The Philippine economy expands by 6.3% in Q2, surpassing expectations. Europe faces an empty economic calendar, while the focus shifts to upcoming labor market data in the US. Political turmoil in Bangladesh raises questions about the relationship between good economics and stability. Stay informed about these economic developments and their implications for global markets and political dynamics.
Sources:
https://business.inquirer.net/473588/philippine-economy-expands-6-3-in-q2-says-psa
https://www.forexlive.com/news/its-an-empty-economic-calendar-in-europe-today-20240808/
https://www.hindustantimes.com/world-news/did-sheikh-hasina-s-good-economics-lead-to-political-disaster-in-bangladesh-101723098521870.html
https://business.inquirer.net/473588/philippine-economy-expands-6-3-in-q2-says-psa
Outline:
(00:00:00) Introduction
(00:00:42) Philippine economy expands 6.3% in Q2, says PSA
(00:03:11) It's an empty economic calendar in Europe today
(00:06:02) Did Sheikh Hasina’s good economics lead to political disaster in Bangladesh?
(00:08:36) Philippine economy expands 6.3% in Q2, says PSA
Simply Economics
Philippine Economy Surges, Empty Economic Calendar in Europe, Political Turmoil in Bangladesh
The Philippine economy expands by 6.3% in Q2, surpassing expectations. Europe faces an empty economic calendar, while the focus shifts to upcoming labor market data in the US. Political turmoil in Bangladesh raises questions about the relationship between good economics and stability. Stay informed about these economic developments and their implications for global markets and political dynamics.Sources:https://business.inquirer.net/473588/philippine-economy-expands-6-3-in-q2-says-psahttps://www.forexlive.com/news/its-an-empty-economic-calendar-in-europe-today-20240808/https://www.hindustantimes.com/world-news/did-sheikh-hasina-s-good-economics-lead-to-political-disaster-in-bangladesh-101723098521870.htmlhttps://business.inquirer.net/473588/philippine-economy-expands-6-3-in-q2-says-psaOutline:(00:00:00) Introduction(00:00:42) Philippine economy expands 6.3% in Q2, says PSA(00:03:11) It's an empty economic calendar in Europe today(00:06:02) Did Sheikh Hasina’s good economics lead to political disaster in Bangladesh?(00:08:36) Philippine economy expands 6.3% in Q2, says PSA
- Duration:
- 11m
- Broadcast on:
- 08 Aug 2024
- Audio Format:
- mp3
Good morning and welcome to Simply Economics. It's Thursday, August 8th. On today's show, the Philippine economy expands 6.3% in Q2, according to the PSA. Plus, we'll discuss whether Sheikh Hasina's good economics led to a political disaster in Bangladesh. And later, we'll take a look at the empty economic calendar in Europe today. This coverage and more, up next. I'm David, and you're listening to Simply Economics. We start off with some positive economic news out of the Philippines. The Philippine economy grew by an impressive 6.3% in the second quarter of the year, accelerating from the revised 5.8% growth in the previous quarter. This marks the highest expansion since the 6.4% seen last year, and places the growth well within the government's target of 6% to 7% for the year. For more on this, we turn to our economics correspondent. So what were the key drivers behind this strong economic performance? The Philippine Statistics Authority attributed much of the expansion to the construction sector, which grew by a robust 16% in the second quarter. Other significant contributors were wholesale and retail trade, repair of motor vehicles and motorcycles at 5.8% and financial and insurance activities, which expanded by 8.2%. It's clear that a broad range of industries played a role in propelling this growth. And how did the different components of demand fare during this period? Household final consumption stood at 4.6%, which is actually a bit slower than the 5.5% seen in the same period a year ago. However, state spending really picked up the slack, surging by 10.7%. This is a significant turnaround from the 1.7% in the previous quarter and the 7.1% shortfall last year. In fact, this was the highest growth in government spending since the 11.1% recorded in the second quarter of 2022. Those capital formation, which represents investment in the economy, also accelerated by 11.5% from 0.5%. Those are some impressive figures, especially on the government spending front. Any other notable data points from the report? Net primary income from the rest of the world came in at 24.7%, easing a bit from the 57-6% in the previous quarter. But overall, this report paints a picture of a Philippine economy that is firing on multiple cylinders. The 6.3% growth not only exceeded the government's target range, but also surpassed the average forecast of 6% from a poll of 11 economists conducted by the enquirer last week. If this momentum can be sustained, it bodes well for the country's economic prospects going forward. The Philippine economy seems to be on solid footing despite global challenges. Thanks for that analysis. Shifting our focus now, storm clouds are brewing again, and that is keeping markets on edge as we look towards European trading. With nothing on the economic calendar in the session ahead, attention will turn towards more labor market data from the US in the form of the weekly initial jobless claims. Here with more insight is our simply economics correspondent. What are you seeing in the markets right now in response to these concerns? The mood in the markets is definitely pensive and guarded at the moment. Investors are closely watching for any further signs of deterioration in the US labor market. Last Friday's jobs report already raised some red flags, and now the focus is on the upcoming jobless claims data to see if it confirms those worries. If we do see a significant uptick in jobless claims, it could fuel fears that the Federal Reserve has been too slow to adjust its monetary policy in response to weakening economic conditions. And how might this translate into market moves today, especially in Europe? Given the cautious sentiment, we can expect risk assets like stocks to remain under pressure. Investors may be hesitant to take on new positions ahead of the jobless claims data. At the same time, we could see some safe haven flows into assets like government bonds and gold if the worries about the US economy intensify. European markets will likely take their cue from the overnight moves on Wall Street, where selling was evident. It sounds like it's a bit of a holding pattern until we get that jobless claims data. What's your take on the bigger picture here in terms of the Fed's policy trajectory? The concern is that the Fed may have fallen behind the curve once again. If the labor market is indeed starting to crack, it raises questions about whether the central bank has tightened monetary policy too much too quickly. The Fed has been aggressively hiking interest rates to combat inflation, but there's a risk that this could tip the economy into a recession, if not calibrated properly. Investors will be closely passing comments from Fed officials in the coming days, for any hints of a potential policy pivot. Certainly, a delicate balancing act for the Fed. Any final thoughts as we head into the European trading session? It feels a bit like the calm before the potential storm at the moment. Investors are catching their breath after yesterday's sell-off, but the underlying unease is still very much present. The jobless claims data will be the key catalyst to watch. A weak reading could unleash fresh volatility and reignite recession fears. It could be a bumpy ride ahead, indeed a lot riding on that data. Thanks for your insights, we'll be keeping a close eye on the markets as this story develops. Meanwhile, in a stunning turn of events, Bangladesh Prime Minister Sheikh Hasina was ousted from power on August 5th amid widespread protests fleeing to India for safety. Despite overseeing significant economic growth that made Bangladesh the second largest economy in the Indian subcontinent, Hasina appears to have misread her popularity among the masses. For more on this developing story, we turn to our correspondent in the region. What can you tell us about the current situation in Bangladesh and India's response? The situation in Bangladesh remains tense and fluid. Prime Minister Hasina is currently at an Indian air force base near Delhi, still coming to terms with her sudden fall from power. India is closely monitoring the situation, particularly violence against Hindu minorities and supporters of Hasina's Awami League party. The Indian government has reached out to Bangladesh's military leadership to push for a return to normalcy, but is prepared to work with the interim government as long as the interests of minorities and India are protected. There are concerns that Islamist groups in Bangladesh, some with ties to Pakistan, could try to seize more power in the wake of Hasina's Auster. How is India viewing this risk? It's definitely a major concern. Groups like Jamate Islami and Hefazare Islam are hardline Islamist organizations with links to jihadists. Any tilt by Bangladesh's interim government toward these groups or toward China would raise alarms in India. While India's borders are secure for now, there are fears that instability in Bangladesh could add to the political turmoil already gripping much of South Asia and parts of the world. And what about the broader geopolitical implications? It seems the West, particularly the US and UK, had been looking to undermine Hasina's government for some time. That's right, India had apparently been aware of Western efforts to uproot Hasina over the past decade. Some see her Auster as a successful example of a tool often used by Islamists to seize power through political upheaval, as we've seen in the Middle East. There are concerns this could further the spread of radicalization across the Indian subcontinent. A senior Indian minister warned of a coming storm of global instability that could reach India's shores if the country is not united and vigilant. Thank you for that update on the complex situation in Bangladesh. We'll continue to monitor developments closely. Resting our focus to Southeast Asia, the Philippine economy grew by an impressive 6.3% in the second quarter of the year, accelerating from the revised 5.8% growth in the previous quarter. This places the GDP growth well within the government's 6-7% target for the year, making it the highest expansion since the 6.4% in last year. For more on this, we turn to our economics correspondent. So tell us, what were the key drivers behind this strong economic growth in the Philippines? The Philippine Statistics Authority attributed much of the expansion to the construction sector, which grew by a robust 16% in the second quarter. Other significant contributors were wholesale and retail trade, repair of motor vehicles and motorcycles at 5.8%, and financial and insurance activities which expanded by 8.2%. It's clear that a broad range of industries played a role in propelling the Philippine economy forward. And how did the different components of demand fare during this period? Were there any notable trends on that front? Household final consumption stood at 4.6%, which is actually a bit slower than the 5.5% seen in the same quarter a year ago. However, state spending really picked up the slack, surging by 10.7% compared to just 1.7% in the previous quarter. This marked a significant rebound from the 7.1% shortfall last year, and was in fact the highest growth in government expenditure since the 11.1% recorded in the second quarter of 2022. Meanwhile, gross capital formation, which represents investment in the economy, also accelerated to 11.5% from 0.5% previously. Those are some impressive figures, especially on the government spending side. How does the Philippines' economic performance compare to the rest of the region and the world at large? The 6.3% GDP growth certainly puts the Philippines among the stronger performers in Asia and is notably higher than the growth rates seen recently in many developed economies. However, it's important to note that many countries are still in the process of recovering from the economic fallout of the COVID-19 pandemic, so comparisons can be a bit tricky at the moment. Nonetheless, the fact that the Philippines has managed to sustain such robust growth in the face of ongoing global challenges is a very positive sign for the economy's resilience and future prospects. The Philippine economy certainly seems to be on solid footing based on these latest numbers. Thanks for that insightful analysis. And with that, we wrap up our stories for today. Thanks for listening to Simply Economics, we'll see you back here tomorrow. [MUSIC] [BLANK_AUDIO]