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IFF Newsletter Issue 62
TIME:2023-02-09
From the Editor
The Fed raised interest rates by a quarter point, the smallest increase since March. Meanwhile US unemployment rate reached record low in January. Japan’s current account surplus fell sharply in December. And countries rushed to send aid and rescue to Turkey and Syria after earthquake.
China’s economy is to rapidly bounce back as domestic consumption and the service sector recover, which will contribute greatly to global development, said the Vice President of the International Finance Forum (IFF) and former Secretary of the International Monetary Fund Lin Jianhai in an interview with People.cn, the official portal of People’s Daily.
“(Chinese economy’s) rebound could be very quick as pent-up demand in the past three years will drive up domestic consumption and accelerate growth in service and other sectors,” said Lin.
Lin said the relaxation of China’s Covid control measures will boost domestic demand for investment and consumption and the recovery of Chinese economy will help stabalise global supply chain.
China’s GDP, which made up one third of the world economy before the pandemic, could return to the same level this year.
“Whether China could maintain this level of contribution to the world economy will hinge on China’s economic policies and structural reform and whether China could maintain high-level opening-up,” said Lin.
Fitch Ratings raised its China growth forecast to 5% from 4.1% on Wednesday, citing faster recovery of consumption and factory activity.
China’s economic recovery will be primarily consumption-led, said Fitch.
The country’s economic rebound will be less vigorous than that of 2021 thanks to its troubled property sector.
Trade could be another drag on China’s GDP this year as economic slowdowns in the US and Europe may damp export demand.
Fitch expected a budget deficit of around 7% of GDP this year and the direction of fiscal policy remains uncertain ahead of March’s National People’s Congress.
China’s luxury market fell 10% year on year in 2022, the first decline in five years according to consulting firm Bain & Company.
Revenues of China’s internet firms saw revenues drop for the first time since 2013, official data showed on Friday.
The combined revenues of internet firms fell 1.1% to 1.46 trillion yuan in 2022, according to data from the Ministry of Industry and Information Technology.
Revenues of internet services in ride-hailing, travel, financial and flat rental services was hit the hardest with a 17.5% drop in revenue last year.
Ten Chinese provinces or regions including Henan, Anhui and Hainan have set growth target for investment in fixed asset at 10% and above this year in an effort to boost growth, according to Chinese media.
Tibet, Hainan and Xinjiang set growth targets for fixed asset at around 13%, 12% and 11% respectively while seven other provinces including Henan, Liaoning and Anhui set growth targets at 10% and above.
The US economy added 517,000 jobs and unemployment rate hit a 53-year low of 3.4% in January, data from the Labour Department showed on Friday.
Job growth was led by gains in leisure and hospitality, professional and business services, and health care. Employment also increased in government, according to the Labour Department.
The number of unemployed stayed at 5.7 million in January and the number of people jobless less than five weeks decreased to 1.9 million in January.
Group of Seven economies agreed to expand sanctions on Russia oil industry on Sunday, according to media report.
The coalition set two caps on Russian oil products, one on products that trade at a premium to crude, such as diesel or gas oil and one for products that trade at a discount to crude like fuel oil, according to Reuters.
The G7 economies agreed to review the level of price cap on exports of Russian oil in March, Reuters reported.
German Chancellor Olaf Scholz said on Wednesday Europe will tighten sanctions against Russia again near the anniversary of the start of the Russia-Ukraine conflict.
Japan’s current account surplus dropped sharply in December, Reuters reported on Wednesday citing data from the Ministry of Finance.
The current account surplus stood at 33.4 billion yen in December, down from November’s surplus of 1.8 trillion yen.
A weak yen has pushed up cost of imports and trade deficit stood at 15.78 trillion yen by the end of December.
Governments around the world have sent aid and rescuers to Turkey and Syria after the 7.8-magnitude earthquake that killed more than 15,000 people.
China committed to send 40 million yuan in emergency aid to Turkey and 30 million yuan in emergency humanitarian aid to Syria.
An earthquake rescue team sent by China arrived in Turkey on Wednesday, China’s state media reported.
The European Union sent 27 rescue and medical teams from 19 member states to assist Turkey and US President Joe Biden said US officials reached out to Turkish authorities to coordinate any and all needed assistance.
South Korea sent a 60-person rescue team and medical supplies to Turkey on Tuesday.
Leaders from five international organisations appealed for urgent action to prevent the global food and nutrition crisis from worsening.
Heads of the Food and Agriculture Organisation, the International Monetary Fund, the World Bank Group, the World Food Programme and the World Trade Organisation called for rescuing “hunger hotspots” and facilitating trade, according to the UN.
Nearly 350 million people across 79 countries are acutely food insecure, and undernourishment is on the rise, according to the UN.