and the Biden administration, approves spending of $ 1.2 trillion over the next five years. The additional $ 579 billion includes more than $ 300 billion for transportation projects, while $ 266 billion would be allocated to investments in digital, disaster, environmental and energy infrastructure.

Biden is in the middle of a road show promoting the plan and told the Wisconsin crowds Tuesday that it will “change the world for families” in Badger State.

The deal will “ensure” [high speed broadband] is available in every American household, including the 35% of rural families who currently forego it, “he added. The president is expected to travel to Michigan this weekend to further praise the deal.

Still, Biden’s transnational mission to generate support for the measure underscores the fragility of even bipartisan efforts to repair the country’s transport infrastructure. The president himself nearly doomed the deal last week when he said he would veto the infrastructure bill if it were not passed along with a larger bill backed entirely by Democrats.

He later withdrew from that promise when it became clear that the comments had angered Republicans.

The latest Wharton study comes months after the school analyzed the Biden government’s first infrastructure proposal, called the American Jobs Plan. This original plan included spending approximately $ 2 trillion over eight years and was estimated by Wharton to reduce economic output by 0.8% in 2050.

When asked why the bipartisan plan would increase GDP over the next 29 years while the original Biden plan would not, Huntley stated that the latest legislation does not include changes to the corporate tax rate and no minimum tax on book income.

By removing corporate tax hikes in the bipartisan plan, legislators have reduced negative tax distortions that would ultimately have reduced corporate investment incentives and household savings incentives.

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World News

Outlook for April-June quarter GDP amid Covid

Outlook for April-June quarter GDP amid Covid

Crowds of people are seen shopping during a weekly market at Kandivali.

SOPA Images | LightRocket | Getty Images

India is expected to see double-digit expansion in the three months ending in June — but economists warn that the data won’t be painting the full picture of the country’s growth trajectory.

South Asia’s largest economy released fourth quarter GDP data Monday that showed an expansion of 1.6% from the same period a year ago, driven mostly by state spending and manufacturing sector growth. Full year GDP is estimated to have contracted 7.3% compared to a 4% growth in the previous year.

Since February, India has been battling a devastating second wave of coronavirus that accelerated in April and peaked in early May. The infection forced most of India’s industrial states to implement localized lockdown measures to slow the spread of the virus.

“With the lockdowns which are there, we think that going ahead, the economy will tend to slow down,” Madan Sabnavis, chief economist at Care Ratings, said Tuesday on CNBC’s “Street Signs Asia.”

“The numbers which we get for the first quarter of fiscal 2022 — that is for the quarter ending in June — may be very much misleading,” he said. India’s fiscal year begins in April and ends in March the following year.

On (a) sequential basis, we are going to see a double digit contraction when we do a seasonally adjusted data, but on the year-on-year comparison, you are going to see a strong double-digit growth.

For the April-June quarter last year, the economy contracted 23.9% as a months-long national lockdown hammered the country. Economists argue that while the reported year-on-year figure for the current quarter will likely show a double-digit growth, the strong number will be due to the low base from last year’s negative print.

“On (a) sequential basis, we are going to see a double digit contraction when we do a seasonally adjusted data, but on the year-on-year comparison, you are going to see a strong double-digit growth,” Radhika Rao, an economist with Singapore’s DBS Group, said Tuesday on CNBC’s “Squawk Box Asia.”

“That’s because it’s coming on the back of a 24% drop the same time last year,” she added.

Still, experts agree that the economic impact of the second wave may not be as severe as the one seen last year. India has, thus far, avoided another national lockdown, allowing states to implement localized shutdowns instead. Economists agree that the country is generally on track to revive its growth but at a delayed pace.

Data is likely to show that consumption lost momentum this quarter on a sequential basis due to the second wave as households had to prioritize more of their spending on hospitalization and medical expenses, Rao explained.

“So, domestic demand, which is the main component for growth, is not going to look that good. Plus you have got contact-intensive services, most of which had been shut down,” she said, adding, “Only into June now, some of the states are starting to talk about reopening. But, certainly, it’s a very staggered and a very unpredictable path, in terms of the unwinding of restrictions.”

Many economists have trimmed their full fiscal 2022 growth predictions for India. Goldman Sachs, for example, lowered its full-year real GDP growth forecast from 11.1% to 9.9%.

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World News

GDP development goal over 6% is straightforward to succeed in, analysts say

GDP growth target over 6% is easy to reach, analysts say

China’s target of more than 6% growth for 2021 isn’t very telling as it’s easy to achieve – but that’s not necessarily a bad thing, analysts told CNBC this week.

“It’s almost the same as having no growth target there because it’s so easy to get to,” said Michael Hirson, head of the Eurasia Group for China and Northeast Asia.

Simon Baptist, chief economist at the Economist Intelligence Unit (EIU), echoed the same sentiment.

“It will be easy to get to,” he told CNBC’s Street Signs Asia on Thursday. “It’s kind of a goal that you have when you don’t really want a goal.”

Chinese Premier Li Keqiang announced last week that the country is targeting economic expansion of more than 6% this year. He spoke at the opening ceremony of the National People’s Congress in China.

Speaking to reporters on Thursday evening, at the end of the annual parliamentary session, Li said China’s target is not low. The 2021 target should be the same as 2022 to avoid large swings, he said.

“By setting the GDP growth target above 6%, we have left options open, which means that there may be even faster growth in actual delivery,” said the Prime Minister.

The EIU predicts China’s growth will be 8.5% this year, more than 2 percentage points higher than the official target, Baptist said.

Focus on quality

To be clear, having an easy-to-achieve goal isn’t pointless, analysts said.

Eurasia’s Hirson said this was in line with China’s desire to put quality over quantity.

“It brings a message home to local authorities and the rest of the system: don’t strive for growth goals, focus on the quality of growth, and I think that’s spot on,” he told CNBC’s Street on Thursday Signs Asia “.

Additionally, he noted that the country’s five-year plan does not have an average growth target, showing “persistent de-emphasis on reaching rigid” numbers.

Baptist from the EIU said previous growth targets have historically created “dangerous imbalances in the Chinese economy”, including debt accumulation, as the country pushed certain sectors to meet these “very ambitious goals”.

However, with the number low for 2021, these issues are unlikely to be fueled any further, he added.

“Indeed, the fact that it is so far below what China is likely to achieve only at a gallop shows that China’s economic policy will be a little tight and that fiscal and monetary support will decline,” he said.

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World News

Japan’s preliminary GDP knowledge forward; China, Hong Kong closed

Japan's preliminary GDP data ahead; China, Hong Kong closed

SINGAPORE – Stocks in Japan should rise on Monday as several markets in North Asia closed for the New Year holidays.

Futures indicated a higher open for Japanese stocks. The Nikkei futures contract in Chicago was at 29,725 while its Osaka counterpart was at 29,590. This is compared to the Nikkei 225’s last closing price at 29,520.07.

Japan’s preliminary pressure on fourth quarter gross domestic product is expected around 7:50 a.m. HK / SIN.

Australian stocks rose in morning trade, with the S & P / ASX 200 up around 0.8%.

The markets in China, Hong Kong, Taiwan and the USA are closed on Mondays for public holidays.

Currencies

The US dollar index, which tracks the greenback against a basket of its peers, stood at 90.422 after weakening against the 91.2 handle earlier this month.

The Japanese yen was trading at 104.98 per dollar, weaker than below 104.8 against the greenback last week. The Australian dollar was trading at $ 0.7766 after rising below $ 0.772 last week.

Here’s a look at what’s on tap:

  • Japan: Preliminary gross domestic product data for the fourth quarter at 7:50 a.m. HK / SIN
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Business

launch of fourth quarter, full-year 2020 GDP

release of fourth quarter, full-year 2020 GDP

Employees working on a dry-type transformer production line at a power generation factory in Haian, east China’s Jiangsu Province, Jan. 4, 2021.

Stringer | AFP | Getty Images

BEIJING – China reported GDP rose 2.3% over the past year as the world battled to contain the coronavirus pandemic.

However, Chinese consumers continued to be reluctant to spend as retail sales fell 3.9% over the year. Retail sales increased 4.6% year over year in the fourth quarter.

The gross domestic product grew by 6.5% in the fourth quarter compared to the previous year.

Economists expected China to be the only major economy to have grown over the past year and forecast GDP growth of just over 2%.

Covid-19 first appeared in the Chinese city of Wuhan at the end of 2019. To control the virus, Chinese authorities closed more than half the country and the economy contracted 6.8% in the first three months of 2020.

However, China returned to growth in the second quarter. Economists polled by Reuters forecast GDP to grow 6.1% in the fourth quarter, faster than the 4.9% pace in the previous quarter.

China’s GDP growth this year is expected to come from a lower base.

In late December, the National Bureau of Statistics cut China’s official growth rate for 2019 to 6.0% from the 6.1% previously reported. The cut came mostly in manufacturing as factories dealt with new US tariffs on Chinese goods valued at billions of dollars.