【Abstract】
This report mainly monitors countries along the "Belt and Road", from the perspective of monitoring content:
1. Russia, Central Asia and Mongolia, mainly monitored that the ban on Russian oil supplies is in force; Inflation in Mongolia slowed to its lowest level in 13 months
2. Southeast Asia, mainly monitoring the growth of Malaysia's trade volume; Thailand benefits from RCEP; Singapore's inflation rate has been flat continuously; Vietnam's trade volume declined; Indonesia's exports grow.
3. In South Asia, it was mainly monitored that the Pakistani government took measures to meet the easing requirements of the IMF, and Nepal's deputy prime minister and interior minister could not stay in office due to nationality issues.
4. Central and Eastern Europe, mainly monitored that Peter Pavel won the Czech presidential election and the parliament rejected the proposal of no confidence in the Czech coalition government; The Slovak coalition government agreed to amend the constitution and hold early parliamentary elections; Bosnia and Herzegovina inflation rate fell month-on-month; The Central Bank of Ukraine kept the key policy rate unchanged at 25%; Growth in Greece is likely to slow to 1.1% in 2023.
5. West Asia and North Africa, mainly monitoring that the UAE's real GDP growth will exceed 4% in 2023, tensions between Israel and Palestine have intensified, Kuwait continues to implement austerity policies, Armenia continues to raise refinancing rates to curb inflation, Iranian natural gas shortages, and strikes and protests in Jordan over rising oil prices; Egypt's extended fund arrangement with the IMF was officially launched.
01
Russia, Central Asia and Mongolia
Monitoring shows that the ban on Russian oil supplies is in effect; Inflation in Mongolia slowed to its lowest level in 13 months.
(i) Russia
The ban on Russian oil supplies went into effect. On February 1, 2023, the ban on Russian oil supplies officially came into effect, which is valid until July 1. The Ministry of Energy will consult with the Ministry of Finance by March 1 to clarify the monitoring procedures for export oil prices. In response to the price ceiling imposed by Western countries on Russian oil, Putin signed a decree at the end of December 2022: prohibiting Russian exporters from supplying oil and petroleum products to foreign legal and natural persons if the price ceiling mechanism is directly or indirectly used in the contract. According to the Russian government's January 28 decree, Russian oil exporters must monitor the entire supply chain to ensure that there are no price caps in the contract. Once it is discovered, the exporter must inform the customs department and the Russian Ministry of Energy and cancel it within 30 days, otherwise customs will ban the export of oil.
(ii) Mongolia
Inflation in Mongolia slowed to its lowest level in 13 months. In December 2022, inflation in Mongolia fell to 13.2%, the lowest level since November 2021. Among them, inflation in health, catering and transportation fell relatively sharply, from 21.4%, 19.2% and 7.7% to 17.4%, 15.1% and 6.2% respectively. In addition, consumer price indices for Food & Non-Alcoholic Beverages, Clothing & Footwear, Housing & Utilities declined slightly, while communications, entertainment, culture and education remained generally stable, while inflation in Alcoholic Beverages and Tobacco rose slightly.
02
Southeast Asia
Monitoring shows that Malaysia's trade volume has grown; Thailand's trade volume benefited from the rapid growth of RCEP; Singapore's inflation rate has been flat continuously; Vietnam's trade volume declined; Indonesia's exports grow.
(i) Malaysia
Malaysia's trade volume increased. According to data released by Malaysia's Ministry of International Trade and Industry, Malaysia's import and export trade volume increased by 27.8% year-on-year to 2.849 trillion ringgit (about US$663.9 billion) in 2022, remaining above 2 trillion ringgit for two consecutive years, the fastest growth in trade volume since 1994. In 2022, driven by strong external demand and higher commodity prices, Malaysia's trade grew strongly, with total trade, imports, exports and trade surpluses all hitting record highs. Annual exports increased to RM1.552 trillion, up 25% year-on-year; Imports topped RM1 trillion for the first time to RM1.297 trillion, up 31.3% year-on-year. The trade surplus grew by 0.6% to RM255.1 billion, marking the 25th consecutive year since 1998. In terms of major markets, Malaysia's exports to ASEAN, China, the United States, the European Union and Japan all reached record highs, while exports to Egypt, Sri Lanka, Mozambique, Papua New Guinea, Togo, Djibouti and Afghanistan also increased significantly. Meanwhile, Malaysia's trade with RCEP countries grew by double digits in 2022. In 2022, China has become the largest trading nation in Malaysia for 14 consecutive years, accounting for about 17.1% of Malaysia's total trade volume and increasing its trade volume by 15.6% year-on-year to RM487.13 billion. It is expected that the Malaysian economy will maintain its growth trend in 2023, and the real GDP growth rate for the whole year may reach about 8%.
(ii) Thailand
RCEP boosts Thailand's trade volume. On January 1, 2023, the first anniversary of the signing of the Regional Comprehensive Economic Partnership (RCEP) agreement, which has facilitated trade between Thailand and RCEP members during this period, the Ministry of Commerce said. Over the past year, Thailand's trade totaled US$300 billion (10 trillion baht), up 7.11% year-on-year, of which Thailand's exports to RCEP members amounted to US$140 billion (480 billion baht). Among the ASEAN countries, Indonesia, Cambodia and Singapore are Thailand's largest export markets, followed by South Korea and Australia. Thailand's imports from RCEP members are US$160 billion (570 billion baht), and its Chinese Rai, Australia and Myanmar are important sources of imports for Thailand. RCEP provides Thai companies with more options for importing and exporting goods from member countries, and in addition to further reducing or eliminating tariffs, enterprises will also benefit from RCEP's relevant regulations on trade facilitation.
(iii) Singapore
Singapore's core inflation rate was flat for three consecutive months. According to the latest data released by the Monetary Authority and the Ministry of Trade and Industry, inflation including private transport and accommodation costs was 6.5% in December 2022, a slowdown from 6.7% in November. Core inflation was flat for three consecutive months at 5.1%, with no further slowdown, up 0.6% from November month-on-month. Singapore's core inflation slowed to 5.1% in October 2022 from 5.3% in September, the first slowdown in eight months before leveling off. Given the inflationary pressures in 2023, MAS is likely to tighten monetary policy further in April. The Singapore government expects core inflation to remain elevated in the first half of 2023, with the potential to moderate in the second half as domestic labour market tensions and global inflation ease. In view of factors such as the GST hike, the HKMA and the Ministry of Trade and Industry forecast inflation to be between 5.5% and 6.5% for the whole year of 2023, and core inflation may be between 3.5% and 4.5%.
(iv) Vietnam
Vietnam's trade volume has declined. According to data released by the Ministry of Industry and Trade of Vietnam, due to the New Year's Day and Lunar New Year holidays, in January 2023, it is expected that the total import and export of goods in Vietnam in that month will be about 46.56 billion US dollars, down 17.3% month-on-month (of which exports fell 13.6% month-on-month and imports fell 21.3% month-on-month), down 25% year-on-year (of which exports fell 21.3% year-on-year and imports fell 28.9% year-on-year), and the trade surplus was estimated to be US$3.6 billion. Among them, the United States is Vietnam's largest export market, with an estimated export value of US$7.6 billion; China is Vietnam's largest import market, with an estimated import value of US$8.1 billion. In addition, Vietnam's trade surplus with the EU was US$1.8 billion, down 45% year-on-year; The trade surplus with Japan was $100 million, down 65.3%; The trade deficit with South Korea was US$2.5 billion, down 20.9%; The trade deficit with ASEAN countries was US$1.3 billion, an increase of 74.3%. Affected by the contraction of demand in the European and American markets, Vietnam's imports and exports have shown signs of decline in the fourth quarter of 2022, with export growth falling to -6.5% from 13.4%, 21.1% and 17% in the previous three quarters. In the fourth quarter, the export value of some major commodities, which accounted for a large proportion of Vietnam's exports, also fell sharply year-on-year, such as telephones and spare parts fell by 14.6% year-on-year, and textiles and garments fell by 9.2%. Affected by inflation and the global recession, global consumer demand is expected to continue to decline in 2023, which will continue to adversely affect Vietnam's import and export of goods.
(v) Indonesia
Indonesia's exports have increased. According to data released by the Indonesian Bureau of Statistics, Indonesia's exports reached US$23.83 billion in December 2022, an increase of 6.58% year-on-year and a month-on-month decrease of 1.1%. Among them, non-oil and gas exports amounted to US$22.35 billion, up 4.99% year-on-year and down 2.73% month-on-month. The top three non-oil and gas exporters in the world were China ($5.79 billion), Japan ($2.08 billion) and the United States ($2.06 billion). In 2022, Indonesia's cumulative export value reached 291.98 billion US dollars, a year-on-year increase of 26.07%. Among them, non-oil and gas exports amounted to 275.96 billion US dollars, a year-on-year increase of 25.80%. The top three provinces for exports were West Java ($38.59 billion), East Kalimantan ($36.46 billion) and East Java ($24.75 billion). The Indonesian government expects exports to continue to grow in 2023, possibly by 12.8% year-on-year.
03
South asia
Monitoring shows that the Pakistani government has taken steps to meet the easing requirements of the IMF, and Nepal's deputy prime minister and interior minister cannot stay in office due to nationality issues.
(i) Pakistan
The Pakistani government has taken steps to meet IMF lending requirements. In January 2023, the Pakistani government took a number of steps to meet IMF loan disbursement requirements. On January 26, the Pakistani government abandoned its policy of maintaining the official upper limit of the rupee, which depreciated by 13.7% against the US dollar on that day. Meanwhile, the Pakistani government raised fuel prices by 15 percent to meet IMF lending needs. According to the Central Bank of Pakistan, Pakistan's external financing needs in FY2022-2023 were $33 billion, of which $23 billion was used to repay external borrowings. At present, Pakistan is in serious shortage of international reserves, and the government is seeking funds from the IMF and friendly countries to replenish international reserves to avoid debt default. The IMF announced that it will send a mission to Pakistan from January 31 to February 9 to discuss the stalled lending package with the government.
(iv) Moldova
Domestic inflation rose to an all-time high. According to Moldovan economic data, domestic inflation continued to rise in 2022, reaching 18.5% in February and accelerating to 22.2% in March, already reaching the highest level since comparable records began in 2007. Among them, the food price index climbed further (23.3% in February and 27% in March); Price indices of non-food goods and services also increased to 18% and 21.4% respectively from 14.9% and 17% in February. On a monthly basis, consumer prices rose by 4.1 per cent, the highest level since June 2000. In addition, in March 2022, Moldova's producer price index rose by 19.8% year-on-year, surging for the fifth consecutive month, up from 19.3% in the previous month and reaching its highest level since December 2000. Almost all sectors saw some degree of increase: electricity, gas, steam and air conditioning (108.3%), manufacturing (13.6%) and mining (15.3%).
04
Central and Eastern Europe
Monitoring shows that Peter Pavel won the Czech presidential election and parliament rejected the proposal of no confidence in the Czech coalition government; The Slovak coalition government agreed to amend the constitution and hold early parliamentary elections; Bosnia and Herzegovina inflation rate fell month-on-month; The Central Bank of Ukraine kept the key policy rate unchanged at 25%; Growth in Greece is likely to slow to 1.1% in 2023.
(i) Czech Republic
Peter Pavel wins the Czech presidential election. On January 13-14, the Czech Republic held its first presidential election, with retired army general Peter Pavel, former chairman of NATO's military commission, narrowly winning the first round of voting with 35.4 percent, while former Prime Minister Babiš, chairman of the dissatisfied citizen action party, received 35 percent. According to the Czech constitution, if no one receives a majority of the votes in the first presidential election, the top two candidates with the highest number of votes will be held in a second round 14 days later. On January 27, the Czech Republic held its second presidential election, Pavel defeated Babiš with 41.7% of the vote, won the second round of the presidential election, became the new president of the Czech Republic, and will be sworn in on March 9.
Parliament rejected the proposal of no confidence in the Czech coalition government. The Czech "Dissatisfied Citizens Movement" party accused the coalition government of unfavorable response to high inflation, refused to discuss drug shortages and planned changes to value-added tax, and launched a government no-confidence motion. On 18 January, the House of Representatives voted 102 to 81 against the no-confidence motion, allowing the coalition government to remain in power.
(ii) Slovakia
The Slovak coalition government agreed to amend the constitution and hold early parliamentary elections. In December 2022, the Slovak Parliament passed a motion of no confidence in Hegel's government, and Hegel has been in power as a caretaker since the dissolution of the cabinet. On 17 January, Chancellor Hegel called for early parliamentary elections because he could not secure a new majority in Parliament. But the Slovak constitution does not allow for early elections, and amending the constitution requires a referendum of more than half or approval by at least 90 votes in the 150-seat parliament. The constitutional referendum held on January 21 was nullified because the turnout was less than 50% (only 27.3%). On 25 January, 92 parliamentarians agreed to amend the constitution and agreed to snap elections on 30 September.
(iii) Bosnia and Herzegovina
Inflation in Bosnia and Herzegovina fell month-on-month. On January 20, 2023, the Federation of Bosnia and Herzegovina released data on the main inflation rate for December 2022. In December 2022, the CPI in Bosnia and Herzegovina increased by 15.7% year-on-year, down 1.9 percentage points from November, of which food and beverage prices rose the fastest, up 23.5% year-on-year, water, electricity, gas and fuel prices increased by 22.1% year-on-year, and transportation costs increased by 16.5% year-on-year. The average CPI growth in 2022 was 14.9%, an increase of 2.1 percentage points over 2021. In December 2022, Bosnia-Herzegovina's PPI increased by 18.5% year-on-year, down 1.7 percentage points from November, of which PPI in the domestic market increased by 17.4% and the international market increased by 19.7%. PPI growth averaged 20.2% in 2022, an increase of 6.4 percentage points over 2021.
(iv) Ukraine
The Central Bank of Ukraine kept the key policy rate unchanged at 25%. On January 25, 2023, the National Bank of Ukraine (NBU) decided to keep the key policy rate unchanged at a high level of 25% and continue to increase the bank's statutory reserve ratio. By the end of 2022, consumer prices in Ukraine increased by 26.6% year-on-year. The Central Bank of Ukraine said it will continue to pursue a tight monetary policy to maintain exchange rate stability, improve inflation expectations, and ensure a steady decline in inflation. Consumer price growth will slow due to a combination of monetary tightening, falling global inflation and weak demand. The Central Bank of Ukraine expects Ukraine's inflation rate to slow to 18.7% in 2023 and continue to decline to 10.4% in 2024.
(v) Greece
Growth in Greece is likely to slow to 1.1% in 2023. According to a January 2023 OECD report, Greece's economic growth could slow to 1.1% in 2023 due to the impact of the Ukraine crisis and energy issues. The report points out that since the gradual lifting of epidemic control measures, Greece's tourism revenue has increased significantly, and consumption and investment conditions have improved, which has led to economic recovery. However, remaining high energy costs, continued supply chain instability, and uncertainty from the Ukraine crisis will weigh on Greek growth. The report notes that the Greek economy, supported by EU recovery funds and the government's energy consumption subsidy policy (10.73 billion euros), can maintain growth, but the economic growth rate may slow until the security situation improves and energy prices stabilize.
05
West Asia and North Africa
Monitoring shows that the UAE's real GDP growth will exceed 4% in 2023, tensions between Israel and Palestine will increase, Kuwait will continue to implement austerity policies, Armenia will continue to raise refinancing rates to curb inflation, Iranian natural gas shortages will occur, and strikes and protests in many parts of Jordan in response to rising oil prices; Egypt's extended fund arrangement with the IMF was officially launched.
(i) United Arab Emirates
The UAE's real GDP growth will exceed 4% in 2023. According to the World Bank, despite tough global economic conditions and tightening monetary policy, the UAE's real GDP growth in 2023 will exceed 4%, benefiting from a strong recovery in non-oil sectors such as real estate, tourism, hotels and logistics. The World Bank's forecast for growth in UAE oil exports in 2023, a rapid pickup in demand from the non-oil sector, and strong economic growth due to the country's favorable business environment and advanced infrastructure. In 2022, the UAE achieved a fiscal surplus of around 4.4% due to higher oil revenues, a recovery in the non-oil sector, as well as the world's leading Covid vaccination program and monetary and fiscal stimulus package.
(ii) Israel and Palestine
Tensions between Israel and Palestine have risen. On January 19, 2023, Israeli and Palestinian clashes broke out in the West Bank, resulting in two deaths. Since 2022, clashes between Israeli security forces and Palestinian armed groups in Xian, Jordan, have increased, with the Israeli military regularly conducting raids in the West Bank to detain or arrest Palestinian militants. Israel began intensifying its military campaign against Palestinian armed groups before the new government took office, and Netanyahu's new government pursued a hardline policy towards Palestine, intending to exert maximum pressure on the Palestinian Authority to maintain security. It is expected that in the future, as Netanyahu's government continues to implement its hard-line policies, tensions and violent clashes will be inevitable.
(iii) Kuwait
Kuwait continues its austerity policy. Effective January 26, 2023, the Central Bank of Kuwait raised its key policy rate (discount rate) by 50 basis points to 4.0% with a view to enhancing monetary and financial stability, maintaining the attractiveness of the dinar and promoting sustainable economic growth. The dinar is not formally pegged to the US dollar, so Kuwait is more flexible than other GCC countries in response to changes in the Fed's monetary policy. Although Kuwait's central bank did not respond to the Fed's policy rate hikes to calm domestic inflationary pressures in early November or mid-December 2022, Kuwait will continue to tighten in order to curb domestic inflationary pressures, maintain dinar competitiveness and avoid capital flight.
(iv) Armenia
Armenia continues to raise refinancing rates to curb inflation. In December 2022, inflation in Israel was 5.3%, unchanged from November, above the Bank of Israel's 1-3% policy target, the highest level since October 2008, but below market expectations of 5.4%. The most important categories of the Israeli consumer price index are housing, transport and communications, and food. The rise in inflation this month was mainly influenced by traffic, which rose from 9.3% in November to 10.5% in December. In addition, inflation in fruits and vegetables fell to 4.9% this month from 5.4% in November, and housing fell 1 percentage point to 6.3%. In response to persistently high inflation, the Bank of Israel has raised interest rates, and it is expected that the Bank of Israel will raise interest rates slightly in the future, and domestic demand may be suppressed.
(v) Iran
There is a shortage of natural gas in Iran. Iran has the world's second-largest proven natural gas reserves, but its gas production has been suppressed for decades due to underinvestment and difficulties in accessing new technologies. Iran is limited by the number of connectors from the North-South gas pipeline and has to import natural gas, especially from Turkmenistan. However, Turkmenistan interrupted gas exports to Iran on January 12, 2023, causing a shortage of natural gas in Iran. Natural gas supplies were cut off throughout Iran, especially in the north and northeast, and the Iranian government ordered the temporary closure of public institutions, universities and banks to save energy. Gas outages have affected not only some public areas, streets and highways, but also industrial output, such as the petrochemical industry. Given existing social, political, and economic grievances in Iran, gas shortages are likely to continue to increase the risk of protests and strikes in the country.
(vi) Jordan
Strikes and protests have erupted in many parts of Jordan in response to higher oil prices. Since December 2022, several trade unions and transport associations in Jordan have continued to stage strikes and protests against low wages and rising oil prices. Truck drivers burned tires and threw stones at vehicles on streets and highways, temporarily closing parts of the highway and at one point causing a massive pile of cargo at the port of Aqaba. On 19 December, the parliament of the capital of Jordan's Karak province called for a strike in the province. On 15 December, the Jordanian Confederation of Independent Trade Unions marched in the capital, Amman, in support of the strike of transport workers that began on 11 December. On the same day, protests along the highway in Jordan's southern provinces turned into low-intensity police-civilian clashes, resulting in the death of at least one policeman and the injury of two. On December 11 and 15, the U.S. Embassy in Jordan issued two safety warnings in response to truckers' strikes, advising U.S. citizens to avoid large crowds and demonstrations, and temporarily barring U.S. government personnel from traveling to the four southern provinces where the riots occurred (Karak, Tafira, Ma'an, and Aqaba).
(vii) Egypt
Egypt's extended fund arrangement with the IMF was officially launched. The Egyptian government and the International Monetary Fund (IMF) reached a staff-level agreement in October 2022 on a 46-month $3 billion Extended Fund Arrangement (EFF). To meet the IMF's lending conditions, the Egyptian government has taken a number of reforms, including reducing the role of the state sector in the economy, cutting government spending, and allowing the exchange rate to fluctuate in response to market conditions. In December 2022, the agreement was approved. In the context of tighter global financial conditions, external financial support can supplement their funding needs to some extent. However, the EIU expects Egypt's total financing needs to approach $45 billion in 2023, and IMF loans can only partially meet its financing needs, and Egypt still needs to attract foreign investment to ease financial pressures.
(Source: Sinosure Country Risk Research Center)
