Economic performance in post-Suharto Indonesia has been inferior to that achieved during the previous three decades, with economic growth slower and income inequality increasing. With the recent election of a new president, now is a good time to focus on improving the quality of economic policymaking.
Japan is ageing; shrinking population will cause serious problems for the country throughout the 21st century. Although the fertility rate has recovered to 1.39, this is still very low by international standards. Current official projections estimate that Japan’s present population of 120 million will decline to 40 million by 2110. In addition, the proportion of elderly (65 years and older) — now 25 percent of the population — is expected to rise to 40 percent by 2060.
But Japan’s ageing population is not just a challenge. It is also an opportunity.
The South China Sea is not the central strategic element in the overall US–China relationship. It was clearly not a centrepiece of the November 2014 Obama–Xi summit in Beijing. Climate change, North Korea, Iran, Taiwan, trade, intellectual property theft and cyber security are more important bilateral issues. But, since 2012, China has been taking a more assertive stance towards territorial disputes in the South China Sea — raising significant policy questions for the United States.
Recent data indicate that the US supply of currency significantly dropped in October. Represented by the “True Austrian Money Supply”, the money supply metric that is regarded to be the most preferred and broadest aggregate, the amount of money in America has fallen since September. The TMS2 announced that the year over year growth was a disappointing 7.7% October, which is a significant drop from September’s 8.3% rate.
Investors are growing more fearful after Japan posts a larger than expected GDP contraction and oil falls to a 5-year low.
The S&P 500 fell in early Monday trading after a strong end to last week as investors weighed the impact of a Japanese recession and falling oil. In a note to investors, UBS cited technological change and falling emerging market demand as potential threats to U.S. company growth, while some economists are wondering if consumer demand growth in the U.S. can offset global weakness.
India’s Prime Minister Narendra Modi is seeking new ways to enhance India’s global diplomacy. Modi is pursuing two paths largely overlooked by analysts of India’s foreign policy: to connect with the Indian diaspora and to encourage links with subnational governments at state and city levels.
Falling commodity prices and better US economic data are the biggest macro drivers for EM, overriding just about all idiosyncratic variables – perhaps with the exception of the weaker yen for Korea. We note that aside from the huge fall of over 40% in the price of Brent oil from its highs, iron ore is down about 50% this year. Brazil, China and India are the biggest EM producers of iron ore. Markets are also becoming apprehensive of the parabolic rise in Chinese equities, in part due to expectations for further easing, which could be dashed just as fast as they have been created.
Developments in the week ahead will be understood within the context of last week’s developments. The most important of these are the strength of the US jobs report and cuts in growth and inflation forecasts by the European Central Bank and the Bundesbank.
By two measures, the US employment report was among the strongest since the Great Financial Crisis. First, the monthly increase in non-farm payrolls of 321k has only been surpassed three times since the fall of Lehman. Moreover, the job growth over the past two months was revised higher by 44k.
The US dollar changed little against most of the major currencies but is taking another step up against the yen. The failure of the Democrat Party of Japan to mount a serious challenge to Abe, despite the quite divided public support for Abenomics, is leading to surveys that the LDP and Komeito coalition will retain the super-majority they now enjoy. This has been the latest excuse to push the yen lower.
1) Some EM policymakers are becoming more worried about weak currencies
2) The PBOC failed to drain liquidity for the past three sessions, fueling speculation of a cut in reserve requirements
3) The Reserve Bank of India keep rates unchanged, but indicated potential easing for the first time this cycle
4) Last weekend’s elections in Taiwan resulted in a stunning loss of the ruling Kuomintang
5) Israel Prime Minister Netanyahu will seek early general elections, likely strengthening the right wing of the party
