Asia

The US economy powered ahead in the first quarter, as strong hiring activity and gradually waning inflationary pressures boosted consumer spending, keeping growth on solid footing. In our view, much of that strength will last, supported by changing demographic trends, leading us to increase our 2024 full-year GDP growth forecast to 1.5% in real, or inflation-adjusted, GDP terms.   Robust economic activity has caused inflation to cool more slowly, though we still expect price pressures to ease as the year progresses. But the process will likely be slower than previously forecast, and that will likely affect the path of Federal Reserve policy—including rate cuts. We now expect policy rates to stay where they are for several months, before cuts eventually start late this year. ...

A top economics researcher is making the case that generative AI could be good for workers, as long as there's a course correction in how businesses plan to use the technology. Why it matters: The economic consequences of AI are a big unknown. But if this outlook is correct, the economy could see the upsides of the rapid economic changes AI might bring while avoiding the pitfalls of uneven labor market outcomes, like those seen during the automation boom of the 1970s. What they're saying: "The right way to think about generative AI is to view it as a flexible tool that's usable by human workers," MIT professor Daron Acemoglu said at an event hosted by the Group of 30 at the International Monetary Fund on Friday. "If we can do that — not just for managers and the top-le...

Recent escalations in Middle East tensions won’t likely have a big impact on the U.S. economy, but that could change if oil prices move higher.If oil prices rise to $100 per barrel or more, it could weigh down the entire economy by pushing up inflation.Higher inflation would likely push back cuts to interest rates by the Federal Reserve.Recent tensions in the Middle East may not create a big impact for the U.S. economy, analysts said, but that could change if things escalate and drive up oil prices. After Israel and Iran recently exchanged drone and missile strikes, the recent standoff may come to a close, Wells Fargo said in a commentary. Forecasters at the bank wrote the conflict was likely to remain “contained” and have minimal impact on the U.S. economy.1Unlike when conflict over I...

Muhammad Boota, a domestic worker in Lahore, requires an insulin injection every 10 days to help manage his diabetes. But just one of these injections costs about one-third of his meagre monthly salary. As with millions of Pakistanis with health conditions, the only thing that keeps food on his table and a roof over his head is unreliable charitable assistance to help pay for an unaffordable medicine that he cannot live without. His story is just one of so many examples of Pakistan’s severe healthcare crisis and one of so many reasons why the government needs to change course to ensure every Pakistani’s human right to the highest attainable standard of health. According to the Pakistani nongovernmental healthcare organization, Sehat Kahani, more than 50 per cent of Pakistanis do not...

Economists argue that Bangladesh remained ensnared in a low-wage economic cycle despite visible development, largely driven by labourers in various sectors like agriculture, RMG, and migration even as they emphasised the need for institutional reform and a shift towards high-technology-based production to ensure sustainable development and economic prosperity. The observations were made at a recent book launch organised by the Centre for Policy Dialogue (CPD) even as they lamented the dysfunctional state of institutions, particularly in fiscal management. Professor Rehman Sobhan, co-editor of the book, highlighted the absence of functional institutions critical for development and expressed concerns over the advanced deterioration in the banking system, identifying bank defaults as ...

In the intricate fabric of Pakistan’s economic landscape, a daunting debt crisis casts a long shadow, threatening the nation’s quest for stability and prosperity. Recent revelations from key economic institutions, notably the State Bank of Pakistan, lay bare a disconcerting reality: Pakistan’s external debt has surged to a staggering $125.7 billion, placing immense strain on its fiscal health. Central to Pakistan’s economic challenges lies its complex relationship with China and the China-Pakistan Economic Corridor (CPEC). Launched in 2013, CPEC stands as a monumental endeavor aimed at fortifying infrastructure and fostering economic growth. With over $60 billion invested primarily by China, it emerges as one of Pakistan’s largest infrastructure projects. However, the financing stru...

As the US delegation looked to the annual springtime gathering of finance chiefs in Washington this week, they hoped to use the confab to put pressure on China to steer clear of dumping exports on world markets. Treasury Secretary Janet Yellen and colleagues were also ready to claim credit for the US having come to the world economy’s aid with growth policies that have lifted the whole global outlook. Things didn’t go quite as Washington hoped. Indeed, US officials found themselves at the bottom of a gang tackle. A dramatic shift in rhetoric from Federal Reserve Chair Jerome Powell on Tuesday effectively rewrote the script for the International Monetary Fund-World Bank spring meetings. As IMF Managing Director Kristalina Georgieva put it Thursday, “All eyes are on the...

Pakistan needs two to three years to implement some of the structural changes the International Monetary Fund has prescribed to break the South Asian country’s chain of financial struggles and bailouts, according to its new finance minister. The country has long known what is needed in order to steady its economy, and the challenge has been follow-through and implementation, Muhammad Aurangzeb said at the Atlantic Council on Monday. Aurangzeb is visiting the US to attend the IMF and World Bank spring meetings this week, his first trip to Washington since taking office last month. “Once we get into the execution, we will need a two- to three-year time period so we can actually go through the structural reforms,” said Aurangzeb, who previously worked at JPMorgan Chase & Co. “If we...

Sri Lanka on Tuesday rejected international bondholders' proposal to restructure more than $12 billion in debt, putting at risk critical International Monetary Fund support and delaying its efforts to resolve a two-year-long debt crisis. Some of the proposal's "baseline" assessments and a lack of a contingency option in the case of continued economic weakness were the two main reasons the deal was not agreed, the government said in a statement. Colombo said it hoped to hold further talks "as soon as feasible" but the immediate risk was that without a compromise in the coming weeks, the next tranche of all-important IMF support money could potentially get delayed. Sri Lanka has already struck a deal with its main government creditors, but an "agreement in principle" with bondholde...