Assignment 2 - Group Assignment PDF

Preview

Summary

Download Assignment 2 - Group Assignment PDF

Description

JAPAN MALAYSIA

Macroeconomic data analysis Group 05: Pham Huynh Phuong Khanh – s3836595 Khieu Ha Trang – s3855827 Nguyen Phuong Duy - s3848081 Dang Hai Long - s3832850

Word count: 3,298 ECON 1192 SGS G3 ASSIGNMENT 2 LECTURER TRA PHAM

THAILAND KOREA RMIT Vietnam University – Group 03 – Team 05

Table of Contents QUESTION

1

............................................................................................................................................3

PART

A:................................................................................................................................3 PART B: ................................................................................................................................9 PART C:..............................................................................................................................12 I. The impacts of COVID-19 on the aggregate demand (AD) and aggregate supply (AS) of these four countries: .....................................................................................................................................................13 II. Article reading: The Global Economic Outlook During the COVID-19 Pandemic: A Changed World ...........................................................................................................................................................15

PART D:..............................................................................................................................16

QUESTION 2 ..........................................................................................................................................19 Part 1: Loanable Funds market.................................................................................................................20 Part 2. Impact of Covid-19 on US economy .............................................................................................21

REFERENCE..........................................................................................................................................22

2 ECON1192 – MACROECONOMICS 01 RMIT Vietnam University – Group 03 – Team 05

QUESTION 1 QUESTION 1 PART A: COLLECTING DATA FOR JAPAN, KOREA, THAILAND, and MALAYSIA (0 WORDS)

ECON1192 – MACROECONOMICS 01 RMIT Vietnam University – Group 03 – Team 05 1. Nominal GDP (billion US$) ('GDP (current US$) - Malaysia, Japan, Korea, Rep., Thailand | Data' 2020)

3

Figure 1: The Nominal GDP table of Japan, Korea, Thailand, Malaysia 2009-2019 (billion US$) YEAR Japan Korea Thailand Malaysia 2009

5231382674594

943941876219

281710416557

202257625195

2010

5700098114744

1144066965324

341104820155

255016609233

2011

6157459594824

1253223044719

370819140947

297951960784

2012

6203213121334

1278427634343

397558222957

314443149443

2013

5155717056271

1370795199976

420333203150

323277158907

2014

4850413536038

1484318219634

407339361696

338061963396

2015

4389475622589

1465773245547

401295941041

301354756113

2016

4922538141455

1500111596236

413430123185

301255454041

2017

4866864409658

1623901496836

456294704153

318958236443

2018

4954806619995

1720578827806

506514103905

358581943446

2019

5081769542380

1642383217167

543649976166

364701517788

Figure 2: The Nominal GDP line chart of Japan, Korea, Thailand and Malaysia 2009-2019 (billion

Nominal GDP (billion USD) s

3000

n

o il li

B

7000

2000

6000

1000

5000

0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Japan

4000

Korea Thailand Malaysia

4 ECON1192 – MACROECONOMICS 01 RMIT Vietnam University – Group 03 – Team 05

2. Real GDP (billion US$) (World Bank 2020 'GDP (constant 2010 US$) - Malaysia, Japan, Korea, Rep., Thailand | Data' 2020)

Figure 3: The Real GDP table of Japan, Korea, Thailand and Malaysia 2009-2019 (billion US$) YEAR

Japan

Korea

Thailand

Malaysia

2009

5470777391092

1071175357672

317267289652

237390711223

2010

5700098114744

1144066965324

341104820155

255016609233

2011

5693518985135

1186233472871

343970551186

268516966238

2012

5778642194556

1214733099700

368883637205

283214119384

2013

5894230516026

1253175863016

378797368589

296507404302

2014

5916317345749

1293308240994

382526345001

314317779626

2015

5988669235428

1329638605060

394514326506

330321318799

2016

6019926762455

1368821481990

408043089557

345019810726

2017

6150456276841

1412071254753

424635143108

364830260262

2018

6170335002842

1449701970129

442260737640

382129075415

2019

6210698351093

1479176599808

452750615084

398676099010

Figure 4: The Real GDP line chart of Japan, Korea, Thailand and Malaysia 2009-2019 (billion US$)

Real GDP (billion USD) s

3000

n

o il li

B

7000

2000

6000

1000

5000

0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Japan

4000

Korea Thailand Malaysia

5 ECON1192 – MACROECONOMICS 01 RMIT Vietnam University – Group 03 – Team 05 3. GDP per capita (constant 2010 US$) (World Bank 2020 'GDP per capita (current US$) - Malaysia, Japan, Korea, Rep., Thailand | Data' 2020)

Figure 5: The Real GDP per capita table of Japan, Korea, Thailand and Malaysia 2009-2019 (US$) YEAR Japan Korea Thailand Malaysia 2009

40855.18

19143.85

4213.01

7292.49

2010

44507.68

23087.23

5076.34

9040.57

2011

48168.00

25096.26

5492.12

10399.37

2012

48603.48

25466.76

5860.58

10817.44

2013

40454.45

27182.73

6168.26

10970.12

2014

38109.41

29249.58

5951.88

11319.08

2015

34524.47

28732.23

5840.05

9955.24

2016

38761.82

29288.87

5994.23

9817.74

2017

38386.51

31616.84

6592.91

10254.23

2018

39159.42

33340.27

7295.48

11373.23

2019

40246.88

31761.98

7808.19

11414.84

Figure 6: The Real GDP per capita line chart of Japan, Korea, Thailand and Malaysia 2009-2019 (US$)

GDP per capita (USD) 60000.00

50000.00

40000.00

30000.00

20000.00

10000.00

0.00 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Japan Korea Thailand Malaysia

6 ECON1192 – MACROECONOMICS 01 RMIT Vietnam University – Group 03 – Team 05 4. GDP growth rate (annual %) (World Bank 2020 'GDP growth (annual %) - Malaysia, Japan, Korea, Rep., Thailand | Data' 2020)

Figure 7: The GDP growth rate table of Japan, Korea, Thailand and Malaysia 2009-2019 (%) YEAR Japan Korea Thailand Malaysia 2009

-5.42

0.79

-0.69

-1.51

2010

4.19

6.8

7.51

7.42

2011

-0.12

3.69

0.84

5.29

2012

1.5

2.4

7.24

5.47

2013

2

3.16

2.69

4.69

2014

0.37

3.2

0.98

6.01

2015

1.22

2.81

3.13

5.09

2016

0.52

2.95

3.43

4.45

2017

2.17

3.16

4.07

5.74

2018

0.32

2.66

4.15

4.74

2019

0.65

2.03

2.37

4.33

Figure 8: The GDP growth rate line chart of Japan, Korea, Thailand and Malaysia 2009-2019 (%)

GDP Growth (annual %) 10 8 6 4 2 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 -2 -4 -6 -8 Japan Korea Thailand Malaysia

7 ECON1192 – MACROECONOMICS 01 RMIT Vietnam University – Group 03 – Team 05 5. Unemployment Rate (% of total labor force) (modelled ILO estimate) (World Bank 2020 'Unemployment, total (% of total labor force) (modeled ILO estimate) - Malaysia, Japan, Korea, Rep.,

Thailand | Data' 2020) Figure 9: The Unemployment rate table of Japan, Korea, Thailand and Malaysia 2009-2019 (%) YEAR

Japan

Korea

Thailand

Malaysia

2009

5.1

3.6

0.94

3.69

2010

5.1

3.7

0.62

3.25

2011

4.52

3.4

0.66

3.05

2012

4.3

3.2

0.58

3.04

2013

4

3.1

0.49

3.11

2014

3.6

3.5

0.58

2.88

2015

3.4

3.6

0.6

3.1

2016

3.1

3.7

0.69

3.44

2017

2.8

3.7

0.83

3.41

2018

2.4

3.85

0.77

3.35

2019

2.29

4.15

0.75

3.32

Figure 10: The Unemployment rate line chart of Japan, Korea, Thailand and Malaysia 2009-2019 (%)

Unemployment rate (% total labor force) 6

5

4

3

2

1

0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Japan Korea Thailand Malaysia

8 ECON1192 – MACROECONOMICS 01 RMIT Vietnam University – Group 03 – Team 05

QUESTION 1 QUESTION 1 PART B: THE COMPARASION OF UNEMPLOYMENT RATES OF THESE COUNTRIES (997 WORDS)

9 ECON1192 – MACROECONOMICS 01 RMIT Vietnam University – Group 03 – Team 05

I. Cyclical unemployment: The poor performance of the United States banking system in 2008 led to a financial crisis that adversely hit other economies around the globe (Khoon, GS & Mah-hui, ML 2010). In that situation, Japan, Korea, Thailand and Malaysia were all affected by this recession, however, the severity of the recession on different countries and their cyclical unemployment are dissimilar. Specifically, Thailand and Malaysia are two modest open and export-relied countries, hence their economies were moderately influenced by a decline in exports because of the plunge in the international demand (Khoon, GS & Mah-hui, ML 2010) (Bank of Thailand 2009). While Thai exports decreased from $17.4 billion to $10.5 billion from July 2008 to January 2009 (Haughton, J et al. 2013), Malaysian exports fall 28% year-on-year in the first month in 2009 (Khoon, GS & Mah-hui, ML 2010). Under that circumstance, the unemployment of Thailand however remained low, at about 2%, thanks to the structure of labor market (Chandoevwit, W 2010), meanwhile, Malaysia witnessed a 0.9% increase in the unemployment rate in first quarter in 2009 (Heong, CY 2009) and a loss of 400,000 workers during the crisis (Khan, NLMA 2020). To explain for it, because these countries limited the exposure to risk assets from foreign banking so the effect of this recession on their unemployment were not really tough (Khoon, GS & Mah-hui, ML 2010) (Bank of Thailand 2009). On the other hand, developed countries were not that fortunate and Japan is a prominent example. Japanese economy significantly depends on the global demand, especially in international trading with the U.S and Western Europe (Kawai, M & Takagi, S 2009). Japanese exports in January 2009 was less than 50%, compared to September 2008 (Kawai, M & Takagi, S 2009), partially leading to 3.59 million job losses during the recession (McCurry, J 2009) and a rapid increase in the unemployment rate (Higuchi, Y 2009) that then hit the peak in the recession at 5.1% in 2009. While Japanese unemployment was hit hard, Korea is an exception. Although Korean exports underwent a drop from 27% in the third quarter in 2008 to -9.9% in the fourth quarter in 2009 in its year-on-year growth (Hangyong, L & Changyong, R 2012), the unemployment rate was remained low at 3.6 with 10,000 job losses in the crisis (Reuters 2018) thanks to the worker-keeping actions of the government and firms (Sung-Teak, K 2010). II. Unemployment circumstance of Japan and Malaysia: In four chosen countries, Japan and Malaysia are one developing and one developed country that have the highest average unemployment rates in the decade, compared to the other in the same category. While Malaysia has remained its jobless rate at around 3% (Khan, NLMA 2020), Japan has undergone an incredible downward trend in its unemployment rate, from over 5% in 2009 to over 2% in 2019. In Malaysia, the around 3% jobless rate is mostly because of frictional unemployment (Khan, NLMA 2020). This term refers to workers who are temporarily unemployed because they are finding or converting to a job that matches their capacity. According to Aun, LH (2020), Malaysian youth unemployment rate is 10.5%, meanwhile, youth employee accounts for 18% of the labor force, which means youth unemployment are responsible for nearly 2% of the total around 3% unemployment. The reason for youth unemployment is the lack of skills and experience (Khan, NLMA 2020), so young workers take time to find a suitable job. On the other hand, from 1868, Japanese structural unemployment caused by skills mismatch took place until the first half of the 20th century (Yamada, M 2017), along with the adverse impacts of two recessions, Asian financial crisis 1997 and Great Recession 2008 (Sheard, P 2009), hence Japanese unemployment rate was higher than that in the pre-recession periods, around 5%, up to 2010, in which, skill mismatch accounted for nearly 40% of the increase in the unemployment rate (Shibata, I 2013). However, Japanese government and private firms attempted to handle this problem by operating the Employment Stabilization Offices and 10 ECON1192 – MACROECONOMICS 01 RMIT Vietnam University – Group 03 – Team 05 providing job trainings (Yamada, M 2017). As a result of that, the structural unemployment has been lowered, which contributes to a considerable reduction in the total unemployment rate to 2%.

III. Unemployment circumstances of Korea and Thailand: Korea and Thailand have the average unemployment rates in the decade lower than those of other countries in the same categories, developed and developing respectively. However, the reasons behind them are different. With Korea, its low unemployment rate is partially due to the low labor force participation rate, 62%, which is resulted from approximately 7 million Korean women who are out of the labor force to be house-wises, accounting for over 50% of females in the working ages (Korea Herald 2014). Additionally, nearly 500,000 workers become discouraged in 2019 (Sam, K 2020), which means they all are out of the labor force. Furthermore, in the recent years, Korean jobless rate tends to raise up due to an increase in the classical unemployment. After vowing to raise the minimum wage to $9.16 per hour, Korean president Moon Jae-in has led to a rapid minimum wage hike which causes small and medium businesses downsize their workforce due to increasing labor costs (Korea Herald 2020). Consequently, according to a report of Korea Economic Research Institute, 27,4% to 30,5% of unemployment cases in 2018 were because of the rising wage level (Jun-tae, K 2020), and subsequently nearly 0.9 million workers were unemployed (Korea Herald 2020). On the other hand, Thai unemployment rate has remained stably under 1. To explain, Thai agriculture predominantly offers over 30% of jobs for citizens (BOT 2019) and over 60% of total employment is in informal sector, which is not registered and hence not protected by the social security and government (ILO 2013). It is effortless for a worker to move from formal sector to informal one (Chandoevwit, W 2010), such as farm helper when he could not find a registered job. Therefore, the unemployment rate in Thailand is incredibly low.

11 ECON1192 – MACROECONOMICS 01 RMIT Vietnam University – Group 03 – Team 05

QUESTION 1 QUESTION 1 PART C: THE IMPACT OF COVID-19 on THE AGGREGATE DEMAND and AGGREGATE SUPPLY of THESE ECONOMIES (978 WORDS)

PART C: THE IMPACT OF COVID-19 ON THE AD and AS OF

THESE ECONOMIES

12

ECON1192 – MACROECONOMICS 01 RMIT Vietnam University – Group 03 – Team 05 I. The impacts of COVID-19 on the aggregate demand (AD) and aggregate supply (AS) of these four countries: The spread-out of COVID-19 has brought several negative impacts on the global GDP, due to interruptions in AD and AS around world (Rynne 2020). According to KPMG Central prediction, the year 2020 will mark a sharply drop in the World’s GDP up to 12%, compare to 2019. To support this point, this analysis divides countries into two factions based on trends in AD, including the AD decreased group (Japan and Thailand) and the increased one (Malaysia and Korea).

Countries Components Q1 2019 (Pre-COVID) (billion USD) Q1 2020 (COVID affected) (billion USD)

Changes (billion USD)

-296.58 -10%

4.05 +8%

2.4

-0.91 -4%

-2.26

-2.66 -34%

-4.36

-7.68 -4%

-8.96 -1%

9.02 +7%

-6.16 -32%

-0.27 -2%

Figure 11: Comparison of GDP components between Japan, Malaysia, Korea and Thailand (Adapted from Moody’s Analytics). 1. Japan and Thailand analysis: Regarding the consumption, it can be observed that there is a decline in Japan by 10%, resulted from the restriction travel and spending on entertainment services, to prevent the spread-out of covid-19 (Wolf 2020). By opposite, Thailand is witnessed a slight increase in...