News

The World Trade Organisation (WTO) has cut forecast global trade growth for 2023 to just 1%, down sharply from its previous estimate of 3.4%, saying the war in Ukraine and infl­ation are set to weigh heavily on economies. In its latest report, the WTO said import demand was expected to soften more than initially forecast as different regions were hit by varying negative factors. High energy prices resulting from the Ukraine war is expected to impact European spending and increase manufacturing costs, while China grapples with continuing COVID outbreaks that have disrupted production at the same time as it faces weaker overseas demand for its products. Meanwhile in the US tightening monetary policy is expected to curb spending. The WTO admitted that its previous forecasts made in April now appeared overly optimistic. This suggests there could be an even greater deterioration in trade conditions next year compared to the current year.

China’s export growth slowed in September, as exports grew by 5.7% last month from a year earlier, compared to 7.1% growth in August, according to the delayed data released by China Customs. The September figure was below expectations of a 5.8%. Imports, meanwhile, grew by 0.3% in September from a year earlier, unchanged from 0.3% growth in August, and below expectations of a 1.3% rise.

Infl­ation slowed in October following a drop in a wide range of food commodities, but analysts expect the drop to be temporary as risks overshadow the economy in the remaining weeks of the year. The annual headline figure eased to 5.71 percent last month, down from the 5.95 percent year-on-year (yoy) recorded in September, according to Statistic Indonesia (BPS) data published on Tuesday. The latest figure was well below projections of several analysts. State-owned lender Bank Mandiri and financial research-firm Moody’s Analytics, for instance, had expected a reading of 5.91 percent and 6.1 percent, respectively.

The Indonesian economy grew by 5.72 percent in the third quarter of the year compared to the same period of 2021, the Central Statistics Agency (BPS) announced recently. It’s the second-strongest quarterly growth since mobility and social restrictions were imposed due to the Covid-19 pandemic in early 2020. “The annual economic growth is trending up and heading to recovery, ” BPS Chairman Margo Yuwono said in a news conference. He said the Indonesian economic growth outpaced that of key trading partners such as China which recorded Q3 economic growth of 3.9 percent, the United States (1.8 percent), Singapore (4.4 percent), Taiwan (4.1 percent), and the European Union (2.4 percent).       https://jakartaglobe.id/business/indonesia-reports-q3-economic-growth-of-572

U.S. real GDP declined at an annual rate of 0.6 percent in the second quarter, up from a 1.6 percent decline in the first quarter. Consumer spending, by far the largest component of the gross domestic product, once again proved to be surprisingly resilient in the face of surging infl­ation. According to the Bureau of Economic Analysis, in­flation-adjusted personal consumption expenditures increased at an annual rate of 2 percent in the second quarter.                   In­ation has altered the economic mood, and potentially reset the path of global and national economies worldwide for many years.   https://www.mckinsey.com/featured-insights/in­ation/how-in­ation-is-­ipping-the-economic-script

Indonesia's central bank raised its benchmark interest rate on Thursday for a third consecutive month as it intensi­es the fi­ght against inflation, bringing the rate to its highest since February 2020. Bank Indonesia hiked its seven-day reverse repurchase rate by 50 basis points to 4.75, as expected by many analysts. Indonesia's inflation rate in Septem-ber rose to 5.95% and took its biggest leap in nearly seven years due to higher oil prices in the wake of the Ukraine war. In the same month, the Indonesian government raised subsidized fuel prices, forcing consumers to pay more. The rate decision in Southeast Asia's largest economy follows hikes by the U.S. Federal Reserve and some central banks of the Association of Southeast Asian Nations to ­ght against global inflation. In September, the Fed pushed up its benchmark rate 75 basis points to between 3% and 3.25%, the highest level in 14 years. Malaysia's central bank raised its key rate for a third consecutive time to 2.50%, while the Philippines also increased it by 50 basis points bringing the benchmark to 4.25%, the highest since August 2019.   https://asia.nikkei.com/Economy/Indonesia-hikes-key-interest-rate-to-4.75-highest-in-over-2-years

Automotive sales were almost 100,000 units in September, which is the highest monthly record since 2019. This happened in the same month when the government decided to increase the price of subsidized fuel.   Data showed 95,422 units of new cars were sold in September, up 4.7 percent compared to August.   https://www.cnbcindonesia.com/news/20221013191436-4-379598/pecah-rekor-lagi-penjualan-mobil-nyaris-100-ribu-unit https://www.cnnindonesia.com/teknologi/20221012110706-384-859435/harga-bbm-naik-september-penjualan-mobil-ri-cetak-rekor-tertinggi

Vietnamese Factories Go Idle As Orders From The West Slow Down Vietnam's exports dropped 14.3% from August to September, feeding concerns about reduced consumption in foreign markets facing infl­ation, fuel shortages and economic contraction. Production of shoes, phones and furniture is slowing, with state-controlled media reporting some laid-off workers have already started returning to their villages, as seen in 2021 -- but for a different reason. A year ago almost to the day, employees who had been sleeping at factories ­ed to the countryside when Vietnam lifted a severe COVID lockdown that had kept workers on-site. "If U.S. and Europe cannot overcome the situation, we may be hopeless," said Anh, sales manager at Po Lai Kam, which prints "Made in Vietnam" labels on Nike, Puma, Yonex and Levi's products. "This year the market is not just slow, but dead," said Megha Khemka, director of cotton supplier S.P. Yarns, who was in Ho Chi Minh City for a recent trade expo. Meters away, vendors showed off wares, with conveyor belts dangling blouses and printers the size of cars spitting out sheets of fabric designs. Vietnam's exports decreased "more sharply" than expected, Goldman Sachs said, hitting USD 29.9 billion last month, the second-lowest this year. Malaysia's Maybank said computers, mobile devices and related parts "were the main drags, amid a slump in global demand. High inventories and declining consumption in importing countries will cut demand for Asia's exports more generally, the World Bank said. It forecast regional economies will expand 3.2% this year, rather than the 5% projected in April. Khemka's India-based company has clients in Indonesia, Bangladesh and Vietnam that produce garments for retailers like Europe's H&M and Primark. She said in an interview the pullback in spending is being felt up and down the industry. "It's very visible," she told Nikkei Asia. "It's not just news we read about, it's happening," In a research note, Maybank predicted Vietnam's fourth-quarter growth would decelerate to 5.7%. "External headwinds will intensify next year and dampen domestic growth, owing to rising recessionary risks in the U.S. and EU on aggressive Fed tightening and supply disruptions from the Russia-Ukraine war," it said. Europe and the U.S. are the Southeast Asian country's biggest customers.   https://asia.nikkei.com/Spotlight/Supply-Chain/Vietnamese-factories-go-idle-as-orders-from-the-West-slow