Tag: emerging economies

Most emerging economies to grow this year, but the U.S. banking sector intensifies the risks: Report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Emerging markets are not in the eye of the storm coursing through the U.S. banking sector, but they are in its orbit. Major emerging market currencies were mostly unchanged in the days following the closure of Silicon Valley Bank, says Moody’s Analytics.

While the reversal flows raises concern about a broader global recession and its repercussions for emerging markets, it is too early to call for the curtain on the recovery of emerging markets. In a report titled ‘Emerging Market View: Traversing a Storm’, Moody’s Analytics says “Grounded by our conviction that the U.S. banking system will hold firm, we are sticking to our call for most major emerging economies to grow this year. They will be supported by China’s economic rebound and the return of growth in Europe, and a Federal Reserve that must now balance risks to financial stability as well as inflation.”

While the expectations for U.S. growth this year and next are pared, the outlook for emerging economies is largely intact. Further, the report says elevated interest rates and uncertainty over the business and political climate will weigh on consumer and business spending and make growth this year barely positive. There is little that high commodity prices can do to reverse this.

In contrast to the crisis-laden 1990s and early 2000s, emerging markets have built up hard currency buffers and rely less on portfolio flows as a source of foreign capital. Their central banks have earned their stripes as diligent inflation fighters and the adoption of free-floating currencies makes them less vulnerable to external shocks.

So far, there is little in the hard data to suggest that emerging economies are struggling. Despite everything policymakers have done to make emerging markets economies more resilient, currencies and ultimately monetary policy decisions are shackled to the Fed in times of global distress.

The risk of currency weakness in emerging Asia is especially worrisome given its status as the cradle of the emerging markets recovery. Nowhere is this risk greater than in India, where a new bout of rupee weakness could force the RBI to press harder on the brakes, slowing India’s economic growth.

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

IMF says emerging economies must prepare for Fed policy tightening

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Emerging economies must prepare for U.S. interest rate hikes, the International Monetary Fund said, warning that faster than expected Federal Reserve moves could rattle financial markets and trigger capital outflows and currency depreciation abroad.

In a blog published Monday, the IMF said it expected robust U.S. growth to continue, with inflation likely to moderate later in the year. The global lender is due to release fresh global economic forecasts on Jan. 25.

It said a gradual, well-telegraphed tightening of U.S. monetary policy would likely have little impact on emerging markets, with foreign demand offsetting the impact of rising financing costs.

But broad-based U.S. wage inflation or sustained supply bottlenecks could boost prices more than anticipated and fuel expectations for more rapid inflation, triggering faster rate hikes by the U.S. central bank.

“Emerging economies should prepare for potential bouts of economic turbulence,” the IMF said, citing the risks posed by faster-than-expected Fed rate hikes and the resurgent pandemic.

St. Louis Fed President James Bullard this week said the Fed could raise interest rates as soon as March, months earlier than previously expected, and is now in a “good position” to take even more aggressive steps against inflation, as needed.

“Faster Fed rate increases could rattle financial markets and tighten financial conditions globally. These developments could come with a slowing of U.S. demand and trade and may lead to capital outflows and currency depreciation in emerging markets,” senior IMF officials wrote in the blog.

It said emerging markets with high public and private debt, foreign exchange exposures, and lower current-account balances had already seen larger movements of their currencies relative to the U.S. dollar.

The fund said emerging markets with stronger inflation pressures or weaker institutions should act swiftly to let currencies depreciate and raise benchmark interest rates.It urged central banks to clearly and consistently communicate their plans to tighten policy, and said countries with high levels of debt denominated in foreign currencies should look to hedge their exposures where feasible.

Governments could also announce plans to boost fiscal resources by gradually increasing tax revenues, implementing pension and subsidy overhauls, or other measures, it added.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Global economic rebound at risk from rising coronavirus cases: Poll

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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There is a high risk the resurgence in coronavirus cases halts the global economic recovery by year-end, according to Reuters polls of around 500 economists, a majority of whom expected the rebound next year to be weaker than previously thought.

Governments and central banks around the world have pledged trillions of dollars of stimulus, helping most economies out of deep recessions. But the second wave of infections in places that eased lockdowns is now underway, leading to more restrictions. That was a top risk repeatedly highlighted by Reuters surveys of economists, FX analysts, bond and equity strategists, as well as global fund managers since the start of the pandemic.

The Oct. 6-27 Reuters polls of economists across Asia, Europe and the Americas covering 46 economies showed scant sign of activity recovering to pre-COVID-19 levels anytime soon.

Nearly three-quarters of 150 analysts who responded to an additional question said the resurgence in coronavirus cases posed a high risk of halting the current global economic recovery as early as this year.

“Even before the renewed lockdowns there was already a broad acceptance that many countries will see a permanently lower level of GDP than they would have done in the absence of the pandemic,” noted Janet Henry, global chief economist at HSBC.

“Higher unemployment and higher debt appear inevitable but there are also implications for equality, long-term growth potential and financial stability.”

Median growth forecasts for over 65 percent of those 46 economies were downgraded or left unchanged for 2020 and nearly 60 percent of those for 2021. The range of forecasts also reveals mostly lower lows and lower highs.

(For a Reuters poll graphic on global 2020 GDP forecast revisions: https://graphics.reuters.com/GLOBAL-ECONOMY/POLL/xegvblekxvq)

(For a Reuters poll graphic on global 2021 GDP forecast revisions: https://graphics.reuters.com/GLOBAL-ECONOMY/POLL/azgpojlbzvd)

In the meantime, there is no sign of the pandemic letting up anytime soon. The United States, Russia, France and many other countries have registered record numbers of cases in recent days, and European governments introduced new curbs.

The global economy was expected to grow 5.3 percent next year after shrinking 4.0 percent this year, a touch higher than the International Monetary Fund’s projection of 5.2 percent for 2021.

But nearly 80 percent of economists, or 119 of 150, said a weaker global recovery than previously thought was the greater risk in 2021, rather than a vigorous rebound or a renewed downturn.

For many major economies, it’s been whiplash: plunging into the deepest contraction on record, then growing at the fastest pace ever, only to face trouble once again during the current quarter.

“For economies it has literally been a roller coaster, from the blissful ignorance and denial in Q1, to the lockdowns and economic implosion in Q2 and the reversal of restrictions fuelling a rebound in economic activity in Q3,” said Stefan Koopman, senior market economist at Rabobank.

“Unfortunately Q4 also comes with renewed virus challenges. Economically speaking, we might have to bridge another 6 months or more before a vaccine can offer substantial relief and should weigh heavily on activity in the near term. Particularly as we may face some fatigue in terms of offsetting stimulus measures.”

Despite expectations for further monetary stimulus in the euro zone and Britain, and another round of US fiscal support, the economic outlook was subdued in the latest polls, with the fresh rise in coronavirus cases the biggest risk to their recoveries.

For Japan, economists said the government needs to pledge a third stimulus package to shore up an economy hammered by the pandemic, while the Australian and Canadian economies were predicted to grow at a much weaker pace than previously thought.

China, the world’s second-largest economy, was projected to grow 8.4 percent in 2021, in stark contrast to much weaker recoveries everywhere else. But some economists outside China expected a much lower figure and said many forecasts do not capture the real extent of the economic hit. Most other emerging market economies were expected to struggle this year and next.

“Emerging market economies are leaving behind the worst of their COVID-19-related economic contractions, even if infection cases continue to increase in a number of countries, notably India,” noted Ajay Rajadhyaksha, head of macro research at Barclays.

“In aggregate, EM economies no longer have a growth advantage over the advanced economies.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Why US-China trade war is an opportunity for India, other Asian economies

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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International trade, in recent years, has become critical with a larger share of country GDPs weighted towards exports and imports. There have, however, also been growing concerns about the potential negative effects of the ongoing trade wars between the US and China, which undoubtedly bear far-reaching repercussions on other economies. This could erode global GDP in 2022 by 1.96 percent, and lead to a 17 percent decline in global trade. Although the outlook of global economies looks grim, Asian economies are trying to cash in on opportunities emerging from the trade war, particularly India and Asean countries, which are trying to increase their trade footprint in the global supply chain.

To avoid tariff, manufacturers are looking at opportunities in Asean and India to relocate capacities. Relocation, however, is time-consuming due to significant fixed and sunk costs.

Exposure to risk versus creation of new opportunities

Trade tensions have affected Asean, especially in sectors such as electronic exports, given that China is its top trading partner. Although Asean countries are losing business, changing trade patterns from the trade war can attract displaced opportunities. Some countries have already realised gains in GDP.

From India’s perspective, the government has identified top product lines that the country can supply to China and the US. The mobile manufacturing business has witnessed an uptrend in the past few years, with mobile companies expanding their manufacturing bases in India. India’s exports to China surged by 25.6 percent to $16.7 billion in 2018-19. With an uptrend in exports of cotton, plastic and inorganic chemicals, India is planning to further increase exports of agricultural products to China as it raised duties on agricultural imports from the US.

Furthermore, FDI inflows from the US in India rose by 65.38 percent to $3.13 billion in 2018-19, in addition to inflows from China. India is likely to see a further increase in FDI following the recent change to FDI regulations.

The growing focus of India and Asean on building a robust supply chain, along with regional connectivity initiatives and the corporate tax structure in India (25 percent), Vietnam (20 percent), Indonesia (25 percent) and Malaysia (24 percent) being at par with that of China, makes these destinations natural alternatives.

Time to strengthen infrastructure, bilateral ties

A huge proportion of exports may shift from China as a result of US and Chinese tariff hikes. If India can improve its business policies, including land acquisition and labour productivity, it stands to boost its exports by $11 billion.

Asean and India, however, need to factor in the following aspects and leverage them in the long term.

• Significant investments required in training and revamping business policies to replicate China’s labour efficiency and production capacity to attract investors.
• Both regions need to identify and tap the void created by the trade war by boosting the production of select product categories. India gains from exporting products such as copper ores, rubber, X-ray tubes and certain chemicals to China. Furthermore, India can cash in on the waning demand for Chinese products in the US.
• India has made several changes to its Act East Policy to bolster bilateral relations with Asean countries. India and Asean need to further streamline coordination with multiple stakeholders.
• India has been seeking strict trade terms while entering into multilateral trade agreements. Although such measures safeguard the domestic industry, focus on regional connectivity is a critical factor.

Although opportunities currently exist, Asean countries will experience a bumpy ride if the US-China trade war continues. To negate the underlying challenges, India and Asean will have to step up their commitment to multilateralism, proactively invest in infrastructure and production capacity and increase regional supply chain integration.

 Neeraj Bansal is Partner and Head – ASEAN Corridor, KPMG in India.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Sovereign investors shun Europe for Asia, emerging markets

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Nearly three times as many sovereign investors plan to raise exposure to emerging markets rather than Europe this year as the continent’s attraction wanes due to slowing economic growth and rising political risk, a study by asset manager Invesco showed.

Europe is falling out of favour with sovereign wealth funds and central banks, with nearly one-third of such investors dropping the amount of funding they set aside for Europe in 2018 and a similar number planning further decreases in 2019, the survey found.

“A large chunk of Europe has negative bond yields and growth forecasts are relatively low compared to emerging markets, so from an investment perspective, it’s less attractive. When we talk about the risks there is quite a lot of focus on eurozone politics and Brexit,” said Alex Millar, head of EMEA institutional at Invesco.

The dovish stance of the European Central Bank and other major central banks in keeping the stimulus gates open have pushed European benchmark bonds ever deeper into negative territory, spurring a fresh hunt for yield.

European politics is also weighing on investor decision-making.

Britain’s exit from the European Union is influencing asset allocation decisions for 64 percent of sovereign investors, the survey found, while eurozone internal politics – deemed more uncertain with the rise of populist movements and new chiefs set to take over at the ECB and European Commission – was clouding investment decisions for 46% of sovereign investors.

As a result, only 13 percent of sovereigns plan on raising allocations to Europe, compared to a 40 percent for Asia and 36 percent to emerging markets.

Despite concerns about trade tensions between China and the United States, China’s perceived attractiveness as an investment destination over the next three years rose compared to the previous year, the survey found.

The annual report, which is based on interviews with 139 sovereign investors and central bank reserve managers with $20.3 trillion in assets, found bonds had overtaken equities to become the biggest asset class in portfolios, averaging 33 percent . This is up from 30 percent in 2018.

“Since we started the survey seven years ago we’ve seen a consistent trending down of fixed income allocations and a move towards moving that allocation more towards private markets. What’s interesting this year is that we’ve seen a noticeable step up in fixed income allocations,” said Millar.

“There was some volatility at the end last year so equities allocations dropped, but there was definitely a feeling that as they move later into the economic cycle they were increasing fixed income or the defensive nature of the policy.”

After a challenging year due to volatile equity markets, sovereign investors achieved returns of 4 percent in 2018 compared to 9 percent in 2017, the survey found.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

ADB lowers India’s growth projection to 7.2% for FY20

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asian Development Bank (ADB) has lowered India’s growth forecast for 2019-20 to 7.2 percent from 7.6 percent estimated earlier due to moderation in global demand and likely shortfall in revenue on the domestic front.

For the just concluded fiscal (2018-19) also, ADB has cut the growth estimate to 7 percent from 7.3 percent projected in December last year.

“Growth slowed from 7.2 percent in fiscal 2017 to 7 percent in 2018, with weaker agricultural output and consumption growth curtailed by higher global oil prices and lower government expenditure.”

“Growth is expected to rebound to 7.2 percent in 2019 and 7.3 percent in 2020 as policy rates are cut and farmers receive income support, bolstering domestic demand,” ADB said in it’s Asian Development Outlook (ADO) 2019 released Wednesday.

This growth will reverse two years of a declining trend as reforms to improve the business and investment climate take effect, the ADO said.

The growth forecast for India has some downside risks such as moderation in global demand as financial conditions tighten, uncertainty arising out of global trade tensions, and the weak economic outlook in industrial countries, the report said.

“On the domestic front, growth could suffer if tax revenue falls short or any disruption affects the ongoing resolution of the twin problems of bank and corporate balance sheets,” it added.

India, however, will continue to be one of the fastest-growing major economies in 2019-20, it said.

“India will remain one of the fastest-growing major economies in the world this year given the strong household spending and corporate fundamentals,” said ADB chief economist Yasuyuki Sawada.

India has a golden opportunity to cement recent economic gains by becoming more integrated in global value chains, and the young workforce, improving the business climate, a renewed focus on export expansion all support this, Sawada said.

The Manila-based multilateral funding agency said recent policy measures by the government to improve the investment climate and boost private consumption will help India lift economic growth in the current fiscal year and the following.

Income support to farmers, hikes in procurement prices for food grains, and relief to taxpayers earning less than Rs 5 lakh ($7,212) will boost household income.

Declining fuel and food prices is also expected to provide an impetus for consumption. An increase in utilisation of production capacity by firms, along with falling levels of stressed assets held by banks and easing of credit restrictions on certain banks, is expected to help investment grow at a healthy rate.

It also said consumer price inflation is expected to rise to 4.3 percent in 2019-20 and 4.6 percent in 2020-21 as food costs increase slightly and domestic demand strengthens.

“Given that inflation is expected to average around 4 percent in the first half of 2019-20, the central bank (RBI) would have some room for lowering policy rates,” it said.

ADB also said India’s imports are expected to rise mainly due to stronger domestic demand while a growth slowdown in key export destinations would dent export growth.

The current account deficit is expected to widen a bit to 2.4 percent of GDP in the current fiscal and 2.5 percent in the next fiscal.

“The deficit is expected to be financed comfortably by capital flows, given that India has emerged as an attractive destination for foreign investment,” ADO said.

On South Asia, it said the region bucks the trend of slowing growth in Asia. Excluding Asia’s high-income newly industrialised economies, growth is expected to slip from 6.4 per cent in 2018 to 6.2 per cent in 2019 and 6.1 per cent in 2020, it said.

In South Asia, growth is expected to edge up by 0.1 percentage point, from 6.7 per cent in 2018 to 6.8 per cent in 2019 and again to 6.9 per cent in 2020, the ADO said.

“Sub-regional averages in South Asia reflect heavy weighting for India, where growth slipped from 7.2 per cent in 2017-18 to 7 per cent in 2018-19 as agriculture and government expenditure both experienced slower growth and as global oil prices rose,” it said.

Sub-regional inflation is expected to rise to 4.7 per cent in 2019 and 4.9 per cent in 2020 under pressure from currency depreciation and India’s upward adjustment of some agricultural procurement prices to cover higher input costs, it added.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Corruption costs $1 trillion in tax revenue globally, says IMF

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Curbing corruption could generate about $1 trillion in tax revenues annually across the world, according to research from the International Monetary Fund.

In addition to increasing government revenue, fighting corruption can also reduce waste and even help to lift test scores among public school students, the IMF said. It also improves overall public trust in the government.

“Less corruption means lower revenue leakage and less waste in expenditures, and higher quality of public education and infrastructure,” said the report.

The pattern of lower corruption perception and higher revenues is maintained across developed, emerging and low-income countries, the data showed.

“Among advanced economies, a country in the top 25 percent in terms of control of corruption collects 4.5 percent of GDP more in revenues, on average, than a country in the lowest 25 percent. The gap in revenue collection is 2.75 percent of GDP among emerging market economies and 4 percent of GDP among low-income countries,” said the report.

Transparency, Strong Press Are Key

Previous studies showed that extractive industries like mining and oil drilling are hotbeds for corruption, as are procurement and the administration of state-owned enterprises. The Fund focuses on transparency and oversight as key elements in curbing corruption in these areas, with a strong, free press as catalyst.

“We expected transparency would go together with good fiscal outcomes, but what surprised us is that the effect of transparency is much stronger in countries that have a free press or a (strong) civil society,” said Paolo Mauro, deputy director in the IMF’s Fiscal Affairs department.

“And when you have those two together the effect is even stronger.”

Mauro and Paulo Medas, a deputy division chief in the same IMF department, co-authored the study, a chapter of the Fund’s Fiscal Monitor, which is being published in parts this week ahead of the IMF’s spring meetings scheduled next week in Washington.

Among other recommendations to curb corruption, the Fund calls for the professionalisation of civil service, including merit-based hiring, as well as the need for simple tax rules and business codes to avoid the temptation of bribes to navigate them.

The report recommended technology that can fight corruption. For instance, it said, taking procurement on line is seen as a rapid and inexpensive part of the anti-corruption puzzle.

So-called e-procurement “is a relatively cheap initiative that can open competition, so you can have bidders from any place in the country or the world and it makes it very cheap and transparent for companies to bid,” said Medas.

Chile and South Korea are cited as examples in the effectiveness of e-procurement, while Rwanda and Georgia show some of the highest increases in revenue collection relative to GDP.

Emerging countries’ dependence on extraction of raw materials for economic development gives them an added incentive to curb corruption and makes success even more important.

“You want to invest in very good institutions, extremely high levels of transparency and very intrusive external oversight,” said Medas.

The trillion in added tax revenues comes on top of a previous study that stated that corruption in the public sector costs between $1.5 trillion and $2 trillion annually in bribes alone.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Not threatened by growing US investment in Asia, says China

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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China on Tuesday said it is not threatened by growing American investments in infrastructure and other sectors of the Asian economy.

US Secretary of State Mike Pompeo had announced on Monday that Washington would be investing $113 million in energy, technology and infrastructural initiatives in Asia, to possibly counteract growing Chinese influence in the region.

“It is a good thing that the US and other countries will increase imports to develop infrastructure and connectivity in this region,” Chinese Foreign Affairs spokesperson Geng Shuang was cited as saying by Efe news.

“We(…) will never seek domination in the Indo-Pacific, and we will oppose any country that does that,” Pompeo had said, in a fresh warning to Beijing in the face of growing tensions in the South China Sea, where countries like Vietnam and the Philippines have disputed China’s claim over a number of islands.

“We hope these countries make investments and carry out imports with the aim of increasing the benefits for the well-being of this region,” said Geng, adding that China was willing to work with the US and other countries to ensure economic growth and regional development.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Wary of China’s rise, Pompeo announces US initiatives in emerging Asia

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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US Secretary of State Mike Pompeo announced $113 million in new technology, energy and infrastructure initiatives in emerging Asia on Monday, at a time when China is pouring billions of dollars in investments into the region.

In a policy speech delivered amid increased US trade frictions with China and other Asian countries, Pompeo sought to define the economic aspect of President Donald Trump’s “Indo-Pacific” strategy, which aims to cast the United States as a trustworthy partner in the region.

Pompeo said Washington wants a “free and open” Asia not dominated by any one country, an apparent reference to China’s growing economic clout and heightened tensions in the disputed South China Sea.

“Like so many of our Asian allies and friends, our country fought for its own independence from an empire that expected deference,” Pompeo told the US Chamber of Commerce. “We thus have never and will never seek domination in the Indo-Pacific, and we will oppose any country that does.”

“These funds represent just a down payment on a new era in US economic commitment to peace and prosperity in the Indo-Pacific region,” Pompeo said.

Pompeo said he will visit Malaysia, Singapore and Indonesia this week, where he planned to announce new security assistance.

US officials said the American strategy does not aim to compete directly with China’s Belt and Road Initiative, which involves dozens of countries in an estimated $1 trillion of mostly state-led infrastructure projects linking Asia, parts of Africa and Europe, but rather to offer a more sustainable alternative by encouraging private-sector investment.

Eswar Prasad, a Cornell University trade professor and former head of the IMF’s China division, said the US initiatives are tiny in comparison to China’s.

“In both scale and scope, these initiatives pale in ambition relative to comparable initiatives by China,” Prasad said. “It also highlights the distinction between China’s approach of bold and grand government-led initiatives and the much more modest role of the US government.”

Analysts said it was difficult to see the US effort generating much excitement in the region, especially given Trump’s habit of undercutting his policy makers on issues ranging from trade to dealings with North Korea.

“The announcement of $113 million to fund economic engagement for the entire region feels a bit underwhelming,” said Daniel Russel of the Asia Society Policy Institute, until last year the State Department’s top diplomat for East Asia.

‘America First’

Countries in the region have been worried by Trump’s “America first” policy, withdrawal from the Trans Pacific Partnership (TPP) trade deal and pursuit of a trade conflict with China that threatens to disrupt regional supply chains.

The United States first outlined its strategy to develop the Indo-Pacific economy at an Asia-Pacific summit last year.

It used the term “Indo-Pacific,” defined by Pompeo as a region stretching from the US West Coast to India’s west coast, to highlight a broader and democratic-led region in place of “Asia-Pacific,” which from some perspectives had authoritarian China too firmly at its centre.

Among the new investments outlined by Pompeo, the United States will invest $25 million to expand US technology exports to the region, add nearly $50 million this year to help countries produce and store energy resources and create a new assistance network to boost infrastructure development.

Pompeo said the United States has signed a $350 million investment compact with Mongolia to develop new water sources. He said the US government’s Millennium Challenge Corporation was also finalising an agreement to invest hundreds of millions of dollars in transportation and other reforms in Sri Lanka.

Speaking at the same event, US Commerce Secretary Wilbur Ross said Washington also eased export controls for high-technology product sales to India.

Ray Washburne, president of the US government’s Overseas Private Investment Corporation, said it hopes to double the $4 billion it currently has invested in the Indo-Pacific “in the next few years.”

Brian Hook, Pompeo’s senior policy adviser, told reporters before Pompeo’s speech that Washington is not competing with China’s mostly state-led initiatives.

“Our way of doing things is to keep the government’s role very modest, and it’s focused on helping businesses do what they do best,” Hook said.

Critics of Beijing’s Belt and Road Initiative have said it is more about spreading Chinese influence and hooking countries on massive debts. Beijing has said it is simply a development project that any country is welcome to join.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow