ASEAN economy to slow down in 2nd half of 2022: JCER/Nikkei survey

[steveluv]

https://asia.nikkei.com/Economy/ASEAN-economy-to-slow-down-in-2nd-half-of-2022-JCER-Nikkei-survey?utm_campaign=GL_coronavirus_latest&utm_medium=email&utm_source=NA_newsletter&utm_content=article_link&del_type=10&pub_date=20220710123000&seq_num=6&si=44594

ASEAN economy to slow down in 2nd half of 2022: JCER/Nikkei survey
Economists see inflation, U.S. rate hikes weighing on region despite COVID easing

The economies of ASEAN's five biggest members will grow 5.0% in 2022, according to the latest survey by JCER and Nikkei in June, thanks to the reopening of borders.   © Reuters
SHOICHIRO TAGUCHI, Nikkei staff writerJuly 4, 2022 17:21 JST

TOKYO -- Economists have raised 2022 growth forecasts for Indonesia, the Philippines and Thailand as they expect growth in the first half of the year to be higher than forecast, thanks to a relaxation of COVID restrictions. However, there are downward revisions to forecasts for the latter half of 2022 for each country due to concerns about slowing economies following the U.S. interest rate hike and ongoing inflation.

Gross domestic product for the five biggest members of the Association of Southeast Asian Nations -- Indonesia, Malaysia, the Philippines, Singapore and Thailand -- will grow 5.0% in 2022, according to the latest quarterly survey by the Japan Center for Economic Research and Nikkei in June. The figure reflects a 0.1 percentage point upward revision from the previous survey in March.

Asian countries are steering their economies away from the pandemic to resume economic and business activities, including accepting tourists. The outlook for Indonesia was upgraded to 5.1% from 5.0% in the previous survey. The Philippines ticked up to 6.6% from 6.3%, while Thailand's figure was up to 3.2% from 3.1%.

Juniman, chief economist at Bank Maybank Indonesia, said the "recovery growth of the Indonesian economy is driven by an improvement of the global economic environment that is driving up performances of exports and investment, and the decline in cases of COVID-19 infection."

On the other hand, Malaysia's growth rate forecast dropped to 6% from 6.1%, while Singapore's dropped to 4.3% from 4.6%. India, also part of the survey, was downgraded to 7.2% from 7.8%. Compared to 2021, a turnaround in economic growth is anticipated in most nations surveyed. However, forecasts for the second half of 2022 for each country have been lowered from the previous survey.

The major reason for the downgrade lies in the U.S. Federal Reserve's interest rate hike. The Fed raised the benchmark interest rate on June 15 by 75 basis points -- the largest hike since November 1994 -- setting the target federal funds range at 1.5% to 1.75%, eyeing to curb the worst inflation the country has faced in 40 years. The Fed has also lowered its 2022 U.S. economic growth forecast from the 2.8% projected in March to 1.7%, casting a long shadow on Asian economies.

Most central banks in Asian countries are moving to raise policy interest rates, with India leading followed by Malaysia and the Philippines. Vincent Loo Yeong Hong, senior economist at KAF Research in Malaysia, noted that "such steep hikes in U.S. interest rates would likely trigger a sharp slowdown [or] recession in the economy."

Indonesia and Thailand are expected to follow. Wisnu Wardana, economist at Bank Danamon Indonesia, believes that with "inflation on the rise ... Bank Indonesia needs to adjust its policy rate in the third quarter [of] 2022." Krungsri Research of Bank of Ayudhya also says: "We anticipate the first rate hike at the next Monetary Policy Committee meeting in August," though the pace of hikes will be slower than in neighboring countries "because the rate hike in Thailand this year should aim at anchoring inflation expectations rather than depressing domestic demand."

In addition to currency depreciation associated with higher interest rates, inflation caused by factors such as high material prices due to the prolonged Russia-Ukraine war is likely to be a major negative risk in the second half of the year.

"Singapore's economy remains on an unstable trajectory as a result of its exposure to geopolitical risks and the fallout from the situation in Ukraine," said Randolph Tan of Singapore University of Social Sciences. Dharmakirti Joshi, chief economist of CRISIL, also pointed out that the "downside risks to growth have increased on account of surging commodity prices and global supply disruptions."

The shift in potential threats to Asian economies was reflected in a survey of what economists think are the top risks for the coming 12 months. "Inflation" was ranked No. 1 in all six countries, while "U.S. monetary policy" was ranked as the second risk in Indonesia, Malaysia and Singapore. Almost no experts listed "COVID-19 infection" as a risk factor, except for Malaysia, where it was ranked sixth.

"Chinese economy slowdown" also was ranked as one of the primary risk factors in Thailand, given the high linkage between the two economies. Lalita Thienprasiddhi, senior researcher at the Kasikorn Research Center, said the Chinese economy "has already slowed down considerably due to Beijing's zero-COVID policy and lockdowns." Even though China has recently eased its lockdown, "China's overall zero-COVID policy remains in place, which would continue to impact Chinese consumer sentiment and cause hiccups in Chinese manufacturing," she added.

The survey was conducted from June 3 to June 23, with 36 economists and analysts responding.

[Windwaver]

This adds to the problem 

https://www.channelnewsasia.com/singapore/reasonable-starting-point-living-wage-singapore-lkyspp-study-2230071

S$2,906 a ‘reasonable’ starting point for a living wage in Singapore: Study

• Study by Lee Kuan Yew School of Public Policy finds that S$2,906 is a "reasonable" starting point for a living wage in Singapore
• Parents are likely to face greater financial strain as children grow up
• Current public housing policies “effectively double” housing costs for single parents who have never married, compared to other parents

SINGAPORE: The “reasonable starting point” for a living wage in Singapore is S$2,906 a month, according to a study by the Lee Kuan Yew School of Public Policy.

This figure is based on the average budget for a couple with two children, assuming both parents are employed full-time. The figure is also adjusted for taxes and all universal and major means-tested benefits.

“The median work income among all workers in 2020 exceeded this amount by 50 per cent, but the current PWM (Progressive Wage Model) wages fall significantly below,” said the school in a media release on Friday (Oct 8).

The Progressive Wage Model aims to lift the salaries of workers by various sectors through upgrading their skills and improving productivity.

The study found that the costs of education and care “dominated” the budgets for children’s needs.

“While some costs associated with children decline with age, others increase sharply. As current measures supporting education and care taper off for older children, parents are likely to face greater financial strain as their children grow up.”

Researchers also found that current public housing policies "effectively double” housing costs for single parents who have never married, compared to partnered, widowed or divorced parents.

The research team includes: The head of the Social Inclusion Project at the Lee Kuan Yew School of Public Policy Dr Ng Kok Hoe, and Nanyang Technological University Assoc Prof Teo You Yenn, author of This Is What Inequality Looks Like.

DETERMINING BUDGETS

The team built on a general definition of basic needs determined in their 2019 study, which investigated budgets necessary for older people living alone or with a partner.

Focus group participants then generated lists of items and services related to several fields, including housing and utilities, food, transport and social participation. They considered the needs of children according to gender and age group.

Researchers only included items and services if participants agreed that it was a basic need and could explain why. Participants also agreed on when and how family members could share items.

The team found that in 2021, a single parent with one child aged between two and six needed S$3,218 per month to meet their basic needs. 

Meanwhile, partnered parents with two children, one aged between seven and 12 and the other aged between 13 and 18, needed S$6,426 a month.

A single elderly person needed S$1,421 a month.

According to the report, the budgets for the two working-age households work out to about S$1,600 per household member.

“As the average work income per household member for the third decile group of employed households in Singapore in 2020 is S$1,609, this indicates that 30 per cent of working households earn less than required for these two types of households to meet their basic needs.”

“These two waves of research give us a comprehensive view of basic needs across the life course,” said Dr Ng.

“They provide a concrete benchmark and starting point for discussing how people may achieve the incomes they need, including allowing us to calculate a possible living wage.”

“MAY NOT BE AN ACCURATE REFLECTION OF BASIC NEEDS”

In a statement issued on Friday, the Ministry of Finance (MOF) said: “Anyone reading the LKYSPP report should bear in mind the limitations of the approach used. The conclusions may not be an accurate reflection of basic needs largely due to assumptions used.”

The ministry noted that the methodology used is “highly dependent” on group dynamics and profile of the participants.

“With most participants having post-secondary education and 15 per cent living in private properties, the findings expressed may not be reflective of the circumstances of the lower-income families,” it said.

For instance, estimates included discretionary expenditure items such as private enrichment classes, jewellery, perfumes and overseas holidays, said MOF.

“The study also did not take into account alternatives, such as MOE (Ministry of Education) student care centres and the various self-help groups, which provide enrichment classes for those who need them at low cost.”

The ministry added that researchers considered mortgage payments for flats as expenditure items, but “downplayed” the fact that non-interest components of such payments are “more akin to savings that help households build up valuable housing equity”.

Highlighting the finding that each household member in working-age households should have about S$1,600 per month, MOF said that the number is “in fact closer to what an average household spends”. This is based on the Household Expenditure Survey 2017/2018, it said.

“This means that it is in excess of basic needs for an average household.”

MOF also said that the report understated the amount of Government subsidies and financial support received by low-income families.

“The amounts reflected in the report are what median earner receives, not low-income families,” said the ministry. 

It added that the report offers additional data points on the expectations and aspirations of Singaporeans, “which will continue to evolve over time”.

“The Government is sensitive to these shifts and regularly reviews our scope and coverage of assistance to ensure it is relevant and adequate,” said MOF.

[Stary]

1 hour ago, Windwaver said:

This adds to the problem 

https://www.channelnewsasia.com/singapore/reasonable-starting-point-living-wage-singapore-lkyspp-study-2230071

S$2,906 a ‘reasonable’ starting point for a living wage in Singapore: Study

• Study by Lee Kuan Yew School of Public Policy finds that S$2,906 is a "reasonable" starting point for a living wage in Singapore
• Parents are likely to face greater financial strain as children grow up
• Current public housing policies “effectively double” housing costs for single parents who have never married, compared to other parents

SINGAPORE: The “reasonable starting point” for a living wage in Singapore is S$2,906 a month, according to a study by the Lee Kuan Yew School of Public Policy.

This figure is based on the average budget for a couple with two children, assuming both parents are employed full-time. The figure is also adjusted for taxes and all universal and major means-tested benefits.

“The median work income among all workers in 2020 exceeded this amount by 50 per cent, but the current PWM (Progressive Wage Model) wages fall significantly below,” said the school in a media release on Friday (Oct 8).

The Progressive Wage Model aims to lift the salaries of workers by various sectors through upgrading their skills and improving productivity.

The study found that the costs of education and care “dominated” the budgets for children’s needs.

“While some costs associated with children decline with age, others increase sharply. As current measures supporting education and care taper off for older children, parents are likely to face greater financial strain as their children grow up.”

Researchers also found that current public housing policies "effectively double” housing costs for single parents who have never married, compared to partnered, widowed or divorced parents.

The research team includes: The head of the Social Inclusion Project at the Lee Kuan Yew School of Public Policy Dr Ng Kok Hoe, and Nanyang Technological University Assoc Prof Teo You Yenn, author of This Is What Inequality Looks Like.

DETERMINING BUDGETS

The team built on a general definition of basic needs determined in their 2019 study, which investigated budgets necessary for older people living alone or with a partner.

Focus group participants then generated lists of items and services related to several fields, including housing and utilities, food, transport and social participation. They considered the needs of children according to gender and age group.

Researchers only included items and services if participants agreed that it was a basic need and could explain why. Participants also agreed on when and how family members could share items.

The team found that in 2021, a single parent with one child aged between two and six needed S$3,218 per month to meet their basic needs. 

Meanwhile, partnered parents with two children, one aged between seven and 12 and the other aged between 13 and 18, needed S$6,426 a month.

A single elderly person needed S$1,421 a month.

According to the report, the budgets for the two working-age households work out to about S$1,600 per household member.

“As the average work income per household member for the third decile group of employed households in Singapore in 2020 is S$1,609, this indicates that 30 per cent of working households earn less than required for these two types of households to meet their basic needs.”

“These two waves of research give us a comprehensive view of basic needs across the life course,” said Dr Ng.

“They provide a concrete benchmark and starting point for discussing how people may achieve the incomes they need, including allowing us to calculate a possible living wage.”

“MAY NOT BE AN ACCURATE REFLECTION OF BASIC NEEDS”

In a statement issued on Friday, the Ministry of Finance (MOF) said: “Anyone reading the LKYSPP report should bear in mind the limitations of the approach used. The conclusions may not be an accurate reflection of basic needs largely due to assumptions used.”

The ministry noted that the methodology used is “highly dependent” on group dynamics and profile of the participants.

“With most participants having post-secondary education and 15 per cent living in private properties, the findings expressed may not be reflective of the circumstances of the lower-income families,” it said.

For instance, estimates included discretionary expenditure items such as private enrichment classes, jewellery, perfumes and overseas holidays, said MOF.

“The study also did not take into account alternatives, such as MOE (Ministry of Education) student care centres and the various self-help groups, which provide enrichment classes for those who need them at low cost.”

The ministry added that researchers considered mortgage payments for flats as expenditure items, but “downplayed” the fact that non-interest components of such payments are “more akin to savings that help households build up valuable housing equity”.

Highlighting the finding that each household member in working-age households should have about S$1,600 per month, MOF said that the number is “in fact closer to what an average household spends”. This is based on the Household Expenditure Survey 2017/2018, it said.

“This means that it is in excess of basic needs for an average household.”

MOF also said that the report understated the amount of Government subsidies and financial support received by low-income families.

“The amounts reflected in the report are what median earner receives, not low-income families,” said the ministry. 

It added that the report offers additional data points on the expectations and aspirations of Singaporeans, “which will continue to evolve over time”.

“The Government is sensitive to these shifts and regularly reviews our scope and coverage of assistance to ensure it is relevant and adequate,” said MOF.

wah so what is the conclusion? Can't really understand  🤪

Edited July 11, 2022 by Starry

[Mkl22]

2 hours ago, Starry said:

wah so what is the conclusion? Can't really understand  🤪

Errrr stage 2 of the 3C’s? Convince, then confuse…..🤣

Edited July 11, 2022 by Mkl22

[Stratovarius]

1 hour ago, Mkl22 said:

Errrr stage 2 of the 3C’s? Convince, then confuse…..🤣

3rd C is concussion?

[Windwaver]

6 hours ago, Starry said:

wah so what is the conclusion? Can't really understand  🤪

Earn below $2906 is not enough in Singapore but if you check most government assistance ends way below $2906 

[Beregond]

 

https://www.forbes.com/sites/williampesek/2022/05/18/recession-risks-are-contagious-as-japans-gdp-stumbles--again/?sh=32fb5b881423

Recession Risks Are Contagious As Japan’s GDP Stumbles—Again

[Jamesc]

Slow down mean COE come down?

[Karoon]

Conclusion: At a time when employees are hoping for a raise that can at least overcome record inflation, bosses can now point to this report and issue the standard ' challenging times ahead' , 'tighten belts', 'prudence' message while they shortlist their family's next gcb. 

[Jamesc]

Only stupid people don't know the rich get richer and the poor get poorer.

That's how stupid I am.

Instead of marrying a smart and good looking wife

I should have just married a rich and good looking wife

I know in forums everyone likes to tell everyone they are so smart.

I just like to tell the real unvarnished truth.