VietNam Business: economic recovery

Showing posts with label economic recovery. Show all posts

Saturday, February 19, 2011

Robust economic recovery in East Asia, says WB

The economic recovery in Vietnam in particular and in East Asia and
the Pacific in general is robust, said the World Bank in its latest
East Asia and Pacific Economic Update.

The WB Update was announced at a press briefing in Hanoi on Oct. 19.

According to the Update, Vietnam ’s economy has recovered strongly
with a GDP growth of 5.3 percent in 2009 and is on the way to the
target of 6.5 percent this year. The nation’s foreign investment rose
from 6.9 billion USD in 2009 to 7.6 billion USD in 2010.

In addition, manufacturing companies’ relocation of plants in Southeast
Asia is benefiting Vietnam as its workers’ salaries are low and its
sea-bordered position is favourable for attracting investment capital.

The Update notes that output has recovered to above
pre-crisis levels throughout developing East Asia, and is expanding at
near pre-crisis rates in some countries. Real GDP growth is likely to
rise to 8.9 percent in the region in 2010 (6.7 percent excluding China
), up from 7.3 percent in 2009 and in line with the average growth
rate during the 2000-2008 period. Private sector investment is once
again driving growth, confidence is on the rise, and trade flows have
returned to pre-crisis levels.

Yet, greater confidence
in the region's growth prospects and concerns about tepid economic
expansion in advanced economies is creating the need for policymakers to
perform a delicate balancing act -- in particular, around the return of
large capital inflows and appreciating currencies.

"Should inflows remain strong, especially against a background of weak
global growth, the authorities will be faced with the challenge of
balancing the need for large capital inflows -- especially foreign
direct investment -- with ensuring competitiveness, financial sector
stability, and low inflation," said Vikram Nehru, World Bank chief
economist for the East Asia and Pacific region.

The East
Asia and Pacific Update which is published twice yearly is the WB’s
comprehensive review of the region’s economies./.

Friday, February 18, 2011

HCMC office building market sees partial recovery

Grade A office rents in Ho Chi Minh City continued to slip in the third quarter but that of grades B and C increased for the first time since the end of 2009, real-estate consultancy CB Richard Ellis reported.

While average rent for grade A offices fell to US$36.70 per square meter per month from $37.51 in the second quarter, it rose from $19.3 to $20 for grade B offices.

The total area leased in the 3rd quarter was 62,000 sq. m, taking the total for the year to 194,000 sq. m, or higher than in the whole of 2009 when the number was around 154,500 sq. m.

HCMC’s economic recovery, which remains on track, is persuading companies to move to large office buildings.

Banks, schools, and service providers are among the main customers for grades B or C in the downtown area.

Although eight new grade C and one grade B buildings opened in the 3rd quarter with more than 63,000 sq. m of space, the rate is still climbing. On the other hand, no new grade A building came into the market but the rental is still falling.

Another reason for the declining demand and rent for grade A offices is the competition from some tenants who buy space in the buildings at preferential prices and lease it out at 15-35 percent lower than the building owners.

Though the economic recovery will mean higher demand for office space in the coming future, rates will decrease as a result of huge supply coming into the market.

In the final quarter of this year alone, 100,000 sq. m will be available, including at the Bitexco Financial Tower which will have 37,000 sq. m of grade A space.

In the next three years, 1.2 million sq. m of new office space for lease will be available.

Old buildings will face tough competition and, though many are planning to upgrade, will find it hard to maintain current rentals.

Monday, November 29, 2010

US Fed 'prepared' to act if recovery stalls

WASHINGTON – The US Federal Reserve avoided pulling the trigger on fresh stimulus spending at a top-level policy meeting, but said it was prepared to act if the tepid economic recovery cools further.

The bank's open market committee held interest rates at record lows in a bid to shore up what it called a "modest" recovery, but shied away from a new -- and controversial -- round of spending.

"The committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery," the Fed said.

During the depths of the recession the bank spent about one trillion dollars buying up long-term US debt and toxic mortgage products in an effort to lubricate blocked up financial markets.

That may have helped stave off a rerun of the Great Depression, but there are widespread concerns that the private sector is not ready to stand on its own.

With US growth projected to be an anemic 1.5 percent this year, many commentators have called on the Fed to once again open the sluice gates and let cash flow into the economy.

At its August meeting, the bank took the baby step of agreeing to keep spending at current levels by plowing the proceeds from investments into US bonds.

Since that meeting, a panel of top economists has declared the US recession over and a slew of data has pointed to a moderately better outlook, but that has not been enough to dampen concerns.

The Fed retained its bleak view of the health of the world's largest economy, making further action possible when the panel meets again in early November.

"(The Fed) statement effectively kicked the can six weeks down the road," said Stephen Stanley of Pierpont Securities.

The Fed's top policy panel said the pace of recovery had "slowed in recent months" while warning the pace of economic growth would be "modest in the near term."

It pointed to now-familiar problems that plague the economy: high unemployment, low consumer spending and a moribund housing sector. Full text of Fed statement

It also gave a thinly veiled warning about the risks of deflation, stating that inflation rates were "somewhat below" target levels.

"The Fed clearly stated current levels of inflation are too low, and that the aim of current policy would be to address the deficiency," according to Andrew Schiff of Euro Pacific Capital.

Even with this bleak backdrop, Fed members again appeared to have tussled over when crisis measures are needed and if they would work.

Kansas Fed Representative Thomas Hoenig, seen as an inflation hawk, voted against the policies, arguing that loose monetary policy would create imbalances over time.

"The doves are ready now, while the hawks would need to see a significant deterioration in the outlook to sign off," said Stanley.

Tuesday's meeting was the policy-making panel's last before November's mid-term elections.

Sunday, November 14, 2010

Japan PM says ready to step into forex markets again

Foreign exchange broker stand in front of a television screen showing Japan's Finance Minister Yoshihiko Noda speaking to the media in Tokyo September 15, 2010.

Photo: Reuters

TOKYO - Japan's prime minister signaled on Thursday authorities would keep intervening to curb yen strength as sagging manufacturing confidence underscored the threat the currency poses to the fragile economic recovery.

A Reuters monthly poll that tracks the Bank of Japan tankan report showed manufacturing confidence dropped in September from August for the first time in nearly a year as firms struggled with the yen's rise to a 15-year high against the dollar.

Responding to the concerns about the yen's rise, authorities intervened in markets on Wednesday for the first time in six years to knock the currency lower by selling an estimated 2 trillion yen.

Prime Minister Naoto Kan, who fended off a leadership challenge from a ruling party powerbroker this week, pointed on Thursday to more yen selling if needed.

"If rapid fluctuations in the yen harm Japanese firms' appetite for investing at home and push them to shift their factories overseas, that could further worsen job conditions and affect to overcome deflation," Kan said.

"I will take decisive steps if needed from now on as well," he told a business group.

Some currency traders see the likelihood of another round of intervention would increase if the dollar slipped back below 85 yen. Its now trading at 85.4 yen, having strengthened from around 83 yen before the intervention.

Pressure on BOJ?

Kan, struggling to unify his party and facing a divided parliament, wants to be proactive in tackling the yen after winning the ruling party leadership race on Tuesday.

He is expected to reshuffle his cabinet soon but retain Yoshihiko Noda as finance minister.

"He is trying to send a message of his party's solidarity. He is showing the strong intention of Japan to take decisive action through intervention," said Ayako Sera, market strategist at Sumitomo Trust & Banking.

A panel of junior lawmakers in the ruling Democratic Party of Japan urged the Bank of Japan to call an extraordinary meeting to ease policy and so support the government's efforts.

Central bank sources have said the authority has no plan to call an emergency meeting but it is ready to act at its next scheduled meeting in early October if the economic recovery remains under threat.

The panel suggested the BOJ increases its buying of Japanese government bonds, although BOJ Governor Masaaki Shirakawa reiterated his opposition to the idea.

"We hardly observe the fact that massive expansions in central bank balance sheets result in an increase in inflation in advanced economies," Shirakawa said in a conference speech.

Shirakawa told a securities dealers' gathering later on Thursday that the BOJ would take timely action as needed and keep providing ample funds to money markets.

In addition, sources familiar with the matter said on Wednesday the BOJ will not drain the money flowing into the economy as a result of the selling, indicating it plans to use the sold yen as a monetary tool to boost liquidity in the economy.

Yen threat to exports

The intervention pushed the dollar more than 3 percent higher on Wednesday, a big move for a currency.

Japan faced some international criticism for its solo intervention. Since most advanced economies are grappling with slow growth at home, making exports an economic imperative, Japan's move heightened concerns countries would launch a round of competitive devaluations to support their own exports.

US lawmaker Sander Levin, who chairs a congressional committee examining China's currency policy, blamed Beijing for Japan's "deeply disturbing" intervention.

But Kan faces domestic pressure for more action on the yen.

"The dollar has recovered to about 85 yen now after the government and Bank of Japan intervened yesterday, and we want them to continue taking strong action to reverse the yen's strength," Toshiyuki Shiga, chairman of the Japan Automobile Manufacturers Association, told a news conference.

"A dollar of 85 or 90 yen is not a level at which job losses can be prevented in Japan," he added.

Japan's economic recovery from the global crisis has faltered with export growth slowing down. Signs the US recovery is also stuttering has added to Tokyo's concerns.

Underlining those concerns, the Reuters Tankan survey, which has a 95 percent correlation with the BOJ's closely watched quarterly tankan business sentiment survey, showed the manufacturers' sentiment index fell 5 points from August to plus 17, down for the first time since October 2009.

Still, the Reuters index has risen during the July-September quarter, suggesting the BOJ data due on out on September 29 will also show a rise.

Wednesday, November 10, 2010

ASEAN economic recovery remains robust: OECD

Photo: AFP

Southeast Asia is showing signs of moderate rebound after the global financial crisis but will remain robust, the OECD has said.

Both leading and coincident indicators for economies in the Association of Southeast Asian Nations (ASEAN) show steady growth is based on sound exports, strong domestic demand and improved business sentiment, the Organisation for Economic Cooperation and Development (OECD) said in its latest quarterly business report.

The OECD, a Paris-based international economic organisation comprising 33 of the world’s richest countries, based its forecast on data from five ASEAN nations, including Indonesia, Malaysia, the Philippines, Singapore and Thailand .

However, leading indicators suggest that growth in many ASEAN countries, while still robust, may be weakening in the next quarter, it said.

According to the report, signs of a slowdown in the Chinese economy, a key export market, constitute a negative factor for the outlook for ASEAN economies, while uncertainty about growth prospects for OECD economies remain.

OECD's forecast is in line with projections by officials and private sector economists that the pace of the region's economic rebound is likely to ease in the second half of the year, although full-year growth will remain strong.

While the OECD report did not contain projections for gross domestic product (GDP) growth in ASEAN this year, Singaporean officials have said they expect the island nation’s economy to surge by up to 15 percent.

Indonesia 's economy is expected to expand 6.0 percent and Malaysia should exceed 6.0 percent GDP growth this year, according to official estimates.

ASEAN's other members are Brunei, Cambodia, Laos, Myanmar and Vietnam.

Monday, October 25, 2010

Global economic recovery is slowing

PARIS – Global economic recovery is slowing faster than expected and extra stimulus from governments may be needed, the OECD warned on Thursday.

Growth in the Group of Seven leading industrialised economies could slow to an annual rate of 1.5 percent in the second half of the year, the Organisation for Economic Cooperation and Development said in an interim assessment.

"Recent high-frequency indicators point to a slowdown in the pace of recovery of the world economy that is somewhat more pronounced than previously anticipated," the OECD said.

But the report also said that such an evaluation was subject to "great uncertainty" and that it remained unclear if the slowdown reflected temporary factors or whether it signalled deeper constraints.

It said that if the trend were deemed to be temporary, governments should withdraw their monetary support "for a few months" while continuing to curb public spending.

But on the other hand, if the latest sluggishness proved to be longer lasting, governments could boost stimulus measures, for example by continuing central bank purchases of corporate debt and maintaining interest rates close to zero.

The report added that if public finances permitted, planned budget cuts could be delayed.

The OECD said in the months ahead consumer spending, the principal motor in many advanced economies, could be constrained by unemployment and falling housing prices.

In addition, "a weak economy and uncertainty in sovereign debt markets might also affect adversely the financial system and private demand growth."

But the OECD also noted that the global economy could take advantage of several strengths, in particular robust corporate profits, inventory levels that should not warrant "a renewed rundown of stocks" and stablised overall financial conditions in most industrialised countries.

In its country-specific forecasts, the OECD foresaw growth in the United States of 2.0 percent in the third quarter this year and 1.2 percent in the fourth.

Japan should experience growth of 0.6 percent in the third quarter and 0.7 percent in the fourth.

For the eurozone, based on an average of the three largest members, Germany , France and Italy , the comparable figures are 0.4 percent and 0.6 percent.

Friday, October 1, 2010

Asia stocks rise on China

Photo: Reuters

SINGAPORE - Asian stocks rose on Wednesday as investors cheered a manufacturing rebound in China and rosier-than-expected Australian growth, which halted the yen's advance towards a 15-year peak against the dollar.

Asian stocks shrugged off a flat lead from Wall Street, reflecting belief that Asia's economic recovery could hold up relatively well compared to the United States, which faces the possibility of a double-dip recession.

Leading European stocks opened 0.4 percent higher, while S&P 500 futures were flat.

China's manufacturing economy regained some momentum in August, while Australia's economy grew at the fastest pace in three years last quarter as households spent far more than expected while exports enjoyed an Asian-driven boom.

"The market is still concerned about the global recovery momentum, but based on fundamentals, some funds will flock from developed countries to Asia," said Daniel Chan, chief economist and wealth management strategist BWC Capital Markets in Hong Kong.

The MSCI index of Asia Pacific stocks outside Japan rose 1.5 percent, led by commodity-related shares due to optimism about Chinese.

But the MSCI Asia index is still down about 2.5 percent so far this year, compared to a 6.6 drop on the MSCI world-wide index, underscoring Asia's economic resilience.

Analysts expect increased volatility in Asian stock and bond markets as markets brace for a slowdown in the world economy.

Japan's Nikkei average rose 1.2 percent after briefly hitting a 16-month low, getting a boost from the Chinese data while technology shares crawled higher in reaction to a sharp fall the day before.

Australian stocks jumped just over 2 percent, the sharpest daily rise since early July, as investors applauded Australia's outperformance against sluggish global economies.

Australia and New Zealand Banking Group led in a rally in local bank shares, powering 2.4 percent higher.

South Korean stocks gained 1.3 percent, propelled by auto and retail counters including Kia Motors and Lotte Shopping, but key technology shares continued to fall amid persisting concern over global economic recovery.

"The market is being helped by gains in defensive, domestic consumption issues as investors seek safer bets," said Lee Sun-yeb, a market analyst at Shinhan Investment Securities.

U.S. Treasury yields rebounded slightly after the benchmark 10-year yield recorded its largest monthly drop in August since late 2008, when markets were reeling from the Lehman Brothers collapse.

Yen off 15-year high

The yen fell as upbeat Chinese and Australian data improved investors' appetite for risk. It extended losses after Japanese ruling party powerbroker Ichiro Ozawa, challenging Prime Minister Naoto Kan in a party leadership vote, said he would implement steps including intervention if the yen rose sharply.

The Australian dollar jumped 1 percent to 75.85 yen and the dollar edged up 0.3 percent to 84.40 yen.

Japanese government bonds fell as investors braced for a debt sale, and the yield curve resumed steepening as superlongs sagged on the underlying prospect of potential political change watering down the government's stance on fiscal austerity.

The 10-year yield was up 5 basis points at 1.010 percent while the 20-year yield climbed 7.5 basis points to 1.735 percent, heading back towards a seven-week high of 1.835 percent hit on Monday.

Gold prices hit a fresh one-month high at $1,250.55 an ounce, while crude gained 36 cents to $72.28 a barrel after tumbling 3.7 percent the previous day on signs U.S. stockpiles rose further last week and prospects of bad weather to suppress demand at the end of the driving season.

Asia stocks rise on China