Today Trends

Author: Arif Rafiq, Middle East Institute Pakistan and the United States have recently been pursuing a reset of relations. High-level visitors from both countries have expressed intentions to find a basis for a partnership not centred on Pakistan’s neighbours Afghanistan or India. While the United States has been circumspect in its vision for relations with Pakistan, emphasising clean energy and public health, the discourse in Islamabad has been unmoored. Pakistani commentators and officials have depicted official visits as major moves toward rekindling the US–Pakistan partnership or even tilting away from China. In September 2022, when the then-chief of army staff of Pakistan general Qamar Javed Bajwa visited Washington, an unnamed Pakistani official claimed that he expressed a desire for a South Korea-like alliance with the United States. But the United States has no interest nor need for Pakistan to play such a role in South Asia. Pakistan is not a pivotal state coveted b...

Author: Allan Gyngell, ANU Not for the first time in its history, distant events in Europe had a deep impact on Australia’s prosperity and security in 2022. Russia’s February invasion of Ukraine was the most blatant breach of international law and norms by a major power since World War II. It reshaped global economic and strategic settings, with direct and indirect consequences for Australia. The war upended energy markets, reinforced the inflationary pressures arising from the COVID-19 pandemic and shook Western Europe’s sense of security, propelling the expansion of NATO and renewing fears of nuclear conflict. It bolstered a sense in the West of a deepening divide between democracies and autocracies and strengthened protectionist tendencies. In the global South, economic pain grew and, with it, the desire to avoid taking sides. After nine years of rule by the conservative Liberal–National coalition, Australia’s federal election in May delivered victory to the Australian Labor Pa...

Author: Rebecca Sta Maria, APEC The start of 2022 held much promise for APEC economies. The pandemic seemed under control. As the 2022 APEC host, Thailand anticipated a full year of in-person meetings to focus the region’s attention on deepening inclusive and sustainable economic growth. All bets were off after 24 February when Russia — an APEC member — launched a military assault on Ukraine. Whether it is called an ‘invasion’ or a ‘special military operation’, a geopolitical conflict involving an APEC member is tough on everyone. Thailand had to recalibrate to ensure that the group stayed focused while managing the fallout from the Ukraine war. The Thai model of managing conflict in an international grouping while simultaneously eking out consensus could provide a template for ensuing meetings in 2023. It may be particularly relevant for the United States as it tries to balance its opposition to the Ukraine conflict with its obligations as host of APEC 2023. This is what was sup...

Author: Suiwah Leung, ANU In 2022, the geopolitical tensions caused by the war in Ukraine, slowing growth in the Chinese economy and sharp rises in energy and food prices led to a significantly higher inflationary outlook globally. These factors all added to the risks confronting Vietnam as its economy recovered from its lengthy COVID-19 lockdowns. Communist Party General Secretary Nguyen Phu Trong’s visit to China in October 2022 aimed to get assurances from Beijing of undisrupted supply chains and smooth export routes. Despite these concerns, the Vietnamese economy rebounded as the country transitioned successfully from ‘zero COVID-19’ to ‘living with COVID-19’, and GDP is reported to have grown by a surprisingly high 8.03 per cent in 2022 — above trend growth compared to the decade before COVID-19 hit in 2020. Domestically, firms and labour markets have been recovering while the external sector showed resilience . Overall employment levels are reported to be back to pre-COVI...

Author: Editorial Board, ANU Those paying attention to the World Economic Forum in Davos will doubtless have heard the latest buzzword of the global elite: ‘polycrisis’, a word that designates a cluster of interrelated systemic risks. Applied to the myriad problems facing Beijing, the word might be a touch melodramatic, but there’s no doubt that Chinese policymakers are confronted by some of the most challenging circumstances in decades: economic, demographic and geopolitical. The most pressing is the massive COVID-19 wave that has hit the country since it abandoned the policy of complete containment in early December 2022. Precisely how many cases and how many deaths there have been is difficult to say, but even going by official figures, the human toll has been enormous. Given the lack of natural immunity in the population and the waning effect of China’s vaccination program, it’s unlikely that this winter wave will be China’s last, either. The central government will have its wo...

Author: Yang Yao, PKU Forecasts for China’s economic growth in 2023 diverge widely. While international organisations and China watchers abroad predict growth of 4 per cent as reasonable, most Chinese economists believe that growth of 5–6 per cent is more likely. The debate has a lot to do with assumptions about China’s potential growth rate. Many models can be used to estimate the potential growth rate, but the simplest and most credible is the Solow model. Based on this model, a country’s GDP growth rate depends on the growth rates of its stock of net capital, its population size and its total factor productivity. China’s population has now stalled and its capital growth depends on its national savings. On this count, China has an edge, with national savings accounting for 45 per cent of its GDP. China’s stock of net capital is 3.6 times its GDP and its depreciation rate is 5 per cent. This means that its annual savings translates into 7.5 per cent growth in its net capital stoc...

Author: Kearrin Sims, James Cook University Laos experienced compounding social and economic pressures in 2022. The headline news story of the year was the country’s dire external debt. 2022 was also significant as it marked the 10th anniversary of the enforced disappearance of Sombath Somphone — a community development worker who provided successful alternatives to the econocentric development agenda that underpins Laos’s debt crisis. At 2.5 per cent, the annual economic growth rate was the second lowest since 1988 and below initial forecasts. Rising public and publicly guaranteed debt are projected to exceed 100 per cent of GDP by the end of the year. This is accompanied by a sharp depreciation of the national currency, the kip, and rising inflation — up from below 2 per cent in 2021 to 37 per cent in October 2022. At the macroeconomic level, Laos needs to find a solution to its ballooning debt . China’s decisions will be critical, as it holds half of Laos’ debt. Yet there are ...

Author: Astrid Noren-Nilsson, Lund University Cambodia stood between past and future in 2022 — balancing completion, new beginnings and legacy creation. As Cambodia’s first electoral term with a one-party National Assembly under the Cambodian People’s Party (CPP) drew to a close (2018–2023), the party prepared for an upcoming generational transition. In December 2021, Hun Manet was endorsed by his father, Prime Minister Hun Sen, and his party as the country’s future prime minister . A photo of what was allegedly 2023’s young incoming cabinet was circulated. The CPP’s key concern in 2022 was to ensure a transition void of surprises. The scions of the old guard slated to become ministers gained public prominence and power constellations settled around them. Manet raised his profile, including as the head of Central Youth CPP, which gained visibility as its members eagerly displayed their allegiance to the successor-in-waiting. Manet and his wife Pech Chanmony also implanted the ide...

Author: Troy Stangarone, Korea Economic Institute of America In May 2022, South Korean President Yoon Suk-yeol was elected on a platform calling for a break from his predecessor’s income-led growth strategy to one focused on deregulation and corporate tax cuts . While the new administration has taken steps to implement Yoon’s free market approach, external events have loomed large over South Korea’s trade-dependent economy . After two years of uncertainty and economic disruptions from the COVID-19 pandemic, coming into 2022 the worry was that the global recovery would lose steam from the spread of the Omicron variant, inflation and continued supply chain disruptions. These challenges were made more difficult due to Russia’s invasion of Ukraine, which accelerated fuel and food inflation. Russia’s war has most directly impacted the South Korean economy through rising fuel costs. Early on, Seoul took steps to align its policies with the United States and Europe by agreeing to enfor...

Author: Suryaputra Wijaksana, Bank Central Asia The oil ‘price cap’ of US$60 per barrel for Russian oil is a controversial move by the European Union and G7. The price cap prohibits Western insurers and shipping companies, which account for more than 90 per cent of the marine insurance industry, from servicing vessels that carry Russian oil above US$60 per barrel. The intention is lofty — prevent Russia from profiting from high global oil prices, but provide enough incentive for Russia to continue supplying oil, especially to vulnerable countries in Africa and Asia. Yet the price cap can be destabilising and have unforeseen consequences . Current buyers of Russian oil, namely India and China, can demand even steeper discounts on shipments because they know Russia has limited options. In addition to weakening global demand, this may push global oil prices down in the short run, putting Russia in a tight spot. If its oil prices fall below production costs, estimated at US$35–40 per...