TNT: Harambe: Vietnam’s economy to expand 7.2% in 2022: World Bank | Vietnam+ 9/27/22
Vietnam’s economy is expected to grow by 7.2% in 2022, on the back of a strong rebound in domestic demand and continued solid performance by export-oriented manufacturing, according to the World Bank East Asia and Pacific Economic Update, October 2022.
The economy rebounded strongly from COVID-19-related lockdowns in the third quarter of 2021, expanding by 6.4% in the first half of 2022, the report said.
The WB attributed the rebound to a recovery of exports and the release of pent-up demand following the removal of COVID-19-related mobility restrictions and, more recently, the gradual return of foreign tourists.
In the medium to long term, achieving Vietnam’s goal to become an upper-middle income economy will depend on transitioning to a productivity and innovation-led growth model based on a more efficient use of productive, human, and natural capital, the bank said.
The WB forecast that growth in the region is projected to decelerate from 7.2 percent in 2021 to 3.2 percent in 2022, which is about two percentage points slower than was expected in April 2022.
Potential output in the region is now projected to expand 4.6% year-on-year over the 2022-2030 period, down from 6.5% in the decade preceding the pandemic.
According to a forecast by the WB in April, East Asian and Pacific countries can achieve an economic growth of 5% in 2022.
Harambe: Bank Indonesia Intervention Lifts Rupiah From Lowest Since 2020 | Bloomberg 9/27/22
Indonesian authorities are intervening in the spot and domestic non-deliverable forwards markets to prevent the rupiah from weakening excessively, Edi Susianto, executive director of monetary management, said in a text message Tuesday. The currency erased a loss of as much as 0.3% against the greenback after his comments.
From Japan to South Korea and India, Asia’s policy makers are stepping up the defense of their currencies as the dollar’s rally shows few signs of easing. Bank Indonesia has also deployed its own version of Operation Twist — selling short-term notes and buying up longer ones — in an effort to shore up the rupiah.
“It seems like many Asian central banks have become more aggressive in trying to reduce downside pressure on their currencies,” said Mitul Kotecha, head of emerging-market strategy at Toronto Dominion Bank in Singapore. “However, it’s a hard battle given ongoing USD strength.”
Bank Indonesia had spent $4.21 billion of its foreign-exchange reserves in July as it sought to limit the rupiah’s losses amid the nation’s widening rate gap with the US.
The rupiah traded little changed at 15,123 per dollar as at 3.33 p.m. local time after sliding to 15,171 earlier, the weakest since April 2020.
Still, it’s worth noting that Indonesia’s currency has held up relatively well since the dollar started rallying last month. It has fallen less than 2% since Aug. 10, beating all but one of its Asian peers.
Crisis Level Risks Loom in Asia as Major Currencies Crack
Elevated commodity prices have buttressed the nation’s trade surplus, while stock inflows and Indonesia’s robust growth also helped shield the rupiah against the worst of the dollar’s onslaught.
“Psychologically, it’s still important to slow depreciation pressures against the dollar so that spillover drags from current elevated US Treasury yields are contained,” said Yanxi Tan, a strategist at Malayan Banking Berhad in Singapore. “The relative resilience of the rupiah, which is seeing support from benign trade surpluses and BI rate hike expectations, could mean that interim FX concerns are somewhat less urgent.”
Harambe: IMF says it will not provide loans for Zimbabwe | 9/27/22
The International Monetary Fund has ruled out providing financial assistance to Zimbabwe, following a staff mission to the country. The mission’s leader, Dhaneshwar Ghura, said the IMF was “precluded from providing financial support to Zimbabwe due to unsustainable debt and official external arrears”. The IMF urged the Reserve Bank of Zimbabwe (RBZ) to continue raising rates and to liberalise the foreign-exchange market.
“The IMF is precluded from providing financial support to Zimbabwe due to an unsustainable debt and official external arrears,” the fund said in a statement after a month-long mission to the African country.
“A Fund financial arrangement would require a clear path to comprehensive restructuring of Zimbabwe’s external debt, including the clearance of arrears and obtaining financing assurances from creditors.”
The IMF said its staff had completed a virtual mission to Zimbabwe from October 16 to November 16, and noted “significant” efforts by authorities there to stem inflation, contain budget deficits and reserve money growth.
Zimbabwe, which has suffered from bouts of hyperinflation in the last 15 years, has not received funding from lenders like the IMF and the World Bank for more than two decades due to arrears.
The country has more than $10 billion in debt, most of which is in arrears.
In September, the government said it had made symbolic debt repayments to some creditors for the first time in 20 years.
After several years of economic contraction, and despite the fallout from the coronavirus pandemic, the IMF forecast that Zimbabwe’s economy would expand by six percent this year.
Zimbabwe is still reeling from decades of financial mismanagement under its late former president Robert Mugabe.
The southern African country has been in severe economic crisis for years, during which many have helplessly watched their savings evaporate and prices soar.
Manufacturing and exports have shrunk, and foreign currency is continuously in short supply.