Thailand's economy rebounds in fourth quarter

BANGKOK - Thailand's economy rebounded in the fourth quarter of last year on the back of rising exports and the easing of coronavirus restrictions that allowed tourists to return, senior officials said Monday.

The 1.9 percent on-year expansion was more than double what was forecast and marked a strong bounce after a 0.2 percent contraction in the previous three months.

For the whole year the economy grew 1.6 percent, according to the National Economic and Social Development Council, and also beat expectations. 

Southeast Asia's second-largest economy was hit with a 6.1 percent contraction in 2020 -- its worst economic performance since the 1997 Asian Economic Crisis.

The NESDC said it saw growth of 3.5 to 4.5 percent this year as tourism picks up and government spending kicks in.

Council secretary-general Danucha Pichayanan said reopening the border to fully vaccinated foreign tourists in November had made some impact. 

Nearly 500,000 tourists have visited since November, well short of the country's target of 5 million, but the arrivals provided much-needed support to the economy.

The reopening was dealt a blow in December by the fast-spreading Omicron Covid variant.

The NESDC said it expected inflation of 1.5 to 2.5 percent for 2022. 

Agence France-Presse

ADB sees 'significant' coronavirus impact on Developing Asia

MANILA – The coronavirus outbreak could have a "significant" impact on Developing Asia, as it slows travel, tourism, consumption and supply chains, the Asian Development Bank said Friday.

The global economy could lose up to $347 billion in a worse case and $156 billion in a moderate case and $77 billion under the best scenario, the Manila-based lender said.

Loses under a moderate case, where travel bans start easing in 3 months, could account for 0.2 percent of global gross domestic product, the ADB said.

China, where the virus originated, could account for $103 billion of losses under the moderate scenario, while the rest of Developing Asia could lose $22 billion.

"We hope this analysis can support governments as they prepare clear and decisive responses to mitigate the human and economic impacts of this outbreak," said ADB chief economist Yasuyuki Sawada.

President Rodrigo Duterte's economic team "will recommend appropriate measures in due time" to counter the economic fallout from the outbreak, Budget Secretary Wendel Avisado earlier said. 

Bangko Sentral ng Pilipinas Governor Benjamin Diokno also signaled deeper cuts to the benchmark interest rate of up to 75 basis points this year, instead of 50. 

The ADB has announced millions in aid to enhance detection, prevention and response to the global outbreak that has infected over 93,000. 

- with a report from Reuters

source: news.abs-cbn.com

Brexit turmoil drives UK economy towards recession

LONDON - Britain's economy unexpectedly shrank in the second quarter of the year on Brexit turmoil, official data showed Friday, placing the country on the verge of a recession.

Gross domestic product (GDP) fell 0.2 percent in the April-to-June period, the first time the economy has contracted in almost seven years, the Office for National Statistics (ONS) said in a statement. 

The data, which was worse than market expectations for zero growth, sent the pound sliding against the euro and dollar.

The latest reading contrasted with the 0.5-percent expansion in the first quarter, when activity was boosted by companies stockpiling ahead of Brexit.

Economic activity was buoyed in the first three months because Britain had initially been scheduled to leave the European Union at the end of March.

"GDP contracted in the second quarter for the first time since 2012 after robust growth in the first quarter," said Rob Kent Smith, head of GDP at the ONS.

"Manufacturing output fell back after a strong start to the year, with production brought forward ahead of the UK's original departure date from the EU.

"The construction sector also weakened after a buoyant beginning to the year, while the often dominant service sector delivered virtually no growth at all," he added.

Another contraction in the current third quarter would put Britain in official recession, ahead of the nation's expected EU withdrawal at the end of October.

British Prime Minister Boris Johnson replaced Theresa May in July after winning the governing Conservatives' leadership contest on a pledge to take Britain out of the bloc with or without a divorce deal on October 31.

"The latest look at the UK economy makes for pretty grim viewing," said XTB analyst David Cheetham.

"Given the growing threat of a no-deal Brexit that looms menacingly overhead, it would not be at all surprising if the current quarter also shows a contraction -- therefore meeting the standard definition of a recession."

The government's official forecaster last month warned that Britain would slide into a year-long recession should it leave the EU without a deal.

source: news.abs-cbn.com

Japan economy grows faster than expected on new-era holidays

TOKYO - Japan's economy grew at a faster-than-expected clip in the second quarter, official data showed on Friday, helped by celebrations to usher in a new imperial era.

Gross domestic product (GDP) in the world's third-biggest economy grew 0.4 percent from the previous quarter, the Cabinet Office said, beating analysts' median forecast of 0.1 percent.

The third straight period of expansion will also bolster Prime Minister Shinzo Abe's determination to push through a controversial sales tax hike in October despite warnings it could weigh on growth.

Shoppers are rushing to make purchases before the rate rises from eight percent to 10 percent on October 1 and this boost for consumption also helped push GDP higher, economists said.

An unprecedented 10-day holiday for the enthronement of Emperor Naruhito, which kicked off a new imperial era in Japan, also pepped up the figures, according to analysts.

However, trade frictions between the US and China weighed on exports and corporate spending in some sectors such as machinery, said Yuichiro Nagai, senior economist at Mizuho Securities.

"But investments in software, research and development, and construction were good," he told AFP.

Nagai said a rush by consumers to buy before the sales tax hike will likely become even more pronounced in the July-September quarter, helping Japan log another quarter of growth.

And while the economy would likely contract in October-December due to the higher tax, it should rebound next year and avoid slipping into a recession, Nagai said.

"There is uncertainty over where the trade war will go... With the US presidential election coming next year, however, I believe the main scenario is that they will find a compromise plan" later this year, he said.

'ADDITIONAL MONETARY EASING'

The last time Japan hiked its sales tax, in 2014, the result was a slump in consumption and the wider economy and some economists have warned that now is not the time to raise the rate amid uncertainty over global trade and Brexit.

But Tokyo has vowed to go through with the plan unless there is a crisis on the level of the 2008 financial meltdown and Abe has promised countermeasures to cushion the blow on the economy.

SMBC Nikko Securities chief market economist Yoshimasa Maruyama said the Japanese economy would likely expand further in the July-September period but warned it could slide into a mild recession in October-December as the global economy slows.

"By the time autumn comes, debates for a supplementary budget will start and calls for additional monetary easing will get louder," he said in a report released ahead of the GDP announcement.

But Naoya Oshikubo, senior economist at Sumitomo Mitsui Trust Asset Management, was not so gloomy.

"Going forward, central banks are expected to continue easing, and the Chinese government will likely announce fiscal measures, resulting in a global economic recovery, which should help Japan maintain its momentum," Oshikubo said in a report.

Besides the planned tax hike, the impact from trade frictions between Japan and South Korea could be a headwind, he said.

"But both should be limited in their effects," he said as the affected goods make up only a fraction of Japanese exports.

source: news.abs-cbn.com

China Q2 GDP growth set to slow to 6.2pct, 27-year low, as trade war bites

BEIJING - China is expected to report on Monday that economic growth slowed to its weakest pace in at least 27 years in the second quarter, reinforcing the case for more stimulus as a bruising trade war with the United States drags on.

Policymakers are likely to ratchet up support measures to prevent mass job losses that could pose a threat to social stability, but analysts say the room for aggressive stimulus is limited by fears of adding to already high debt levels and structural risks.

"The gloom hanging over China's economy is unlikely to go away soon due to challenges on both domestic and external fronts," analysts at ANZ said in a note.

Analysts polled by Reuters expect China to report gross domestic product (GDP) grew 6.2 percent in the April-June quarter from a year earlier, the slowest pace since the first quarter of 1992, the earliest quarterly data on record.

That would mark a further loss of momentum from the previous quarter's 6.4 percent, which could bring the full-year economic growth to a near 30-year low of 6.2 percent.

The government has been leaning more on fiscal stimulus to underpin growth this year, announcing massive tax cuts worth nearly 2 trillion yuan ($291 billion) and a quota of 2.15 trillion yuan for special bond issuance by local governments aim at boosting infrastructure construction.

But the economy has been slow to respond, and business confidence remains shaky, weighing on investment. Investors fear a longer and costlier trade war between the world's two largest economies could trigger a global recession.

The government will publish the second-quarter GDP data on Monday (0200 GMT), along with activity data for June which could point to continued weakness.

Data on Friday showed exports fell in June after the US sharply hiked tariffs on Chinese goods, while imports shrank more than expected, highlighting sluggish domestic demand. Bank lending and credit data were largely solid, however.

A recent official factory gauge for June showed Chinese manufacturers were shedding jobs at the fastest pace since the global financial crisis a decade ago.

WILL PBOC FOLLOW FED?

Premier Li Keqiang said this month that China will make timely use of cuts in banks' reserve requirement ratio (RRR) and other financing tools to support smaller firms, while repeating a vow not to use "flood-like" stimulus.

Investors are eagerly waiting to see whether the People's Bank of China (PBOC) will follow the US Federal Reserve in easing policy.

Federal Reserve Chair Jerome Powell indicated again on Thursday that an interest rate cut from the US central bank is likely at its next meeting later this month as businesses scale back investments due to trade disputes and a global growth slowdown.

Most analysts believe the PBOC is most likely to lower its newly developed market-based interest rates, or continue to cut the RRR, especially for small banks, if it opts to follow the Fed.

Economists in the latest Reuters poll forecast two more RRR cuts of 50 basis points each in this quarter and the fourth quarter, but did not expect the PBOC to cut its benchmark lending rate, as it did in past downturns.

ANZ expects the central bank to cut the 7-day reverse repo rate by 5 basis points (bps), and cut the RRR by another 100 bps over the rest of the year.

The PBOC has slashed the amount of cash banks must hold in reserve six times since early 2018 to spur credit growth. It has also quietly guided short-term rates lower.

China does not need "big" stimulus unless the trade war worsens, a central bank adviser said early this month.

Leaders of the United States and China agreed in late June to try to get trade talks back on track after negotiations broke down in May, and Washington said it would hold off on additional tariffs.

But existing levies imposed by both sides remain in place, weighing on profits and supply chains, and the two sides remain at odds over significant issues needed for an agreement.

source: news.abs-cbn.com

US economy grew 2.9 pct in 2018, but shows signs of slowing

WASHINGTON - The US economy kicked into high gear last year in the wake of sweeping tax cuts but slowed in the final months, suggesting the boom had begun to fade, according to government data released Thursday.

Cooling in the fourth quarter also pointed to significantly slower growth this year, as many economists now forecast, even though the White House continues to predict robust growth will continue unabated.

GDP expanded by 2.9 percent in 2018 compared to 2017, according to a Commerce Department report, up from 2.2 percent the prior year and approaching the target set by President Donald Trump.

Last year's pace matched growth in 2015, which was the highest since 2005.

With businesses facing a sudden windfall in tax cuts amid increased government spending, growth zoomed higher as companies built factories and stockpiled inventories, according to the Commerce Department report that was delayed by a month due to a shutdown of the federal government.

Defense spending grew 3.4 percent last year, the biggest increase in nine years.

But in the October-December period, growth tapered down to an annual rate of 2.6 percent, a sharp drop from 3.4 percent in the third quarter, and 4.2 percent in the second.

Still even the slower fourth-quarter expansion was better than expected, as economists had predicted lackluster consumer spending over the holiday period would take a deeper cut.

The robust full-year growth could simultaneously lend support to Trump and to his critics, showing unmistakable economic gains last year, amid brisk job creation, but indicating it may have been a temporary boost purchased with skyrocketing government deficits.

"In short, this is not a bad performance," Ian Shepherdson of Pantheon Macroeconomics wrote in a note to clients.

"Growth had to slow as the boost from tax cuts faded, though the transition was eased by the plunge in gas prices."

The first quarter of 2019, however, faces "real headwinds," he noted, such as recovering fuel prices, a five-week government shutdown and sluggish business investment in machinery and equipment.

The non-partisan Congressional Budget Office predicted last month the US economy would see respectable but markedly slower growth of 2.3 percent this year as the 2017 tax cuts and 2018 fiscal stimulus wear off. 

THE TRADE WAR BITES

But Trump said Thursday the US economy was now "better than ever."

"Our economy is probably as good as it has ever been. We are just doing great, we are setting records," Trump said to troops in a hangar at Elmendorf Air Force Base, in Anchorage, Alaska, where his plane stopped to refuel on the way back from Vietnam.

"You are looking at a country now that is doing better than ever," he said. 

Wall Street was largely unmoved by the numbers, with stock prices finishing lower, in part due to somber data from China's manufacturing sector, which contracted for the third month in a row.

Trump's trade war also took a nasty bite out of US growth in the third quarter as Washington and Beijing exchanged punishing tariffs on more than $360 billion in 2-way trade, a dispute both sides say they are now close to resolving.

Falling international trade subtracted 2 percent from the overall economy in the third quarter.

And in the final 3 months of the year, areas that had seen a post-stimulus boost appeared to be slowing: businesses investment in factory building slowed to its lowest level in a year, and non-defense government spending contracted by 5.6 percent, its biggest decrease in 5 years.

The weak housing sector, which has seen falling sales and slowing construction, also shrank 3.5 percent, its third quarterly contraction in a row.

The 5-week government shutdown, most of which fell in January, likely had little impact on the GDP data, as the work stoppage mostly fell in January, and will not show up until the first quarter. Officials estimate it took a meagre 0.02 percent slice out of economic output but could have had larger effects indirectly.

source: news.abs-cbn.com