According to the International Monetary Fund (IMF) Indonesia’s economy should grow at a slightly faster rate in 2016 after slowing for several years. The growth comes because of higher public investment and improving sentiments around the world toward the Southeast Asian nation’s economy, the largest in the region.
After two weeks of recovery, the Chinese yuan is expected to fall after further data shows Asia’s largest economy continues to slow. Production in China’s industrial sector rose just 5.4% in the first two months of 2016, a disappointment that has led many analysts to warn that the country’s new sub-7% GDP growth target is still too optimistic.
The rise of China has created new uncertainties. A crucial question is whether China actively seeks an alternative to the existing US-led liberal regional order. In addition, if it does, what sort of order would it be?
In 2000, Aron Friedberg warned enthusiasts of multilateralism against exaggerating the ‘pacifying’ effects of regional trade. Friedberg predicted that the more economically powerful South Korea and China became, the more they would seek to undermine Japan’s regional status and eventually confront the United States.
The introduction of negative interest rates in Japan and the subsequent chance for yields has seen domestic investors move further out on the curve. They have also stepped up their purchases of foreign bonds.
In three weeks (through March 4) since the negative deposit rate went into effect, Japanese investors bought JPY4.4 trillion of foreign bonds. This is the second most since at least 2001 (when Bloomberg’s time series began), trailing slightly behind the August 2010 flurry.
EM enjoyed an extended rally last week, and it should carry over to the early part of the week. The Wednesday FOMC meeting poses a risk to EM, especially if markets continue to price in a more hawkish Fed. The dot plots and press conference will be very important. BOE and the Norges Bank meet this week, with the latter expected to deliver a 25 bp rate cut to 0.5%.
Expectations of corporate bankruptcies and debt defaults have skyrocketed, with America’s companies struggling to stay afloat.
Credit research firm, Fitch Ratings, has increased its high yield bond default prediction for 2016 by 33%, now saying that the high yield bond market, also known as the “junk bond” market, will see default rates of 6%, significantly higher than the historical average and about 300% higher than in 2015.
Zimbabwe, like many African countries, faces an ongoing struggle to secure fair compensation for its mineral wealth. The question of how to maximise government revenues from the mining sector is a complex matter.
However, turning the sector over to state-owned mining companies has rarely optimised mining revenues. What’s needed instead are improvements in management practices, regulations, regulatory capacity and the investment environment.
After being out of fashion for a long period, agriculture has been coming back into the spotlight again as part of development policy. Amid rising concerns about food insecurity and high expectations from agribusiness, policymakers have started to emphasise the importance of agriculture as a source of employment.
Across Africa interest in agricultural investment as a source of employment growth and profit is growing. In South Africa, the National Development Plan identifies agriculture as the potential basis of one million new jobs.
Unfortunately, even though the U.S. is bountiful and the world’s biggest individual exporter of food, millions of Americans actually are not.
Each year the Department of Agriculture runs a nationwide survey to determine how many people go hungry. The latest figures show almost 6 percent of households – about 18 million people – are consistently not getting enough to eat. Another 8 percent – 30 million people – have occasional problems feeding themselves.
On 29 January, the latest draft of what may become Thailand’s 20th constitution was released. The draft was not the first since security forces seized power in May 2014 — an earlier draft, by a different body, was rejected in September 2015 amid speculation that the junta had orchestrated the rejection in order to avert tensions and gain more time in power.
