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Asia's Emerging Economies To Exceed China, ADB

Developing economies in Asia will see recovery; which is the first time within over 3 decades that developing Asia will transcend China, said Manila-based lender in a recent report on Wednesday. China’s economic growth fell to 3.9% and the rest of the countries in the region saw a GDP growth by 6.9%, according to the report. 

However, the Asian Development Bank (ADB) stated a low growth prediction for them again as China has developed its zero-Covid approach. 

Emerging Asia is expected to expand by 5.3% this year while China will expectedly grow by 3.3%, the ADB stated. ADB’s growth forecast was 4% for China in the month of July, which relates to the country’s zero-Covid approach, property sector issues, and slow economic activities due to decreased demand from abroad.

The forecast for the country’s growth in 2023 is to 4.5% compared to April’s 4.8% outlook due to increasingly weak external demand, which in turn lowers investment in manufacturing sector. While Asia is facing constant recovery thanks to invigorated tourism industry, headwinds in the world are hindering global development, said the ADB.

Emerging Asian economies, the ADB predicts, will increase by 4.3% in 2022 and 4.9% next year. Also, recent updates of Asian Development Outlook expects that the inflation pace will see an even higher rate to 4.5% this year and 4% in the year 2023, compared to July’s revised prediction of 4.2% and 3.5% respectively, due to heavy food and energy expenses.

While inflation has currently jumped to a level before the pandemic, central banks in the region are increasing their policy rates, the ADB said. This plays a role in stricter financial situations as the Federal Reserve is facing a gloomy growth prospect and tight monetary policy, it also added.

China will constantly be an exception as it exerts strict lockdowns occasionally to curb intermittent outbreaks, according to the ADB. This is not the case in many parts of Asia, where Covid-19 restrictions ease, immunization policy grows, the pandemic death toll decreases, and there’s increased mobility, the report also expressed.

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By Samira Ha. on September 24, 2022

OECD Countries See Highest Inflation Since 1988

Industrialized OECD countries have seen a rise in inflation, a 34-year record high, since June 1988. The most recent statistics reveal the annual inflation rate in Organization for Economic Co-operation and Development (OECD), measured by the consumer price index (CPI), jumped to 10.3% in June 2022, versus 9.7% a month earlier.

In England, consumer prices saw an average rise of 9.1% in the year to June, which has been the speediest rate in inflation in the Irish economy since the year 1984. The rate is also higher than 7.8% in the year to May. Food and energy are top things with the main inflation rates.  

In the OECD countries, food prices jumped to 13.3% in June 2022, from 12.6% a month earlier, which is the highest amount in food price since July 1975. Alike, energy inflation rate rose to 40.7% year over year in June 2022, which is larger than 35.4 a month earlier.

Year-over-year inflation rate, apart from food and energy, rose to 6.7% in the month of June, from 6.4% in May.

Double-digit inflation was listed for almost a third of OECD countries, the highest was recorded in Turkey (78.6%) with the lowest in Japan (2.4%).

Measured by the harmonized index of consumer prices (HICP), year-over-year headline inflation, in the eurozone, had a jump of 8.6% in June, from 8.1% in May 2022. Both food and energy prices saw high rises between the months of May and June 2022. Flash estimate for the eurozone in July by the Eurostat suggests a further rise in year-over-year inflation rate (8.9%). In the meantime, price inflation, without considering food and energy, jumped to 4% versus 3.7% June 2022.  

As shown by Refinitiv data, stock markets are now pricing with a more than 90% possibility of a huge 50 basis point rate rise in the meeting to be held on Thursday while the central bank tries to curb inflation from a point recorded in four decades.

Additionally, a survey conducted by Reuters from over 70% of 65 economists and analysts predicts a half-point rise from the Bank of England's Monetary Policy Committee (MPC) in the current week.

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By Samira Ha. on August 4, 2022

Asian Stocks Fall Amid Fed's Rate Jump

With persistent concerns over the world’s economy, main markets in Asia fell on Thursday. 

After the US Federal Reserve on Wednesday approved its biggest interest rate hike since 1994, raising the federal fund's target rate by 75 basis points, Japan’s Nikkei share snapped a four-day losing streak. This was negligible as investors considered the impact of rising inflation and probable negative impacts of the Fed’s rate hike amid central banks' tightening.

The Nikkei finished the day at 26,431.20, up 0.4%. The figure shows a bounce back from its lowest since May 12. Topix with 0.64% reached 1,867.81.

MSCI AC Asia Pacific Index ex Japan saw a drop of 1.1% as opposed to earlier gains.

Stocks in China experienced a bad day: the blue-chip CSI300 index fell to 4,250.06, a drop of 0.7%, with the Shanghai Composite Index fell 0.6% to 3,285.38.

Following the pandemic lockdowns’ impact on the property business, new house prices in May fell for the second month in 2022. Real estate developers in China faced a drop of 1.3%. 

Hong Kong’s Hang Seng Index fell 2.17% to 20,845.43. Hong Kong’s tech index fell 3.3%: Alibaba, Tencent and Meituan fell between 3% to 4%.

Stocks in India experienced a bad trade day too: Mumbai’s signature Nifty 50 index fell 2.07% to 15,367.85.

In the meantime, the Bank of England expected to increase rates to cope with inflation, and will be focused on later today.

On Wednesday, the European Central Bank committed to modify the rout in the bond market. The pan-European STOXX 600 dropped over 1% and S&P 500 e-mini futures saw a decrease of 1.8%.

Giuseppe Sersale, strategist and portfolio manager at Anthilia in Milan said, “After the initial relief to the Fed … markets seem to have woken up that it is still a 75-basis-point rate hike.” He also said even if the Swiss central bank sees a jump by half a point, investors would obviously think that tightening policies are severe. The amount is too little to be happy about, he added.

The dollar gained power again in the Asian meeting, after receding from a 20-year high.

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By Saha on June 16, 2022

Low Earners Shattered Most As Inflation Rises

The lowest earners in America are struggling as inflation affects their family budgets.This is while what they have saved up after the breakout are growing less.

Federal aid including payments for child tax credit (CTC) each month along with payments for student loans are coming to a halt. Tax refunds might be paid with a delay; making challenges for low-income families.

The fastest yearly inflation pace was seen in January as prices were up 7.5% from 2021.

A survey at the University of Pennsylvania’s Wharton School showed the lowest earner families, gaining less than $20,000 a year, suffered the most in 2021. 

Higher portion of low-income families' budget goes to essentials including energy and transportation whose prices go up faster than other commodities and services.

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By Saha on February 26, 2022

South Korea's Interst Rate Jumps

South Korea’s interest rate has raised to the level it was before the global pandemic, aiming to curb high inflation and rising household debts.

According to the Bank of Korea's (BOK), the plan to increase the rate to 1.25% was the third time within six months. This is while central banks across the world strive to lower the effects of the pandemic on inflation.

South Korea was the first Asian country to increase the rates in August. With the rise in consumer inflation reaching 2.5% in 2021, the highest price increase since 2011, the country’s policy makers are pressed to take actions.

To curb the negative consequences due to the Covid-19, global central banks and governments have added trillions of dollars to the world’s economy in the last two years. International policy makers are currently trying to remove emergent stimulus packages.

South Korea, in the front line to switch to unwind the huge economic stimulus, tries to control high consumer prices. In the same front, the United States of America also aims to grow its interest rate three times in 2022. Prices in the U.S. have seen the fastest pace for nearly 40 years; inflation has increased up 7% year-over-year last month.

To address rising prices, the Bank of England, too, increased interest rates in December for the first time within over three years.

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By Saha on January 16, 2022

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