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India Becomes 6th Largest Economy and Beat France

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The World Bank issued the updated economic figures for previous year which showed that India held the sixth rank for the world’s largest economy and pushed France lower into the seventh spot. The gross domestic product (GDP) of India reached $2.597 trillion at the end of 2017 while France’s GDP amounted to  $2.582 trillion.

The Indian economy had a strong rebound since July last year following the declines in the past quarters due to economic policies imposed by the Prime Minister Narendra Modi's administration. There are about 1.34 billion Indian citizens which would likely make India the world’s highest population against 67 million French inhabitants. This explains that India’s per capita GDP remains a portion of France which is approximately 20 times higher according to the World Bank.

The consumer and manufacturing expenditure served as the main drivers for India’s economy in 2017 after Modi’s demonetization program of large banknotes way back in 2016 as well as the unorganized new tax system of the country.

India was able to double its GDP in a span of a decade and anticipated to power ahead as Asia’s economic engine as China wind down. The International Monetary Fund stated that India is predicted to grow by 7.4 percent in the current year and 7.8 percent in 2019, supported by tax reform and household spending. This was compared to the world’s forecast average expansion of 3.9 percent.

The Centre for Economics and Business Research mentioned that India would likely beat the GDP of France and the United Kingdom at the end of 2017. The London-based consultancy further told that there is a modest chance for the Indian economy hit the third place for the world’s largest economy by 2032.

Last year, Britain was regarded to be the fifth biggest economy in the world with a GDP worth $2.622 trillion. Meanwhile, the United States hailed as the number one economy followed by China, Japan, and Germany.

Irish Economy to Reach Highest Growth in 2018

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The economy of Ireland is projected to reach its highest record in 2018 based on the latest outlook of the European Commission. Ireland’s gross domestic product (GDP) is projected to expand by 5.6 percent this year and 4 percent in 2018, supported mainly by domestic demand.

Meanwhile, the estimate of the EU executive shows that eurozone GDP has the potential to increase by 2.1 percent, which is below the 2.3 percent forecast according to its May report. 

Since Ireland is a very open economy, the country is potential to have revisions in the international taxation and trade environment. While the activities of multinational corporations could affect the headline GDP growth. In the near term, the commission expects that the domestic economic activity could possibly grow at a strong momentum.

In general, the commission reduced its predictions for the EU economic growth for this year because of trade adjustments due to increasing oil prices and tensions with the United States which drove the EU inflation higher.
There is an optimistic outlook for the whole year despite better trade with the United States. Forecasts were mostly taken prior to the United States raising their stakes through 10 percent tariffs on an extra $200 billion worth of Chinese imports, announced on Tuesday. 

The worsening trade war has added uncertainty on the outlook that also affected the Chinese financial markets in the past few weeks. 

With sluggish credit expansion and domestic demand ranging from government-funded infrastructure investment to consumer spending, China’s economy seems to be showing signs of struggle and weakening. 

The huge export sector may add impact on tariffs with the U.S. giving 25 percent tariffs on $34 billion of Chinese imports on Friday, which then triggered Beijing for rapid retaliatory measures on the same amount of U.S. Chinese exports to China. 

Moreover, the uncertainty caused by trade war pushed the corporate borrowing costs higher in reaction to soften the economic effect of a multi-year easing on riskier lending. More cash were accumulated through lesser reserve requirements for lenders three times this year.

Drop in Inflation Rate of Malaysia

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The Annual inflation rate of Malaysia declined to 1.3 percent in June from 1.8 percent the month earlier due to the withdrawal of a goods and services tax based on the poll by Reuters. 

A survey of ten analysts by Reuters forecast for June ranged from 0.6 percent to 1.9 percent. The central bank of Malaysia kept the interest rates at 3.25 percent at a policy meeting on July 11 despite sluggish inflation and steady growth. 

The new government by Prime Minister Mahathir Mohamad starting May 9 general election abolished the consumption tax of 6 percent on June 1, which was implemented for three years. 

According to economists, the elimination of goods and services tax affect the inflation and pushed it lower in June,  despite the higher cost of transportation and food during the month of fasting in Ramadan and subsequent Eid al-Fitr celebrations.

South Korea to Unite with Asean and India

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The 1950-53 Korean War ended under the Presidency of South Korean leader Moon Jae-in and successfully settled regional programs for economic, political, security, social and cultural. While the previous presidents including  Kim Dae-Jung, Roh Moo-hyun, Lee Myung-bak and Park Geun-Hye attempted to fix similar issues but failed to do so. 

Whenever the country’s leaders turned their attention to Southeast and South Asia, problems will always come up within the Northeast especially in the Korean Peninsula, which causes immediate distraction and inconsistency.

However, President Moon tried a new method instead of using the same strategy, he positioned South Korea within the ongoing alliance with the Indo-Pacific region. Mr. Moon travels within and outside the country and promised to take a visit on Asean nations on the first two years of his leadership.

Weak Income Growth In UK Despite High Employment

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Income growth in Britain showed down at its weakest rate in six months despite positive figures in record employment. This further adds concerns whether interest rates will be raised since the global financial crisis. 

Average weekly earnings grew by 2.5 percent on the year between the period of March and May at a lesser rate with 2.6 percent at three months earlier which was the lowest since September last year based on the report by the Office of National Statistics. 

Momentum picks up in the British economy after a sluggish first three months of the year due to heavy snow downfall and the central bank is considering being affected by the speed limit that would begin to raise the inflation rate. 

The BoE Governor Mark Carney mentioned that the economy as a whole, as well as, the pay is rising similar to the forecast in May that paves the way for a rate hike in August. 

Yet, a central bank deputy said that rising figure did not exceed the recent values of .5-3.0 percent range with the purpose of 3 percent growth rate by the end of the year. 

Also, according to him, there have been multiple ‘false dawns’ regarding the growth rate of the income where there could still be a spare storage in the labor market than the initial estimate of the central bank.


There is also another record employment rate and the number of job openings has also reached a record new. Thus, it can be said the labor market is progressing steadfastly based on the reports, as described by the ONS statistician Matt Hughes.

NZ Economy Driven by Rural-Based Firms

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The provincial economies of New Zealand were able to drive economic growth, reinforcing the price recovery in the dairy products as mentioned by Infometrics chief forecast Gareth Kiernan on Wednesday. The regional spending activity was able to improve faster than the activity in the main centers. While prices for exports commodity remained at high levels.


Moreover, the government’s simulatory fiscal policy also ease down the decline. Prior to the approval of the May Budget, the NZ expenditure options was restrained by the said policy which includes fees-free courses in tertiary education as well as the Families Package.


Forecasts from the Treasury shows surplus growth by $7.3billion in 2022, with an expected increase in government revenue and the administration projected for a further boost in spending while keeping its records written.


On the other hand, the lack of workers (skilled and unskilled) continue to hold back the NZ economic growth. Wage inflation expanded in the previous quarter and was able to trigger price pressure across the board for the next few years.


In the provincial areas, issues about the lack of labor and effects of Mycoplasma bovis are the most critical problem in the main centers, as the world economy would likely weaken because of the trade dispute between the US and China.


Low business reliance indicates that those companies who are domestically-centered were uncertain to hire or invest. Meanwhile, households were careful on their expenses due to higher oil prices and sluggish housing market.

US Leading Indicators Grew by 0.5% in June

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The Leading Economic Index by the Conference Board was able to expand by a half percent this month, showing a higher than expected figures. The indicator had increased by 0.5 percent in June which beat the forecast of 0.4 percent growth based on the Reuters’ poll. The boost marks the eighth consecutive month of improvement for the index.

Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board, stated that the US LEI rose due to the continued stable growth in the American economy. He added that the overall strengthening in leading indicators, except the housing permits which decreased again, does not indicate any significant slowdown in the near-term.

The flat reading in the month of May suggested that the economic performance will remain strong but will not move higher as shown in the  Conference Board's report. The measurement evaluates the US economic conditions and the outlook of world economic trends. Furthermore, the Conference Board imposed a composite value based on 10 key metrics which includes the average weekly unemployment claims, producers’ new orders and stock prices.

Germany Imposed Export Limit Against Turkey

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Germany increased its economic sanctions against Turkey and eased down its travel advisory as Ankara’s two-year state of emergency ended. The report from the newspaper Frankfurter Allgemeine Zeitung confirmed that the export limit worth 1.5 billion-euro ($1.7bn) ensures Turkey cannot be renewed for this year according to the German economy ministry.

The assessment was introduced in July 2017 in order to constraint Turkey due to the arrest of five German activists and a German human rights campaigner which further includes the leader of Amnesty International in Turkey. The opposing blocs in Germany denounce that the limit was too weak since the value of export guarantees boosted from 1.1bn euros in 2016 to 1.46bn euros next year.

Eurozone’s Steady Growth of Consumer Confidence in July

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Consumer confidence in the eurozone remained the same in July, signifying steadfast growth in the third quarter based on the data published on Monday. 

According to the European Commission, the flash estimate of the eurozone consumer morale was kept unchanged at -0.6 points in July. Meanwhile, the data for June was adjusted lower from the earlier figure of -0.5 to 0.6. 

As for the general consumer sentiment in the European Union, a significant increase in the result to -0.7 with 0.6 points difference from the previous data. 

Yet, economists are still optimistic of growth to continue by the second half of the year amid the weakened status in the second quarter. Forecast of the European Central Bank says growth will be 2.1 percent this year in the whole eurozone.

India and Uganda to Boost Defense Ties

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India and Uganda made a deal to expand bilateral cooperation in terms of defense and economy after the delegation-level talks between  Ugandan President Yoweri Museveni and Prime Minister Narendra Modi on Tuesday.

India further expanded two lines of credit in agriculture, dairy sectors, energy and infrastructure amounted USD 200 million to Uganda and PM Modi had comprehensive discussions with Museveni about the ways to strengthen bilateral agreements.

According to the Indian leader, the arrangement lies within the great contentment and development of defense effort between the two nations. While Museveni stated that both countries were focused on investment, trade, and tourism. Also, Modi suggested that Indian firms will invest in Uganda’s healthcare industry.

“No Winner” in Trade Battle, says China

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The BRICS (Brazil, Russia, India, China and South Africa) leaders will have a three-day meeting in Johannesburg, South Africa. According to China, no nation could be declared as the winner in the global trade dispute, as Chinese President Xi Jinping appealed to the developing countries to refuse protectionism. While South African President Cyril Ramaphosa cautioned about the effect of tariff threats by the American President Donald Trump. The BRICS consists of more than 40% of the world population but never work together as a coordinated economic bloc.

Furthermore, Xi stated that the consolidated expansion of developing countries and emerging market is continuous and will balance more the global growth. In the previous week, Trump spoke that he was ready to set upon $500bn worth of tariffs on all imported Chinese goods.

While South Africa is currently suffering from collateral damage due to US tariffs on steel and aluminum which affects 7,000 jobs, said the country’s Trade Minister Rob Davies. And the attempt to impose an exemption from the US administration ended up failing.

There were 22 more countries expected to participate in the summit this week, 19 of them is from Africa. China pledged $14.7bn worth of investments to South Africa, according to the announcement of President Ramaphosa after the opening ceremony.

U.S. GDP to Grow Significantly, says Econ Advisor Kudlow

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U.S. economic advisor Larry Kudlow anticipates that the GDP for the second quarter will have a maximum raise. Kudlow was unable to give the specific figures, however, he contradicted the expected range of 4 to 4.5 percent. Moreover, the head of National Economic Council is the most recent official to discuss his viewpoint on economic data prior its publication, which infrequently happens in the White House.

Earlier in June, American President Donald Trump posted on Twitter about his anticipation for the release of the May nonfarm payrolls report, an hour prior the publication. Based on the Reuters survey, economists predicts that the quarterly GDP will reach 4.1 percent for the initial reading. In case that the growth rate will gain 5.2 percent, this can be regarded as the best single-quarter projection since Q3 of 2014 which is also the most significant increase during the presidency of Barack Obama.

Hence, the forecasts continue to show different numbers, as CNBC Rapid Update survey of top economists foresees 4.2 percent expansion and Barclays speculates for a 5.2 percent increase. On the other hand, the New York Fed assumes for a 2.7 percent low end while the Atlanta Fed stands at 3.8 percent.

US Economy to Gain 3pc, says Mnuchin

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US Treasury Secretary Steven Mnuchin stated his growth outlook for the American economy, he mentioned that the United States is heading for a 3 percent annual increase for many years.

Mnuchin further expressed that it is easy to predict potential earnings for the upcoming years, however, he deems that the ongoing growth supported itself for the next four or five years. He also said that the current administration concentrates on long-term and well-maintained economic performance, as their proposed plans were achieved. This was seen after the 4.1 percent Friday’s GDP report for the second quarter of this year.

UK Interest Rates Predicted to Grow This Week

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The survey on top economists shows that experts are expecting for the Bank of England to lift its interest rates to 0.25% on Thursday, which would likely put pressure towards house hunters. Based on the poll of the Finder.com on Monday, there were nine economists who agreed that the Monetary Policy Committee will increase its rates during the Thursday’s meeting. The personal finance site mentioned that it’s the first time for the unanimous votes by experts in terms of the interest rates direction since 2007, while they have various responses about the effect of the predicted hike and further economic indicators.

Moreover, the economic figures indicate increasing wages and lesser unemployment rate influences the projected percentage hikes. Nevertheless, homebuyers anticipate for a bounce in their budgets due to wage growth offset led by the mounting costs on mortgages. One-third of the polled economists expressed pessimism towards housing affordability.

Also on Monday, the economic research consultancy Pantheon Macroeconomics further projected a raise on Thursday and stated that there could possibly rate hikes in 2019.

S. Korea Factory Activity Slump for Five Months in a Row

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The factory activity of South Korea declined for the fifth time in July and recorded as the worst drop since November 2016. While new orders and output fell as shown in the private manufacturing poll on Wednesday.

The Nikkei/Markit purchasing managers’ index (PMI) had a downturn to 20-month low at 48.3 last month, compared to June’s 49.8 and remained to be lower than the 50-point mark that separates growth from contraction since March 2018. The manufacturing activity was affected by the new orders and output and slumped to its 3-month lows at 47.8 and 47.3, respectively. Furthermore, the data showed that the business confidence shrunk to ten-month low due to gloomy conditions. The output reading indicates notable weakness in the production figures for the month of June.

On the other hand, the instability in domestic demand occurred during the intensive global growth uncertainties as the international trade conflict threatens to affect economies that primarily rely on exports. The sub-index for new export orders had decreased from 52.9 on June to 50.1 in July, which gave hints for the potential marginal increase in new foreign businesses and if such trend will continue, the economic growth might get hurt.

South Korea was also afflicted by the war between the United States and China, as their largest export market, and this further heightened the risks for transport manufacturers.

German Factory Output Pick up in July, says PMI

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According to a survey on Wednesday, stronger new orders and increased in output supported the development in German manufacturing industry for July. Markit’s Purchasing Managers’ Index (PMI) for manufacturing comprises one-fifth of the economy and expanded to 56.9 versus 55.9 in June. Moreover, the July reading coincided with the May’s figures and higher than the 50 line that separates growth from contraction. The figure was below than flash reading of 57.3.

Germany’s economy was able to gain momentum following a soft patch during the first four months of 2018, but the forecasts appear to indecisive due to trade conflict issues. IHS Markit revealed that firms remain optimistic, showing that the level of positivity for the future surge since April..

Singapore GDP Growth Down to 3.8%, says MTI

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The economic report of Singapore for the second quarter of the year is expected to be release on Monday, Aug 13, at 8am, according to the Ministry of Trade and Industry (MTI). The survey will further show the final economic growth data for Q2 which includes comprehensive details about employment, growth sources, inflation, productivity, and sectoral performances. 

While last month, the forecasts indicated that Singapore's economic growth declined to a one-year low of 3.8 percent in April to June quarter due to escalation of trade uncertainties and slackening manufacturing sector. The expectation came in weaker than market outlook and lower than the 4.3 percent expansion reported in the first quarter this year.

Nevertheless, economists remained consistent with their growth outlook for the whole year despite the remarkably downside risks on the back of increasing tensions between the US and China and the recent property cooling measures.

According to the central bank of the country, Monetary Authority of Singapore (MAS), the economy is projected to keep a  "steady expansion path" last month amid the headwinds brought by trade wars. While in May, the MTI reduced the range estimate for Singapore's annual growth between 2.5 and 3.5 percent.

Japan Wage Growth Makes Significant Increase

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Wages for workers in Japan had a significant increase in June due to the huge amount of summer bonuses. With this, the people were able to control their money despite the decline of household expenditure for five consecutive months.

Moreover, labor cash earnings increased by 3.6 percent in June 2017 against expected +1.7 percent. Real wages, on the other hand, were adjusted for inflation and showed growth of 2.8 percent versus the forecast of +0.9 percent. Since Japan was supported by the tightest labor markets for decades, wages had a steady growth path since mid-2017 and real wages also begin to rise. This is a favorable news for the central bank of Japan, as the BOJ recently adjusted their monetary policy to sustain the easing programme.

Families will be willing to have higher spending if they were convinced about the continuous pay hikes, which could prompt prices to increase as well as the economic growth development. However, the problem lies with the employers who tend to raise bonuses rather than imply permanent wage hike.

South Korea Slow Economic Recovery due to Weak Domestic Demand

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The economic recovery of South Korea was restricted by the sluggish domestic demand despite the positive exports, as mentioned by an economic think tank on Tuesday. In a monthly report from the Korea Development Institute (KDI), exports sustained its optimistic growth on demand for locally produced semiconductors. However, the KDI mentioned that domestic demand slightly softened alongside the lagging recovery in consumer expenditure and fluctuation in corporate investment.

While the production recovery was affected by the trend and cooled down aside for several sectors such as the chip industry. Moreover, S. Korea’s retail sales grew by 4 percent in June but below than 4.5 percent expansion in July. While consumer sentiment index versus the economic status contracted to 101.0 in July from 105.5 in the previous month.

UK GDP Outlook for Q2 Expected to Double Q1’s Rate

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The Gross Domestic Product (GDP) growth rate of the United Kingdom for the April- June quarter is predicted to double the Q1’s rate with an increase of 0.4 percent. The report is scheduled to be released on Friday, August 10 at 8:30 GMT by the Office for National Statistics.

Compared last year, the UK GDP for the second quarter is projected to grow by 1.3 which is higher than the 1.2 percent growth rate in the first quarter of 2018. The recovery of Britain’s GDP rate to an increasing momentum from the near-zero level combined with the recent reports of the EU in settling the Brexit deal for the UK Prime Minister Theresa May are both intended to cool down the selling pressure of the GBP after its decline to 1.2841 yesterday.

Moreover, the overall development is expected and the British economy sustained its position well below the average growth rate outlook for major advanced countries, considering that Brexit risks affect the expenditure and business investment decisions.

The initial forecast of the National Institute of Economic and Social Research (NIESR) for the UK GDP was issued and showed that the research institute’s GDP Tracker indicates an expansion of 0.4 percent in Q2 of this year and 0.5 percent in Q3. The policymakers of the Bank of England also shows optimism towards the UK, stating that growth would likely remain discreet based on its historical standards but relatively higher than the beginning of this year.

US Economy Rose to 3.1 pc: CBO

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The American economy is expected to boost by 3.1 percent this year due to increase in government expenditure and tax reductions supported the growth, according to the Congressional Budget Office yesterday. However, the strong expansion may slow down earlier in 2019 considering that the United States may weaken as temporary government policies may elapse based on CBO’s report.

Moreover, the Congressional Budget Office predicted showed that the economic growth will decline to 2.4 percent next year and 1.7 percent in 2020, hovering above that level on the following decade. In case that CBO’s figures coincided with the results, the US economy would likely leap to 3.1 percent this year versus 2.6 percent last year. The mentioned numbers indicate a significant development amid the impact of the Great Recession, with a slackening annual growth rate of 2.2 percent.

Strong Dollar Curbs Inflation, Drop in U.S import prices

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Import costs of the U.S. were kept the same in July with the surge of fuel costs that balanced out weak prices on other aspects, implying keeping an eye to inflation due to a strong dollar. 

The flat reading of import prices revised upwardly to 0.1 percent decline in June as reported by the Labor Department on Tuesday. A decline of import prices by 0.4 percent in June. 

Reuters survey of economists is an increase of 0.1 percent in  July. Twelve months after, import price grew to 4.8 percent, the highest gain since February 2012, following a rise of 4.7 percent in June. 

In the previous month, imported fuels and lubricants rose by 1.6 percent from 1.3 percent increase in June. On the other hand, food costs decline by 1.8 percent from 2.6 drop in June. As for imports prices, excluding fuels and foods, it slid down by 0.1 percent in July after a drop of 0.2 percent last month. Core import prices grew by  1.6 percent in 1 year from July. 

The dollar grew 0.5 percent compared to other main trading partners in July and further strengthen by 4 percent on a trade-weighted basis this year, which could affect the expected increase of import goods prices in the background of tension between global major economies and America. 

Tariffs on steel and aluminum imposed by the Trump administration to protect the domestic business that was seen to be performing unevenly to the foreign competitors. Consequently, their major trading partners such as the E.U., China, Canada, and Mexico responded the same way with their tariffs.

Turkey’s Albayrak Reins Capital Control as Policy Option

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Treasury and Finance Minister Berat Albayrak of Turkey had excluded controls on capital movement as an option to the policy and urges to strengthen confidence amid conference call held yesterday.

The finance minister further stated that the main priorities were the restriction in inflation and contracting the current-account deficit. The remarks of Albayrak hinted for the economy chief’s thoughts of a dispute against the United States with regards the American pastor detention that displeased financial markets. The lira weakened a quarter of its value within a few weeks as the United States sanctioned the government staffs of President Recep Tayyip Erdogan, however, it was able to cut down some losses as the central bank and banking regulators caused higher value in betting the currency.

The Turkish lira was able to grow and currently trades strongly by 3.1 percent at 5.7660 per dollar at 4:46 pm in Istanbul. As Albayrak talked about inflation and mentioned that the central bank itself could not control the price hikes in its target level with the absence of fiscal policy. The economic growth is temporarily steady at 7.4 percent growth in the medium term recorded last year.

Business Confidence in UK Decline due to Brexit Uncertainty

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The survey issued on Monday showed the lowest decline of business leaders’ confidence towards the UK economy due to the risky effects of the Brexit agreement. Britain is expected to the leave the European Union in less than eight months, however, the government has not yet settled its exit with Brussels and proceeded to plan for the possible failure to come up with an official agreement. 

The Institute for Directors (IoD) employers group polled 750 executive leaders and found out that the major trading concern is the uncertainty within the European Union. When asked about the leader's optimism about the expanding economy for next year, the majority of them were pessimistic which resulted the confidence level to reach -16 percent versus -11 percent in June and lower than the positive 3 percent rating in April.

According to the IoD, there was 44 percent of the participants mentioned the uncertainty towards EU’s trading condition which they believe will have an unfavorable impact on their companies. The poll was made on July 11-26 which indicates that respondents had a positive outlook on their own businesses, with a net optimistic forecast of 37 percent but further showed a decline from 46 percent in June.

Business Confidence in UK Decline due to Brexit Uncertainty

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The survey issued on Monday showed the lowest decline of business leaders’ confidence towards the UK economy due to the risky effects of the Brexit agreement. Britain is expected to the leave the European Union in less than eight months, however, the government has not yet settled its exit with Brussels and proceeded to plan for the possible failure to come up with an official agreement. 

The Institute for Directors (IoD) employers group polled 750 executive leaders and found out that the major trading concern is the uncertainty within the European Union. When asked about the leader's optimism about the expanding economy for next year, the majority of them were pessimistic which resulted the confidence level to reach -16 percent versus -11 percent in June and lower than the positive 3 percent rating in April.

According to the IoD, there was 44 percent of the participants mentioned the uncertainty towards EU’s trading condition which they believe will have an unfavorable impact on their companies. The poll was made on July 11-26 which indicates that respondents had a positive outlook on their own businesses, with a net optimistic forecast of 37 percent but further showed a decline from 46 percent in June.

Japan’s Easing of Stimulus Program is Likely Even Before The Target Rate

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The economic growth of Japan is getting better which is expected to reduce its huge stimulus program even before reaching the 2 percent target rate as stated by a former Bank of Japan board member, Koji Ishida. 

Considering that Ishida was a commercial bank executive back then, he added that the action of the central bank was “long overdue”, affecting the returns of regional banks because of ultra-low rates. 

A very low inflation rate induced the BOJ to keep an ultra-easy policy in the past years in spite of the possible consequences of such policies, as well as its banking system. 

In achieving the mandate of the central bank by law, the inflation target is necessary in order to stabilize “sound economic development”, as described by Ishida during Reuters’ interview on Tuesday since exiting the central bank two years ago. 

Yet, the BOJ would not keep the present policy rates until the inflation target of 2 percent has been reached. Moreover, he said that the central bank will have a “flexible” monetary policy regardless of achieving the target rate. 

With looming concerns on very low policy rates, the BOJ allowed loosening their bond yields to be more agile in meeting the zero percent target. However, it may take some time before considering the rates for long-term not to overwhelm the market speculation but instead, they are aiming for a short-term exit from the loose monetary policy, he said. 

The central may not rush in curbing the yield curve as of the moment, but it is also apparent that it is possible when the market becomes steady, he added.

Japan’s Manufacturing Activity Grew Due To Domestic Demand in August

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Japan’s manufacturing activity grew at a bit faster rate in August as the domestic demand increased according to a preliminary survey on Thursday. Although the export orders dropped adding to the problem with the trade protectionism. 

The flash Markit/Nikkei Purchasing Managers Index (PMI) on manufacturing sector increase to 52.5 on a seasonally adjusted in August compared to the 52.3 figure in July. Figures remained above the 50 mark which puts it apart from contraction for the 24th straight month. 

The flash data prolonged the growth cycle of Japan’s manufacturing sector for two years, which has been the longest period since the global financial crisis, as described by an economist at IHS Markit. 

Adding to that, he said that the expansion was supported by the strengthening domestic market with the most recent data that came out. 

Data shows that export orders increased to 52.6 from 50.9 last month, giving emphasis on the steadfast growth of the domestic market. However, the new export orders declined to 49.3 from a final 50.0 in July, showing a decline in two months. 

Real wages grew in June, which was the quickest rate over 21  years, signaling consumer spending to further rise. 

The economy progressed at a better rate in the second quarter, boosting a strong household and business spending and further strengthening the domestic demand. Yet, concerns on trade disputes add risk in the manufacturing sectors as it may affect the export demands.

France Advised Turkey to Use Economic Policy Tools

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French Finance Minister Bruno Le Maire told Turkish counterpart Berat Albayrak at a meeting on Monday that Turkey should make use of their tools available for economic policy in order to establish a sustainable growth.

Turkish lira had declined by almost 40 percent this year due to concerns on monetary policy as well as the issue of the Christian pastor Andrew Brunson. Moreover, Le Maire mentioned that everyone, including Europe, France, and Turkey itself, that the situation in Turkey will become stable. France further stated that Turkey is committed to structural reforms.

NZIER Revised Downward its Growth Outlook

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The New Zealand Institute of Economic Research (NZIER) decided to reduce its economic growth outlook due to combined events of slackening population growth, the decline in business confidence and global trade war. However, the demand for residential and nonresidential construction continued to be strong and capacity constraints limit the highest extent of construction activity. 

Moreover, the prospect of economists and the Reserve Bank indicates that the official cash rate will remain steady until 2020. Generally, the monetary policy normalization introduced by the United States reflects for the rate increase which is required to allocate among emerging markets.

Mexico’s Central Bank Lower Growth Forecast Amid NAFTA Talks

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The central bank of Mexico adjusted lower their forecast for this year and the next, based on the report released on Wednesday. Although, the NAFTA trade talks could allay the uncertainty of the economy. 

The gross domestic product is anticipated to rise between 2.0 and 2.6 percent in 2018 compared to the previous inflation report of 2.0 to 3.0 percent, which may denote a problem in the future. 

Growth forecast for 2019 is around 1.8 and 2.8 percent much lower than the range of 2.2 and 3.2 percent. The fourth quarter inflation is presumed to be at 4.2 percent this year, higher than the former 3.8 percent.

Other than that, the central bank raised its inflation estimates for 2018 and the next close to the 3.0 percent target in the first half of 2020. 

 For 2019, the central bank increased the inflation estimate to 3.3 percent for the fourth quarter next year than the 3.1 percent previously. 

The board said that monetary policy will be adjusted and will continue to do so if the situation demands a more “firm” approach to reach the inflation target.

China’s Services PMI Rose in August From an 11-month Low

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The services sector in China gained momentum in August following a decline in the previous month, according to the official report on Friday. Somehow this supports the economic slowdown of the US amid the stiff tariffs of Chinese goods. 

The official Purchasing Managers’ Index (PMI) of the non-manufacturing sector grew to 54.2 after an 11-month low of 54.0 in the previous month, whereas higher than 50 mark divides growth from contraction. 

More than half of the Asian economy relies on the services sector, supported by higher spending power from increasing wages of Chinese people. 

The composite PMI, including the manufacturing and services activity, rose to 53.8 this month from 53.6 in the previous one. 

Although, it is unforeseen for the manufacturing sector in the Chinese sector in China to rise from a two-months decline while the PMI increased to 51.3 from 51.2 in July.