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Asian Economy: Overview, Growth & Development

ASIAN ECONOMY: OVERVIEW, GROWTH & DEVELOPMENT
S&P revises MOL outlook to positive on Azerbaijan acquisition

S&P Global Ratings revised the outlook for Hungarian oil and gas company MOL from “stable” to “positive” after it announced the acquisition of exploration and production as well as midstream stakes in Azerbaijan from Chevron, state news wire MTI reported.

“We believe the acquisition… will strengthen MOLʼs business profile despite increasing leverage,” S&P Global Ratings said. “We are therefore revising our outlook on MOL to positive from stable, and affirming our BBB- ratings on MOL and its senior unsecured debt.”

“The positive outlook indicates that we could raise the ratings in the next 24 months if MOLʼs business resilience and diversity strengthen, and it restores its credit metrics,” it added.

MOL announced on Monday that it agreed to acquire a 9.57percent stake in the Azeri-Chirag-Gunashli oil field in the Caspian Sea, one of the largest offshore oil fields in the world, and an 8.9percent stake in the pipeline that transports the crude to a port on the Mediterranean Sea, for a consideration of USD 1.57 billion from Chevron.

S&P Global Ratings said the acquisition will boost MOLʼs daily oil and gas production by 15-20percent. MOLʼs proven and probable (2P) reserves are projected to reach 360 million barrels of oil equivalent (boe) by the end of 2020 with the acquisition, compared to 324 million boe at the end of 2018, it added.

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Bangladesh booms in a sluggish world economy

Ongoing trade disputes between the United States and China have stymied global markets and shaken the established order. Projected economic growth in South Asia has fallen 1.1 percentage points in just the last six months. Bangladesh, on the other hand, has adapted to the rapidly changing landscape and managed to maintain its impressive record of economic growth.

The Asian Development Bank says Bangladesh has the fastest-growing economy in the Asia-Pacific region. Lately, it’s been closing in on double-digit annual growth in its Gross Domestic Product. The reason: Bangladesh has made enormous strides by finding new markets for its exports and attracting large numbers of foreign investors. It’s also been investing in a variety of modernization projects.

At a time when many countries are looking inwards and closing their doors, Bangladesh is open for business.

Bangladesh can open its doors because of its burgeoning economy. Since 2009, Bangladesh’s economy has grown 188 percent. This year, Bangladesh is on track to post record high annual GDP growth of 8.1 percent, up from 7.9 percent in 2018. By comparison, other South Asian countries, including India, Pakistan, and Sri Lanka, suffered significant dips in GDP growth in recent years.

Yet Bangladesh has continued to thrive. HSBC Bank recently predicted that Bangladesh would be the 26th-largest economy in the world by 2030.

India and the mistrust economy

Countries with strong governments often end up with weak economies, and India, after years of impressive growth, risks becoming one of them.

The World Bank recently released its annual report comparing the ease of doing business in 190 countries, and India’s ranking improved to 63rd, up from 77th last year. India — along with Saudi Arabia, Pakistan and China — was among the 10 states that made the most progress. Yet major indicators show that its economy is slowing down sharply.

Narendra Modi came to power in 2014 on the back of the promise that if elected, he would make of India an economic powerhouse that would rival China. This year, after being re-elected, he pledged to turn India into a $5 trillion economy, nearly twice its current size, by 2024.

According to official government data, however, the growth rate of national income for the second quarter of this year was only 5 percent, down from 8 percent a year before. The International Monetary Fund’s just-released World Economic Outlook cut India’s growth forecast for 2019 to 6.1 percent, down from the 7.3 percent that the organization had predicted in April. Between 2003 and 2011, growth averaged nearly 8.5 percent, well exceeding 9 percent every year between 2005 and 2008. The recent turnaround is sudden and unexpected, and that is a cause for concern.

 

Online marketplace mondeb2b to onboard 100 Brunei businesses by q1 2020

Regional online marketplace MondeB2B is in the process of onboarding 100 Brunei companies onto their platform by the first quarter of 2020 to export to economies within the Asia Pacific Economic Cooperation (APEC).

MondeB2B’s COO Juan Sebastian Olea said their regional Q1 2020 target also would be onboarding 100 companies from each of the BIMP-EAGA nations (Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area) and the Pacific Alliance countries which covers Chile, Colombia, Mexico and Peru.

The 100 Bruneian companies being onboarded are mostly small and medium enterprises (SMEs) producing food and beverage, fashion and health and beauty products. DST, Baiduri and DARe are collectively sponsoring the 100 SMEs their online listing fees which are between US$15 to US$49 monthly.

China’s IP system was improving even before the trade war

President Donald Trump announced a “phase one” trade deal with China, agreeing that the United States would not increase tariffs on Chinese imports while China would increase purchases of US agricultural products. However, the agreement has yet to be put in writing and the details that have been shared publicly are quite limited in scope.

Even as the trade war drags into its eighteenth month, negotiations have led to little progress on the Trump administration’s core complaints about the US-China relationship — namely, China’s lack of protection for US intellectual property (IP) and its policy of forced technology transfers. Despite initial reports stating that the “phase one” agreement would include additional protections for enforcing IP rights in China, officials have yet to clarify what these protections may include.

Continued pressure from the Trump administration and the lack of progress on the core issues of trade war belie the fact that China has become increasingly serious about promoting stronger protections for intellectual property domestically. This shift has grown in importance as China’s economy continues to slow and the Chinese Communist Party (CCP) seeks new avenues to promote growth.

But even as Chinese companies demand stronger IP protections as they push into high-tech industries and focus on global market expansion, systemic change—even under the increasingly centralized leadership of Xi Jinping—is not as simple as it may appear at first.

Indonesia defends economic data against doubters

Indonesia’s Finance Minister Sri Mulyani Indrawati defended the nation’s statistics, saying there was no manipulation of the economic growth figures after some analysts questioned the unusual stability of the data.

“The government never intervenes in the statistics,” Indrawati said in a phone interview from Dubai on Wednesday. Statistics Indonesia, known as BPS, is independent and “quite reputable,” she said.

Data on Tuesday showed the economy expanded 5.02 percent in the third quarter from a year ago, little changed from 5.05 percent in the second quarter and 5.07 percent in the first three months of the year. Growth has been fairly steady around 5 percent for several years, prompting some economists, including Gareth Leather of Capital Economics, to question the figures.

Ms Indrawati said growth has held above 5 percent in recent years because household consumption, which accounts for 56 percent of the economy, has been growing more than 5 percent. With imports sharply contracting in the third quarter, net exports turned positive, boosting overall growth, she said.

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Japan q3 gdp growth may slow, but domestic demand still solid: poll

Japan’s economy likely grew for a fourth straight quarter in July-September helped by solid domestic demand as consumers rushed to beat a sales tax hike, it is said on Wednesday.

But the pace of growth was seen slowing from the second quarter as a strong typhoon and rainy weather countered strong domestic spending and weak external demand hurt exports.

Analysts expect the economy could shrink in the fourth quarter as the effect of the sales tax hike filters through.

Gross domestic product (GDP) is expected to have risen an annualised 0.8 percent in July-September after a downwardly revised 1.3 percent in the second quarter, the poll of 15 economists showed.

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