Russia partially unfreezes foreign assets, US-China tensions ease, 'locomotive' Europe lacks motivation

BRICS expands global influence, Russia partially lifts the blockade of foreign assets, inflation in the UK decreases, Germany may stagnate again in the third quarter of 2023, the US and China make efforts to cool down tensions... are some of the outstanding world economic news of the past week.

It is expected that in the first stage, Russia will unblock about 100 billion rubles of accounts for retail investors. (Source: Crypto insider)

World economy

BRICS agrees on mechanism for considering new members

On August 23, South African Minister of International Relations and Cooperation (DIRCO) Naledi Pandor said that leaders of the BRICS group of emerging economies including Brazil, Russia, India, China and South Africa have agreed on a mechanism to consider new members, paving the way for dozens of countries interested in joining the group representing countries in the Southern Hemisphere.

Speaking on Ubuntu Radio , a station run by DIRCO , Ms Pandor said the expanded agreement could help give BRICS global influence.

“We have agreed on the issue of enlargement. We have adopted a document that sets out the guidelines and principles, the process for considering countries that wish to become BRICS members… That is very positive,” Pandor said after the BRICS leaders met at the BRICS Summit in South Africa from August 22-24.

Ms. Pandor did not provide details on the criteria framework for considering candidates, saying only that the bloc’s leaders would make an announcement on expansion before the summit ends on August 24. South African officials said more than 40 countries have expressed interest in joining BRICS and 22 have formally requested admission.

Earlier the same day, at the BRICS leaders' meeting, South African President Cyril Ramaphosa informed that the five BRICS member countries are ready to expand the group with new members.

Calls for BRICS expansion dominated the agenda at this year's Summit. (VNA)

US economy

* Shares of several US banks fell on August 22, a day after S&P Global followed Moody's in downgrading the credit ratings of several regional banks with high risks related to commercial real estate (CRE).

S&P on Aug. 21 downgraded Associated Banc-Corp and Valley National Bancorp due to funding risks and higher reliance on brokered deposits.

The agency downgraded UMB Financial Corp and Comerica Bank, citing a loss of deposit flows and higher interest rates. S&P also cut KeyCorp’s rating due to limited profitability, and lowered the outlook for S&T Bank and River City Bank to negative from stable, citing higher CRE risks.

Following the news, shares of KeyCorp, Comerica and Associated Banc-Corp fell more than 3%, while Valley National and UMB Financial fell between 2-4%. At the close of trading on August 22, the above stocks all lost an average of more than 4% of their value . (Reuters)

* According to data released by the US Department of Commerce on August 23, new home sales in the country in July 2023 increased to the highest level in more than a year as home builders continued to benefit from limited supply in the pre-owned home market.

Sales of new U.S. single-family homes rose 4.4% to a seasonally adjusted annual rate of 714,000 in July 2023, compared with a year earlier. (Reuters)

Chinese Economy

* On August 22, the Chinese Ministry of Commerce announced that US Secretary of Commerce Gina Raimondo will visit the country from August 27-30 at the invitation of her Chinese counterpart Wang Wentao.

Meanwhile, the US Department of Commerce's announcement stated that Ms. Raimondo will travel to Beijing and Shanghai, hoping to have constructive discussions on issues related to the US-China trade relationship, challenges for US businesses and potential areas of cooperation.

According to the ministry, Ms. Raimondo's visit will reinforce the agreement to promote bilateral communication in a range of areas that US President Joe Biden and Chinese President Xi Jinping reached during their meeting in November 2022. (THX)

* The People's Bank of China (PboC) on August 21 lowered its base interest rate in an effort to stem the economic slowdown.

Accordingly, the PBoC lowered the one-year loan prime rate (LPR), the benchmark interest rate for corporate loans, from 3.55% to 3.45%, while maintaining the five-year LPR, which applies to mortgage loans, at 4.2%.

After the previous reduction in June 2023, the two interest rates are now at record lows. (THX)

European Economy

* According to data from the German Federal Statistical Office (Destatis), the cost of production of goods and commercial products in this country in July 2023 decreased by 6% compared to the same month last year. Compared to the previous June, the cost of production decreased by 1.1%.

This is the first decline since November 2020 and the sharpest decline since October 2009 after the global financial crisis.

However, Destatis also said that this sharp decline was partly due to the sharp increase in production costs after the conflict in Ukraine broke out in late February 2022. After more than a year of conflict, the prices of energy and goods, intermediate products such as metals, wood... have now become significantly cheaper. (TTXVN)

* The German Central Bank (Bundesbank) said on August 21 that the country's economy could stagnate again in the third quarter of 2023, due to weak foreign demand and high interest rates expected to damage Europe's leading industrial power.

The outlook for the July-September 2023 period is not much better, the Bundesbank said, after preliminary estimates showed the economy recorded no growth in the second quarter.

The central bank assessed that Europe's largest economy "remains lacking momentum" and "continues to experience a period of weakness". (AFP)

* Core inflation (which includes prices of all goods excluding food and energy) in the UK has started to fall over the past two months , according to official estimates.

In a report released on August 21, the UK Office for National Statistics (ONS) said that when considering all previously measured prices, they found that the annual rate of implicit inflation (including food and energy prices) fell to 6.8% in July from 7% in June and 7.3% in May. (VNA)

* On August 23, the Ministry of Finance of the Russian Federation announced that the ministry and the Central Bank of the Russian Federation (BoR) have decided to loosen restrictions on dividend payments to foreigners investing in the Russian economy.

The notice reads: “Payments of dividends (profits) to foreigners can be made without restrictions, but the total amount of these dividends must not exceed the amount of investment in Russia.”

In addition, one of the conditions for dividend payment is foreign creditors' investment in the Russian economy from April 1, 2023, including expanding production in Russia and developing new technologies. According to previous regulations, the total amount of dividends must not exceed 50% of the total net profit of the previous year, provided that the set KPIs are met. (TTXVN)

* On August 22, speaking at a meeting of the Council for Strategic Development and National Projects chaired by Russian President Vladimir Putin, Finance Minister Anton Siluanov said that the government and BoR have drafted a decree on partially unfreezing foreign assets in exchange for Russian assets.

It is expected that in the first stage, Moscow will unfreeze accounts of about 100 billion rubles for retail investors. According to Minister Siluanov, the assets of more than 3.5 million Russian citizens with an amount of 1,500 billion rubles are currently frozen. (TTXVN)

Japanese and Korean Economy

* According to the Yomiuri newspaper on August 20, China's seafood imports from Japan in July 2023 decreased by 34% compared to the previous month and decreased by 28% compared to the same period last year.

Trade statistics from China's General Administration of Customs showed that the decrease was equivalent to 234.51 million yuan (about 4.7 billion yen). The decrease is believed to be related to China's implementation of radiation testing - applied around July 8-9 - on all seafood imported from Japan.

Beijing's inspections take at least two weeks to complete and the procedure has become a de facto import restriction on perishable seafood - an item where freshness is key. (VNA)

* The Bank of Korea (BoK) survey results showed that inflation expectations in August 2023 remained unchanged at 3.3% compared to the previous month amid a cooling trend in consumer prices this year.

After peaking at 4% in February 2023, inflation expectations in South Korea have gradually declined to 3.7% in April and 3.5% in June . (Yonhap)

* On August 22, the Federation of Korean Industries (FKI) held an extraordinary general meeting, officially approving the plan to change its name and launch under the new name of the Korean Economic Association (KEA).

The Korea Economic Research Institute, a research institute under the FKI, has announced its merger with the Korea Economic Association. Accordingly, some member companies of Samsung, SK, Hyundai and LG Group, which are members of the Korea Economic Research Institute, will be converted to become members of the Korea Economic Association.

Thus, all four major Korean corporations, including Samsung (major member companies, except Samsung Securities Company), Hyundai, SK, and LG, have rejoined the Korean Economic Association after more than six years of withdrawing from this structure . (Vietnam News Agency)

ASEAN Economy and Emerging Economies

* Following the ASEAN Finance Ministers and Central Bank Governors Meeting (AFMGM) in March 2023 on Bali Island (Indonesia), the second AFMGM 2023 and related meetings taking place from August 22-25 in Jakarta emphasized commitment and cooperation to maintain regional economic stability.

The second AFMGM in 2023 aims to monitor and update progress in implementing the Priority Economic Drives (PEDs) and discuss issues of concern to ASEAN member countries. The meeting focuses on several key agendas, such as Global Economic Update and Risks, Regional Economic Outlook and Challenges, as well as Policy Dialogue on Infrastructure Financing and Promoting Sustainable Finance. (VNA)

* Speaking at the ASEAN Finance Ministers and Central Bank Governors Meeting held in Jakarta on August 22, Indonesian Finance Minister Sri Mulyani Indrawati said that Indonesia will need an investment of 200 billion USD in the next 10 years to achieve sustainable development goals .

According to Ms. Sri Mulyani Indrawati, financial resources will be prioritized for innovative and environmentally friendly development to carry out economic transformation. In addition, Indonesia also implements policies to attract investment in green projects and green industries. (VNA)

* According to the Nation newspaper (Thailand) on August 21, many businesses in this country are struggling to continue operating, with 1,867 businesses having to close in July 2023, an increase of 18.70% over the same period last year and not out of the trend of business closures in the past 5 years.

Sources at the Thai Commerce Ministry said some of these business closures could be due to businesses adjusting to changing market conditions and consumer behavior. The closure trend was observed across various sectors, with construction in general witnessing 175 closures (9%), real estate 103 (6%) and hotels/restaurants 43 (2%). (VNA)

* According to The Strategist website, China's economy is slowing down but Australia's exports to this Northeast Asian country reached a record 102.5 billion AUD (65.75 billion USD) in the first half of this year thanks to huge shipments of lithium.

Lithium has overtaken liquefied natural gas (LNG) to become Australia's second-largest export to China after iron ore, with sales soaring to A$11.7 billion (US$7.5 billion) between January and June 2023. Two years ago, lithium sales to China in the first half of the year were just A$470 million (US$302 million). (VNA)

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