1 Japan industrial production slips (Straits Times) Japan's
industrial production unexpectedly fell in July, sapping a rebound in the
economy from a slump last quarter. Output fell 0.6 per cent from June, when it
increased 1.1 percent, the trade ministry said on Monday, compared with the
median forecast for a 0.1 per cent gain in Bloomberg survey.
The world's third-biggest economy is struggling to
recover from a contraction, as slowing growth in China - Japan's biggest
trading partner - weighs on exports. Household spending unexpectedly declined
and the Bank of Japan's key inflation gauge slowed to zero for a third time
this year, data for July showed last week.
Production cutbacks in the electrical components and
the transport equipment industries led the decline in manufacturing. Companies
trimmed inventories by 0.8 per cent in July from the previous month, the first
reduction since May. Bank of Japan Governor Haruhiko Kuroda said in New York
last week that weakness in production and exports would pass and that leading
indicators point to a pick-up in business investment.
2 China woe ‘broader than expected’ (Sydney Morning
Herald) China's deepening struggles are starting to make a bigger dent in the
global economic outlook. Moody's Investors Service on Friday cut its 2016
growth forecast in Group of 20 economies to 2.8 per cent, down 0.3 percentage
point from the company's call less than two weeks ago. China is projected to
grow 6.3 per cent in 2016, down from 6.5 per cent previously, the credit-rating
company said.
Citigroup last week pared its projection for world
growth in 2016 to 3.1 per cent from 3.3 per cent, the third straight time the
bank has cut the forecast. Recent Chinese data including numbers on credit
expansion and fixed-asset investment suggest a sharper slowdown this quarter
than Moody's previously judged, while Citigroup said the worsening outlook was
driven by "significant" downgrades for China, the euro area, Japan
and several other major countries.
Economists in a Bloomberg survey earlier this month gave
a median estimate of 3.5 per cent global growth in 2016, compared with 3.6 per
cent in the July survey. China shocked markets on August 11 by devaluing the
yuan and aligning its exchange-rate policy more with market forces. The
currency is down 2.8 per cent against the dollar this month, while the Shanghai
Composite Index of stocks has plunged 12 per cent.
Even with the weaker outlook, Moody's dismissed the
impact of China's stock-market rout, saying it happened after a "long
period of price increases" and will have limited effects on consumer
spending and financial-industry profit. US growth also rebounded more than
estimated in the second quarter, with the world's biggest economy expanding at
a 3.7 per cent annual pace, compared with the initial estimate of 2.3 per cent.
3 Malaysia protests recipe for chaos (Khaleej Times)
Malaysia is in turmoil because Prime Minister Najib Razak allegedly swindled
money. Street protests are not good for the economy and for political
stability. The 1MDB scandal is likely to have far-reaching consequences for the
Southeast Asian country. It is alleged the prime minister accepted a staggering
$700 million, which went into his personal account.
An investigation is called for and the PM has a
moral responsibility to clear the air and prove it was a legal transaction or
step down for an impartial probe. Razak's kneejerk reaction to remove the
attorney general and suspend the investigation has made him a prime suspect.
The crosscurrents are political in essence and could
push the country into administrative chaos and anarchy. Mahathir Muhammad, who
is still widely respected as the father of modern Malaysia, has came out openly
against the man he groomed to be his successor. These upheavals could not have
come at a worse time for Malaysia as the impact of the China's downturn is
being felt across the world.
The PM has to introspect and take the right, ethical
decision, or fight the taint with proof that clears his name. Malaysians still
value his national unity campaign in which he pledged to broker a new social
contract and to make the economy more transparent and introduce serious
political reforms. He must live up to those lofty ideals before the
demonstrations get out of control.
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