Highlights in major Asian economies in 2022
Asian economies struggle with uncertainties caused by war, COVID-19, global financial tightening
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Asian economies struggled with uncertainties in 2022 caused by Russia's war against Ukraine, the resurgence of the coronavirus, and global financial tightening after posting a strong rebound in 2021.
While the Bank of Japan (BoJ) pursues an ultra-loose monetary policy, the People’s Bank of China lowered the key lending rates by 1.5 points.
The Japanese yen weakened the most among major currencies against the greenback due to a widening policy gap between the BoJ and the US Federal Reserve.
After plunging to a 32-year low in October, the yen started to gain ground but was still down 15.5% against the greenback as of Dec. 26.
In its latest meeting Dec. 20, the BoJ kept its benchmark rate at a record low, as expected, but expanded the range for yield fluctuations in the benchmark government bonds, surprising markets.
The BoJ held its key short-term interest rate unchanged at -0.1% and 10-year bond yields at around 0% at its December meeting.
The bank increased the 10-year Japanese government bond yield fluctuations to a range of -0.5% and 0.5%, from between -0.25% and 0.25%.
The BoJ's move last week pushed the Japanese 10-year government bond yield to as high as 0.485% on Dec. 21.
Japan saw an annual inflation rate rise to a nearly 32-year high of 3.8% in November.
The Japanese economy has shrunk by 0.8% year-on-year in the third quarter, posting the first contraction in four quarters. Japan’s GDP grew 4.4% in the second quarter, accelerated from a rise of 0.2% in the first quarter.
Last week, the Japanese government upgraded its growth forecast for 2023 to a real 1.5%, expecting an increase in consumer spending.
In January, China cut its key lending rates for corporate and household loans for a second straight month to cushion a slowdown in economic recovery. The one-year loan prime rate (LPR) was lowered to 3.7% from 3.8%.
After keeping the rate constant for six straight months, the bank lowered the rates by 50 basis points to 3.65% in its August meeting to boost support for the economy affected by COVID-19 lockdowns and a property downturn.
On June 1, China ended coronavirus-related lockdown measures in Shanghai -- move that was cheered by the markets.
Due to a rise in food prices, China's annual inflation rate hit a 29-year high of 2.8% in September. The figure then eased to 2.1% in October and 1.6% in November.
The Chinese economy grew 3.9% on an annual basis in the third quarter thanks to measures from Beijing to revive activity. The figure was up from a 0.4% growth in the previous quarter.
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