Western sanctions on Russia, European banks 'take the bullet'; the world's fourth largest economy recovers unevenly

Western sanctions against Russia pose a big risk to Swiss banks, the US cuts interest rates for the first time since 2020, Goldman Sachs and Citigroup lower China's growth forecast... are the world economic highlights of the past week.

A survey of Swiss banks on September 12 found that international sanctions against other countries, such as those targeting Russia, are the biggest geopolitical risk to their business. (Source: ukrainianworldcongress)

World economy

Global semiconductor market to reach $5 trillion by 2050

The president and CEO of Tokyo Electron, a semiconductor and electronics company, Toshiki Kawai, has said that the company wants to participate in India's rapidly growing chip supply chain. Mr. Toshiki Kawai predicts that the global semiconductor market will reach $5,000 billion by 2050.

According to Mr. Toshiki Kawai, in the past, the semiconductor market had a growth cycle driven by the launch of new products such as personal computers and then smartphones, the Internet of Things, cloud computing. The world semiconductor market is now in the second wave, with growth momentum coming from technologies such as artificial intelligence and autonomous driving. The next waves will be quantum technology and 6G and 7G telecommunications.

Mr. Toshiki Kawai commented that the above forecasts show why it is necessary to penetrate the potential market of India at an early stage and contribute to the development of the semiconductor industry in this country. At the Semicon India 2024 exhibition held on September 11-13 in New Delhi (India), Tokyo Electron announced a partnership with the electronics manufacturing company Tata Electronics (India) with the desire to cooperate for long-term development in this most populous market in the world.

America

* On September 18 (local time, early morning of September 19 Vietnam time), the US Federal Reserve (Fed) decided to cut interest rates by 0.5 percentage points , starting a cycle of easing monetary policy, in the context of steadily cooling inflation and growing concerns about the health of the labor market.

This is the Fed's first rate cut since 2020. In a statement after its September 18 policy meeting, the Fed said it decided to cut rates to a range of 4.75-5.00% based on recent inflation developments. Fed policymakers assessed that the agency had increased confidence that inflation was on a steady path toward the 2% target.

* The US government's September 13 decision to increase tariffs on electric vehicles and some goods imported from China marks the end of a more than two-year review of tariffs imposed by former US President Donald Trump.

Specifically, tariffs on Chinese electric vehicles will quadruple to 100%, while tariffs on lithium-ion batteries will increase from 7.5% to 25%. Tariffs on aluminum and steel products will also increase from 0% to 7.5% on September 27.

In a statement on September 13, US Trade Representative Katherine Tai stated that the above tariff policy reflects the commitment of President Joe Biden and Vice President Kamala Harris to stand with American workers and businesses.

China

* Goldman Sachs and Citigroup have cut their forecasts for China's full-year 2024 economic growth to 4.7% after the world's second-largest economy reported industrial output slowed to a five-month low in August. Goldman Sachs had previously forecast full-year growth of 4.9%, while Citigroup forecast 4.8%.

China's industrial output grew 4.5% year-on-year in August 2024, down from 5.1% in July 2024 and marking the slowest growth since March 2024, data from the National Bureau of Statistics (NBS) showed.

* China's new home prices fell at their fastest pace in more than nine years in August 2024, official data showed on September 14, as government support measures failed to spur a significant recovery in the property sector.

According to data from the National Bureau of Statistics (NBS), new home prices in China fell 5.3% year-on-year in August, the fastest decline since May 2015, compared with a 4.9% decline in July. On a monthly basis, new home prices in China fell for the 14th consecutive month, down 0.7% from the previous month and the same as July.

Europe

* According to Bloomberg news agency estimates, the value of Russia's crude oil exports has decreased by nearly 30% since the end of June , due to the decline in crude oil prices on the international market.

The increase in export volumes has not offset the impact of the drop in oil prices in recent weeks. Russia’s Urals crude is currently trading below $60 a barrel, the ceiling that the European Union (EU) and the United States impose on Russia to use the services of Western shipping, insurance and financial companies to transport crude.

Brent crude oil prices are currently below $75 a barrel, after hitting a near three-year low of below $70 last week. The overall decline in the price of “black gold” has dragged down the price of Russian crude oil.

* A survey of Swiss banks on September 12 found that international sanctions imposed on other countries, such as those targeting Russia, are the biggest geopolitical risk to their business.

Policymakers should develop a sanctions approach that ensures the country's neutrality and that it remains a safe haven for banks and their customers, a report by the Swiss Bankers Association (SBA) and consulting firms said.

The value of frozen Russian financial assets, real estate, luxury cars and artworks was 7.1 billion francs ($8.33 billion) as of mid-August 2024, according to the Swiss Ministry of Economic Affairs. According to bankers, Switzerland’s clear stance on the conflict in Ukraine has raised concerns among foreign clients that the country could support further Western sanctions in the future.

* The EU will introduce 12 duty-free import quotas for Norwegian seafood from May 2021 to April 2028, according to an agreement between the two sides.

The Norwegian government said the plan is part of a funding agreement between the European Economic Area (EEA) and Norway. Accordingly, the quotas for the period past May 2021 will be distributed over the remaining period of the agreement between the two parties, which runs until May 2028. If the quotas are not used up by this time, they can be carried over until May 2030, or until a new duty-free quota period comes into effect.

* The German government and its partners have pledged to invest around 12 billion euros ($13.3 billion) in venture capital by 2030 to support startups for their innovations, according to a joint statement issued at the recent Startup Summit in Germany.

The declaration, signed by the government, state development bank KfW and other companies, is part of an initiative to boost startups and increase venture capital and private innovation in Germany.

"The initiative aims to mobilize private investments in venture capital, startups and innovative technologies," said German Chancellor Olaf Scholz, stressing that it would help strengthen Germany's position as a business location.

* The French central bank forecasts the economy will grow over the next two years, as low inflation boosts consumer spending, helping to offset the drag from government austerity measures.

The eurozone's second-largest economy is expected to grow 1.1% in 2024, up from an estimated 0.8% growth in June, according to a quarterly forecast released on September 17.

Growth is then expected to pick up to 1.2% in 2025 and 1.5% in 2026 as wages rise faster than inflation, boosting consumer spending. However, the 2026 estimate has been cut slightly from the previous 1.6%.

Japan and South Korea

* Japan's export growth slowed in August 2024 despite extending its streak of gains to a ninth straight month, pointing to an uneven recovery in the world's fourth-largest economy .

Japan's exports rose 5.6% in August from a year earlier, down from 10.2% in the previous month, the Finance Ministry said on September 18. The figure was lower than economists' estimates of 10.6%, mainly due to a 9.9% drop in auto exports. Construction and mining machinery also fell in the same month.

* Average land prices across Japan in the 12 months to July 1, 2024, rose 1.4% from the previous year, the third straight annual increase and the sharpest increase since 1992 , thanks to increased international tourism and foreign investment due to a weakening yen.

According to the Ministry of Land, Infrastructure, Transport and Tourism, commercial land prices in Japan rose 2.4% and residential land prices rose 0.9% from a year earlier in the period. Both commercial and residential land prices rose for the third consecutive year and posted their sharpest increases since 1992, when land prices collapsed as Japan's asset bubble burst.

* Sales of company-owned vehicles in South Korea continued to decline sharply in 2024, especially for high-end imported models, largely due to a new government policy to curb tax fraud. The introduction of green license plates for expensive company-owned cars, effective from January 2024, is seen as a major factor in the sharp decline.

According to data from Carisyou Data Research Institute, the number of company car registrations costing over 80 million won (about $59,600) fell 27.7% from the same period in 2023 between January and July 2024, bringing the total number of registered vehicles to 27,400. The decline is closely related to the government's new policy, which specifically targets company-owned cars costing over 80 million won.

ASEAN and emerging economies

* The Directorate General of Taxation under the Ministry of Finance of Indonesia recorded tax revenue from the country's digital economy sector reaching Rp 27,850 billion (US$1.75 billion) from 2022 to the end of August 2024.

This revenue comes from the collection of value-added tax (VAT) on e-commerce, tax from the cryptocurrency sector, peer-to-peer lending or online lending tax and shopping tax through the government's Information System for Purchasing (SIPP tax).

Director of Consulting, Services and Public Relations, Dwi Astuti, said that since 2020, VAT revenue from e-commerce has reached Rp 22,300 billion from 166 tax collection units, of which revenue in 2024 will reach Rp 5,390 billion.

Meanwhile, tax revenue from the digital currency sector from 2022 will reach Rp 875.44 billion, including Rp 411.12 billion in income tax from cryptocurrency transactions and Rp 463.32 billion from VAT on digital currency.

* Thailand's rice exports are likely to reach less than 8 million tonnes next year due to a series of risk factors hampering its competitiveness, such as the strong baht and the possibility of India lifting export restrictions later this year, according to the Thai Rice Exporters Association.

The association expects Thailand to exceed its annual export target of 8.2 million tonnes this year and if exports average 600,000 tonnes per month for the rest of the year, the full-year figure could reach 9 million tonnes.

However, the association warned of a difficult year in 2025 as India is likely to continue exporting rice, which together with a stronger baht could see Thailand's rice exports fall to between 7 million tonnes and 7.5 million tonnes.

Source: https://baoquocte.vn/kinh-te-the-gioi-noi-bat-13-199-phuong-tay-trung-phat-nga-ngan-hang-chau-au-dinh-dan-nen-kinh-te-lon-thu-4-toan-cau-phuc-hoi-khong-dong-deu-286832.html