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Bloomberg
05-08-2025
- Business
- Bloomberg
Trump's Tariff to Test India's Central Bank: Decision Guide
US President Donald Trump's tariff shock on India is complicating the central bank's interest rate decision Wednesday, with some economists bringing forward their expectations for easing. Before Trump's announcement, most economists had expected no change in rates following the governor's cautious stance in the June policy meeting. Now, some of them — including Soumya Kanti Ghosh of State Bank of India Ltd. and Dhiraj Nim of Australia & New Zealand Banking Group — are forecasting a quarter-point rate cut to shield Asia's third-largest economy from tariff-related uncertainty.
Japan Times
16-07-2025
- Business
- Japan Times
China's growth momentum offers Xi rare window to fight deflation
China's humming factories threw a lifeline to an economy struggling with weak demand in the second quarter. That's also given policymakers space to fight deflation — if they choose to do more than just hitting their growth target. Gross domestic product beat expectations to grow 5.2% between April and June, bringing the official 5% expansion goal for the year within reach. But while strong exports made up for sluggish consumption at home, they also masked a worsening decline in prices that threatens to drag the world's second-largest economy into a prolonged slowdown. Nominal GDP, which accounts for price changes, grew only 3.9%, the least outside the pandemic since the quarterly data began in 1993. The GDP deflator, a measure of economywide prices, extended the longest streak of decline on record. This persistent deflation fuels a dangerous cycle: As consumers withhold purchases in anticipation of further price drops, business profits and wages will suffer, further dampening the appetite to spend. "I worry that policymakers will be complacent because of the good GDP numbers,' said Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group. "They shouldn't ignore that deflation is the most urgent problem now.' A delay in further stimulus risks exacerbating sluggish consumer confidence, which remains weighed down by a worsening property market. Continued reliance on exports, which made up almost a third of growth in the first half of the year, also leaves the economy vulnerable to external shocks. While the outcome of tariff talks with the U.S. remains unclear, exports are already expected to slow in the coming months as the effect of front-loading fades, with economists forecasting growth to decline sharply to 2% for the year. A drop in overseas shipments would not just hurt growth but also worsen the oversupply at home and put even more pressure on prices. With expansion in the first six months now standing at 5.3%, banks including Nomura Holdings and Goldman Sachs Group have revised up their forecasts for the economy. The improved outlook offers leader Xi Jinping a rare opportunity to tackle sticky deflation before real growth starts to falter. The Chinese president signaled his intent to do so earlier this month, when he and other top officials offered their bluntest assessment yet of the cutthroat competition that's been dragging down prices and profits across industries. Reining in overcapacity may also ease China's tensions with trading partners, who have increasingly complained of a flood of Chinese products drowning out local competition. "Curbing excessive competition could have a negative impact on the economy in the short term, so it needs to be pushed forward when the economy is relatively stable,' said Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered. But such a pivot won't be easy. As Chinese consumers remain reluctant to spend, tackling deflation means cutting supply and production capacity — effectively allowing less efficient or unprofitable companies to fail. To curb price wars, authorities will likely prevent local governments from supporting companies trapped in chronic losses, encourage mergers and tighten competition rules, Ding said. A key challenge lies in the nature of industries suffering from price wars. Many are emerging sectors where significant production capacity was built only in recent years, said Jacqueline Rong, chief China economist at BNP Paribas. That makes it difficult to identify outdated capacity for shutdown, unlike a 2015 supply-side reform targeting traditional heavy industries. "Unless we see significant progress in production or capacity cuts across industries, the problem of low prices is bound to persist in the second half the year,' Rong said. Other than industrial capacity, economists believe authorities will focus on supporting the ailing property sector in the coming months. Home prices fell at a faster pace in June, in a yearslong slump that erodes homeowner wealth and make them less inclined to spend. In a sign of policy in the works, Xi this week called for the acceleration of a "new model' for property development, advocating a more measured approach to urban planning and upgrades. While falling short of some investors' expectations for more aggressive measures, it's not uncommon for China's top leaders to set a general policy direction and task lower-level officials with working out specifics. Goldman Sachs economists including Lisheng Wang expect modest easing steps including further cuts to mortgage rates and greater policy support for urban village renovation and some urban infrastructure, they wrote in a Tuesday note. Despite signals of policy actions on the supply side, some economists are worried that a lack of direct stimulus for domestic demand will ultimately hobble China's efforts to ease deflation. The People's Bank of China appears comfortable keeping its current policy stance without further easing moves in the near term. Deputy Gov. Zou Lan said in a Monday briefing the central bank will monitor the impact of measures already implemented while repeating its vow to maintain a moderately loose monetary policy. Economists generally expect the monetary authority to deliver another round of moderate interest rate cut between 10 and 20 basis points in the fourth quarter, when growth may slow. The impact of government subsidies, which drove consumption and investment growth, could weaken then due to a higher base late last year. Authorities may also step up fiscal stimulus modestly once the economy loses steam. Policymakers planned a 500 billion yuan ($70 billion) program for infrastructure investment via policy bank financing as well as a nationwide child subsidy. Larry Hu, chief China economist at Macquarie Group, said policymakers will have little motivation to boost domestic demand, given the strong export and manufacturing performance. "Ideally, China would do more to boost demand even if it hits 5% growth,' said Hu, adding that it will make the economy more balanced. "The Chinese government will just do enough to hit 5% growth.'
Japan Times
19-05-2025
- Business
- Japan Times
China consumption miss overshadows factory strength amid tariffs
China's industrial output expanded faster than expected in April while consumption disappointed, highlighting the challenges facing the world's second-largest economy despite a quick de-escalation of trade tensions with the U.S. Industrial output climbed 6.1% on year in April, slowing from the prior month but far exceeding the median estimate in a Bloomberg survey of analysts. Retail sales growth, a key gauge of consumption, also weakened from March to 5.1%, according to figures published by the National Bureau of Statistics on Monday, below economists' projection. Despite the resilience of factories, weaker consumption for April points to the need for more supportive policies as economists warn of complacency after a 90-day pause on tariffs. China's prolonged property crisis, deflationary pressure and worries about unemployment are weighing on confidence among households. The government, which set an ambitious economic growth target of about 5% for 2025, has previously made boosting domestic consumption a priority this year. Stay updated on the trade wars. Quality journalism is more crucial than ever. Help us get the story right. For a limited time, we're offering a discounted subscription plan. Unlimited access US$30 US$18 /mo FOREVER subscribe NOW "Rosy industrial production figures reflect only one part of the economy,' said Raymond Yeung, chief economist for Greater at Australia & New Zealand Banking Group. "But April retail sales figures show that people are not willing to spend. To achieve 5% growth, we still need consumption.' The urban jobless rate fell slightly to 5.1% in April, while growth in fixed-asset investment slowed to 4% in the first four months of the year. China's new home prices dropped at a faster pace in April. The offshore yuan held little changed after the data release. Yields on China's 10-year government bonds edged lower slightly to 1.67%. A gauge of Chinese stocks listed in Hong Kong pared early losses following the data. The snapshot of the economy offers the fullest look yet at how China coped with a drastic escalation in trade tensions with the U.S. While the two sides in May reached the truce in their tariff war, the uncertainty surrounding further negotiations toward a final deal could keep businesses cautious about expanding production or investing in new projects. Still, the surprise performance of industrial production provides further evidence that China was able to dodge a steep slowdown as it navigated the onset of U.S. President Donald Trump's trade war. Exports in April also rose more than forecast, as companies diverted goods to Southeast Asia and Europe to compensate for a plunge in shipments to the U.S. A few major international banks including Goldman Sachs Group upgraded their forecasts for China's 2025 growth last week, although their views remain below Beijing's target. Many economists are also expecting the de-escalation to buy the government more time before it needs to deploy more stimulus to prop up the economy. The agreement "between the U.S. and China could have reduced tariff uncertainties while domestic policymakers could further switch into a wait-and-see mode,' Citigroup economists including Xiangrong Yu wrote in a note last week. Morgan Stanley economists including Robin Xing have dialed back their expectations on a supplementary fiscal package to up to 1 trillion yuan ($139 billion) in the fourth quarter, from a previous forecast of as much as 1.5 trillion yuan in July-September. Consumer sentiment has remained fragile amid the property slump and concerns the trade war could cause layoffs in China's massive manufacturing and export sectors. In April, China's program to subsidize purchases of new consumer goods probably contributed to huge gains in sales of home appliances, telecommunications equipment and furniture. At the same time, car purchases — which account for nearly a 10th of total retail sales — grew less than 1% after an increase of 5.5% in March. "This indicates that while measures such as the trade-in policy indeed can help stabilize short term consumption, a more sustainable recovery of consumption may require an improvement in consumer sentiment,' said Lynn Song, ING's chief economist for greater China. That "requires a broader stabilization of asset prices and a recovery of wage growth,' he added.
Time of India
08-05-2025
- Business
- Time of India
RBI's dividend payment to govt for FY25 set to beat estimates, could be 50% higher than FY24
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Mumbai: Reserve Bank of India's (RBI) surplus transfer to North Block for the last fiscal could be as high as ₹3 lakh crore, much higher than that estimated a month ago. Robust gross dollar sales, higher foreign exchange gains, and anticipated increases in interest income should help boost the payout, recent reports by economists said. The new estimate of ₹3 lakh crore is 50% more than the ₹2.1 lakh crore paid in the previous fiscal estimates for FY25 worked with the ballpark of around ₹2-₹2.5 lakh crore, showed an ET poll of 10 institutions published April ANZ Banking Group had estimated a transfer of ₹3.25 lakh crore. The government had estimated a dividend of ₹2.3 lakh crore in its budget."We estimate an RBI dividend of ₹2.6 lakh to ₹3 lakh crore, depending on the level of provisioning. The higher dividend creates a fiscal space of 0.1% to 0.2% of GDP," Gaura Sen Gupta, chief economist at IDFC First Bank , said in a report on are raising estimated payouts as the transfer time-window nears. "RBI's FY25 dividend payout to the government is projected to increase, fuelled by higher income from forex reserve deployments due to elevated US treasury yields," a report by the ICICI Research team said. "This boost is further supported by strong commissions from forex operations and interest income on government securities."The dividend could help the Centre shrink the fiscal gap. Plus, spending from the government would pump liquidity into the banking system, and the liquidity would be visible from early July, economists said"Gross dollar sales rose to $371.6 billion in FY25, till February versus $153 billion in FY24. Meanwhile, decline in GSec yields has resulted in MTM (market to market) gains on RBI's holdings of rupee securities. In FY25, RBI's holdings of rupee securities increased by ₹1.95 lakh crore to ₹15.6 lakh crore as of March 2025," according to IDFC First RBI was the top seller of foreign exchange reserves in January among other Asian central banks. Foreign exchange reserves peaked in September 2024 to $704 billion and the RBI is estimated to have sold over $125 billion since then, according to estimates by Nomura and DBS Bank."The RBI undertook significant dollar sales to support the rupee and maintain exchange rate stability. Additionally, tight systemic liquidity prompted the RBI to extend funds to banks, thereby contributing to its interest income. Therefore, the dividend payout for FY25 is likely to be large," said Dhiraj Nim, economist and FX strategist, ANZ Banking Group. Contingency provisions are expected to be similar to last year, or higher. Provisions stood at ₹42,800 crore and is expected to be between ₹40,000 crore and ₹80,000 crore, according to IDFC First surplus amount of the dividend is arrived at on the basis of the Economic Capital Framework (ECF) adopted by the Reserve Bank on August 26, 2019 as per recommendations of the Expert Committee to Review the ECF chaired by former governor Bimal Jalan. Committee had recommended that the risk provisioning under the Contingent Risk Buffer (CRB) be maintained within a range of 6.5% to 5.5% of the RBI's balance sheet.
Yahoo
15-04-2025
- Business
- Yahoo
ACEN Australia secures $473.5m for renewables portfolio expansion
ACEN Australia has secured $473.5m (A$750m) in portfolio debt financing to bolster its clean energy initiatives in Australia. The financing supports the company's ongoing and future renewable projects, highlighting ACEN Australia's commitment as a long-term investor in the nation's clean economy. The funding will support the nearly finished 400MW Stubbo Solar project in New South Wales and follows the first power output from the 400MW Stage 1 of the New England solar project in 2023. The deal was supported by a group of 11 lenders from Australia and overseas, broadening ACEN Australia's network of finance partners and highlighting strong market trust in the company's growth plans and proven performance. ACEN Australia managing director David Pollington stated: 'Our ability to attract top-tier financial partners re-inforces our position as a trusted, long-term developer, owner and operator of assets, and reflects growing investor appetite for high-quality, renewable infrastructure in Australia.' The financing establishes a funding base for ACEN Australia's diverse portfolio, which includes more than 1GW of renewable capacity in operation and under construction, with an additional 13GW in development across the national electricity market. ACEN Australia chief financial and investments officer Phillip Mak stated: 'This transaction strengthens our funding platform, accelerates our delivery pipeline and positions us as a capable partner backed by a stable and diverse capital base.' The transaction involved a range of financial institutions: ANZ Banking Group, the Commonwealth Bank of Australia, CTBC Bank Co (Singapore branch), CTBC Bank (Philippines) and Cathay United Bank. Other participants included Deutsche Bank (Sydney branch), DBS Bank (Australia branch) and Westpac Banking. Macquarie Capital and Morgan Stanley acted as joint financial advisors for the transaction, with Allens serving as legal adviser for ACEN Australia and Herbert Smith Freehills advising the lenders. ACEN is on track to achieve 100% renewable energy generation by 2025 and reach net-zero greenhouse gas emissions by 2050. "ACEN Australia secures $473.5m for renewables portfolio expansion" was originally created and published by Power Technology, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
