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September
GLOBAL ECONOMY Factories hit by pandemic-related supply disruptions
Written by Nur Yasmin
Global factory activity lost momentum in August as the ongoing coronavirus pandemic-disrupted supply chains, raising concerns faltering manufacturing would add to economic woes caused by slumping consumption, surveys showed on Wednesday.
Many firms reported logistical troubles, product shortages and a labour crunch which have made it a sellers' market of the goods factories need, driving up prices.
While factory activity remained strong in the euro zone, IHS Markit's final manufacturing Purchasing Managers' Index (PMI) fell to 61.4 in August from July's 62.8, below an initial 61.5 "flash" estimate.
"Despite the strong PMI figures, we think that lingering supply-side issues and related producer price pressures might take longer to resolve than previously expected, increasing the downside risk to our forecast," said Mateusz Urban at Oxford Economics.
In Britain, where factories also faced disruptions, manufacturing output grew in August at the weakest rate for six months. The United States likely suffered a similar slowdown, data is expected to show later on Wednesday.
Canada's economy unexpectedly shrank last quarter and in July, official data showed on Tuesday - hurt by decreases in manufacturing, construction and retail trade - and Australia reported slower growth in the second quarter on Wednesday. read more
CHINA BRAKES
Meanwhile, Southeast Asia - a low-cost manufacturing hub for many global companies - was hit particularly hard with factory activity shrinking in Vietnam, Indonesia and Malaysia because of virus outbreaks and output suspensions.
And in a worrying sign for the global economy, China's factory activity slipped into contraction in August for the first time in nearly 1-1/2 years as COVID-19 curbs, supply bottlenecks and high raw material prices weighed on output. read more
China's Caixin/Markit Manufacturing PMI fell to 49.2 in August, from 50.3 in July, breaching the 50-mark separating growth from contraction.
The result was well below market expectations, underscoring the fragile nature of China's recovery that had helped the global economy emerge from pandemic-induced doldrums.
The private survey followed an official PMI on Tuesday, which showed the index falling in August but staying above the 50 mark. read more
"The elephant in the room for the long North Asia, short ASEAN view is China. This morning, the Caixin Manufacturing PMI followed yesterday's official number South, falling under 50," said Jeffrey Halley at OANDA.
"That rounds out a grim week for China's PMIs as COVID-19 lockdowns and the same supply chain challenges the rest of the world is experiencing erode economic performance."
Export power-houses Japan, South Korea and Taiwan also saw manufacturing activity expand at a slower pace in August, a sign chip shortages and factory shutdowns in the region could delay a sustained recovery from the pandemic-induced slump.
The surveys highlight the pandemic's broadening damage in Southeast Asia, where soaring infections and subsequent lockdown measures have hurt both the service and manufacturing sectors. read more
Delta variant outbreaks in the region have caused supply chain headaches for the world's largest manufacturers, many of which rely on auto parts and semiconductors made in low-cost bases such as Thailand, Vietnam and Malaysia.
"If the strict lockdown measures continue, Southeast Asia may find it hard to remain a global production hub," said Makoto Saito, an economist at NLI Research Institute.
Japan's PMI eased and new export orders posted their first contraction since January. South Korea's index fell to 51.2. read more
In Vietnam and Malaysia, activity was hurt by lockdown measures and rising infections that forced some factories to suspend operations. Vietnam saw factory activity shrink while Malaysia's PMI stood at 43.4 in August.
Once seen as a driver of global growth, Asia's emerging economies are lagging advanced economies in recovering from the pandemic's pain as delays in vaccine rollouts and a spike in Delta variant cases hurt consumption and factory production.
Growth in India's factory sector activity slowed as persistent pandemic-related weakness weighed on demand and output, forcing firms to cut jobs again following a brief recovery in July. (Reuters)
September
Pakistan frets over security threats from neighbouring Afghanistan
Written by Nur Yasmin
There is growing concern among Pakistani officials about security in neighbouring Afghanistan, as the Taliban tries to form a government and stabilise the country following the departure of U.S. and other foreign forces.
Islamabad is particularly worried about militant fighters from a separate, Pakistani Taliban group crossing from Afghanistan and launching lethal attacks on its territory. Thousands of Pakistanis have been killed in jihadist violence in the last two decades.
Underlining the security threat within Afghanistan, in the last few days a suicide bombing claimed by an Afghan offshoot of Islamic State outside Kabul airport killed more than 100 people, including 13 U.S. troops.
A rocket attack on the airport followed, and on Sunday militant gunfire from across the border in Afghanistan killed two Pakistani soldiers.
"The next two to three months are critical," a senior Pakistani official said, adding that Islamabad feared a rise in militant attacks along the Afghan-Pakistan border, as the Taliban tried to fill a vacuum left by the collapse of Afghan forces and the Western-backed administration.
"We (the international community) have to assist the Taliban in reorganising their army in order for them to control their territory," the source added, referring to the threat posed by resurgent rival militant groups including Islamic State.
U.S. officials have repeatedly accused Pakistan of supporting the Afghan Taliban, which fought in a civil war in the mid-1990s before seizing power in 1996.
Islamabad, one of the few capitals to recognise the Taliban government that was toppled in 2001, denies the charge.
Pakistan's government has said that its influence over the movement has waned, particularly since the Taliban grew in confidence once Washington announced the date for the complete withdrawal of U.S. and other foreign troops.
The official, who has direct knowledge of the country's security decisions, said Pakistan planned to send security and intelligence officials, possibly even the head of the powerful Inter-Services Intelligence (ISI) agency, to Kabul to help the Taliban reorganise the Afghan military.
An Afghan Taliban spokesperson did not immediately respond to Reuters' requests for comment on security relations with Pakistan.
PAKISTAN EXPECTS TALIBAN COOPERATION
Though recognition of a new Taliban government was not immediately on the table, the official said, the world should not abandon Afghanistan.
"Whether we recognise the Taliban government or not, stability in Afghanistan is very important."
The official warned that Islamic State Khorasan (ISIS-K), a loosely-affiliated offshoot of Islamic State in Syria and Iraq, was actively looking to launch attacks and recruit new fighters.
Left unhindered, it would almost certainly grow from relatively small numbers currently.
The United States recently launched two drone strikes targeting ISIS-K militants, including one in Kabul and one near the eastern border with Pakistan.
The strikes followed a pledge by President Joe Biden that the United States would hunt down the militants behind the recent suicide bombing.
The Taliban criticised the strikes as a "clear attack on Afghan territory".
Pakistan, whose armed forces also possess unmanned drones as well as conventional aircraft, will avoid intervening directly in Afghanistan if at all possible, said the official.
The Afghan Taliban have reassured their neighbour that they will not allow their territory to be used by anyone planning attacks on Pakistan or any other country.
But Islamabad expected the Afghan Taliban to hand over militants planning attacks against Pakistan, the official added, or at least force them from their mutual border, where Pakistani troops have been on high alert in recent weeks. (Reuters)
September
New Zealanders venture out as COVID-19 curbs eased in most regions
Written by Nur Yasmin
New Zealanders on Wednesday visited beaches and queued for takeaway food as tough lockdown measures enforced to beat an outbreak of the highly infectious Delta variant of the coronavirus were eased for most of the country.
About 1.7 million people in the largest city Auckland still remain in strict level 4 lockdown for another two weeks, but restrictions for the remainder of the country were loosened. read more
Surfers and kayakers were seen heading to the beaches in droves, local media reports said, while other outdoor recreation facilities like golf courses were busy again.
People started lining up from early morning as takeaway food outlets reopened after being shut for two weeks, while construction activity resumed and large hardware stores opened for click and collect purchases.
However, schools and offices remained shut nationwide and businesses can only provide contactless services.
Except for a small number of cases in February, New Zealand was largely coronavirus-free until the outbreak of the Delta variant prompted Prime Minister Jacinda Ardern to order a snap nationwide lockdown on Aug. 17.
The country reported 75 new cases of COVID-19 cases on Wednesday, up from 49 a day earlier. Of those, 74 were in Auckland and one was a household contact in Wellington. The total cases from the current outbreak rose to 687, nearly all in Auckland.
"The latest bounce in numbers is not unexpected," the Director General of Health Ashley Bloomfield said at a news conference, adding it was still below the peak daily number.
Ardern's lockdowns, along with closing the international border from March 2020, have been credited with reining in COVID-19 allowing the country to live largely without restrictions.
However, the government now faces questions over a delayed vaccine rollout, as well as rising costs in a country heavily reliant on an immigrant workforce.
Just over a quarter of the population has been fully vaccinated so far, the slowest pace among the wealthy nations of the OECD grouping. (Reuters)
September
Russia's Putin says U.S. Afghan foray achieved nothing but tragedy
Written by Nur Yasmin
Russian President Vladimir Putin said on Wednesday that the U.S. military intervention in Afghanistan had achieved nothing but tragedy and loss of life on all sides and showed it was impossible to foist foreign values on other nations.
Speaking to teenagers at an educational facility in the Russian far east, Putin made clear that he deemed the U.S. approach to a country once invaded by the Soviet Union to have been deeply flawed.
"U.S. forces were present on this territory for 20 years and for 20 years tried ... to civilise the people who live there, to instil their own norms and standards of life in the widest possible sense of this word, including when it comes to the political organisation of society," said Putin.
"The result is only tragedies and losses of life for those who did it, the United States, and even more so for those people who live on the territory of Afghanistan. The result is zero, if not a negative one all round."
The final U.S. forces pulled out of Afghanistan on Monday and U.S. President Joe Biden spoke on Tuesday of the end of an era of major military operations to remake other countries. read more
The U.S. exit is a security headache for Moscow, which sees nearby former Soviet Central Asia as part of its southern defensive flank and fears the spread of radical Islamism.
Moscow has reinforced its military base in Tajikistan, which neighbours Afghanistan, and its forces are holding a month of exercises near the border.
Though some Russian state media have revelled in what they have cast as a catastrophic U.S. geopolitical failure, gloating has been tempered by the fact that the Soviet Union was also forced to withdraw its forces from Afghanistan in 1989 after a decade of fighting there.
Russia's security chiefs have made clear they are deeply worried about a potential spill-over of instability into Central Asia, the possible infiltration of extremists into the wider region including Russia, and Afghan drug production.
Putin, who has previously said that Moscow has learnt the lessons of the Soviet Union's own Afghan debacle and has no plans to deploy troops there, said it was important to take into account the history, culture, and philosophy of life of people like the Afghans when dealing with them.
"It's not possible to foist anything on them from the outside," said Putin. (Reuters)
September
China envoy visits Myanmar as new route to Indian Ocean opened
Written by Nur Yasmin
China's special envoy for Asian Affairs Sun Guoxiang visited Myanmar last week for talks with its military rulers, as a new route spanning the Southeast Asian nation opened up connecting Chinese trade flows to the Indian Ocean.
As opposed to most Western countries that have condemned the army for ousting the elected government of Aung San Suu Kyi, China has taken a softer line and said its priorities are stability and not interfering in its neighbour.
During his Aug. 21 to Aug. 28 visit, Sun met military ruler Min Aung Hlaing as well as foreign minister Wunna Maung Lwin and Minister for the Union Government Office Yar Pyae and "exchanged views with them on the political landscape in Myanmar", China's foreign ministry spokesperson Wang Wenbin said on Tuesday.
"We will work together with the international community to play a constructive role in Myanmar's efforts to restore social stability and resume democratic transformation at an early date," Wang told a regular news briefing in Beijing, when asked about Sun's trip.
China supported Myanmar working with the Association of Southeast Asian Nations (ASEAN) to implement a five-point consensus aimed at resolving the crisis and "opposes undue external intervention", Wang said.
Opponents of Myanmar's junta have accused China of supporting February's military takeover that has sparked daily protests leading to hundreds of deaths and thousands displaced by fighting between the army and hastily formed militias.
Beijing has rejected such accusations and said it backs regional diplomacy on the crisis.
A spokesman for Myanmar's National Unity Government made up of opponents of military rule did not immediately respond to a request for comment on the Chinese visit.
But members of the shadow government have previously urged countries to deal with them rather than the military.
"China seems to be endorsing the junta by the way it is conducting diplomacy," said Sai Wansai, a political analyst from the Shan ethnic minority, who said it was possible Myanmar's other big neighbour India could decide to follow suit.
Separately, China's embassy in Myanmar announced the opening of the new trade route linking Yangon's port on the Indian Ocean to the Chinese border province of Yunnan and by rail onwards to Chengdu in the southwestern province of Sichuan.
"Successful testing of the new Indian Ocean route is an important breakthrough in strengthening China-Myanmar trade relations," the embassy said on its Facebook page. (Reuters)
September
Afghanistan central bank board member urges Biden, IMF to release funds
Written by Nur Yasmin
A senior board member of Afghanistan's central bank is urging the U.S. Treasury and the International Monetary Fund to take steps to provide the Taliban-led government limited access to the country's reserves or risk economic disaster.
The Taliban took over Afghanistan with astonishing speed, but it appears unlikely that the militants will get quick access to most of the roughly $10 billion in assets held by Da Afghanistan Bank (DAB), which are mostly outside of the country.
U.S. President Joe Biden's administration has said any central bank assets the Afghan government have in the United States will not be made available to the Taliban, and the IMF has said the country will not have access to the lender's resources.
Shah Mehrabi, an economics professor at Montgomery College in Maryland and a member of the bank's board since 2002, told Reuters in a telephone interview on Wednesday that Afghanistan faces an "inevitable economic and humanitarian crisis" if its international reserves remain frozen.
Mehrabi stressed he doesn't speak for the Taliban but is making this push in his capacity as a sitting board member. He said he plans to meet with U.S. lawmakers this week, and hopes to talk with U.S. Treasury officials soon as well.
"If the international community wants to prevent an economic collapse, one way would be to allow Afghanistan to gain limited and monitored access to its reserves," he said.
"Having no access will choke off the Afghan economy, and directly hurt the Afghan people, with families pushed further into poverty."
Mehrabi is proposing that the United States allow the new government in Kabul a limited amount of access each month, perhaps in the range of $100 million-$125 million to start with, that would be monitored by an independent auditor.
"The Biden administration should negotiate with the Taliban over the money in the same way they negotiated over the evacuation," he said.
If the assets remain entirely frozen, then inflation will continue to soar, Afghans will not be able to afford basic necessities, and the central bank will lose its main tools for conducting monetary policy, he said.
The Taliban can survive through customs duties, increasing opium production, or selling off captured American military gear, but every day Afghans will suffer and be solely reliant on international aid if the country doesn’t have access to currency, Mehrabi added.
After nearly 20 years of American intervention, the Afghan economy is heavily dollarized, and depends on imports that largely must be purchased with foreign currency, he said.
With overseas reserves off-limits, Da Afghanistan Bank may be undermined after having cultivated a non-political, technocratic institution that so far has been allowed to continue its work under the Taliban, Mehrabi said.
"Their work there is not based on who is in power," he said, noting that he has not been personally in touch with Taliban representatives, but is in daily contact with colleagues running operations there now.
Ajmal Ahmady, who led the central bank until the capture of Kabul, has said about $7 billion of DAB's assets was held as a mixture of cash, gold, bonds and other investments at the U.S. Federal Reserve.
Most of the rest is in other international accounts and at the Bank for International Settlements, a bank for central banks based in Switzerland, and not physically in DAB vaults, he said - leaving about 0.2% or less of the total accessible to the Taliban. (Reuters)
September
Afghan migrants stranded in Serbia fear for families under Taliban rule
Written by Nur Yasmin
Two Afghans with links to U.S. forces who ended up in Serbia after fleeting the Taliban advance are watching in dismay as the Islamist militants take over back home, saying the group cannot be trusted and they fear for relatives left behind.
Ahmadmir and Mohaed left about three months ago for their own security because of their past work for U.S. troops, making separate journeys across Iran and Turkey and ending up in a refugee camp in Serbia, where they are stranded.
Speaking to Reuters at the Obrenovac camp, 30 km (18 miles) west of Serbia's capital Belgrade, Mohaed, 45, said his wife, two children, brother, sister and parents remained in Kabul.
"Me and my brother used to work for the U.S. army, they (the family) are not safe, because we cannot trust the Taliban. They are in hiding," he said, speaking on condition his last name not be used due to the sensitivity of the subject.
A former handyman for U.S. forces, Mohaed said the decision by U.S. President Joe Biden to order the American military to pull out was wrong.
"Our government needed more help, and they just left," he said.
In 2013 Mohaed applied for a special visa program to move to the United States, without success.
He left Afghanistan months before the massive but chaotic airlift by the United States and its allies that evacuated more than 123,000 people from Kabul over the past two weeks.
Despite the airlift, many of those who helped Western nations during the war were left behind.
RIGHTS
Ahmadmir, a former interpreter for U.S. special forces, said the Taliban were offering false assurances of safety to those who worked for the former Afghan government, when in reality they planned to take action against them.
“They (Taliban) are telling them – no problem, come to your jobs, continue living normally, but no – that’s not the case. Things are going in a different way. Yeah... I’m so worried about it,” Ahmadmir said. "They are pretending."
Ahmadmir said his father, mother and two married sisters remained in Kabul. "You are asking me - are you scared that something could happen to your family; I say, yes, if the government is in the hands of the Taliban."
The Taliban has sought to assure Afghans it will respect people's rights, including women who it barred from studying and working during its 1996-2001 rule when it enforced its harsh interpretion of Islamic law. Those proclamations have been met with doubt by many.
Ahmadmir called a relative in Kabul and allowed a visiting team from Reuters to listen in.
"There is silence in Kabul, the bazaar is closed, the residents are not visible, everyone has disappeared somewhere ..." the relative told Ahmadmir, according to a translation of the Pashto language by Reuters.
Serbia was a focal point for migrants in 2015, when more than a million people fleeing wars and poverty in the Middle East and Asia made it to the European Union.
According to Serbian authorities, there are around 4,500 migrants in government operated camps across the country, 1,200 of them Afghans. Hundreds of other migrants are scattered in fields and forests near Serbia's borders with Bosnia and EU members Croatia and Hungary, all countries they want to enter. (Reuters)
September
Afghanistan crisis shows EU must seek greater military autonomy -Michel
Written by Nur Yasmin
The European Union must take action to be better prepared for military evacuations of its citizens in situations such as occurred in Afghanistan in recent weeks, EU Council President Charles Michel said on Wednesday.
"In my view, we do not need another such geopolitical event to grasp that the EU must strive for greater decision-making autonomy and greater capacity for action in the world," he told the Bled Strategic Forum in Slovenia.
Western nations scrambling to get their citizens out of Kabul after the Taliban takeover were dependent on the U.S. military to keep the airport running during airlifts. (Reuters)
August
Australia in vaccine swap pact with Singapore as COVID-19 cases surge
Written by Nur Yasmin
Australia will receive 500,000 doses of Pfizer's (PFE.N) COVID-19 vaccine from Singapore this week, Prime Minister Scott Morrison said on Tuesday, after Canberra agreed to a swap deal in a bid to curtail surging coronavirus infections.
The agreement, which will see Australia return the same amount of Pfizer vaccine doses to Singapore in December, will allow Canberra to accelerate its vaccination program as daily cases near record levels for the country.
"That means there are 500,000 doses extra that will happen in September that otherwise would have had to wait for several months from now, accelerating our vaccination program at this critical time as we walk towards those 70% and 80% targets," Morrison told reporters in Canberra.
While Australia had managed to successfully contain the coronavirus with a system of strict lockdowns and quarantine, a slow vaccination rollout has made the country vulnerable to the highly infectious Delta variant.
With just under 28% of Australia's population fully vaccinated, compared with 80% in Singapore, several states and territories have had to implement strict lockdowns as cases soared, hitting businesses and the domestic economy.
Capital city Canberra on Tuesday extended its hard lockdown by a further two weeks, and Victoria, the country's second-most populous state, is expected to soon follow suit.
Canberra has been in lockdown for three weeks after a spate of cases believed to have spread from New South Wales, the epicenter of Australia's COVID-19 outbreak.
"We are bending the curve down and are getting on top of the outbreak. However, it is a slow process and it will take more time," Australian Capital Territory Chief Minister Andrew Barr told reporters in Canberra.
On Tuesday, Canberra reported 13 new cases in the past 24 hours. New South Wales reported 1,164 new infections, down slightly from a record 1,290 cases the day prior.
Victoria, which has been in lockdown for five weeks, on Tuesday reported 76 new locally acquired coronavirus cases in the past 24 hours, up marginally from 73 cases reported the previous day.
State Premier Dan Andrews said too many people remain unvaccinated to significantly ease restrictions, but that Victoria would outline a plan on Wednesday to reduce curbs as vaccination levels rise.
Australia has recorded nearly 54,000 COVID-19 cases and 1,006 deaths since the start of the pandemic, still lower than the caseload and death toll in most comparable nations. (Reuters)
August
Germany's Merkel says some 10-40,000 left in Afghanistan with right to German residence
Written by Nur Yasmin
Germany estimates there are still between 10,000 and 40,000 local staff working for development organizations in Afghanistan who have a right to be evacuated to Germany if they feel they are endangered, Chancellor Angela Merkel said on Tuesday.
Speaking at a Berlin news conference with her Austrian counterpart, Merkel said most of those working for the German armed forces and police were already outside Afghanistan, but that, since development aid to Afghanistan had not been stopped, many staff in that field remained in the country.
"For us, the focus at the moment is local staff and that's not 300 people, that's probably more like 10-40,000 people, and we will have to see how many of them want to leave the country and how many not," she said.
"As we've seen, nobody takes the decision to leave their home lightly." (Reuters)