ASIAN ECONOMY: OVERVIEW, GROWTH & DEVELOPMENT
Post-olympic economic slump unlikely to hit Japan
As Japan gears up for Olympic euphoria later this summer, some fret that the country could experience a sense of deja vu, recalling the significant economic downturn that followed the hosting of the 1964 Tokyo Games. However, it is unlikely that Japan will face such a slump this time around. Rather than fearing an Olympic hangover, Japan should carefully observe other risks, economists say, such as trade conflicts, the U.S. presidential election and fallout from October’s consumption tax hike. “If the economy were to slow down after the Olympics, we would have seen the economy booming more prior to it,” said Takayuki Miyajima, senior economist at Mizuho Research Institute, adding that Japan’s economic growth rates in recent years do not indicate such a scenario. In the lead-up to the 1964 Games, Japan invested massively in infrastructure and built modern transportation networks such as the Tokaido Shinkansen and the Metropolitan Expressway. According to the Japanese Olympic Committee, spending on infrastructure totaled ¥960 billion, which at the time was worth 3 percent of the country’s GDP. As a result, the economy grew by 11.2 percent in 1964, but the growth rate plunged the following year to 5.7 percent due to the excessive construction demand before the games. The number of bankruptcies more than tripled to 6,141 compared with the year before the games.
Indian economy likely to grow to $7 trillion by 2030: Deutsche Bank
India’s economy is likely to grow two and half times to $7 trillion by 2030, from about $3 trillion now, making India the world’s third largest economy. This implies that nominal GDP growth is likely to average just over 10percent through the next decade, Deutsche Bank said in a research report, Imagine 2030. The sharp slowdown in the recent years, despite Indian economy’s promise over the last decade, is not indicative of what is in the store for the next decade, Deutsche Bank said. “Despite its promise over the last decade, the Indian economy has slowed down sharply in recent years. That has led some to predict the decade ahead will be one of lower growth and frustration that India’s enormous potential will, yet again, go unfulfilled,” the report said.
China moves to steady its slowing economic growth
China on Wednesday moved to pump more cash into its financial system, suggesting that Beijing remained concerned about faltering growth despite signs that the world
’s second-largest economy was stabilizing. China’s central bank, the People’s Bank of China, announced that it would inject about $115 billion into the economy by freeing up banks to lend more money. The move comes after a similar action in September. The change, announced on the New Year’s Day holiday, is likely to focus renewed attention on the health of the Chinese economy, a major driver of global growth. The move is relatively modest given the vast size of the Chinese economy, but the timing suggests that the country’s leaders are on high alert for new evidence of a slowdown. It follows a recent meeting of the country’s top economic planners and comes just weeks before Beijing releases closely watched estimates of year-end growth.
Downside risks abound for Vietnam’s 2020 economy
Vietnam’s Communist Party leaders could be excused if their 2020 outlook is overly politicized. Apparatchiks and their respective factions are expected to begin jockeying for position ahead of the Party’s quinquennial National Party Congress in early 2021, where key leadership posts and policies will be decided. The country will also serve in 2020 as rotating chairman of the Association of Southeast Asian Nations (ASEAN), in a year when tensions in the South China Sea between rival Southeast Asian claimants and China could come to a head. Vietnam will also take up a non-permanent seat on the United Nations’ Security Council, a position that could herald the nation’s arrival as a responsible global actor after previous decades of international isolation. But despite all those political happenings, the Party and its planners would be ill-advised to lose sight of the economy.
Indonesia providing zero tariffs for 20 items: envoy
Indonesia providing zero tariff facility to Pakistan under a trade agreement to improve the bilateral trade with Pakistan, said Consul General of Indonesia Totok Prianamto. Speaking at a meeting of Korangi Association of Trade & Industry (KATI), he said that bilateral trade is to promote mutual progress and growth.
“This is the reason that we are offering zero tariffs for 20 items to Pakistan under a deliberation, part of trade agreement between both countries finalised previous year,” he added. He mentioned that many Indonesian investors and industrialist are showing interest to explore new business avenues in Pakistan.
Thai economy ends gloomy year with little sign for cheer in 2020
Thailand ended last year with its weakest pace of growth in five years. It has little to cheer about this year too, as South-east Asia’s second-largest economy faces headwinds from global trade tensions, a surging baht and rising political risks. The export-reliant country has been sharply hit by the Sino-US trade conflict. Exports may fall 3.3 percent last year before rising just 0.5 percent this year, according to the Bank of Thailand (BOT). A strong baht, which gained 8.3 percent against the dollar last year and is Asia’s top-performing currency, has added to the pressure on exports. Analysts say it could also hit tourism. Thailand’s growth has lagged behind that of its peers for years. The central bank, after several downgrades, predicts it will be just 2.5 percent last year, the weakest pace since 2014 when the army seized power in a coup. The bank forecasts 2.8 percent growth this year.