The current strategic environment in the Asia Pacific can be characterised by an intensifying competition (mixed with some cooperation) between China and the US. As the strategic competition between these two countries is likely to intensify, whether they prefer to accommodate or confront each other will have spillover effects on other Asia Pacific countries’ decisions.
1. Turkey looks to have a coalition government for the first time since 2002. 2. Brazil’s central bank is reducing its rollover of FX swaps. 3. Hungary recorded the first positive y/y CPI reading in 8 months. 4. MSCI deferred its decision on including China A-shares in its indices. 5. Mexican President Pena Nieto would not commit to reappointing central bank Governor Carstens. 6. Poland will see a cabinet reshuffle as three ministers and the parliamentary speaker resigned. 7.
The US dollar is set to close the week on a strong note. The relatively constructive data is boosting confidence that the Federal Reserve will have the opportunity it has been looking for to begin, however gradual, the normalization of monetary policy. At the same time, the Greece impasse remains, and German Chancellor Merkel has weighed in suggesting that too strong of a euro impedes reforms in Spain and Ireland. This, of course, leads to fresh selling.
Going by the growing investment opportunities in emerging markets, their popularity with investors from the developed economies is not dying down any time soon. Most of the investors are looking for high returns that their mature markets cannot offer, and hence finding prime investments in the emerging markets.
South Korea is plagued with a rising death toll in its third week as the MERS virus spreads throughout the country. Analysts believe the outbreak will worsen the economy, as tourists stay away and locals remain at home. South Korea’s economy underwent turmoil before the outbreak, due to low exports and consumption.
The United Kingdom is seeing more demand from foreigners, helping the country’s trade deficit to fall by nearly $2 billion.
The UK trade deficit fell by 1.2 billion pounds, or about $1.9 billion, in April of this year. That is a fall of over 50% from the prior month, according to the Office for National Statistics, as consumption was offset by greater demand for British services.
Indonesia faces a serious infrastructure crisis, which could slow or even halt its economic development if not addressed effectively. Today, only 81 percent of households have modern access to electricity, only 61 percent are connected to sanitation systems and only 69 percent have access to clean water. Logistics costs are much higher than in neighbouring countries — average transport time per kilometre is 2.6 hours in Indonesia compared to 1.4 hours in Thailand and 1.2 hours in China.
The Narendra Modi-led government came to power with an overwhelming mandate in May 2014 and, broadly speaking, seems to be on the right track.
The Japanese economy grew at an annualized 3.9 percent from January to March, which is beyond an initial estimate of 2.4 percent, due to increased spending among consumers and the business sector. The economy itself expanded 1.0 percent, surpassing a previous estimate of 0.6 percent. Analysts predict slower growth from April to June.
Much has been written about the impact of remittance inflows on economic and social outcomes, including economic development, inequality, and poverty. However, little is known about the effect they have on the attitude of remittance recipients to democracy in sub-Saharan Africa.
