International News 13/12
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In contrast to Indonesia, Vietnam reduces VAT from 2% to 8%
Vietnam has implemented a reduction in Value Added Tax (VAT) rates, in contrast to the policy pursued by Indonesia. The Vietnamese National Assembly has recently approved a draft regulation that will reduce the VAT rate from 10% to 8%. This extension will remain in place until June 2025. Goods and services currently subject to the 10% tax rate will enjoy the 8% rate for the next six months, with the exception of certain industries such as real estate, banking, and telecommunications. The objective of this VAT reduction is to stimulate consumption, support production and business, and lower the cost of goods and services. However, the Ministry of Finance in Vietnam estimates that this will result in a reduction in state budget revenue of approximately 26.1 trillion Vietnamese dong (equivalent to US$1.028 billion) in the first half of 2025.
Brazil's central bank raises interest rates higher than expected
The Brazilian central bank has taken the market by surprise by raising interest rates by 100 basis points, thereby indicating its intention to continue fighting inflation under the new government-appointed governor. Should the proposed roadmap be adhered to, the benchmark interest rate could reach 14.25% in March, representing the highest level observed in eight years. The decision reflects the policymakers' determination to rein in rising inflation expectations in the context of a robust economy, a tight labour market and a relatively weak currency. The rate increase follows the implementation of the government's recently announced fiscal measures, which have influenced Brazil's real currency, asset prices, and inflation expectations. However, the spending cuts proposed by President Luiz Inacio Lula da Silva's administration did not meet expectations, leading to a lack of confidence in the government's ability to manage rising public debt. In summary, the central bank's decision is intended to address the inflationary pressures currently facing the economy.
Forex traders beware, today is the European Central Bank interest rate decision (12 December 2024)
A number of significant economic events are scheduled to occur in the near future, which could have a notable impact on the global economy and major currencies. In the United States, the results of the 10-year note auction will provide insights into the level of demand and the expected interest rates. The Federal Budget Balance data will provide insights into the financial position of the US government, which can have an impact on the value of the USD. The Producer Price Index (PPI) data will indicate changes in raw material and finished product prices, providing insights into inflationary trends and the Federal Reserve's monetary policy stance. The latest unemployment data, including Initial Jobless Claims and Continuing Jobless Claims, will provide insights into the US labour market. Additionally, the 4-Week Bill Auction of short-term Treasury bills may offer insights into anticipated interest rates. In the Eurozone, the Quarterly Unemployment Rate will indicate the level of unemployment, which may affect the value of the EUR. Consumer Price Index (CPI) data will measure inflation, which is important for the European Central Bank's (ECB) monetary policy. Further events from the ECB, such as the Deposit Facility Rate Decision, Interest Rate Decision, and Marginal Lending Facility Rate, will also be considered in the economic agenda.
Singapore Revises Higher Economic Outlook
The Singaporean government has revised its economic growth forecast for the year upwards, with the economy now projected to grow by 3.6% compared to the previous estimate of 2.6%. The results of a survey conducted by the central bank indicate that there will be no changes in monetary policy in January. A survey of economists by the Monetary Authority of Singapore indicates a projected growth rate of 3.1% in the final quarter of 2024. The economy is projected to expand by 2.6% in the coming year. The Ministry of Commerce has increased its economic growth forecast for 2024 to 3.5% following stronger-than-anticipated third-quarter growth of 5.4%. The majority of economists surveyed believe that the Monetary Authority of Singapore will maintain its monetary policy in January, April, and July 2025. In October, the MAS kept its monetary policy unchanged as the economy expanded and inflation declined.
https://internasional.kontan.co.id/news/singapura-merevisi-proyeksi-ekonomi-lebih-tinggi