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‘Risks loom large’: Asian Development Bank cuts growth forecast | Business and Economy

Manila-based development bank lowers the growth forecast for 2022 from 5.2 percent to 4.3 percent.

The Asian Development Bank (ADB) has slashed its economic growth forecast for Asia’s developing economies, pointing to challenges including China’s “zero COVID” lockdowns, the war in Ukraine and rising interest rates.

The Manila-based development bank said on Wednesday it had lowered its growth forecast for 2022 to 4.3 percent, down sharply from 5.2 percent in April.

Excluding China, the rest of developing Asia is expected to grow by 5.3 percent in 2022 and 2023, the bank said.

The bank said that although the lifting of pandemic restrictions was spurring consumer spending and investment across the region, the war in Ukraine had “heightened global uncertainty, worsened supply disruptions, worsened supply disruptions, and unsettled energy and food markets​.”

Interest rate hikes by the US Federal Reserve and the European Central Bank are also weighing on global demand, while new lockdowns in China have hampered growth in the world’s second-largest economy,  the bank said.

The bank also lifted its inflation forecast to 4.5 percent in 2022 and 4 percent in 2023, up from 3.7 percent and 3.1 percent, respectively, due to soaring food and energy prices.

ADB Chief Economist Albert Park said “risks loom large” for the region’s developing economies despite the ongoing recovery.

“A significant downturn in the world economy would severely undermine demand for the region’s exports,” Park said.

“Stronger-than-expected monetary tightening in advanced economies could lead to financial instability. And growth in the People’s Republic of China faces challenges from recurrent lockdowns and a weak property sector.

“Governments in developing Asia need to remain vigilant against these risks and take the necessary steps to contain inflation without derailing growth.”

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North Korea fires ballistic missile over Japan into Pacific | Military News

Pyongyang’s fifth test in 10 days comes after South Korea and the United States hold military drills.

North Korea has fired a mid-range ballistic missile over Japan, the fifth launch in 10 days, amid expectations that it is gearing up to test its first nuclear weapon in five years.

The missile, detected by the Japanese coast guard and South Korea’s Joint Chiefs of Staff, prompted warning alarms in northern Japan with residents advised to take shelter. Train services in northern regions of the country were suspended temporarily.

Japanese Prime Minister Fumio Kishida condemned what he called a “barbaric” act.

TV Asahi, citing an unnamed government source, said North Korea might have fired an intercontinental ballistic missile and that it fell into the sea some 3,000 km (1,860 miles) from Japan.

There were no further details on the weapon.

Pyongyang has conducted a series of launches around military drills held by the United States and South Korea, which it considers a rehearsal for invasion. The US and South Korea, which staged its own show of advanced weaponry on Saturday to mark its Armed Forces Day, say the exercises are defensive in nature.

Leif-Eric Easley, a professor at Ewha University in Seoul, said that firing a weapon over Japan represented a “significant escalation” of recent provocations.

“Diplomacy isn’t dead, but talks aren’t about to resume either,” Easley said in comments by email. “Pyongyang is still in the middle of a provocation and testing cycle and is likely waiting until after China’s mid-October Communist Party Congress to conduct an even more significant test.”

North Korea has conducted a record number of weapons tests this year and analysts see the increased pace of testing as an effort to build its capacity for ballistic weapons, which it is banned from testing under UN sanctions.

Officials in South Korea have suggested North Korea might carry out a nuclear test after the end of the Congress in China and before the US holds its mid-term elections in November. Pyongyang last carried out a nuclear test in September 2017.

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As Japan’s Kishida marks 1st year, ‘new capitalism’ is flailing | Business and Economy

Tokyo, Japan – When Japanese Prime Minister Fumio Kishida came to power in October last year, he pledged to foster a “new form of capitalism” that would spur healthy growth alongside a more equal distribution of wealth.

But as Kishida marks one year in office on Tuesday, the Japanese leader’s “new capitalism” is still struggling to get off the ground amid criticism that his signature strategy lacks concrete details or clear targets.

Kishida’s struggles to turn his vision into a coherent economic plan capable of reversing decades of stagnation come as the world’s third-largest economy faces mounting challenges at home and overseas, from rising inflation and a weakening yen to global supply chain snags and the war in Ukraine.

Kishida, a former banker who positioned himself as the only post-war prime minister with experience in the finance industry, is widely seen as an awkward fit for the populist rhetoric he has championed.

“The key point is that Kishida has no strong personal convictions, particularly on economic policy,” Jesper Koll, an economist and executive director at Monex Group in Tokyo, told Al Jazeera,

“Setting up this ‘new capitalism’ slogan, and various teams around it, is effectively just a plan for business as usual.”

“There’s absolutely nothing new or radical in what [Kishida’s] proposed or in what’s going to be coming,” Koll added, describing the Japanese leader’s “steady hand” governance as in accordance with the incremental approach favoured by the ruling Liberal Democratic Party establishment.

The Prime Minister’s Office of Japan did not respond to Al Jazeera’s request for comment.

Japan’s economy is facing a host of challenges including rising inflation, a weakening yen, global supply chain snags and the war in Ukraine [File: Kim Kyung-Hoon/Reuters]

In an address at London’s Guildhall in May, Kishida spoke of capitalism’s “two major transformations”, from laissez-faire to the welfare state and from the welfare state to neoliberalism.

“In both of these transitions, the pendulum swung between two ideas: ‘market or state’, ‘public or private,’” he said. “But the next transition will be to a ‘new form of capitalism’, in which the public and private sectors work together.”

While stressing the need for a “virtuous cycle” of growth and wealth redistribution, Kishida has laid out policy in mostly broad terms, including investment in human capital, greater female participation in the workforce, funding for green initiatives, the digitalisation of government, and support for startups.

Tom Learmouth, who is undertaking doctoral studies on Japan’s economic history at the London School of Economics, said Kishida appeared to be aiming for a return to the industrial strategy of Japan’s post-war, high-growth era when the public and private sectors worked in close collaboration.

During this period of rapid economic growth, Tokyo actively tried to pick winners in industry by directing investment to sectors deemed to be promising, such as automobiles and electronics.

“Trying to resurrect that now, in a very different economic climate – where interest rates are close to zero – it’s difficult to see how the government can exercise much power over the private sector,” Learmouth told Al Jazeera.

Kishida, who criticised his predecessor Shinzo Abe’s “Abenomics” for exacerbating wealth inequality, did weigh concrete reform early in his tenure by proposing to raise Japan’s capital gains tax from the current rate of 20 percent. The Japanese leader, however, backpedalled within days after pushback from the business community and investors.

Eric J Ritter, a professor of economics at Lakeland University Japan, said Kishida’s redistribution agenda had failed to make headway.

“He had to give up on raising capital gains taxes on the rich which could’ve been spent on the poor,” Ritter told Al Jazeera. “Another issue is raising the tax ceiling on working wives who have to start paying tax if they earn above 1.1 million yen [$7,580] a year. This depresses family incomes and female participation.”

Ageing population

More recently, Kishida tried to spur, through corporate tax breaks, a rise in Japan’s long-stagnant wages, which have scarcely risen since the late 1990s and sit well below the OECD average. These efforts have also fallen short of expectations, with real wages continuing to fall as a result of rising import costs.

The plunging yen, which last month hit a 24-year low against the US dollar, has heaped more pressure on retailers and households, causing famously thrifty Japanese consumers to tighten their belts further.

Worse for the long-term health of the economy, Japan’s labour force is shrinking. After years of plunging birth rates, the country already has the world’s oldest population, with 28 percent of residents aged over 65. Japan’s labour market has also been criticised for lacking mobility, which is ranked about half of the OECD average.

Shigeto Nagai, head Japan economist at Oxford Economics, said labour market reforms and social security reforms that provide for the vulnerable working age population as well as the elderly should be key priorities of Kishida’s economic strategy.

“Rigid seniority-based wages under the lifetime employment system have undermined the dynamism of Japanese companies,” Nagai told Al Jazeera, describing the Japanese leader’s strategy so far as “very conceptual and confusing”.

“Making the labour market more flexible and dynamic will enable individual workers to earn more competitive wages reflecting productivity,” Nagai said. “It is [also] essential that the state takes responsibility for providing social security for the working-age population, rather than leaving it to the companies.”

NTT, Japan’s largest telecommunications company, recently announced plans to shift from seniority to performance-based promotion and compensation, raising hopes that corporate peers could be encouraged to follow suit.

While Kishida has struggled to initiate significant economic reform, some analysts say that simply keeping Japan’s economy steady during such a period of global turmoil would be an achievement in itself.

“This is a political world where it’s another day, another crisis,” Koll said. “Having a steady hand, which doesn’t rock the boat, but focuses on incremental changes – maybe that’s the right thing to do in the current environment.”

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US to impose additional ‘costs’ on Iran amid protests, Biden says | Politics News

US president says he is ‘gravely concerned’ by reports of crackdown on protests in Iran over death of Mahsa Amini.

US President Joe Biden has said his administration will impose “further costs” on those responsible for violence against Iranian protesters, who have taken to the streets for more than two weeks in anger over the recent death of a 22-year-old woman in Tehran.

In a statement on Monday evening, Biden said he was “gravely concerned about reports of the intensifying violent crackdown on peaceful protesters in Iran, including students and women, who are demanding their equal rights and basic human dignity”.

“This week, the United States will be imposing further costs on perpetrators of violence against peaceful protestors. We will continue holding Iranian officials accountable and supporting the rights of Iranians to protest freely,” he said.

The ongoing protests in Iran were sparked by the death of Mahsa Amini, who was arrested in mid-September by the country’s so-called morality police for wearing “unsuitable attire” in the capital.

Amini’s death prompted an outpouring of anger against the Iranian government, with demonstrators demanding more civil liberties, including an end to the dress code imposed on women.

Dozens of people are believed to have been killed, while many others also have been arrested, but the authorities have not released an official tally.

On Monday, Iran’s supreme leader, Ayatollah Ali Khamenei, made his first comments on the anti-government protests, accusing the US and Israel of being responsible for the unrest and seeking to stop Iran’s “progress”.

“I say explicitly that these riots and this insecurity were a design by the US and the occupying, fake Zionist regime [Israel] and those who are paid by them, and some traitorous Iranians abroad helped them,” Khamenei told graduating cadets at a police university in Tehran.

The Iranian authorities also have denied reports that Amini was beaten in custody.

Tehran’s police chief, Brigadier-General Hossein Rahimi, said last month that she was detained for wearing tight trousers and wearing her headscarf improperly, but that claims she was mistreated were “completely false”.

Still, the US and its allies have condemned Iran for Amini’s death and the government’s response to the subsequent protests — and large rallies have been held around the world in solidarity with the Iranian demonstrators.

Last week, Washington sanctioned Iran’s “morality police”, as well as seven leaders of Iranian security organisations that it said “routinely employ violence to suppress peaceful protestors and members of Iranian civil society, political dissidents, women’s rights activists, and members of the Iranian Baha’i community”.

Canada on Monday also sanctioned top Iranian security officials for what it said were “gross human rights violations”.

This included the “systematic persecution of women and in particular, the egregious actions committed by Iran’s so-called ‘Morality Police,’ which led to the death of Mahsa Amini while under their custody”, Canadian Prime Minister Justin Trudeau’s government said in a statement.

Biden’s promise to impose more “costs” on Iran comes as talks to restore the 2015 Iran nuclear agreement, formally known as the Joint Comprehensive Plan of Action, have stalled.

The multilateral pact, which former US President Donald Trump unilaterally withdrew from in 2018, had seen Iran scale back its nuclear programme in exchange for lifting international sanctions against its economy.

While Biden had pledged to restore the deal, indirect talks have so far failed — and the US administration has continued to pile on a variety of sanctions against Tehran.

Late last week, the Biden administration promised to impose financial penalties on Iran on a “regular basis” in an effort to “severely restrict” Iranian oil and petrochemical exports.

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