BANGKOK // Emerging countries in East Asia are heading towards a V-shaped recovery but cannot rely on China alone to stimulate a regional rebound as risks remain, the Asian Development Bank (ADB) said yesterday.
The bank said prospects of a return to growth levels seen in recent years also would not materialise until industrialised economies recovered enough "to rekindle demand for the region's exports".
"The risks to emerging East Asia's transition to recovery, while having dissipated somewhat over the past few months, remain firmly tilted on the downside," the bank, based in Manila, said in its Asia Economic Monitor released in Bangkok.
"Emerging East Asia has entered the transition from recession to recovery, possibly V-shaped, with GDP growth sourced more from domestic stimulus than a resurgence in external demand," the ADB said. "But it is only a small V shape."
The region's exporters still depend on orders from the US, Europe and Japan, and trade in goods will "remain sluggish" until industrialised economies recover enough to rekindle demand, the ADB said.
The economies, including China, South Korea and Indonesia, would probably grow faster than the 3 per cent estimated in March, before accelerating to 6 per cent next year, the report said, adding it would take time before the region's economies returned to their "full potential". Emerging East Asia is defined as the 10 Association of South East Asian Nations plus China, Hong Kong, Taiwan and South Korea.
Asian policy makers, who have slashed borrowing costs and pledged more than US$950 billion (Dh3.48 trillion) of stimulus plans, have started saying their economies may be past the worst of the global recession. Economists are raising estimates for the region's growth this year as China starts to recover and indicators show production declines may have bottomed.
The report said China looked set for a quick recovery, with growth expected at 7 per cent this year and 8 per cent next year, providing a much needed boost to the region's economies.
"China alone cannot be the sole engine for the region's recovery as external demand is very weak; we need two engines," it said.
The report said GDP in Japan was forecast to shrink 5.8 per cent this year, the largest contraction since 1955, due to a collapse in exports and weak domestic demand. It expected the US economy to shrink 3 per cent this year and the euro zone to contract 4.3 per cent.
The report said there were some positive signs starting to come through that should offer support for a recovery late this year. Industrial production, retail sales, fixed-asset investment, business and consumer confidence are all showing that economic activity slowed less or began growing in the second quarter.
However, the ADB raised concerns about possible deflation across emerging East Asian countries. While it was too early to say deflation had emerged, it said, "continued depressed economic conditions, worsening labour markets and lower food and energy prices are expected to increase disinflationary [and possibly deflationary] pressures throughout the region in 2009".
Inflation should remain under control next year, although if commodity prices rise quickly it could hurt the economic recovery.
The ADB said other risks to the region's recovery included the potential for the recession in advanced economies to linger longer, and the recovery could be weaker than expected. In the long term, East Asia must shift away from its dependence on exports to spur growth and instead bolster domestic demand. This required more development of financial sectors and further structural reforms.
In countries where consumption was low, governments could boost spending on social safety nets, housing, education and health, indirectly raising disposable incomes, it said. "The authorities should plan rather than implement credible and coherent exit strategies to unwind the policy stimulus to prevent inflationary expectations from rising, which could later impede recovery and sustainable growth," the report said. The ADB said that, despite aggressive rate cuts, monetary conditions in the region had not been too expansionary considering the sharp contractions in the real economy, the benign inflation environment and moderating bank lending growth.
* with agencies
Points classification after Stage 4
1. Arnaud Demare (France / FDJ) 124
2. Marcel Kittel (Germany / Quick-Step) 81
3. Michael Matthews (Australia / Sunweb) 66
4. Andre Greipel (Germany / Lotto) 63
5. Alexander Kristoff (Norway / Katusha) 43
The biog
Hobbies: Salsa dancing “It's in my blood” and listening to music in different languages
Favourite place to travel to: “Thailand, as it's gorgeous, food is delicious, their massages are to die for!”
Favourite food: “I'm a vegetarian, so I can't get enough of salad.”
Favourite film: “I love watching documentaries, and am fascinated by nature, animals, human anatomy. I love watching to learn!”
Best spot in the UAE: “I fell in love with Fujairah and anywhere outside the big cities, where I can get some peace and get a break from the busy lifestyle”
WORLD CUP FINAL
England v South Africa
Yokohama International Stadium, Tokyo
Saturday, kick-off 1pm (UAE)
The specs
Engine: 2.0-litre 4-cylinder turbo
Power: 240hp at 5,500rpm
Torque: 390Nm at 3,000rpm
Transmission: eight-speed auto
Price: from Dh122,745
On sale: now
MATCH INFO
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The specs
Price, base / as tested Dh960,000
Engine 3.9L twin-turbo V8
Transmission Seven-speed dual-clutch automatic
Power 661hp @8,000rpm
Torque 760Nm @ 3,000rpm
Fuel economy, combined 11.4L / 100k
How to help
Send “thenational” to the following numbers or call the hotline on: 0502955999
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Power: 400hp
Torque: 475Nm
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The specs
Engine: 2.9-litre twin-turbo V6
Power: 540hp at 6,500rpm
Torque: 600Nm at 2,500rpm
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How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
COMPANY%20PROFILE%20
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The Brutalist
Director: Brady Corbet
Stars: Adrien Brody, Felicity Jones, Guy Pearce, Joe Alwyn
Rating: 3.5/5
Company%20profile
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RESULTS
6.30pm Al Maktoum Challenge Round-2 – Group 1 (PA) $49,000 (Dirt) 1,900m
Winner RB Frynchh Dude, Pat Cosgrave (jockey), Helal Al Alawi (trainer)
7.05pm Al Bastakiya Trial – Conditions (TB) $50,000 (D) 1,900m
Winner El Patriota, Vagner Leal, Antonio Cintra
7.40pm Zabeel Turf – Listed (TB) $88,000 (Turf) 2,000m
Winner Ya Hayati, Mickael Barzalona, Charlie Appleby
8.15pm Cape Verdi – Group 2 (TB) $163,000 (T) 1,600m
Winner Althiqa, James Doyle, Charlie Appleby
8.50pm UAE 1000 Guineas – Listed (TB) $125,000 (D) 1,600m
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9.25pm Handicap (TB) $68,000 (T) 1,600m
Winner Bedouin’s Story, Frankie Dettori, Saeed bin Suroor
The specs: 2019 Subaru Forester
Price, base: Dh105,900 (Premium); Dh115,900 (Sport)
Engine: 2.5-litre four-cylinder
Transmission: Continuously variable transmission
Power: 182hp @ 5,800rpm
Torque: 239Nm @ 4,400rpm
Fuel economy, combined: 8.1L / 100km (estimated)
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UAE currency: the story behind the money in your pockets
COMPANY%20PROFILE
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How to play the stock market recovery in 2021?
If you are looking to build your long-term wealth in 2021 and beyond, the stock market is still the best place to do it as equities powered on despite the pandemic.
Investing in individual stocks is not for everyone and most private investors should stick to mutual funds and ETFs, but there are some thrilling opportunities for those who understand the risks.
Peter Garnry, head of equity strategy at Saxo Bank, says the 20 best-performing US and European stocks have delivered an average return year-to-date of 148 per cent, measured in local currency terms.
Online marketplace Etsy was the best performer with a return of 330.6 per cent, followed by communications software company Sinch (315.4 per cent), online supermarket HelloFresh (232.8 per cent) and fuel cells specialist NEL (191.7 per cent).
Mr Garnry says digital companies benefited from the lockdown, while green energy firms flew as efforts to combat climate change were ramped up, helped in part by the European Union’s green deal.
Electric car company Tesla would be on the list if it had been part of the S&P 500 Index, but it only joined on December 21. “Tesla has become one of the most valuable companies in the world this year as demand for electric vehicles has grown dramatically,” Mr Garnry says.
By contrast, the 20 worst-performing European stocks fell 54 per cent on average, with European banks hit by the economic fallout from the pandemic, while cruise liners and airline stocks suffered due to travel restrictions.
As demand for energy fell, the oil and gas industry had a tough year, too.
Mr Garnry says the biggest story this year was the “absolute crunch” in so-called value stocks, companies that trade at low valuations compared to their earnings and growth potential.
He says they are “heavily tilted towards financials, miners, energy, utilities and industrials, which have all been hit hard by the Covid-19 pandemic”. “The last year saw these cheap stocks become cheaper and expensive stocks have become more expensive.”
This has triggered excited talk about the “great value rotation” but Mr Garnry remains sceptical. “We need to see a breakout of interest rates combined with higher inflation before we join the crowd.”
Always remember that past performance is not a guarantee of future returns. Last year’s winners often turn out to be this year’s losers, and vice-versa.
Emergency
Director: Kangana Ranaut
Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry
Rating: 2/5
yallacompare profile
Date of launch: 2014
Founder: Jon Richards, founder and chief executive; Samer Chebab, co-founder and chief operating officer, and Jonathan Rawlings, co-founder and chief financial officer
Based: Media City, Dubai
Sector: Financial services
Size: 120 employees
Investors: 2014: $500,000 in a seed round led by Mulverhill Associates; 2015: $3m in Series A funding led by STC Ventures (managed by Iris Capital), Wamda and Dubai Silicon Oasis Authority; 2019: $8m in Series B funding with the same investors as Series A along with Precinct Partners, Saned and Argo Ventures (the VC arm of multinational insurer Argo Group)
UAE%20ILT20
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Other workplace saving schemes
- The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
- Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
- National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
- In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
- Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
How to avoid crypto fraud
- Use unique usernames and passwords while enabling multi-factor authentication.
- Use an offline private key, a physical device that requires manual activation, whenever you access your wallet.
- Avoid suspicious social media ads promoting fraudulent schemes.
- Only invest in crypto projects that you fully understand.
- Critically assess whether a project’s promises or returns seem too good to be true.
- Only use reputable platforms that have a track record of strong regulatory compliance.
- Store funds in hardware wallets as opposed to online exchanges.
THE LIGHT
Director: Tom Tykwer
Starring: Tala Al Deen, Nicolette Krebitz, Lars Eidinger
Rating: 3/5
