06/03/2025

BIZ & FINANCE THURSDAY | MAR 6, 2025

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Robust demand propels India’s services sector in February BENGALURU: Growth in India’s services sector accelerated in February, supported by robust demand and a firm business outlook that led to a substantial increase in hiring, a survey showed. Asia’s third-largest economy expanded 6.2% year-over-year last quarter, lifted by government and consumer spending. The government expects India to grow 6.5% for the full financial year on expectations urban consumption will improve after weakening due to feeble job and income growth. HSBC’s final India services Purchasing Managers’ Index , compiled by S&P Global, rose to 59.0 in February from January’s 26-month low of 56.5 but was lower than a preliminary estimate of 61.1. It has remained above the 50-mark separating expansion from contraction since mid-2021. “Global demand, which grew at its fastest pace in six months according to the new export business index, played a major role in driving output growth for India’s services sector,” noted Pranjul Bhandari, chief India economist at HSBC. Overall demand for services picked up in February, recovering from January’s 14-month low, while growth in foreign orders reached its highest in six months. Services companies remained optimistic about the business outlook for the upcoming 12-months. The future activity sub-index, gauging sentiment, stayed firm despite falling to a six-month low. – Reuters period for pricing rule JAKARTA: The Indonesia Coal Miners Association (APBI) is seeking a six-month grace period to adjust to a new pricing system launched this month and called for the government to re-evaluate the policy. The new system, based on government-set coal prices (HBA), has resulted in rates going above market levels, prompting some international buyers to baulk at the costs. “Our association has requested for a grace period. Convincing the buyers is not a simple matter,” APBI acting executive director, Gita Mahyarani, told Reuters yesterday. Indonesia began using the HBA prices from March 1 to calculate a floor price for transactions as it sought to have more control over the price of its commodities. on goods from Canada and Mexico, a doubling of duties on Chinese goods to 20%, and threats of levies against other countries that have stoked fears of a global economic slowdown. Markets are roughly pricing in a rate hike to 0.75% around July, followed by another increase to 1% early next year, according to a chart attached to Uchida’s speech text posted on the BOJ’s website. A majority of economists polled by Reuters expect the BOJ to hike rates once more this year, most likely during the third quarter. After its rate review later this month, the board will meet on April 30 and May 1 when it will produce fresh quarterly growth and inflation forecasts. – Reuters The HBA is based on recent prices reported by coal miners to the government for their royalty fee filings. For the first half of March, Indonesia set prices between US$34.16 and US$128.24 per metric ton, depending on the calorific grade. Buyers of Indonesian coal typically use weekly prices from the Indonesia Coal Price Index as a benchmark for transactions, and HBA prices were previously used only to calculate royalty fees. A Mining Ministry official said exporters are allowed to honour prices stated in their ongoing long-term contracts with buyers, but the government expects firms to make adjustments should their contracts allow it. – Reuters Indonesian coal miners seek grace

A group of hostesses walking during the opening session of the National People’s Congress at Tiananmen Square in Beijing. – AFPPIC

China eyes 5% growth despite trade war o Govt seeks to make domestic demand the main economic driver

“Domestically, the foundation for China’s sustained economic recovery and growth is not strong enough,” added the report. Chinese exports reached record levels last year. But as thousands of delegates congregated in Beijing’s opulent Great Hall of the People for the opening session of the National People’s Congress, the second of China’s “Two Sessions” political meetings this week, sentiments were clouded by a broadening trade war under Trump. Beijing on Tuesday announced its own measures in retaliation for Washington’s latest tariff hike – and vowed it would fight a trade war to the “bitter end”. The moves will see China impose levies of up to 15% on a range of US agricultural products including soybeans, pork and wheat starting from early next week. Beijing’s countermeasures represent a “relatively muted response” in comparison to Trump’s all-encompassing tariffs, wrote Lynn Song, chief economist for Greater China at ING. “The retaliation could have been a lot stronger, and with every further escalation the risks are also rising for a stronger response.” Analysts say authorities may announce further plans this week to boost the economy – adding to a string of aggressive support measures announced late last year. – AFP consumption will likely be underpinned by solid pay increases expected in this year’s wage talks between firms and unions. With underlying inflation accelerating gradually and wages rising, raising interest rates “will lead to stability in economic activity and prices in the long run”, he said. “If our economic and price projections outlined in our latest outlook report in January are realised, we will continue to raise the policy rate,” Uchida said in a speech delivered to business leaders in Shizuoka before the news conference. The remarks suggest the BOJ’s rate-hike resolve has been undeterred so far by Trump’s 25% tariffs

anchor” of growth, adding that Beijing should “move faster to address inadequate domestic demand, particularly insufficient consumption”. And in a rare move, Li said China would hike its fiscal deficit by one percentage point, something that analysts have said will give Beijing more latitude to tackle its economic slowdown. Dylan Loh, an assistant professor at Singapore’s Nanyang Technological University, said Beijing’s growth target would be “tough but possible”. He said low consumption was a “confidence issue”, adding that “if people are, in their own calculations, worried about spending – especially on big-ticket items – it is far harder to address”. Major Asian markets traded up yesterday, reversing their losses a day after US President Donald Trump went ahead with imposing more blanket tariffs on Chinese imports following a similar move last month. US tariffs are expected to hit hundreds of billions of dollars in total trade between the world’s two largest economies. “Internationally, changes unseen in a century are unfolding across the world at a faster pace,” the government work report said. “Unilateralism and protectionism are on the rise,” it warned.

BEIJING: China yesterday set an annual growth target of around 5%, vowing to make domestic demand its main economic driver as an escalating trade war with the United States hit Beijing’s exports. Beijing also announced a rare hike in fiscal funding, allowing its budget deficit to reach 4% this year as it battles stuttering employment for young people, stubbornly low consumer demand and a persistent property sector debt crisis. The headline growth figure announced by Premier Li Qiang at an annual Communist Party conclave was broadly in line with an AFP survey of analysts, though experts say it is ambitious considering the scale of the country’s economic challenges. Under the plans, some 12 million new jobs will be created in Chinese cities as Beijing pushes for two percent inflation this year. A government work report vowed to make domestic demand the “main engine and

Bank of Japan vows to keep raising rates TOKYO: The Bank of Japan (BOJ) can raise interest rates at a pace in line with dominant views among financial markets and economists, its Deputy Governor Shinichi Uchida said, keeping alive expectations that there is a chance of a near-term increase in borrowing costs. yesterday, suggesting his preference to spend time gauging the impact of past policy steps before proceeding with further increases. “The pace of rate hikes will depend on economic and price developments at the time.” The BOJ raised its short-term policy rate to 0.5% from 0.25% in January on the view that Japan was making progress towards durably achieving its 2% inflation target.

While he declined to say how soon the BOJ could raise rates, Uchida essentially ruled out another hike at the bank’s next meeting on March 18 and 19 by saying it “wasn’t as if we would hike rates at every meeting”. “We can look at how the economy and prices respond (to a rate hike), then decide whether to raise rates again,” Uchida told a news conference

Uchida warned of the need for vigilance due to strong uncertainty over the global economic outlook due in part to US President Donald Trump’s policies and geo-political tensions. But he was upbeat on Japan’s economy, saying