Highlights in major Asian economies in 2022

ANKARA

Asian economies struggled with uncertainties in 2022 caused by Russia's war against Ukraine, the resurgence of the coronavirus, and global financial tightening after posting a strong rebound in 2021.

While the Bank of Japan (BoJ) pursues an ultra-loose monetary policy, the People’s Bank of China lowered the key lending rates by 1.5 points.

The Japanese yen weakened the most among major currencies against the greenback due to a widening policy gap between the BoJ and the US Federal Reserve.

After plunging to a 32-year low in October, the yen started to gain ground but was still down 15.5% against the greenback as of Dec. 26.

In its latest meeting Dec. 20, the BoJ kept its benchmark rate at a record low, as expected, but expanded the range for yield fluctuations in the benchmark government bonds, surprising markets.

The BoJ held its key short-term interest rate unchanged at -0.1% and 10-year bond yields at around 0% at its December meeting.

The bank increased the 10-year Japanese government bond yield fluctuations to a range of -0.5% and 0.5%, from between -0.25% and 0.25%.

The BoJ's move last week pushed the Japanese 10-year government bond yield to as high as 0.485% on Dec. 21.

Japan saw an annual inflation rate rise to a nearly 32-year high of 3.8% in November.

The Japanese economy has shrunk by 0.8% year-on-year in the third quarter, posting the first contraction in four quarters. Japan’s GDP grew 4.4% in the second quarter, accelerated from a rise of 0.2% in the first quarter.

Last week, the Japanese government upgraded its growth forecast for 2023 to a real 1.5%, expecting an increase in consumer spending.

In January, China cut its key lending rates for corporate and household loans for a second straight month to cushion a slowdown in economic recovery. The one-year loan prime rate (LPR) was lowered to 3.7% from 3.8%.

After keeping the rate constant for six straight months, the bank lowered the rates by 50 basis points to 3.65% in its August meeting to boost support for the economy affected by COVID-19 lockdowns and a property downturn.

On June 1, China ended coronavirus-related lockdown measures in Shanghai -- move that was cheered by the markets.

Due to a rise in food prices, China's annual inflation rate hit a 29-year high of 2.8% in September. The figure then eased to 2.1% in October and 1.6% in November.

The Chinese economy grew 3.9% on an annual basis in the third quarter thanks to measures from Beijing to revive activity. The figure was up from a 0.4% growth in the previous quarter.