28/05/2026

BIZ & FINANCE THURSDAY | MAY 28, 2026 17 Temporary energy shock can turn persistent: Bank of Japan chief TOKYO: Bank of Japan (BOJ) governor Kazuo Ueda said yesterday central banks should not look at oil prices in isolation because a temporary energy shock can become persistent if it feeds into wages, expectations, and price-setting behavior. Comparing various energy shocks Japan experienced in past decades, Ueda said the same oil price increase can have very different effects on wages, expectations, demand and currency rates depending on the initial conditions at which they hit. “If inflation expectations are already high and wages are accelerating, the risk of second-round effects is large,” while a large cost shock may not raise inflation expectations if expectations are very low and wages are stagnant, he said. “Thus, the boundary between tem porary and persistent inflation is not mechanical,” Ueda told a conference hosted by the BOJ and its think tank, the Institute for Monetary and Economic Studies. The remarks come as surging oil prices from the Middle East conflict add to inflationary pressure in Japan’s economy, prompting BOJ officials to dial up hawkish signals that have led markets to expect an interest rate hike as soon as next month. “A temporary shock can become persistent if it changes wages, expectations, and price-setting behavior. Conversely, a large shock can remain temporary if those channels do not activate,” Ueda said. Japan’s core inflation as measured by a new central bank gauge accelerated in April and blew past its 2% target, data showed on Tuesday. Ueda described the oil spike caused by the US-Israeli war on Iran as a “fifth oil price shock” and said policymakers can learn from their experiences in dealing with previous shocks. “Japan’s experience shows that oil price shocks are never just oil price shocks,” he said. “They are tests of the entire inflation regime.” – Reuters IMF: Bangladesh seeks new aid programme WASHINGTON: The International Monetary Fund (IMF) said on Tuesday it was in negotiations with the Bangladeshi government for a new assistance programme at Dhaka’s request, as the South Asian country reels from the economic fallout of the Iran war. “The Bangladeshi authorities have requested a new IMF-supported pro gramme,” said Ivo Krznar, the IMF’s mission chief for Bangladesh. “IMF staff are in discussions with the authorities on their reform agenda and policy priorities.” In March, Bangladesh’s government said it was seeking loans of around US$2 billion (RM7.93 billion) from multilateral donors to tackle energy security concerns sparked by the surging fuel prices caused by the war on Iran. In a virtual meeting last week between Bangladesh Finance and Planning Minister Amir Khasru Mahmud Chowdhury and IMF deputy managing director Nigel Clarke, both sides agreed to move quickly toward a new programme, the finance ministry said in a statement on Monday. Bangladesh is already in the middle of a US$5.7 billion IMF programme, which began in 2023 and was due to run for four years. – AFP

China April industrial profits grow fastest in over 2 years

Exports gained steam across many sectors last month, fuelled by a global AI investment surge while buyers stepped up purchases on concerns about further cost increases linked to the US-Israeli war with Iran. As AI and other emerging industries significantly boost demand for non-ferrous metals such as aluminium, copper, gold, and lithium, profits in the sector jumped 117.8% in the first four months, the official data shows. Still, solid export performance has not been enough to offset persistent weakness at home, a trend particularly evident in the auto sector. “The external environment is complex and volatile, while the mismatch between strong domestic supply and weak demand remains pronounced,” said NBS statistician Yu Weining. “Some enterprises are still facing operational difficulties.” Industrial profit figures cover firms with annual revenue of at least 20 million yuan (RM11.7 million) from their main operations. – Reuters

persistent domestic headwinds and heightened global uncertainty, with US President Donald Trump’s visit to China earlier this month delivering only modest commercial and trade commitments and an agreement to build a “constructive” relationship. Profits at China’s industrial firms rose 24.7% last month from a year earlier, sharply up from a 15.8% jump in March, data from the National Bureau of Statistics (NBS) showed yesterday. For the January-April period, industrial profits climbed 18.2%, versus a 15.5% increase recorded in the first quarter. “Profit divergence is pronounced,” said Tianchen Xu, senior economist at the Economist Intelligence Unit. “Growth is mainly driven by upstream price increases and AI, while downstream sectors still face significant profit pressure due to rising upstream costs and intensified ‘involution.’” The term refers to cut-throat competition in industries such as autos and solar panels, viewed as a sign of economic malaise.

BEIJING: China’s industrial profits in April grew at the fastest pace since November 2023, despite financial pressures stemming from softening domestic demand and rising component costs exacerbated by the Middle East crisis. The latest data adds to signs of an uneven recovery, with the economy largely losing momentum at the start of the second quarter. While exports have remained a rare bright spot, most other indicators have undershot expectations, leaving firms increasingly reliant on overseas markets for growth. The shift comes as companies navigate o Increase of 24.7% year-on-year quickest since November 2023 but recovery uneven across sectors

Beijing said to have issued export quotas for urea BEIJING: China has issued export quotas for urea fertiliser, sources with direct knowledge of the matter said, a move that could help ease soaring global prices for one of the world’s most widely used crop nutrients after supply disruptions linked to the Iran war. but declined to provide further details. An Indian importer also said the Chinese government had issued a notification permitting urea exports, though no specifics were disclosed. fertiliser production, Bloomberg News reported. “We will prefer Chinese supplies in the current situation as shipments are far more predictable,” said a senior official with an Indian fertiliser-producing company. “They do not have to pass through the Strait of Hormuz and are therefore more likely to be delivered on time.” IN EBOLA’S SHADOW ... African Developmen Bank (AfDB) president Sidi Ould Tah (right) attending a press conference alongside Niger’s Minister of Economy and Finance Maman Laouali Abdou Rafa during the bank’s annual meeting at the Kintele International Conference Center in Brazzaville, Republic of Congo, on Tuesday. African leaders and financiers gathered as the continent faces shrinking aid flows, with this week’s event in Congo Republic overshadowed by an Ebola outbreak across the border. – REUTERSPIC

China’s General Administration of Customs and National Development and Reform Commission did not immediately respond to requests for comment. Domestic urea prices in China remain well below international levels and new export quotas are likely to be welcomed in particular by India, which imported more than 40% of its urea, a nitrogen-based fertiliser, and diammonium phosphate, a widely used phosphate-based one, from the Middle East last year. In March, India asked China to allow the sale of some urea cargoes as the US-Israeli war on Iran disrupted gas supplies and threatened

One of the world’s largest fertiliser exporters, China banned exports of many categories in March to protect domestic farmers from the surge in prices triggered by the closure of the Strait of Hormuz, through which a large share of global fertilisers and their inputs normally flow. Urea exports are managed by a quota system and the issuance of quotas is a signal authorities are confident there is enough supply domestically to release some for export. Two Chinese urea producers confirmed to Reuters that they had received export quotas

Several fertiliser industry sources and social media accounts said that around 1.5 million metric tons of urea will be allocated, although Reuters could not independently verify the total volume. China exported 4.9 million tons of urea in 2025, below its historical range of 5 million to 5.5 million tons, which usually accounts for around 10% of global urea exports, according to StoneX, a consultancy. – Reuters