The angst that characterized the first several weeks of the year continues to dissipate. Major equity markets are extending their two-week recovery into a third week. Immediate concerns about the US falling into a recession have eased.
Since ASEAN’s creation in 1967, it has contributed enormously to regional stability and prosperity. It consists of 10 countries whose populations total over 600 million people. In addition, its economy ranks collectively as the third largest economy in Asia and the seventh largest in the world.
Many economists argue that the key challenge is that of insufficient aggregate demand. That is why world growth is slow. Hobbled with debt, households have pulled back. Business investment is weak. Household and business savings have offset government dissavings. The solution offered by some economists is a large public investment program.
Following its landmark agreement with the international community regarding halting its nuclear weapons development programs, Iran has exploded onto the world stage. In what is the most recent in a series of new economic treaties and alliances, Iran and Singapore have signed an investment treaty designed to support Singapore companies that seek to invest in a market that, until recently, was embargoed from the outside world.
It could have been a disaster. US faltered yesterday, with the S&P 500 again struggling in the 1945-1950 area, and China’s PMIs were weaker than expected. However, after initial weakness Asian shares turned higher. The nearly 0.9% rise allowed the MSCI Asia Pacific Index to close at its best level in five sessions.
There has been a good deal of hype touting the recently concluded Trans-Pacific Partnership (TPP) agreement as the first ‘21st century’ trade pact. Whether it lives up to this high accolade is currently under debate, both in the United States and among the 11 other TPP member states that still need to pass the agreement through their national legislatures.
The topic of China dominates almost every economic and foreign policy discussion in India. Yet the concept of a rising India is still a foreign concept in the circles of Chinese elites. Many Chinese are often surprised or amused by the enthusiasm of analysts in comparing China and India. In the eyes of many Chinese the only similarities are that both countries are in Asia and have a population of over a billion people.
It seemed that it was only after Asian equity markets fell did reports begin suggesting disappointment with the G20 meeting. The narrative followed the price action rather than the other way around. Before that, at least, one newswire claimed China was the winner of at the G20 meeting.
The year has begun on a tumultuous note. The Nikkei, DAX and S&P 500 all gapped lower the first day of the year. However, heightened anxiety has calmed as the fire appears to have burnt itself out, and equities have moved higher over the past two week.
The last time G20 finance ministers met in China back in 2005, the country was the world’s fifth-largest economy. As the next two-day meeting begins, with China as president, it lies in second spot, having overtaken several other G20 members: first the UK, then Germany, and most recently Japan.
With US economic momentum uncertain and concerns that the Federal Reserve’s recent interest rate rise might have been premature, many will be looking to growth in China to keep the global economy moving forward.
