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| Issue 479 | 4 Oct 2021 |
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World news: Delta variant slowing economic growth in East Asia and Pacific |
| In its East Asia and Pacific Fall 2021 Economic Update, World Bank said economic activity in the region began to slow down in Q2 undermined by the spread of the COVID-19 Delta variant, and growth forecasts have been downgraded for most countries in the region. While China’s economy is projected to expand by 8.5%, the rest of the region is forecast to grow at 2.5%, nearly 2 percentage points less than forecast in April. World Bank viewed that, while most firms have faced difficulty, larger firms are likely to see smaller decline in sales and more likely to adopt sophisticated technologies and receive government support. |
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| Asia and Australasia |
China: Factory activity falls into contractionary territory
According to the National Bureau of Statistics (NBS), China’s Manufacturing Purchasing Managers' Index (PMI) stood at 49.6 in September, down from 50.1 in August. A reading above 50 represents expansion, while a reading below indicates contraction. This reflects China’s factory activity fell into contractionary territory for the first time since February 2020, as the manufacturing sector suffered from recent power shortage and real estate debt crisis. NBS Senior Statistician Zhao Qinghe explained that, due to the low sentiment of high energy-consuming industries, the manufacturing PMI fell to below the threshold. But looking from the sentiment perspective, among the 21 surveyed sectors, there were 12 above the threshold, two more than last month, and most manufacturing sectors expanded from last month.
Hong Kong: Exports rose 25.9% in August
The Census and Statistics Department reported that the value of Hong Kong's total exports of goods increased by 25.9% yr/yr in August, compared with 26.9% in July. For the first eight months of 2021 as a whole, the value of total exports of goods increased by 29.0% over the same period in 2020. A Government spokesman said that exports to the Mainland China, the US, the European Union and many other Asian economies showed visible increases. Looking ahead, the global economic recovery and vibrant regional trade flows should continue to support Hong Kong's export performance in the near term. Yet, the pandemic development is still casting uncertainties on the economic outlook. Other risk factors such as China-US relations and heightened geopolitical tensions also warrant attention. |
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| Europe |
UK: Fuel prices hit eight-year high amid panic buying
Long queues of cars were seen outside UK petrol stations amid panic buying in recent days. The chaos was attributed to the national labour shortage resulting from Brexit and the COVID-19 pandemic. This also pushes fuel prices to their highest level in eight years. Against this backdrop, the UK government announced measures to help ease supply chain pressures and spikes in localised demand for fuel last week, including the approval to put on a limited number of military tanker drivers on a state of readiness and deployed if necessary, as well as extension to specific Heavy Goods Vehicle (HGV) licences. It is estimated that UK is short of around 100,000 HGV drivers currently. |
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| North America |
US: Yellen urges lawmakers to raise or suspend debt limit by October 18
Last week, US Treasury Secretary Janet Yellen said during testimony before the Senate banking committee that US lawmakers have until October 18 to raise or suspend the statutory debt limit before the country is expected to default on the national debt. She further explained that waiting until the last minute can cause serious harm to business and consumer confidence, raise borrowing costs for taxpayers, and negatively impact the credit rating of US for years to come. Yellen’s comment came after Senate Republicans rejected a bill to raise the borrowing limit. Fed chairman Jerome Powell warned in the same occasion that the Fed had limited ability to reduce the extent of the damage in the event of a default. |
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Hong Kong Export Credit Insurance Corporation
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