Global headwinds to slow several Asian countries
Global headwinds to slow several Asian countries
At the current juncture, the brightest spot in Asia is India. The implementation of Prime Minister Narendra Modi’s ambitious reform agenda is expected to unleash India’s growth potential. The recently announced budget proposed three key areas of reform: (i) addressing supply bottlenecks; (ii) reducing the subsidy bill; and (iii) introducing a uniform federal goods and services tax (GST). Overall, the government expects these reforms to result in a growth rate of 8.0-8.5 percent in 2015/16, compared with an estimated 7.5 percent in 2014/15. If these three key reforms are fully implemented, we expect these growth rates to be achieved, making India one of the fastest growing economies in the world.
Myanmar is opening up to the rest of the world economy after two decades of international economic sanctions and underinvestment. As a result, the IMF expects Myanmar to grow by 7.8 percent in 2014/15, compared with 8.3 percent in 2013/14. Structural reforms are attracting FDI in infrastructure and the financial and manufacturing sectors. However, Myanmar still needs to implement significant structural reforms to improve the ease of doing business. Going forward, the growth outlook remains favorable but downside risks remain.
China missed its 2014 growth target of 7.5 percent by 0.1 percent (the first outturn below target since 1998), mainly as a result of slower investment growth, a weakening of global demand for Chinese exports and lower growth in private consumption. Going forward, the government announced a growth target of around 7.0 percent for 2015 on the back of weak domestic demand and strong deflationary risks. We expect growth to be slightly lower than 7.0 percent due to domestic and foreign headwinds.
In the Philippines, the economy is performing robustly, supported by strong remittances from overseas workers and accommodative monetary and financial conditions. Going forward, lower oil prices are expected to provide a stimulus to growth while inflation is likely to slow. The IMF projects the Philippines to grow by 6.3 percent in 2015, from 6.2 percent in 2014.
In Vietnam, the economy improved in 2014 underpinned by robust exports and foreign direct investment (FDI). Domestic demand, however, remains subdued partly due to tight financial conditions and inefficient state-owned enterprises (SOEs). The IMF forecasts Vietnam to grow by 5.6 percent in 2015, compared with 5.5 percent in 2014.
Malaysia’s economy is slowing as a result of lower oil prices and weaker domestic demand. The government has responded to lower oil prices by implementing significant fiscal consolidation which will weigh on growth in 2015. As a result, the IMF expects Malaysia to grow by 4.8 percent in 2015, compared with 5.9 percent in 2014.
Indonesia continues to face significant challenges amidst lower global commodity prices and tighter financial conditions. As a result, we expect economic growth to slow to 4.5 percent in 2015 as the USD debt overhang and the stronger USD are a drag on growth, making the government’s investment program harder to implement.
In Singapore, activity is slowing, reflecting headwinds from the global economy as well as lower domestic investment and real estate prices. "We expect growth of 2.5 percent in 2015, compared with 3.0 percent in 2014, on sluggish global demand and declining domestic investment spending," QNB said.
Overall, Asian economies are expected to continue on a similar growth path this year as they experienced in 2014. However, strong global economic headwinds suggest significant downside risks to several Asian countries most exposed to global trade. The projected slowdown in US economic growth in Q1, deflation in advanced economies, the prospects of higher US interest rates and lower commodity prices are all likely to contribute to a significant slowdown in external demand for Asian exports and a cooling of domestic demand. As a result, Indonesia, Malaysia and Singapore are most at risk of a further slowdown, while India and Myanmar are the least exposed. Nevertheless, Asia is still likely to remain the fastest growing region in the world in 2015.
One in five financial institutions consider cryptocurrency trading, survey says
LONDON: One in five financial institutions is considering trading cryptocurrencies within the next 12 months, a survey published by Thomson Reuters on Tuesday found.
Among those respondents who said they were willing to trade cryptocurrencies like bitcoin, the best known of the digital coins, 70 percent said they were planning to start trading in the next three to six months, the survey showed.
The survey covered more than 400 clients across Thomson Reuters Corp. platforms including large asset managers, hedge funds and trading desks at the biggest banks. Thomson Reuters, the parent company of Reuters, provides data and news to the financial services industry.
Retail interest in the buying and selling of digital coins exploded last year after prices skyrocketed, and institutional involvement has been predicted to grow, despite regulatory warnings that cryptocurrencies are highly risky and prone to scams.
Banks are examining client interest and several hedge funds have tried their hand trading virtual currencies.
Large falls in cryptocurrency prices this year, however, have encouraged critics to warn again that the market is a bubble and that investors should stay away.
The survey was the first conducted by Thomson Reuters so it was not possible to gauge how institutional appetite for crypto trading has changed.