Tourists to Russia soar, Ukraine fails to pay off debt in 10 years, US-China strive to 'heal rift'

Top 3 companies paying the highest dividends in the world, tourists to Russia increasing sharply, Ukraine's public debt at 80% of GDP, Japan supporting domestic seafood industry, US-China efforts to de-escalate... are the outstanding world economic news of the past week.

Russia's seaborne oil exports are now at 3.4 million barrels per day, approaching their maximum since late June 2023. Pictured, an oil refinery of Russian oil giant Lukoil. (Source: Lukoil)

World economy

Global dividend payouts hit record high

Dividends paid by the world's largest listed companies soared to a record $568.1 billion in the second quarter of 2023, according to a report by asset manager Janus Henderson. Not only that, the level of profit payments to shareholders is expected to increase further, despite the uncertain global economic situation.

The report said that payments by the world's 1,200 largest public companies in the second quarter of 2023 increased 4.9% compared to the same period last year, higher than economists and companies expected.

Of these 1,200 companies, banks accounted for half of the global dividend growth, thanks to the gains in yields as interest rates rose. Notably, automakers accounted for one-seventh of this dividend growth.

Geographically, companies in Europe, excluding the UK, led the way in dividend payments, with a 9.7% increase to $184.5 billion. Companies in North America paid out $165.3 billion in dividends, up 4.2% year-on-year.

Swiss food giant Nestle is the world's highest dividend-paying company, followed by British bank HSBC and German carmaker Mercedes-Benz.

However, contrary to the joy of shareholders, Mr. Ben Lofthouse - head of global equity income at Janus Henderson - commented that global economic growth is "slowing down" as interest rates rise.

Markets expect global profits to be flat this year, after soaring to a record high in 2022, but companies around the world are becoming more cautious about the outlook, he said.

Major central banks around the world have been continuously raising interest rates, to combat high inflation. This has led to commercial banks and financial institutions increasing lending rates and earning more operating profits.

Mr Lofthouse explained that while a weaker economy is usually bad for banks, rising profit margins have prompted banks to pay higher dividends. (AFP)

US economy

* During a meeting with Chinese Premier Li Qiang in Beijing on August 29, US Secretary of Commerce Gina Raimondo affirmed that the US wants to cooperate with China to solve issues such as climate change and artificial intelligence (AI).

Ms. Raimondo also emphasized that the US wants to maintain its $700 billion trade relationship with China and asserted that trade relations can help bring stability to the overall relationship.

In response, Premier Li Qiang said that healthy economic relations and trade cooperation not only benefit the United States and China, but the whole world. (Reuters)

* The number of US jobs in July 2023 returned to pre-Covid-19 pandemic levels, opening a sign that the country's labor market is cooling and giving hope to the US Federal Reserve (Fed) in being able to lower inflation without causing the unemployment rate to rise sharply.

The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) forecasts that 2.3% of nonfarm workers quit their jobs in July, the lowest figure since January 2021, when the pandemic-induced layoffs were at their peak. Meanwhile, the hiring rate for the same month was the lowest since April 2020.

Combining these two data, analysts assessed that labor demand in the world's largest power is decreasing and hiring conditions are loosening, strengthening the necessary conditions for the Fed to achieve a "soft landing" scenario for the US economy. (Reuters)

Chinese Economy

* China's Ministry of Finance said on August 29 that it will extend tax incentives for foreign nationals working in the country until the end of 2027, in order to support foreign companies struggling to attract talent in the post-Covid-19 era.

Previously, the Chinese government planned to eliminate non-taxable allowances for foreign workers in 2022, but decided to extend the program on a review basis until the end of this year. (Reuters)

* China now has a total of 243 GW of coal-fired power plants approved or under construction, while local governments remain concerned about securing power supplies. China started construction of 37 GW of coal-fired power plants in the first half of this year and approved 52 GW of new projects.

In addition, 149 GW of plants have been announced but not yet officially licensed. Total coal-fired power capacity could increase by 23-33% compared to 2022 levels, if all projects are approved.

China has pledged to cut coal consumption from 2026, aiming to peak greenhouse gas emissions by 2030, as growing energy security concerns are driving approvals for new projects. (Reuters)

European Economy

* According to the Ministry of Finance of Ukraine, in July alone, Ukraine's public debt increased by $4 billion, reaching a record of nearly $133 billion. The largest part of this debt is state debt. The projected size of Ukraine's GDP in 2023 is $169 billion.

This means that Ukraine ’s total debt is approaching 80 percent of GDP. Under current conditions, Ukraine will not be able to pay off its debt for 10 years. This means that Kiev will have to rely on new loans from its Western partners. This will be a huge burden on the younger generation and many generations to come. (Reuters)

* After the introduction of the e-visa regime, the number of foreign tourists coming to Russia has increased. The number of hotel reservations by foreigners in August 2023 increased by 25% compared to July 2023 and by 40% compared to the same period last year.

Most tourists come from China, India, Turkey, Iran, Saudi Arabia, Vietnam, Singapore, France, Spain, Italy and the Netherlands. Foreign tourists usually book hotels in Moscow, Kazan, Vladivostok, Irkutsk, St. Petersburg, Sochi, Kaliningrad, Yekaterinburg and Novosibirsk. (VNA)

* Russia's seaborne oil exports are currently at 3.4 million barrels per day, approaching their maximum since late June 2023 .

Russian producers exported an average of 800,000 barrels of oil per day between August 20 and 26, up from a week earlier, according to Bloomberg economist Julian Lee. As a result, exporters’ revenues rose by an average of 35% to $47 million per day over the four weeks. (TASS)

* According to statistics from the Market Research Institute (GfK), German consumer confidence is likely to decrease in September 2023 .

Specifically, consumer confidence will decrease by 0.9 points to -25.5 points in September, after recording a slight increase in August compared to July 2023.

“The chances of a sustained recovery in consumer sentiment this year are getting narrower,” said Rolf Burkl, a researcher at GfK. Persistently high inflation, particularly for food and fuel, further confirms that consumer confidence is not improving at the moment.

The GfK survey also showed that people's salary forecasts and their expectations for overall economic growth are decreasing. (TTXVN)

* UK home purchases are likely to fall 21% this year to their lowest level since 2012, property firm Zoopla has forecast, as borrowing costs rise.

UK home sales will hit 1 million in 2023, down from 1.26 million last year, and reach a 14-year high of 1.48 million in 2021, as ultra-low interest rates and Covid-19 tax breaks boost demand.

Although UK house prices rose 0.1% year-on-year, the number of home purchases was hit hardest by rising borrowing costs, especially for buyers relying on mortgages. (Reuters)

Japanese and Korean Economy

* Nikkei newspaper reported on August 31 that Japan will use additional funds to support the fishing industry , after China banned all seafood imports from Japan in response to the country's decision to release treated radioactive wastewater from the Fukushima nuclear power plant into the Pacific Ocean.

The Japanese government has set up two funds worth 80 billion yen ($547.9 million) to help develop new sales channels and maintain fish freezing operations until demand recovers so they can be sold, among other measures. Officials have previously ruled out further fiscal measures to support the fishing industry . (Reuters/Nikkei)

* In its monthly economic report released on August 28, Japan maintained its view that its economy was recovering moderately in August 2023 and appeared more optimistic about exports. However, Tokyo also warned of downside risks due to China's slowing economic growth related to the real estate crisis.

In the same report, the Japanese government upgraded its outlook on exports for the first time in three months, noting “signs of growth” in the sector. The revised report showed a sharp increase in auto exports after a chip shortage eased and domestic tourism revived. (Kyodo)

* The South Korean Ministry of Agriculture said it will buy 400,000 tons of rice from this year's harvest for storage. The purchase process will start from August 30 and last until the end of the year.

The government will purchase rice at the estimated average market price from October to November 2023. Farmers will initially receive 30,000 won ($22.7) per 40-kg bag, with the remaining amount to be paid later this year, the ministry said. (Yonhap)

* The South Korean government convened a Cabinet meeting on August 29 and proposed a budget for 2024 of 656.9 trillion won (496.22 billion USD), up 2.8% from 2023. This is the lowest increase since the country began keeping statistics in 2005.

The South Korean Cabinet approved the draft budget on the same day and will submit it to the National Assembly for approval on September 1. (Vietnam News Agency)

ASEAN Economy and Emerging Economies

* Indonesian Trade Minister Zulkifli Hasan said on August 30 that the country is focusing on increasing trade, especially implementing an export policy to ASEAN, a top priority market with a population of more than 600 million.

According to Mr. Hasan, “ In the future, ASEAN's trade orientation will be similar to the European Union (EU). Exports will be tax-free; customs procedures will use electronic means; all data can use digital means.” (VNA)

* The Chairman of the Malaysian Semiconductor Industry Association (MSIA) said that the country is expected to receive more investments in the future , based on investors' confidence in the Madani economic framework and from existing investments.

Prime Minister Anwar Ibrahim is making a big push to attract investment from around the world, including China, the US, and even Tesla CEO Elon Musk.

There were also other investment announcements from European semiconductor manufacturing companies. Investors will view these approved investments positively. (TTXVN)

* On August 28, Brazilian President Luiz Inácio Lula da Silva signed a law increasing the minimum wage for workers to 1,320 Reals (269.7 USD). This is also the base level for adjusting the minimum wage based on inflation and economic growth in this South American country from 2024.

According to the Brazilian government, starting next year, the minimum wage increase will be based on this base level and two important economic indicators, which are the annual inflation rate and the average growth of the Gross Domestic Product (GDP) over the previous two years. (TTXVN)

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