06/08/2025

BIZ & FINANCE WEDNESDAY | AUG 6, 2025

17

Indonesia’s Q2 GDP rises 5.12%, fastest in two years

TOKYO: Japan’s top tariff negotiator Ryosei Akazawa said he would seek to press for US President Donald Trump’s signing of an executive order that would bring an agreed cut to tariffs on Japanese auto imports into effect. The US last month agreed in a trade deal to lower existing tariffs on Japanese car imports to 15% from levies totalling 27.5% previously, but a timeframe for the change to go into effect was not announced. Duties on other Japanese goods will be cut to 15% from 25% from tomorrow. “We will push the United States to make sure that an executive order be signed on the agreed tariff on automobiles and automotive components as soon as possible,” Akazawa told parliament before leaving for Washington later yesterday. Referring to the problem of “stacking” where goods can be affected by multiple tariffs, Akazawa also said Japan wants to make sure goods that are already levied at more than 15% would be exempt from the additional 15% rate. A table attached to Trump’s July 31 executive order that addressed tariff rates for many trading partners showed a “no stacking” condition applies to the European Union, while no such clarification was given for Japan. Akazawa told parliament Japan has received reassurances from the US that it would be treated the same way as the European Union regarding the condition. He stressed that there was no misunderstanding with the United States about Japan’s US$550 billion (RM2.3 trillion) investment package agreed in the tariff deal. “We have repeatedly explained to the US that Japan will invest up to US$550 billion in the form of equity, loans and guarantees” through state-owned financial institutions to jointly build supply chains critical for national security, Akazawa said. “This is what we believe is our consensus.” Akazawa has said equity investment would account for just about 1-2% of the US$550 billion. – Reuters TOKYO: Japan’s Cabinet Office will lower its fiscal 2025 gross domestic product real growth rate forecast from around 1.2% seen in January after factoring in the impact of US tariff policies, the Nikkei business daily reported yesterday. Japan’s government also said its primary budget surplus in the fiscal year 2026 starting in April next year will exceed its January forecast of about ¥2.2 trillion (RM63.1 billion) thanks to increased tax revenue, without giving the new estimate, the Nikkei reported without citing sources. For the current fiscal year ending in March, the government projects a deficit, though narrower than the ¥4.5 trillion shown in January, the newspaper said. – Reuters PHILIPPINE JULY INFLATION UP SLOWEST IN NEARLY SIX YEARS MANILA: Philippine consumer prices rose at their slowest pace in nearly six years in July as utility costs moderated and food prices declined, the statistics agency said yesterday, potentially allowing the central bank to cut interest rates later this year. The consumer price index rose 0.9% year on year, the lowest rate since October 2019, and below the 1.1% median forecast in a Reuters poll. The July figure was also less than June’s 1.4%. That brought the average rate in the seven-month period to 1.7%, below the central bank’s 2.0% to 4.0% target for the year. The July inflation slowdown was partly driven by a faster annual decline in rice prices, which fell 15.9%, compared with June’s 14.3% drop. – Reuters Japan to press US for auto tariff deal’s swift implementation JAPAN TO LOWER FY25 GDP GROWTH ESTIMATE: NIKKEI

JAKARTA: Indonesia’s second quarter growth was better than expected, driven by robust investment and household spending, the fastest pace since the second quarter of 2023, but economists said more support may be needed to protect growth in the second half. Gross domestic product (GDP) accelerated to 5.12% from 4.87% in the previous quarter, data from the statistics bureau showed on Tuesday, and beat 4.80%

o Increase in investment highest since second quarter of 2021, household consumption buoyed by holiday spending

balance on account of frontloading,” said DBS Bank economist Radhika Rao. The growth pace defied concerns over weakening economic indicators, including falling car sales, softening consumer confidence and contracting purchasing managers’ index, which had pointed to slowing activity. Ahead of yesterday’s data, Bank Indonesia, which has cut policy rates four times since September, forecasts economic growth would be in a range of 4.6% to 5.4% this year. Household spending, which makes up over half of Indonesia’s GDP, accelerated slightly to 4.97% year on year in the second quarter, compared to 4.95% in the previous quarter, supported by higher spending for food and travel during a number of religious holidays and a school break. Investment growth surged to a four-year high of 6.99% in the second quarter, from 2.12% previously, helped by infrastructure projects including the expansion of the Jakarta mass rapid transit, Statistics Indonesia Deputy Chief Moh. Edy Mahmud, said. Government spending contracted by an annual 0.33%. Meanwhile, exports were boosted by shipments of vegetable oil, metals, electronics and auto parts. Frontloading of export orders as buyers sought to get ahead of US tariffs has seen the value of exports rise in the first half of the year. Brian Lee, an economist at Maybank, warned the trade surplus could narrow further as export growth cools while slower global trade weighs on demand for Indonesia’s key commodities. “We expect a further 50 bps of rate cuts before year-end while the government has laid out plans to introduce a third package of stimulus towards year-end, albeit scaled down in size,” Lee said. Rao of DBS also expects slower export momentum. “We continue to expect moderation to set in (in) the second half, partly on account of payback in trade,” she said. On a non-seasonally adjusted, quarter on-quarter basis, gross domestic product expanded 4.04% in April-June, Statistics Indonesia said. – Reuters

growth forecast in a Reuters poll. “GDP growth registered an upside surprise in the second quarter compared to our expectations, with the gap likely explained by a supportive net exports

A passenger train running on an elevated track in Jakarta’s central business district yesterday. The Indonesian central bank forecasts economic growth would be in a range of 4.6% to 5.4% this year. – AFPPIC

BR I E F S

China, India services sectors post robust growth in July BEIJING: China’s services activity expanded at its fastest pace in 14 months in July, fuelled by stronger demand, including a rise in new export orders, a private-sector survey showed yesterday. fastest growth in new business in a year supported the rise in activity heading into the second half of the year. The new export orders sub-index rose for the first time in three months, bolstered by stronger tourism activity and more stable trade conditions. The HSBC India Services Purchasing Managers’ Index, compiled by S&P Global, inched up to 60.5 in July from 60.4 in June, confounding a preliminary estimate that showed a drop to 59.8.

The new export business sub-index – a key gauge of international demand – showed a marked acceleration in July, registering the second-strongest expansion in a year. Total new business remained robust despite easing slightly from June’s pace, supported by advertising efforts and new client acquisitions. Among service categories, finance and insurance emerged as the top performer for both new orders and business activity, while real estate and business services recorded the slowest growth. Business confidence improved as firms anticipated benefits from marketing initiatives, technological innovation and growing online presence. – Reuters

The S&P Global China General Services PMI rose to 52.6 in July from 50.6 the previous month, marking the fastest pace since May last year. The 50-mark separates expansion from contraction. The reading contrasted with China’s official survey, which showed services activity edging down slightly to 50.0 in July from 50.1 in June. The S&P PMI is considered a better read of trends among smaller, export-oriented firms, particularly along the east coast, while the official PMI primarily tracks large and medium-sized enterprises, including state-owned companies. Meanwhile, the S&P China General Composite PMI dipped to 50.8 in July from 51.3 the previous month. According to the S&P Global survey, the

The survey showed that after reducing staffing levels in June, service providers increased employment at the quickest rate since July 2024, driven by higher workloads and improved confidence. Rising costs for raw materials, fuel and salaries kept average input prices in expansion territory in July. As a result, service providers raised their selling prices for the first time in six months. With new business and activity on the rise, overall business confidence improved. Separately, in India, a survey showed growth in the country’s services sector accelerated to an 11 month high in July, driven by strong international demand and sustained domestic sales,