Category: Economy

After pandemic restrictions were relaxed across the country in 2021, the British economy grew by 7.5 percent, its strongest year of growth since the Second World War.

According to The Office for National Statistics, the rise in the gross domestic product, which exceeded Bank of England projections, came despite a 0.2% contraction in the economy in December because of the outbreak of Omicron, which led to tougher restrictions.

With the UK sighting the fastest growth in the G7 last year along with GDP remaining at the GDP pre-pandemic levels in December, Chancellor of the Exchequer, Rishi Sunak said that the government’s $542.44 billion package of the COVID support helped the country’s economy to abide remarkably resilient in 2021.

Mr. Sunak said, “I’m proud of the resolve that whole country has demonstrated and proud of our incredible vaccine program which has allowed the economy to stay open”.

In stark contrast to the robust economic performance in 2021, the economy contracted 9.4 percent in 2020 – the worst drop since 1919 when the demobilization following the First World War was followed by a lockdown caused by the pandemic.

The United Arab of Emirates secured the first position worldwide in the latest Global Entrepreneurship Index. UAE outperformed major global economies like the US, Japan, UK, Canada, South Korea, and some major EU countries.

The nation has the highest total score of 6.8 by a clear margin having approved in 11 of the 13 framework conditions. It was named as the best place to start a new business followed by 6.3 scored by the Netherlands, 6.2 by Finland, 6.1 by Saudi Arabia, Lituania with 6.1 and 5.7 by South Korea.

In the last years, GEI ranked Emirates in the fourth position which is complied by London-based researcher Global Entrepreneurship Monitor.

According to the report, “Of the 47 participating economies, national expert assessments suggest that the UAE has the most supportive environment for entrepreneurship and Sudan the least supportive”.

The report said, “The UAE is the only economy to have scored as sufficient or more for all framework conditions. These changes are the direct result of policy adjustments that have moved increasingly to prompting business conditions for entrepreneurs”. With the high score in most of the framework, conditions may help explain the improvement in entrepreneurial attitudes.

A final stage of talks in Vienna has resulted in progress that led to a 2% drop in oil prices early on Tuesday. Talks to bring Iran and the United States back to the Iran nuclear deal reached a crucial stage.

The New York Stock Exchange reported that as of 10:32 a.m. Eastern Standard Time, WTI Crude was trading at $89.58 a barrel, down by 1.91% on the day. The price of Brent Crude fell 1.88% to $90.93 as diplomats from Iran and the countries still part of the Joint Comprehensive Plan of Action (JCPOA) resumed talks to salvage the deal on Tuesday. In the midst of pressure for results, the talks are in a crucial final phase.

Considering that the United States would be removing sanctions on Iranian oil exports if the talks are revived, market participants will closely monitor the progress of the talks.

In a possible sign of progress, the Obama team restored sanctions waivers to Iran.

On Friday, allowing the country to cooperate internationally on civil nuclear matters. As a result of these difficult talks, the U.S. is expected to remove sanctions on Iranian oil exports if they are successful. The U.S. anticipates these talks will result in either a nuclear crisis or a new deal. 

On Monday, France’s Finance Minister said the country is creating a multi-billion euro fund to boost investment in Europe’s tech sector, so it can compete against US and Asian firms.

Mr. Bruno Le Maire said if European tech start-ups are to reduce their dependence on foreign firms, they will need far higher levels of financing.

On Tuesday, he added that a new fund of funds will be announced along with his German counterpart Christian Lindner, who said it would feed between 10 and 20 funds worth up to one billion euros (S$1.5 billion) to finance tech companies.

Mr. Le Maire said, “Our ultimate target is to have 10 technology companies worth more than 100 billion euros each by 2030”.

According to the German minister said in a statement Berlin will one billion euros to the fund.

It is often too difficult for Europe’s venture capital funds to fund European tech start-ups, leaving them with no choice but to turn to much bigger US funds.

Moreover, many US and Chinese tech companies have benefited from public funding during their development, something that was more difficult for European firms due to strict EU state aid rules in the past.

On Wednesday, India’s Prime Minister Mr. Narendra Modi announced the digital currency’s launch by the RBI and said that the digital rupee can be exchanged for cash. The statement was proposed in the Union Budget will open new opportunities in the fintech sector.

PM said, “The digital rupee will revolutionize the fintech sector by creating new opportunities and lessen the burden in handling, printing, logistics management of cash”. He further added the Central Bank Digital Currency (CDBC) will be in the digital form for the physical rupee which will be regulated by the RBI.

This system will enable the exchange of physical and digital currencies. This will directly help in improving the digital economy within the nation and if anyone which to make payment in the digital currency he will be able to change it into cash.

In addition to its potential to revolutionize the fintech sector, he said the digital rupee will reduce the burden of handling, printing, and storing cash.

As part of its digital currency initiative, Finance Minister Nirmala Sitharaman announced earlier that India will launch a digital currency in 2022-23 based on blockchain and other technologies.

On Wednesday, The House Of Representatives along with the Senate ratified a reconciled bill amending the 85-year-old law that stopped foreign ownership of public utilities to 40%. The new bill allowed full foreign ownership of telecommunication and railway services.

The announcement came from the Philippine Congress regarding opening up one of the world’s most restrictive economies. Earlier the lawmakers agreed in their version of the bill regarding railway, shipping, and telecommunication should be further opened to foreign investors.

The bill’s sponsor, Senator Grace Poe said that all the industries will be liberalized except the electricity distribution, water distribution, petroleum pipeline transmission, seaports, and public utility vehicles. Poe further added that the bill will still restrict foreign state-owned enterprises from owning capital in public utility or critical infrastructure within the nation.

According to the Organization for Economic Cooperation and Development, the Philippines is one of the world’s most restrictive economies for foreign direct investments.

Before the bill was passed, the European Chamber of Commerce of the Philippines President Lars Wittig said, “The Philippines must act quickly in terms of carrying out economic reforms that further trade and investment activities”

On Thursday, the Purchasing Manager’s Index (PMI) released survey data which shows UAE’s non-oil sector continuing to expand sharply in January. The report showed a high increase in new work led to a further significant increase in output in the non-oil sector

Strong sales in Expo 2020 had boosted the business activity once again within the nation along with a broad recovery in economic conditions from the pandemic.

IHS Markit UAE Purchasing Managers’ Index (PMI), which measures operating conditions in the non-oil private sector economy, fell from 55.6 in December to 54.1 in January.

The indices range between 0 and 100, with readings over 50 representing an overall improvement, and those below 50 representing a decrease.

The January PMI showcased a powerful improvement in operating conditions, which was the slowest seen since September last year

However, previous reports of the year-end of 2021 showed that after reaching the record high, the growth had begun to slow down as the rate of expansion in both activity and sales softened to its low of four months. This low was linked to the rise in Omicron cases that directly affected the customer’s spending.

On Tuesday (Feb 1), Nirmala Sitharaman, India’s finance minister, proposed a $713 billion (39.5 trillion rupees) expansion in the economy’s annual spending for the fiscal year beginning in April.

As India stages a world-beating recovery from the pandemic, the government is vowed to devote more resources to promoting growth. India is targeting a deficit of 6.4% of GDP for the next fiscal year and hopes to build high tax revenues and increase the privatization of state firms.

Finance Minister said that she will be left with a budget shortfall of 6.4% of gross domestic product, this is 6.1% wider than the median seen in a Bloomberg survey. With a deficit of 6.9%, the government will end the current financial year of GDP against its previous target of 6.8%.

In Parliament, she said, “This budget continues to provide the impetus for growth”. He further announced to spend 200 billion rupees on the program for highway expansion and pledged to manufacture 400 new trains over the next three years.

India’s 1.4 billion people look to the budget for direction on policy and spending priorities. It is the country’s one of the most closely watched economic events.

For the first time in the United Arab Emirates history, the government plans to introduce a federal tax on corporate earnings. As part of this effort, it is dismantling a levy-free tax regime that had made it a global magnet for businesses.

From June 2023, the government is set to introduce a 9% federal corporate tax on profits earned by businesses. Employees in the UAE will not be directly affected by this new taxation, but consumers could be indirectly affected if corporations raise prices as a knee-jerk reaction.

Thomas Vanhee, the Partner, Aurifer Middle East Tax Consultancy, said, “With the implementation of CIT, the UAE seems to have also introduced mandatory transfer pricing regulations. Free Zone companies are seemingly outside the scope of the new CIT regime, however, it seems that the carve-out is at least subject to certain conditions, such as complying with all regulatory requirements and not conducting business in mainland UAE. We also anticipate that the implementation of CIT will have an impact on the Economic Substance Regulations that were implemented in 2018”.

The exemption for the SME sector (up to Dh375,000 in income) is an encouraging development. Salaries and individual income are exempt from taxation.

On Wednesday, a free trade agreement stuck between Singapore and a bloc of countries comprising Colombia, Chile, Peru, and Mexico. Through the agreement, local companies will now be able to bid for government projects in the Americas, which together represent the eighth largest economy in the world.

Singapore’s first direct free trade agreement, or The Pacific Alliance-Singapore Free Trade Agreement (PASFTA), is with the Pacific Alliance, a bloc with a combined economic output of more than $2.6 trillion.

These negotiations have lasted over four years. The Pacific Alliance continues similar discussions with Australia, Canada, Japan, and New Zealand.

Singapore traded goods with the alliance for a total of $6.1 billion in 2019, a small amount compared with its global trade of more than $1 trillion in that same year.

More than 100 Singapore companies operate in the four countries, including the online shopping platform Shopee and high-tech software firm Taiger.

Singapore identifies agricultural trade, technology, and infrastructure as potential opportunities for growth as part of the 25-chapter FTA. On Wednesday, in the remark for the 16th Pacific Alliance Summit, Prime Minister Lee Hsien Loong said, “This is a landmark moment in Singapore’s partnership with the Pacific Alliance. Our two regions are in fact more connected than people imagine”.