The World Bank has cut growth forecasts for China and East Asia, only a few days after the Asian Development Bank eased its expectations for growth in the wider region on the back of a slowdown in India and China.
Reuters quotes a report from the World Bank which said that it had lowered its 2013 and 2014 economic growth forecasts for China and most of developing East Asia on Monday, citing slower growth in the world’s most populous nation, and weaker commodity prices that have hurt exports and investments in countries such as Indonesia.
“Developing East Asia is expanding at a slower pace as China shifts from an export-oriented economy and focuses on domestic demand,” the World Bank said in its latest East Asia Pacific Economic Update report.
“Growth in larger middle-income countries including Indonesia, Malaysia, and Thailand is also softening in light of lower investment, lower global commodity prices and lower-than-expected growth of exports,” it added.
China and Japan, the two biggest creditors of the US are increasingly worried the US government shutdown and standoff over the debt ceiling could wreak havoc on their trillions of dollars of investments in treasury bonds.
Reuters says Beijing and Tokyo have publicly called on the White House and Congress to resolve the dispute, which could threaten a US debt default as soon as next week, and Asia’s two biggest economies are privately urging Washington to find a solution.
Bloomberg reports that Governor Raghuram Rajan lowered the marginal standing facility rate to 9% from 9.5%, but left the repo rate at 7.5%, raised to this left last month to help combat inflation.
The country’s currency has climbed about 11% against the US dollar since reaching a record low in August, boosted by Rajan’s steps to attract dollar inflows.
Mirza Baig, Singapore-based head of foreign-exchange and interest-rate strategy at BNP Paribas SA, told Bloomberg that Rajan was “saying the right things and he’s being more orthodox in terms of how he’s running monetary policy”.
Fox Business reports that a growing number of analysts who worked for big name investment banks in Asia are opting to go independent as banks trim costs.
As a result of pressure on banks, the number of jobs in research has declined, as has the pay and chances of career advancement. Hong Kong-based IND-X has marketing and support relationships with over 30 quality independent research providers, focusing mainly on Asia and emerging markets. It estimates there are roughly 40 such independent firms operating in Asia.
Asian Investor reports that Germany’s Allianz is planning to expand its asset liability management operation in Asia, and will introduce local teams in various countries where it operates, including Thailand, Malaysia, Korea, Taiwan, Indonesia, China, Sri Lanka and Laos.