Latest news with #economicstability
RNZ News
2 days ago
- Business
- RNZ News
South Korea election: Wave of anger could sweep liberals to victory
By Cynthia Kim , Reuters Democratic Party leader Lee Jae-myung. Photo: JUNG YEON-JE/AFP When then-President Yoon Suk Yeol's martial law decree plunged South Korea into chaos, it plummeted sales at Park Myung-Ja's diner in Jechon and became a turning point for many voters in the town. The 66-year-old chef and restaurant owner is one face of South Korea's North Chungcheong Province, a swing region that has become even more pivotal at a time of deep political polarisation in Asia's fourth-largest economy. "We need to get furthest away from all that martial law drama to get things back to where they were," Park said at her Korean restaurant two hours south of Seoul, adding liberal candidate "Lee Jae-myung looks alright for that". Voters are now looking for the winner of the 3 June snap election to calm the economic and political shocks that have roiled the country since Yoon's 3 December martial law decree led to months of economic downturn and sparked nationwide protests. Park's Chungcheong Province is a key battleground for Kim Moon-soo, candidate for the conservative People Power Party campaigning on deregulations for companies, and liberal Democratic Party frontrunner Lee, who's vowing to bring back stability after months of turmoil. In swing regions such as North Chungcheong Province, where Jechon is located, the ruling conservative party risks losing a big chunk of its vote base with many voters blaming the martial law debacle for weaker private consumption and easing export momentum. Park's business crashed after Yoon's declaration with some of her biggest customers who are local council officials cancelling dinner reservations in groups of five to 10. "The first call I got on 4 December was from a regular customer who does his year-end dinner here every year. I asked him why he is cancelling it, and he said - 'don't you watch news?'" Yoon Suk Yeol. Photo: HANDOUT / AFP Lee, who defied Yoon's martial law decree , had a 10-percentage point lead over Kim in one of the final opinion polls issued last Tuesday with 45 percent of voters trusting him to revive the economy compared to 32 percent for Kim. Conservatives have criticised Lee for a series of criminal cases he faces over accusations of election law violations, corruption, and other issues, but they have struggled to unify behind a single candidate and to distance themselves from Yoon. On Friday, right-winger Kim said voting for Lee would end up "collapsing our economy", hoping to sway voters in small cities such as Jecheon, an inland town of about 130,000 surrounded by mountainous tourist spots, who are looking for a turning point to revive South Korea's fortunes. But the martial law call continues to weigh heavily on conservative chances. "We definitely had fewer customers, especially from office dinners, after the martial law declaration. It did bite us hard," said Choi, a Chinese restaurant owner in Pangyo, a town south of Seoul. "Lee is someone who will uplift more of us who are not doing so well." Consumer sentiment, which dropped by the most since the outbreak of Covid-19 in December, recovered to pre-martial-law levels of 101.8 in May, on expectations of a fresh stimulus package under a new leader. The shock move rattled markets and put the won among the region's worst-performing currencies of the last year, hurt business sentiment even before exporters absorbed the full force of US President Donald Trump's punitive tariff policies. Now, the strains are setting in, as economic tailwinds from the semiconductor boom and reforms in the capital markets in the past few years are fading. Whoever wins the 3 June election will face an economy that contracted in the first quarter, manage negotiations with Washington to avoid high tariffs, and assuage voters such as Park who are seeing their living standards go backwards from elevated grocery bills and weak spending. South Korea's election campaign has been light on policy and heavy on spectacle after twists and turns involving the main candidates. "I wish they had taken housing supply and boosting the domestic market more seriously in their pledges," said 59-year-old Jung Soo-hyeon. "But perhaps because it's a snap election, that kind of in-depth consideration seems to be missing ' which is a bit disappointing." Analysts say voters watched economic pledges closely as consumption has been badly hit. A win for Lee could spur "faster economic growth in the short-term," Kim Jin-wook of Citi Research said. The Democratic Party "would likely be relatively more keen on providing policy and support for the mid-to-low-income bracket", he added. While both top candidates have pledged to draft a second supplementary budget for the year as soon as the election is over, Lee has also promised vouchers to help local businesses and subsidies for childcare, youth, and the elderly. While Lee has backed away from advocating for universal basic income, some voters including Park, who backed Yoon last time, said they see Lee as most likely to look out for their interests. "Lee's party seems to be willing to give out more to those who are struggling," Park said, emphasising that "change" is important. - Reuters
Zawya
4 days ago
- Business
- Zawya
The World Debt Situation Has Become More Unstable, Octa Broker warns
KUALA LUMPUR, MALAYSIA - Media OutReach Newswire - 30 May 2025 - Traders and investors alike are unnerved by the recent turbulence in the bond markets. After Moody's—a major rating agency—downgraded U.S. government debt on 16 May, and Japanese long-term bond yields soared to multi-decade highs, some market participants started to fear that the world may be on the verge of a major debt crisis. Meanwhile, the yield on 20-year UK government bonds neared 5.5%, a level not seen in 27 years, as investors grew more worried about the extent of Chancellor Rachel Reeves' borrowing plans. Octa Brokers looks at the potential implications of these developments for global markets. Ticking Fiscal Bomb The U.S. mounting national debt has long been the subject of intense debate and concern among economists, policymakers, and the public. Apocalyptic predictions of a U.S. default and dollar collapse are nothing new. They first appeared decades ago and have been surfacing here and there regularly, attracting plenty of followers. However, these predictions have never materialised, while the doomsayers have been dismissed as amateur conspiracy theorists at best and irresponsible alarmists at worst. Still, while we are not inclined to take a grand stance on this issue, we cannot afford to ignore the latest market developments regarding the U.S. debt. Often called a 'ticking fiscal bomb', it has recently started raising fears about the nation's long-term economic stability and potential impact on global markets. 'On current trends, U.S. national debt is projected to reach $37 trillion in two weeks and may reach $40 trillion by the end of the year. This trend cannot continue forever. The Fed's [Federal Reserve] printing press may have no limit, but market patience does have its limit', says Kar Yong Ang, a financial market analyst at Octa broker. Indeed, the market's perception of risk regarding U.S. government debt has clearly risen. This is evident in the noticeable increase in the cost of insuring exposure to U.S. government debt over the past month. The spreads on U.S. credit default swaps (CDS)—a key measure of default risk—have reached their widest levels since the 2023 debt ceiling crisis in recent weeks (see chart below). Market stress intensified even more following Moody's downgrade and the passage of the U.S. President Donald Trump's 'One Big Beautiful Bill Act' in the House of Representatives. The bill features $3.8 trillion in tax cuts and is widely expected to worsen the federal budget deficit outlook. As a result, investors started to demand higher returns for holding long-term U.S. government bonds, pushing the yields on 20-year notes above the important 5% level on 21 May. 5-Year Credit Default Swaps Kar Yong Ang comments: 'Policy uncertainty is all over the place. Tariffs, tax bill, debt ceiling. No wonder investors charge a premium for holding the debt of a country, which is not in a 'triple-A club' anymore. Investors want higher yield in order to provide long-term lending in the current uncertain climate'. Indeed, the U.S. government actually hit its legal borrowing limit back in January and has been using special procedures to avoid exceeding it and potentially defaulting. However, these measures are expected to run out around late August or early September, at which point the government might be unable to meet all its financial commitments. Yields of government bonds with the longest maturities have been rising sharply not just in the United States but also in Japan and the United Kingdom (UK) (see chart below). On 20 May, Japan's 20-year government bond (JGB) auction had its worst results since 2012. The demand was weak, with the bid-to-cover ratio dropping to 2.50, while the lowest accepted price was just ¥98.15, some 2% below the expected price. Yields on 20-Year Government Bonds 'Japan's auction signals poor liquidity and weak interest in new long-term securities as investors are concerned about excessive profligacy. It seems to me that the BoJ wants to stop buying bonds at the worst possible moment. Who is going to replace it?', rhetorically asks Kar Yong Ang, referring to BoJ plans to taper its massive bond purchase programme. Indeed, although yields on long-term JGBs have been rising since the COVID pandemic, the trend accelerated after the Bank of Japan (BoJ) moved toward monetary policy normalisation amid rising wage growth and inflation. Policy normalisation implied higher short-term rates and fewer bond purchases. Thus far, BoJ has ended its yield curve control (YCC), raised its benchmark interest rate from -0.1% to 0.5% and even embarked on quantitative tightening (QT). These factors contributed to the consistent increase in Japanese government bond yields. Today, however, the situation is complicated by additional fiscal stimulus, which could result in more government borrowing just as the BoJ prepares to slowly exit the debt markets. The Cabinet already approved a massive ¥21.9 trillion ($142 billion) economic stimulus package back in November 2024. Most recently, it approved an emergency plan to allocate ¥388 billion ($2.7 billion) from reserve funds to assist businesses and households affected by U.S. tariffs. 'Investors are sending a very clear message: if we are the only ones left to finance these spending plans, then we demand higher returns', concludes Kar Yong Ang. The recent movements in the U.S., Japanese, and UK government bond markets paint a concerning picture of increasing investor unease regarding sovereign debt. From the rising cost of insuring U.S. debt and the poor reception of Japan's long-term bond auction to the near 27-year high in the UK gilt yields, a common thread of heightened risk perception is evident. As Kar Yong Ang of Octa Broker points out, factors like policy uncertainty, fiscal profligacy, and the prospect of central banks reducing their bond purchases are prompting investors to demand greater compensation for lending to governments. 'The problem is not just that governments have an enormous mountain of debt. The real problem is that the market is intricately interconnected. A small trouble in one place can morph into a major crisis elsewhere. What if higher JGB yields lure Japanese capital back home? If they decide to increase their JGB holdings, they may have to sell the U.S. Treasuries and that could be catastrophic given that Japan is a major holder of U.S. debt', says Kar Yong Ang. Investors should watch the upcoming BoJ meeting scheduled for 17 June. The BoJ will issue its regular policy rate decision and will likely announce its balance sheet reduction plan. According to MacroMicro, markets currently expect a gradual pace—around 6–7% reduction over two years. However, if the BoJ opts to speed up the process, it could put pressure on global markets ___ Disclaimer: This content is for general informational purposes only and does not constitute investment advice, a recommendation, or an offer to engage in any investment activity. It does not take into account your investment objectives, financial situation, or individual needs. Any action you take based on this content is at your sole discretion and risk. Octa and its affiliates accept no liability for any losses or consequences resulting from reliance on this material. Trading involves risks and may not be suitable for all investors. Use your expertise wisely and evaluate all associated risks before making an investment decision. Past performance is not a reliable indicator of future results. Availability of products and services may vary by jurisdiction. Please ensure compliance with your local laws before accessing them. Hashtag: #Octa The issuer is solely responsible for the content of this announcement. Octa Octa is an international CFD broker that has been providing online trading services worldwide since 2011. It offers commission-free access to financial markets and various services used by clients from 180 countries who have opened more than 52 million trading accounts. To help its clients reach their investment goals, Octa offers free educational webinars, articles, and analytical tools. The company is involved in a comprehensive network of charitable and humanitarian initiatives, including improving educational infrastructure and funding short-notice relief projects to support local communities. In Southeast Asia, Octa received the 'Best Trading Platform Malaysia 2024' and the 'Most Reliable Broker Asia 2023' awards from Brands and Business Magazine and International Global Forex Awards, respectively. Octa
Zawya
5 days ago
- Business
- Zawya
The Minerals Council president: "Mining must succeed for South Africa to succeed"
Paul Dunne has been appointed president of The Minerals Council South Africa, after acting as caretaker president during 2024, at the Council's 135th Annual General Meeting. Paul Dunne has been appointed president of The Minerals Council South Africa, after acting as caretaker president during 2024, at the Council's 135th Annual General Meeting. c The Council also published its Integrated Annual Review and Annual Financial Statements for the year ended 31 December 2023 at the AGM. The reports present the dual role of the Minerals Council by presenting an accurate and relevant picture of the important role the mining industry plays in South Africa's economy, and the contribution to society of the mining industry as well as the activities of the Minerals Council in supporting and promoting its members and the sector. Cornerstone of economic stability 'Mining must succeed for South Africa to succeed,' says Dunne, as he reflected on the past year, saying that South Africa's mining industry remains a cornerstone of economic stability and progress. 'Despite formidable challenges, the sector continues to play a pivotal role in job creation, foreign exchange earnings and industrial growth, reinforcing its position as a vital contributor to the country's economic and social fabric,' he says in his president's letter in the IAR. 'Despite the vital role that mining plays in South Africa's economy, its contribution to GDP has declined over the years. 'This is not due to a lack of potential but rather the result of structural challenges, ranging from regulatory uncertainty to infrastructure constraints.' Dunne highlights the interventions the Minerals Council has led to address illegal mining, regulatory and infrastructure constraints in energy and rail and port infrastructure, while noting that water supply is an emerging risk that needs urgent collaborative action and responsible stewardship. 'Our industry's commitment to responsible water management is not only fundamental to mitigating this risk, but also to strengthening our social licence to operate and ensuring mining communities benefit from shared water infrastructure solutions,' he says. Bold action In his letter to stakeholders, CEO, Mzila Mthenjane, discusses the five outcomes the Minerals Council aims to achieve. These are: - To strengthen the climate response and advance a just energy transition by driving responsible mining practices and reducing carbon emissions - The enhancement of its advocacy through a data-driven approach to policy engagement where positions are backed by clear evidence of mining's impact on the economy and society. - Acceleration of investment promotion to showcase South Africa as a destination for responsible mining investment. - Contribution towards improving infrastructure efficiency in logistics and energy to remove barriers that hinder the sector's growth. - Transformation beyond compliance for a more inclusive and representative industry./ol> 'The future of South African mining requires bold action from both government and private sector,' says Mthenjane. Solutions He says the solutions are clear: 'The mining industry stands ready to invest, create jobs, and drive economic growth. 'What we need is an 'all-of-government commitment to removing barriers to encourage investment in exploration, mine development and existing operations,' says Mthenjane. The report details the Minerals Council's strategic plan and reports on how the organisation delivered against this plan during the year. The Integrated Annual Review and Financial Statements 2024 may be accessed on the Minerals Council website Read the reports here
Zawya
7 days ago
- Business
- Zawya
ASEAN leaders renew commitment to addressing global trade turmoil
KUALA LUMPUR -- Leaders of the Association of Southeast Asian Nations (ASEAN) adopted a statement at the end of their 46th summit in Kuala Lumpur on Tuesday to reaffirm commitment to collective action to address the economic uncertainty and trade instability around the globe. They expressed concern over the increasing unilateral trade measures and punitive actions, including the reciprocal tariffs and protectionist restrictions on investment, which risk undermine the world economic system. Those actions have direct adverse impacts on the ASEAN economies, according to the statement issued by the host Malaysian Ministry of Foreign Affairs. The leaders agreed to stand as up as one to protect the regional economic stability, enhance economic resilience and sustainable development. They stressed the importance of maintaining constructive dialogue and mutual respect based on the rules of the international law and the Treaty of Amity and Cooperation in Southeast Asia (TAC). The leaders agreed to speed up the implementation of ASEAN Digital Economy Framework Agreement (DEFA) and update the ASEAN Trade in Goods Agreement (ATIGA) with a view to speeding up regional integration and creating a stable and competitive business environment. They also agreed to update the ASEAN+one free trade agreements (AFTAs) with dialogue partners - such as China, India, Japan and South Korea, so as to boost bilateral trade, control instability in supply chains, and expand the prospects of cooperation with new partners, including the Gulf Cooperation Council (GCC) member countries. To support internal coordination, the leaders launched the ASEAN Geo-economics Task Force and tasked the competent ministers to keep watch on global economic developments and draw up a single strategy for response to emergencies. Reaffirming commitment to a global multi-lateral trade system based on transparency, justice and indiscrimination, the leaders stated readiness to engage in constructive dialogue with other members of the World Trade Organization and push for substantive reforms that could better preserve the credibility and resilience of the global trade system. As the ASEAN Economic Community 2025 enters its final stage, the leaders adopted "the ASEAN Community Vision 2045: Our Shared Future." The new ambitious 20-year vision and its strategic plans aim to ensure seamless coordination across pillars and sectors and cross-sectoral strategic measures. The ASEAN leaders stressed the importance of cooperation with regional partners to ensure stability and peace in the Indo-Pacific region based on transparency and rule of law. Founded in 1967, the ASEAN is made up of Brunei Darussalam, the Kingdom of Cambodia, the Republic of Indonesia, the Lao People's Democratic Republic, Malaysia, the Republic of the Union of Myanmar, the Republic of the Philippines, the Republic of Singapore, the Kingdom of Thailand, and the Socialist Republic of Viet Nam. All KUNA right are reserved © 2022. Provided by SyndiGate Media Inc. (
The National
7 days ago
- Business
- The National
IMF: Egypt making progress on reforms but must widen tax base
The International Monetary Fund on Tuesday said Egypt is making progress towards economic stability, but said authorities still need to widen the country's tax base. 'As Egypt's macroeconomic stabilisation is taking root, it is now time to accelerate and deepen the reform efforts to reduce the state footprint, level the playing field, and improve the business environment,' the fund said. An IMF staff mission held discussions with officials in Cairo from May 6 to 18 that could support the completion of the fifth review under Egypt's extended fund facility deal. The IMF approved an $8 billion agreement in 2024 after first agreeing to a $3 billion programme in 2022. 'Egypt has made substantial progress towards macroeconomic stability,' mission chief Vladkova Holler said in a statement. The fund said it had upgraded its economic growth forecast for Egypt for the 2024-25 fiscal year to 3.8 per cent. The Central Bank of Egypt last week said it expected real gross domestic product to increase by 4.3 per cent in the 2024-25 fiscal year after a slowdown in growth of 2.4 per cent in fiscal year 2023-24. While inflation slightly rose to 13.9 per cent in April, the fund noted it remains 'on a downwards trend'. The central bank cut also cut its key interest rates by 100 basis points last week due to accelerated economic growth and a downwards trend in inflation. It was the bank's second rate cut this year. Egyptian Prime Minister Mostafa Madbouly has previously said the country would implement more subsidy cuts on fuel, bread, diesel, electricity and water under the IMF programme. The fund said it welcomed officials' efforts to improve tax and customs procedures to increase efficiency and build confidence. The IMF also noted reforms are beginning 'to yield positive results'. 'Alongside these efforts, domestic revenue mobilisation will need to continue, mainly by widening the tax base and streamlining tax exemptions.' 'With the macroeconomic stabilisation now under way, it is critical for Egypt to carry out deeper reforms to unlock the country's growth potential, create high-quality jobs for a growing population, and sustainably reduce its vulnerabilities and increase the economy's resilience to shocks," it said. The fund said it would continue to hold virtual discussions on policies and reforms that could help support the completion of the fifth review.
