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South China Morning Post
a day ago
- Business
- South China Morning Post
China mostly unscathed by turbulent six months, but 2025 still an uphill climb
While China's economy has shown considerable resilience through a turbulent first half of 2025 – navigating the dramatic twists and turns of US trade policy while maintaining steady growth - experts warn Beijing's challenges are far from over. Advertisement Although many believe the country can still hit its annual goal of 'around 5 per cent' for gross domestic product growth, more pressure points are expected to emerge in the latter half of the year. After the bilateral trade war saw a temporary de-escalation following separate rounds of talks in Geneva and London, ratings agency Fitch raised its full-year forecast for China's economy from 3.9 per cent to 4.2 per cent, even without the details of the framework to which the two countries had agreed. Other institutions remain more cautious, with Barclays holding to its below-consensus projection of 4 per cent. While forecasts vary, financial institutions broadly agree on the challenges ahead - a downturn in exports, persistent sluggishness in the property sector, weak domestic demand and inefficiencies in the labour market. Although the decline in China's shipments to the US has been partially offset by heightened trade with a more diversified set of partners, Barclays forecast that export growth will slow to zero in the second half of the year, owing to a payback effect from a front-loading of orders in the first half and a projected slowdown in US consumer spending. Advertisement China Galaxy Securities was less optimistic, predicting that exports in the next six months will contract, with an ultimate annual growth rate of around 1.5 per cent.
Asharq Al-Awsat
6 days ago
- Business
- Asharq Al-Awsat
IMF: Saudi Economy Shows Resilience Amid Global Shocks
The International Monetary Fund (IMF) has confirmed that Saudi Arabia's economy has demonstrated remarkable resilience in the face of global disruptions, with non-oil activities continuing to expand and inflation remaining contained. The IMF also noted a historic decline in unemployment rates, underscoring the strength of the Kingdom's economic fundamentals. In a statement concluding its Article IV mission to Saudi Arabia - a review welcomed by the Ministry of Finance - the Fund noted that despite the challenges posed by lower oil revenues and higher investment-related imports, which resulted in a dual deficit, the country still maintains significant external and fiscal buffers. The Fund added that the current fiscal expansion beyond the budgeted plans remains appropriate, supporting growth in non-oil sectors. According to the IMF, non-oil real GDP grew by 4.2 percent in 2024, driven mainly by robust private consumption and rising non-oil investments. Although oil production decreased to 9 million barrels per day, the overall economy expanded by 1.8 percent last year. Preliminary estimates for the first quarter of 2025 indicate non-oil GDP accelerated further, rising 4.9 percent year-on-year. Previously, the IMF had projected Saudi Arabia's total GDP growth at 1.5 percent for 2024. Higher-than-planned spending widened the fiscal deficit to 2.5 percent of GDP in 2024, surpassing initial targets. Still, the non-oil primary balance improved modestly, narrowing by 0.6 percentage points. Central government debt rose to 26.2 percent of GDP. However, the Kingdom remains among the least indebted countries globally, with net debt below 17 percent. The Fund expects domestic demand, including large-scale government projects, to continue as the main growth engine, even as global uncertainties mount and commodity price forecasts soften. For 2025, non-oil real GDP is projected to grow by 3.4 percent, supported by Vision 2030 initiatives and strong credit expansion. Over the medium term, the Fund anticipates non-oil growth will rise to about 4 percent by 2027, then gradually moderate to 3.5 percent by 2030. The Kingdom's hosting of major international events is expected to sustain this momentum. On trade risks, the IMF noted that the direct impact of global trade tensions should remain limited. Oil products, which accounted for 78 percent of Saudi exports to the United States in 2024, are exempt from US tariffs, while non-oil exports to the American market represent only 3.4 percent of the Kingdom's total non-oil shipments. Inflation is expected to remain contained around 2 percent, thanks to the riyal's peg to the US dollar and the credibility of Saudi monetary policy. Externally, the current account deficit is projected to widen, peaking near 3.9 percent of GDP by 2027, before easing to 3.4 percent in 2030. This increase largely reflects higher imports linked to investment projects and greater remittances. Nonetheless, Saudi Arabia's international reserves are anticipated to stay robust. The Fund warned that weaker oil demand, intensifying trade frictions, or deeper geoeconomic fragmentation could weigh on oil revenues. Such shocks could widen fiscal deficits, raise debt, and increase borrowing costs. However, higher oil prices or accelerated reform implementation could yield stronger growth. On fiscal policy, the IMF judged the current expansionary approach appropriate, estimating the overall fiscal deficit will rise to 4.3 percent of GDP in 2025. This figure masks improvements in the non-oil primary balance, which is projected to strengthen by 3.6 percentage points relative to non-oil GDP. Over the medium term, the fiscal deficit is expected to decline gradually, falling to about 3.3 percent of GDP by 2030. This adjustment would be driven by efforts to contain the public wage bill and improve spending efficiency. During this period, the non-oil primary deficit should narrow by around 4.2 percent of non-oil GDP. The Fund anticipates that these deficits will be financed primarily through borrowing, including debt issuance and bank loans, with public debt rising to about 42 percent of GDP by the end of the decade. To ensure intergenerational fairness and fiscal sustainability, the IMF emphasized the importance of gradually tightening fiscal policy over the medium term. It recommended raising additional non-oil revenue equivalent to about 3.3 percent of non-oil GDP between 2026 and 2030. The Fund welcomed government plans to increase taxes on undeveloped land and broaden the value-added tax base, alongside recent adjustments in energy prices. It also urged authorities to accelerate the phase-out of energy subsidies, including removing the gasoline price cap. Additionally, the IMF supported ongoing reviews of public spending to deliver savings and improve efficiency, with an emphasis on reducing low-impact recurrent expenditure. Turning to monetary policy and the banking sector, the IMF reaffirmed that the currency peg to the US dollar remains appropriate, underpinned by large foreign reserves and high credibility. The Saudi Central Bank is expected to keep its policy rate aligned with the US Federal Reserve. The Fund welcomed the Central Bank's efforts to review prudential tools to contain risks from rapid credit expansion and called for continued vigilance to preserve financial stability. It also praised regulatory reforms, including the new banking law and the development of a risk-based supervisory framework. Finally, the IMF underscored the critical role of structural reforms in sustaining non-oil growth and diversifying the economy. It noted that Saudi Arabia has implemented wide-ranging changes in corporate regulation, governance, labor markets, and the financial sector. New measures, such as the updated investment law and labor law amendments, are expected to boost investor confidence and productivity. The Fund encouraged further efforts to strengthen human capital, enhance access to finance, and advance digital transformation, including integrating artificial intelligence into public services.
Yahoo
6 days ago
- Business
- Yahoo
India's economy to hold top spot for growth, but underlying weaknesses remain: Reuters poll
By Pranoy Krishna and Vivek Mishra BENGALURU (Reuters) -The Indian economy will grow at a mostly steady pace this fiscal year and next after marking a four-year low in 2024-25, according to economists polled by Reuters, who have mostly either kept their forecasts unchanged or made marginal upgrades. That stable outlook comes despite the Reserve Bank of India cutting interest rates by a full percentage point since early this year, including an unexpected 50 basis point reduction on June 6, to boost growth in the face of rising global uncertainties. But the world's fastest-growing major economy still earns that title mostly because government capital expenditure remains strong. Gross domestic product was forecast to expand 6.4% in the current fiscal year ending March 2026, the June 17-26 Reuters poll of 51 economists found. That is weaker than 6.5% reported for fiscal year 2024-25, which was the slowest since 2020-21. Growth was forecast to pick up modestly to 6.7% in FY 2026-27. That marks a slight upgrade from last month's poll, which had medians of 6.3% and 6.5%, respectively. "Most of the growth that was happening was mainly because of the capital expenditures of the government, which will flatten out," said Indranil Pan, chief economist at Yes Bank. Private sector spending is still trailing far behind, and analysts generally agree the economy is still failing to create enough quality jobs for its large young population. "One of the biggest challenges for India at the current juncture ... is per capita income. Job creation has not been strong enough to generate the income needed to support sustainable economic growth," Pan added. Some economists said there may be downgrades to the GDP outlook in the coming months if New Delhi fails to secure a trade agreement with Washington before the 90-day pause on tariffs comes to an end on July 9. Trade talks between the two sides have stalled over auto parts, steel and farm goods, Indian officials with direct knowledge told Reuters on Thursday, dashing hopes of a deal ahead of U.S. President Donald Trump's deadline to impose reciprocal tariffs. But ANZ economist Dhiraj Nim wrote they have upgraded their FY 2026 growth forecast on hopes that the two countries would reach a trade deal. "Even so, growth will remain below potential in a challenging global environment, warranting policy support," he added. The RBI shifted its policy stance to "neutral" from "accommodative" on June 6, signalling a likely end to its shallowest rate-cutting cycle in over a decade. But economists are divided on whether there would be a long pause or another 25-basis-point cut in the final three months of the year. Just over half of respondents - 28 of 53 - expected the repo rate to stay at 5.50% in the fourth quarter, while the rest forecast it at 5.25% or lower. Consumer inflation was expected to average 3.6% this fiscal year before rising to 4.3% next year, the poll showed. (Other stories from the June Reuters global economic poll) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Reuters
6 days ago
- Business
- Reuters
India's economy to hold top spot for growth, but underlying weaknesses remain
BENGALURU, June 27 (Reuters) - The Indian economy will grow at a mostly steady pace this fiscal year and next after marking a four-year low in 2024-25, according to economists polled by Reuters, who have mostly either kept their forecasts unchanged or made marginal upgrades. That stable outlook comes despite the Reserve Bank of India cutting interest rates by a full percentage point since early this year, including an unexpected 50 basis point reduction on June 6, to boost growth in the face of rising global uncertainties. But the world's fastest-growing major economy still earns that title mostly because government capital expenditure remains strong. Gross domestic product was forecast to expand 6.4% in the current fiscal year ending March 2026, the June 17-26 Reuters poll of 51 economists found. That is weaker than 6.5% reported for fiscal year 2024-25, which was the slowest since 2020-21. Growth was forecast to pick up modestly to 6.7% in FY 2026-27. That marks a slight upgrade from last month's poll, which had medians of 6.3% and 6.5%, respectively. "Most of the growth that was happening was mainly because of the capital expenditures of the government, which will flatten out," said Indranil Pan, chief economist at Yes Bank. Private sector spending is still trailing far behind, and analysts generally agree the economy is still failing to create enough quality jobs for its large young population. "One of the biggest challenges for India at the current juncture ... is per capita income. Job creation has not been strong enough to generate the income needed to support sustainable economic growth," Pan added. Some economists said there may be downgrades to the GDP outlook in the coming months if New Delhi fails to secure a trade agreement with Washington before the 90-day pause on tariffs comes to an end on July 9. Trade talks between the two sides have stalled over auto parts, steel and farm goods, Indian officials with direct knowledge told Reuters on Thursday, dashing hopes of a deal ahead of U.S. President Donald Trump's deadline to impose reciprocal tariffs. But ANZ economist Dhiraj Nim wrote they have upgraded their FY 2026 growth forecast on hopes that the two countries would reach a trade deal. "Even so, growth will remain below potential in a challenging global environment, warranting policy support," he added. The RBI shifted its policy stance to "neutral" from "accommodative" on June 6, signalling a likely end to its shallowest rate-cutting cycle in over a decade. But economists are divided on whether there would be a long pause or another 25-basis-point cut in the final three months of the year. Just over half of respondents - 28 of 53 - expected the repo rate to stay at 5.50% in the fourth quarter, while the rest forecast it at 5.25% or lower. Consumer inflation was expected to average 3.6% this fiscal year before rising to 4.3% next year, the poll showed. (Other stories from the June Reuters global economic poll)
Zawya
09-06-2025
- Business
- Zawya
IMF backs Oman's reforms, warns of global risks
A recent visit by a staff team from the International Monetary Fund (IMF), held in Muscat from May 21 to 29, 2025, has provided a timely and comprehensive assessment of Oman's macroeconomic trajectory. Led by César Serra, the mission engaged with national authorities on key developments, fiscal performance, structural reforms and medium-term outlooks. The statement issued at the end of the visit presents a cautiously optimistic picture of Oman's economy — one marked by resilience, reform and prudent policymaking — while also highlighting emerging risks that require close attention. According to the IMF, Oman's real GDP expanded by 1.7 per cent in 2024, up from 1.2 per cent the previous year. This growth was achieved despite reduced hydrocarbon output, in line with Opec+ production curbs. The performance reflects strong non-oil sector activity — especially in manufacturing, logistics, tourism and services — all core areas targeted under Oman Vision 2040's diversification agenda. Looking ahead, GDP growth is forecast to accelerate to 2.4 per cent in 2025 and 3.7 per cent in 2026, supported by the expected phase-out of production limits and sustained investment in strategic sectors. Inflation remains well contained, registering 0.9 per cent year-on-year during January–April 2025, providing a stable environment for consumers and investors alike. The IMF notes that Oman's fiscal surplus stood at 3.3 per cent of GDP in 2024, although this figure was slightly lower than earlier estimates due to accelerated public investment in infrastructure, health, education and water services. In parallel, Energy Development Oman (EDO) redirected a portion of its dividend payments to long-term investment, further contributing to the temporary narrowing of fiscal space. Over the short term, the fiscal surplus is projected to moderate to an average of 0.5 per cent of GDP during 2025–2026, before recovering in the medium term as oil output increases and reform measures take hold. Importantly, Oman continues to make significant progress in public debt reduction. Central government debt declined to 35.5 per cent of GDP in 2024, down from 37.5 per cent the previous year. State-owned enterprise (SOE) debt also fell to approximately 31 per cent of GDP, reflecting continued progress on governance and operational reform under the Oman Investment Authority. Oman's current account posted a surplus of 2.2 per cent of GDP in 2024 but is expected to shift into a moderate deficit of around 2 per cent of GDP during 2025–2026, due to softer oil prices and more subdued non-oil export growth. Nonetheless, the IMF expects a return to surplus thereafter, contingent on higher oil production and stronger trade performance. On the financial front, the banking sector remains robust. Omani banks are well-capitalised, profitable, and maintain strong liquidity positions. The sector continues to support private sector credit growth, backed by an expanding deposit base and a positive net foreign asset position. The IMF report underscores that structural reforms are advancing across multiple fronts. The Tax Authority is implementing its Tax Administration Modernisation Programme, the Central Bank of Oman is refining its liquidity management framework, and efforts are underway to expand access to finance through a well-structured financial development agenda. One of the most significant milestones is the operational launch of Future Fund Oman, a new investment platform designed to mobilise private capital into key economic sectors. Several projects have already been approved, and substantial co-investment from the private sector has been secured. Simultaneously, Oman is intensifying its efforts in renewable energy, particularly green hydrogen. These initiatives are vital for future energy security, export diversification and industrial development. The finalisation of the 11th Five-Year Development Plan (2026–2030) — framed under the objectives of Vision 2040 — is expected to play a critical role in consolidating these reform gains and accelerating economic diversification. Despite a broadly favourable outlook, the IMF warns of downside risks. Geopolitical tensions, global trade disruptions and prolonged weakness in oil prices could all undermine fiscal and external stability. Furthermore, elevated global interest rates could raise borrowing costs and dampen private investment, particularly if hydrocarbon revenues soften. To mitigate these risks, the IMF recommends that Oman sustain its current reform momentum, enhance private sector participation and continue building fiscal buffers. Policy consistency and timely implementation will be essential to navigating this uncertain landscape. The IMF's mission affirms that Oman has made tangible progress in strengthening its economic fundamentals. Growth is returning, inflation is low, debt is declining and reforms are deepening. The economy is now better positioned to respond to external shocks and capitalise on long-term opportunities. As Oman prepares to launch its next development cycle, the focus must remain on execution. Maintaining investor confidence, advancing green energy initiatives and ensuring inclusive growth will be critical to achieving Vision 2040's long-term goals. Oman's economic strategy is evolving with purpose. The challenge now is to maintain momentum, institutionalise reform, and drive the transition from a hydrocarbon-dependent model to a resilient, diversified and sustainable economy. 2022 © All right reserved for Oman Establishment for Press, Publication and Advertising (OEPPA) Provided by SyndiGate Media Inc. (
