RECENT NEWS
Philippines: Maharlika Investment Fund
Marcos signs Maharlika Investment Fund bill into law
President Ferdinand signed the Maharlika Investment Fund (MIF) into law, establishing the country's first-ever sovereign wealth fund. The Republic Act (RA) 11954 aims to create a platform for profitable and strategic investments in key sectors and accelerate the implementation of 194 infrastructure projects approved by the National Economic and Development Authority (NEDA). Despite some experts' warnings about potential risks and mismanagement, President Marcos reassured that the wealth fund would not be politicized or misused, and emphasized its necessity to fund investments that would enhance the Philippines' competitiveness in a post-pandemic economy.
Source: Marcos signs Maharlika Investment Fund bill into law (19 July 2023), BusinessWorld
Marcos signs Maharlika Investment Fund bill into law
President Ferdinand signed the Maharlika Investment Fund (MIF) into law, establishing the country's first-ever sovereign wealth fund. The Republic Act (RA) 11954 aims to create a platform for profitable and strategic investments in key sectors and accelerate the implementation of 194 infrastructure projects approved by the National Economic and Development Authority (NEDA). Despite some experts' warnings about potential risks and mismanagement, President Marcos reassured that the wealth fund would not be politicized or misused, and emphasized its necessity to fund investments that would enhance the Philippines' competitiveness in a post-pandemic economy.
Source: Marcos signs Maharlika Investment Fund bill into law (19 July 2023), BusinessWorld
Philippines: Economic Growth
Q2 GDP growth likely slowed to 5.6%
The Philippine economy faced a slowdown in the second quarter of 2023, with economic growth forecasted to reach 5.6%. This was mainly due to the lasting impact of the COVID-19 pandemic and other factors that affected the country's economic recovery. Despite these challenges, government officials are cautiously optimistic about the economy's ability to bounce back, and they anticipate further improvement in the coming months.
Source: Q2 GDP growth likely slowed to 5.6% (20 July 2023), BusinessWorld
Q2 GDP growth likely slowed to 5.6%
The Philippine economy faced a slowdown in the second quarter of 2023, with economic growth forecasted to reach 5.6%. This was mainly due to the lasting impact of the COVID-19 pandemic and other factors that affected the country's economic recovery. Despite these challenges, government officials are cautiously optimistic about the economy's ability to bounce back, and they anticipate further improvement in the coming months.
Source: Q2 GDP growth likely slowed to 5.6% (20 July 2023), BusinessWorld
Asia: Inflation
Asia's central banks go easy as West ramps up inflation fight
Amid increasing tensions between Beijing and Western countries over efforts to reduce economic reliance on China, a form of "decoupling" is already taking place in the realm of central banks. While Western central banks are raising interest rates to combat stubbornly high inflation, Asian counterparts like China and Japan are keeping rates low, and other regional nations are considering rate cuts. The U.S. Federal Reserve has raised rates significantly since March 2022, with plans for further increases in 2023 before eventually easing its policy. The Bank of England has also tightened its policy at the fastest rate in over 30 years. On the other hand, central banks in Asia, such as the People's Bank of China and the Bank of Japan, are maintaining loose monetary policies. For example, the People's Bank of China has cut key policy rates and reserve requirement ratios multiple times since 2021, with further cuts expected in the coming months. These differing approaches to monetary policy have led to variations in economic conditions, with the U.S. and Europe experiencing restrictive financing conditions, while Asian economies maintain more accommodative stances. For instance, Germany has entered a recession, and the U.S. economy is projected to contract in the latter half of the year. In contrast, Asian central banks like China and Japan are more optimistic about inflation being transitory in their economies.
Source: Asia's central banks go easy as West ramps up inflation fight (10 July 2023), Nikkei Asia
Asia's central banks go easy as West ramps up inflation fight
Amid increasing tensions between Beijing and Western countries over efforts to reduce economic reliance on China, a form of "decoupling" is already taking place in the realm of central banks. While Western central banks are raising interest rates to combat stubbornly high inflation, Asian counterparts like China and Japan are keeping rates low, and other regional nations are considering rate cuts. The U.S. Federal Reserve has raised rates significantly since March 2022, with plans for further increases in 2023 before eventually easing its policy. The Bank of England has also tightened its policy at the fastest rate in over 30 years. On the other hand, central banks in Asia, such as the People's Bank of China and the Bank of Japan, are maintaining loose monetary policies. For example, the People's Bank of China has cut key policy rates and reserve requirement ratios multiple times since 2021, with further cuts expected in the coming months. These differing approaches to monetary policy have led to variations in economic conditions, with the U.S. and Europe experiencing restrictive financing conditions, while Asian economies maintain more accommodative stances. For instance, Germany has entered a recession, and the U.S. economy is projected to contract in the latter half of the year. In contrast, Asian central banks like China and Japan are more optimistic about inflation being transitory in their economies.
Source: Asia's central banks go easy as West ramps up inflation fight (10 July 2023), Nikkei Asia
China: Economic Growth
China's frail Q2 GDP growth raises urgency for more policy support
China's economic growth in the second quarter of 2023 slowed down to 0.8% on a quarterly basis, which was just slightly above what experts forecasted. The slow growth happened because of the government's actions to control property market speculation and the persistent negative impacts of the COVID-19 pandemic. Despite this, the economy remains stable, and the positive growth rate matches the predictions made earlier, indicating that China is doing well despite the challenges it faces.
Source: China's frail Q2 GDP growth raises urgency for more policy support (17 July 2023), Reuters
China's frail Q2 GDP growth raises urgency for more policy support
China's economic growth in the second quarter of 2023 slowed down to 0.8% on a quarterly basis, which was just slightly above what experts forecasted. The slow growth happened because of the government's actions to control property market speculation and the persistent negative impacts of the COVID-19 pandemic. Despite this, the economy remains stable, and the positive growth rate matches the predictions made earlier, indicating that China is doing well despite the challenges it faces.
Source: China's frail Q2 GDP growth raises urgency for more policy support (17 July 2023), Reuters
China: Economic Growth
How much trouble is China’s economy in?
China's economy grew by 6.3% in the second quarter of the year compared to the same period last year, which appears positive. However, the growth was slower than expected and partly due to a low base in 2022 during pandemic lockdowns. The recovery faced both foreign and domestic obstacles, with a sharp drop in the dollar value of exports and a struggling property market. The nominal growth, before adjusting for inflation, was weaker than the inflation-adjusted figure, indicating a possible deflationary trend. Some commentators and the public believe the actual economic situation may be worse than official figures suggest. Despite this, the government has not introduced significant fiscal stimulus, possibly due to its confidence in the ongoing recovery and concerns about potential side effects on state-owned banks and local governments. However, if growth remains weak, the government may be forced to take more action to revive the economy.
Source: How much trouble is China’s economy in? (17 July 2023), The Economist
How much trouble is China’s economy in?
China's economy grew by 6.3% in the second quarter of the year compared to the same period last year, which appears positive. However, the growth was slower than expected and partly due to a low base in 2022 during pandemic lockdowns. The recovery faced both foreign and domestic obstacles, with a sharp drop in the dollar value of exports and a struggling property market. The nominal growth, before adjusting for inflation, was weaker than the inflation-adjusted figure, indicating a possible deflationary trend. Some commentators and the public believe the actual economic situation may be worse than official figures suggest. Despite this, the government has not introduced significant fiscal stimulus, possibly due to its confidence in the ongoing recovery and concerns about potential side effects on state-owned banks and local governments. However, if growth remains weak, the government may be forced to take more action to revive the economy.
Source: How much trouble is China’s economy in? (17 July 2023), The Economist
Climate Change
Climate summit needs private sector to succeed — COP28 president
The private sector has a crucial role in the success of COP28. The president of COP28 says that involving businesses is important to address climate change. With the collaboration between governments and other stakeholders, the private sector can drive sustainable innovations, investments, and initiatives that will make a real impact in combating climate challenges. The COP28 president urges businesses to step up and take a leading role in the global fight against climate change, contributing to a better and more sustainable future for all.
Source: Climate summit needs private sector to succeed — COP28 president (14 July 2023), PhilStar
Climate summit needs private sector to succeed — COP28 president
The private sector has a crucial role in the success of COP28. The president of COP28 says that involving businesses is important to address climate change. With the collaboration between governments and other stakeholders, the private sector can drive sustainable innovations, investments, and initiatives that will make a real impact in combating climate challenges. The COP28 president urges businesses to step up and take a leading role in the global fight against climate change, contributing to a better and more sustainable future for all.
Source: Climate summit needs private sector to succeed — COP28 president (14 July 2023), PhilStar
Global Manufacturing
The world is in the grip of a manufacturing delusion
Governments worldwide are investing in manufacturing to tackle climate change, unemployment, geopolitical tensions, and enhance economic growth. However, The Economist argues that the expectation that manufacturing will address these problems needs reconsideration. Policymakers in developed countries hope that a revived manufacturing sector will create jobs and strengthen the middle class. Yet, automation has reduced the number of traditional manufacturing jobs and lowered wages, making it uncertain whether reshoring manufacturing will benefit the middle class. Manufacturing might no longer be the primary driver of economic growth as other sectors like finance and IT have recently matched its productivity. It is also unclear whether manufacturing will improve innovation since there is no clear measure for the service sector’s contribution to innovation. Similarly, investing in manufacturing for the green transition may not accelerate this process, as some green industries are already meeting demand, and subsidies could lead to unnecessary competition for funding. Regarding supply chains, The Economist suggests that globally diversified chains might be more resilient than reshoring, which could expose production to local shocks. The pandemic highlighted the vulnerability of relying on single trading partners, but reshoring might not fully address this issue. In conclusion, while governments seek to revive manufacturing, the impact may not align with their intentions due to automation, changes in industry dynamics, and limited effects on growth and innovation. The efficacy of manufacturing as a solution to current challenges remains uncertain and could be reassessed by future leaders.
Source: The world is in the grip of a manufacturing delusion (13 July 2023), The Economist
The world is in the grip of a manufacturing delusion
Governments worldwide are investing in manufacturing to tackle climate change, unemployment, geopolitical tensions, and enhance economic growth. However, The Economist argues that the expectation that manufacturing will address these problems needs reconsideration. Policymakers in developed countries hope that a revived manufacturing sector will create jobs and strengthen the middle class. Yet, automation has reduced the number of traditional manufacturing jobs and lowered wages, making it uncertain whether reshoring manufacturing will benefit the middle class. Manufacturing might no longer be the primary driver of economic growth as other sectors like finance and IT have recently matched its productivity. It is also unclear whether manufacturing will improve innovation since there is no clear measure for the service sector’s contribution to innovation. Similarly, investing in manufacturing for the green transition may not accelerate this process, as some green industries are already meeting demand, and subsidies could lead to unnecessary competition for funding. Regarding supply chains, The Economist suggests that globally diversified chains might be more resilient than reshoring, which could expose production to local shocks. The pandemic highlighted the vulnerability of relying on single trading partners, but reshoring might not fully address this issue. In conclusion, while governments seek to revive manufacturing, the impact may not align with their intentions due to automation, changes in industry dynamics, and limited effects on growth and innovation. The efficacy of manufacturing as a solution to current challenges remains uncertain and could be reassessed by future leaders.
Source: The world is in the grip of a manufacturing delusion (13 July 2023), The Economist
US: Banking System
America’s big banks are in rude health—with one exception
The article discusses the generally healthy state of America's major banks, despite operating in a high-interest rate environment, but raises concerns specifically about Goldman Sachs. This bank has faced challenges due to exposure to risky assets, leading to its struggles over the past year and reporting its worst quarterly profits in three years. These difficulties were particularly evident in their consumer lending business. On the other hand, other prominent names in the banking industry like Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo have benefited from the rise in interest rates, achieving a record high net income of $63 billion. Overall, the financial markets have adapted well to the increase in interest rates, surpassing expectations. However, with the anticipation of additional Federal Reserve rate hikes, the future of the American economy remains uncertain and will be closely monitored.
Source: America’s big banks are in rude health—with one exception (19 July 2023), The Economist
America’s big banks are in rude health—with one exception
The article discusses the generally healthy state of America's major banks, despite operating in a high-interest rate environment, but raises concerns specifically about Goldman Sachs. This bank has faced challenges due to exposure to risky assets, leading to its struggles over the past year and reporting its worst quarterly profits in three years. These difficulties were particularly evident in their consumer lending business. On the other hand, other prominent names in the banking industry like Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo have benefited from the rise in interest rates, achieving a record high net income of $63 billion. Overall, the financial markets have adapted well to the increase in interest rates, surpassing expectations. However, with the anticipation of additional Federal Reserve rate hikes, the future of the American economy remains uncertain and will be closely monitored.
Source: America’s big banks are in rude health—with one exception (19 July 2023), The Economist
US: Inflation
Is America’s inflationary fever breaking?
Yes, inflation is slowing down in America, but the Fed is ready to raise rates due to a hot labor market. June showed a slowed pace of inflation, only growing at 3% due to drop in energy prices. Core inflation, excluding housing, also fell slightly compared to May. However, the job market is strong as jobs continue to be added and wages continue to rise. Such a phenomenon could lead to higher prices in general because of businesses passing the cost onto consumers. Therefore, the Fed is preparing for this and future rate increases will depend on inflation data in the coming months.
Source: Is America’s inflationary fever breaking? (13 July 2023), The Economist
Contributors:
Natasha Amber Cabiltes
Edgar Desher Empeño
Jose Lorenzo Mercado
Brendan Emmanuel Miranda
Jacobe Joaquin Sevilla
Is America’s inflationary fever breaking?
Yes, inflation is slowing down in America, but the Fed is ready to raise rates due to a hot labor market. June showed a slowed pace of inflation, only growing at 3% due to drop in energy prices. Core inflation, excluding housing, also fell slightly compared to May. However, the job market is strong as jobs continue to be added and wages continue to rise. Such a phenomenon could lead to higher prices in general because of businesses passing the cost onto consumers. Therefore, the Fed is preparing for this and future rate increases will depend on inflation data in the coming months.
Source: Is America’s inflationary fever breaking? (13 July 2023), The Economist
Contributors:
Natasha Amber Cabiltes
Edgar Desher Empeño
Jose Lorenzo Mercado
Brendan Emmanuel Miranda
Jacobe Joaquin Sevilla