Key takeaways Strong Q2 GDP growth masks weakness in the private sector. Uncertainty over the upcoming Autumn Budget could weigh on sentiment and activity. A looser labour market could help dampen inflation concerns. Source: HSBC The fastest growing economy in the G7 GDP data published in August, for the second quarter, was a mixed bag. Strength in the government sector was partially offset by weakness in the private sector, where a 0.2% q-o-q contraction was reported. However, taken as a whole, economic growth in the first half of 2025 was robust relative to a backdrop of heightened global uncertainty, a large rise in labour costs, ‘Awful April’ for consumer prices, and a weakening jobs market. Some déjà vu in the third quarter So far data for the third quarter has provided a little optimism on the activity front. UK PMIs point to an improvement in momentum relative to Q2, and consumer confidence ticked higher alongside stronger growth in consumer credit. There is the prospect that the second half of 2025 will look similar to that of 2024 as the UK government finds itself again in the midst of speculation that the Autumn Budget on 26 November will require a combination of higher borrowing, spending cuts, and tax increases. Indeed, markets, business and consumers alike have become more concerned over future growth, and UK borrowing costs have continued to rise. Higher debt servicing costs, alongside reversals in planned spending cuts, and possible downgrades to growth forecasts all contribute to the erosion of fiscal headroom. How the Chancellor chooses to respond is more uncertain; we see a few possible scenarios, but the key decision will be whether the fiscal can is kicked down the road or is there the political courage to reset the public finances onto a more sustainable footing. Looser labour markets are yet to weigh on inflation Fiscal woes have seen yields on government debt, globally, rise sharply in 2025 but for the UK more specifically, sticky inflation is also a concern. Headline CPI rose to 3.8% y-o-y in July, driven by services and food prices. We think that headline CPI will top 4.0%, double the BoE inflation target, in the coming months. If price growth continues to be broad-based, that may warrant a pause in the BoE’s current one-ratecut-per-quarter pace until there is greater certainty that price pressures have abated. That will depend on labour market loosening translating into softer wage growth. The unemployment rate has risen to 4.7%, and we expect slack will continue to emerge. But, while employment intentions are subdued, official data point to continued growth in jobs; the lack of reliable employment data only adds to BoE cautiousness. Source: Macrobond, ONS, HSBC calculations Source: Macrobond, S&P Global Source: Macrobond ONS, HMRC https://www.hsbc.com.my/wealth/insights/market-outlook/uk-in-focus/the-fastest-growing-economy-in-the-g7/

Key takeaways The GST rate cuts and rationalisation across a host of goods and services has been approved by the GST Council and will be effective from 22 September. Key to funding the tax cuts without a large fiscal implication is the folding of the compensation cess into the GST. Growth could be higher and inflation lower, improving India’s macro mix. The Goods and Services Tax(GST) overhaul announced by Prime Minister Modi on 15 August was approved by the GST Council on 3 September. The following are worth noting: Fewer and lower rates. The new rate structure will comprise two key rates – 5% (merit rate) and 18% (standard rate) – alongside a 40% ‘de-merit’ rate. This was arrived at by slashing tax rates from 12% to 5% and from 28% to 18% for the majority of items (though rates were raised for a few items like coal). The new rates will apply from 22 September (except for tobacco products, which will be moved from the compensation cess rate to the 40% GST rate later in the year). Products impacted. On the consumption side, several essential items saw a rate cut (e.g.,toothpaste, shampoo, small cars, air conditioners, and medicines, see Exhibit 1). On the production side, inputs in several sectors will face a lower tax burden (e.g. tractors in the agriculture sector, leather and marbles in labour-intensive goods, cement in construction sector, RE devices in the power sector, medical devices in the healthcare sectors). Some exemptions were added –individual life and health insurance policies will be exempt from the GST. Structural improvements. The rationalisation was not limited to lower and fewer tax rates. Some of the inverted duty problems were corrected for the textiles and fertiliser sectors. Plans were laid out for easier GST registration, pre-filled returns, and quicker refunds. If these improvements are indeed made, it will improve the ease-of-doing-business environment. From compensation cess to a 40% bracket. The compensation cess fund, which served several purposes since the inception of the GST regime, will be closed around September (or when the GST bonds are fully repaid). The items in the compensation cess bucket will be moved to the 40% GST bracket, making it regular GST revenue to be shared by the centre and state governments. This has been a key step for ensuring that the fiscal cost of tax cuts is not too high. Fiscal implication. Details showed that the gross revenue loss from the tax cuts is about INR930bn (USD10.8bn) in a consumption base of FY24. Revenues folded from the compensation cess to the 40% tax bracket can fund INR450bn (USD5.2bn) of the loss, leaving a net loss of INR480bn (USD5.6bn), which is 0.16% of GDP. Scaling this to the FY26 base implies a net revenue loss of INR570bn (0.16% of GDP) over a year. Since only halfofthe fiscal year is left, the implication for FY26 would be around 0.1% of GDP. Growth boost. Crudely put, the government’s loss is the consumer’s gain. Over a year, led by stronger consumption, GDP growth can increaseby 0.2ppt. (However, for this to transpire, the government should not run a tighter fiscal policy to offset the consumption boost.) It is also important to put the GST cuts in a broader context. If we add on the benefits from the income tax cut earlier this year (0.3% of GDP), and a lower debt servicing burden due to repo rate cuts (0.17% of GDP), the overall boost to consumption can be 0.6% of GDP. Of course, a part of this could be saved instead of spent, lowering the net boost. Inflation impact. We estimate that the tax rate cuts can lower headline CPI inflation by c1ppt if producers pass on all benefits to consumers. If the pass-through is only partial, the inflation fall could be closer to 0.5ppt. We expect the RBI to cut rates once again by 25bp in 4Q25, taking the repo rate to 5.25%. https://www.hsbc.com.my/wealth/insights/market-outlook/india-economics/gst-rationalisation-goes-live/

Brent, WTI down for a third consecutive session On weekly basis, both down more than 1% OPEC+ to consider further output hike on Sunday SINGAPORE, Sept 5 (Reuters) - Oil prices extended their decline into a third session on Friday, heading for a weekly loss for the first time in three weeks as supply expectations grow and a surprise build in U.S. crude stocks adds to demand concerns. Brent crude futures fell 19 cents, or 0.28%, to $66.80 a barrel by 0642 GMT, while U.S. West Texas Intermediate crude fell 23 cents, or 0.36%, to $63.25. Sign up here. Brent was down 1.92% and WTI down 1.19% so far this week. Crude oil remained under pressure amid concerns of rising OPEC+ supply, ANZ research analysts wrote in a note on Friday. Market expectations are growing that the group will push more barrels into the market to regain market share lost to U.S. shale producers in recent years, the analysts said. Reuters reported on Wednesday that eight members of the Organization of the Petroleum Exporting Countries and allies like Russia - known together as OPEC+ - will consider raising production further in October at a meeting on Sunday, citing two sources familiar with the discussions. Another boost would mean that OPEC+, which pumps about half of the world's oil, would be starting to unwind a second layer of output cuts of about 1.65 million barrels per day, or 1.6% of world demand, more than a year ahead of schedule. Meanwhile, U.S. crude oil inventories rose 2.4 million barrels last week as refineries headed into maintenance season, data from the Energy Information Administration showed on Thursday, compared with expectations in a Reuters poll for a 2 million-barrel draw. Strength in the downstream sector has been a key support for prices over recent months, BMI analysts said in a report, but refining margins will likely be squeezed in coming months as global demand growth wanes and refiners ramp up maintenance. This, in turn, will lower throughput, reducing the call on crude, the BMI analysts said. Supply risks, though, continue to cloud the market. U.S. President Donald Trump told European leaders on Thursday that Europe must stop buying Russian oil, a White House official said. Any cuts to Russia's crude exports or other disruption to supplies could push global oil prices higher. https://www.reuters.com/world/middle-east/oil-heads-first-weekly-loss-three-supply-glut-looms-2025-09-05/

Ganoderma spreads in Malaysia, affecting newly replanted areas Fungal infection could reduce palm oil yields significantly Palm board says 13.7% of surveyed Malaysian palm areas infected KUALA LUMPUR, Sept 5 (Reuters) - A fungal disease once confined to older palm trees in coastal areas is spreading across Malaysian palm plantations and appearing much earlier in growth cycles, threatening yields in newly replanted areas, agricultural industry experts say. The rise of the fungus in second-largest palm oil exporter Malaysia, as well as in top producer Indonesia, is another headache for an industry struggling with stagnating output of the world's most popular vegetable oil as plantations age. Sign up here. Ganoderma, the fungus, is emerging in second-generation plantings, whereas previously it was only evident after three planting cycles, said Julian McGill, managing director of oil crop advisory firm Glenauk Economics. The disease occurs more frequently when successive palm generations are replanted on the same land. “The enforcement of zero-burning policies in the field has also increased its spread, and examples of Ganoderma in newer plantings, inland soils and younger trees appear to be becoming more frequent,” McGill said. Ganoderma spreads slowly but detection is difficult. “By the time you see the symptoms in the field the disease is already well established, and the infection may have spread,” McGill said. Previously, plantations would burn old trees to make way for new plantings and that would stop the spread of an existing infection, but burning has been banned because of its contribution to Southeast Asia haze events. Chong Khim Phin, a professor of plant pathology at the University Malaysia Sabah, said some studies estimate that a 1% increase in Ganoderma infection could reduce plantation yield by 0.5% to 0.8%, depending on factors including tree age and infection density. “Over a 25-year crop cycle, this could mean a cumulative loss of 15%–20% in fresh fruit bunches (FFB) productivity in heavily affected areas,” he said. According to Malaysian Palm Oil Board data, of 1.46 million hectares of oil palm area surveyed last year, 199,644 hectares, or 13.7%, were infected with Ganoderma, with the states of Johor, Sabah, Sarawak, Perak and Negeri Sembilan most affected. Data on previous years was unavailable. Malaysia's total oil palm planted area is 5.61 million hectares. Ganoderma will potentially cut into yields and palm oil output and further tighten global supplies, which have already been impacted by replanting delays and Indonesia's biodiesel mandate, driving palm prices to a premium to soybean oil last year, reversing years of discounts. 'DEATH SENTENCE' M.R. Chandran, chairman of agritech firm IRGA, described Ganoderma as the second-greatest concern for oil palm planters after labour shortages, given its impact on yields. A roughly 14% Ganoderma infection rate in a plantation can lead to a FFB yield loss of 20% to 60% per hectare, depending on other conditions, the industry veteran said. In Peninsular Malaysia, young palms in replanted areas have high infection rates because old diseased material was not properly removed, he said. Smallholders that lack resources to prevent Ganoderma's spread are especially vulnerable. Mohd Sharul Haizam Shafei, a planter in Selangor state, said about two acres of his family's 50-acre plantation have been affected, although only one tree has been felled because it reached a critical stage. Kuala Lumpur Kepong Berhad (KLKK.KL) , opens new tab, which has a planted area of 287,354 hectares in Malaysia and Indonesia, said in its annual report that it was battling the disease across its plantations but did not specify the extent or impact. Malaysian planter FGV Holdings (FAGVF.PK) , opens new tab told Reuters around 1% of its planted area was infected as of 2024, but that the impact on FFB production this year would be below 0.1% due to continuous intervention. Carl Bek-Nielsen, chairman of the Malaysian Palm Oil Council, said, however, that Ganoderma is "like a death sentence" because there is no cure or treatment once a tree is infected. “Yields will immediately start a progressive decline after infection so yields will be considerably lower in infected fields,” Bek-Nielsen said. https://www.reuters.com/business/environment/palm-oil-yields-risk-ganoderma-appears-earlier-planting-cycles-2025-09-05/

Sept 5 (Reuters) - West Africa-focused Tullow Oil (TLW.L) , opens new tab named oil and gas industry veteran Ian Perks as its new CEO on Friday, succeeding Richard Miller, who will return to his previous role as the group's chief financial officer. The change comes as the company, which has been streamlining its operations, recently agreed to sell its assets in Gabon and Kenya to reduce debt. Sign up here. Perks brings more than three decades of experience in the oil and gas sector, with a strong focus on Africa and international markets, having held senior positions at BG Group, Anadarko, and Total. He has overseen major projects such as the $20 billion Mozambique LNG project and the delivery and subsequent operations of the $10 billion Queensland Gas Company LNG project, Tullow said in a statement. In August, Tullow swung to an interim loss and cut its annual production forecast, citing continued underperformance at its flagship Jubilee oilfiled. Miller was appointed as Tullow's interim chief in February after Rahul Dhir announced his exit as CEO last December. https://www.reuters.com/sustainability/boards-policy-regulation/tullow-oil-names-industry-veteran-ian-perks-new-chief-2025-09-05/

VLADIVOSTOK, Russia, Sept 5 (Reuters) - Russian President Vladimir Putin said on Friday that the planned Power of Siberia 2 gas pipeline to China was a "mutually beneficial project" and the price of the gas would be based on a market formula similar to the one used for supplies to Europe. Russia proposed the route years ago, but the plan has gained urgency as it looks to Beijing as a customer to replace Europe, which is seeking to wean itself off Russian energy supplies over Moscow's 2022 invasion of Ukraine. Sign up here. Russia and China signed a binding memorandum to build the pipeline during Putin's visit to China this week, but Russian energy company Gazprom (GAZP.MM) , opens new tab, which aims to start delivering gas via the pipeline by 2030, said pricing was yet to be agreed. "This is one of the largest energy projects in the world," said Putin, speaking at an economic forum in Vladivostok. He said the price would "be calculated using essentially the same formula as for deliveries to Europe ... It is absolutely market-based." Russia has lost most of its gas market in Europe since the start of the war in Ukraine. Mongolian Prime Minister Zandanshatar Gombojav, through whose country the new pipeline will pass, told the same event that Ulaanbaatar was ready to proceed but there were details to be worked out. Mongolia may buy some of the Russian gas, he said. https://www.reuters.com/sustainability/boards-policy-regulation/putin-says-planned-gas-pipeline-china-will-be-mutually-beneficial-use-market-2025-09-05/

Monsoon season has killed 880 in Pakistan, 150 died in India over August Punjab on both sides hit hardest, crops destroyed Delhi's Yamuna river at dangerous levels, thousands evacuated Jhelum river breaches embankment in Kashmir, 9,000 relocated NEW DELHI/LAHORE, Sept 4 (Reuters) - Heavy rain in the Himalayas continued to lash northern India and neighbouring Pakistan on Thursday with flooding of homes and highways worsening as major rivers overflowed. Although weather officials in India forecast some respite from downpours later in the day, Pakistan has warned that rain is expected to continue until September 9. Sign up here. A fierce monsoon season has brought immense destruction in the region this year, killing 880 in Pakistan over the season while in India, nearly 150 people have lost their lives in August alone. Torrential rain has swollen many rivers, spurring authorities in India to release water from dams and further flooding areas on both sides of the border. The countries share rivers, which flow from India into Pakistan. New Delhi has issued seven warnings to Islamabad about opening dam gates, three in the last 24 hours, officials in Pakistan said. Irfan Ali Kathia, director-general of the Provincial Disaster Management Authority, told Reuters on Thursday that three rivers in Pakistan have been affected by the release of more water from Indian dams. India's foreign and water resources ministries did not immediately respond to Reuters requests for a comment. The two countries share a border along their breadbasket states, called Punjab on both sides, which has borne the brunt of the worst flooding in years. In Indian Punjab, 37 people have died since the start of August and the rain has destroyed crops across tens of thousands of hectares. The state government said it would provide 710 million rupees ($8 million) in flood relief and that nearly all of its 23 districts have been impacted. In Pakistan's Punjab, 1.8 million people have been evacuated in recent weeks after floodwaters submerged nearly 3,900 villages. Authorities in Pakistan said on Thursday that to save the historic city of Multan from being flooded, they are considering breaching the Chenab riverbank. That will allow water to be released into the city's outskirts so the river's levels can come down. FLOODING IN DELHI India's Yamuna river rose to dangerous levels in the capital Delhi - a flow the Central Water Commission described as a 'severe' situation. On Thursday, muddy water poured into homes in low-lying areas, from which thousands had already been evacuated to safer places as a precaution. Authorities shut the historic Loha Pul, or Iron Bridge, spanning the Yamuna in the older part of the city. People waded through floodwaters in areas surrounding the historic Red Fort, many carrying an idol of Lord Ganesha, that is often immersed in river waters in a Hindu ritual at this time of year. Residential areas were flooded in Srinagar, the summer capital of India's Jammu and Kashmir federal territory, after a breach of the Jhelum river embankment, while 9,000 people were evacuated in Budgam, the local commissioner said. "The Jhelum is climbing, but at a much slower rate than was feared," Omar Abdullah, Jammu and Kashmir's chief minister, said on X. "The administration is not going to lower its guard. We continue to monitor the situation very closely." Rescuers searched for people trapped under debris after the rain triggered a landslide at the Ratle hydroelectric power project on the Chenab river in Drabshalla, officials said. Indian weather officials have forecast showers will ease on Thursday, with moderate rain expected in Jammu and Kashmir and the state of Uttarakhand. ($1 = 87.5060 Indian rupees) https://www.reuters.com/sustainability/climate-energy/heavy-rain-overflowing-rivers-cause-fresh-flooding-northern-india-pakistan-2025-09-04/

LONDON, Sept 5 (Reuters) - Tin continues to outperform the rest of the London Metal Exchange (LME) base metals pack as the market awaits the return of the Man Maw mine in Myanmar. It's been two years since the mine, one of the world's largest, was closed for a resource audit. It's been six months since the authorities in the semi-autonomous Wa State invited applications for new mining permits. Sign up here. Yet to date there is no evidence of any ramp-up in activity. Indeed, the flow of tin concentrates from Myanmar to neighbouring China has almost dried up completely. The lingering uncertainty over Man Maw has rekindled fund buying interest and lifted the LME three-month tin price from below $30,000 per metric ton in April to more than $35,000 at the end of August. Speculators are once again betting on the obscurest part of the tin supply picture. WAITING FOR MAN MAW The continued absence of Man Maw supply is manifest in China's reduced imports of tin concentrates from Myanmar. The flow of raw material to Chinese smelters dropped to just 933 tons in July, which suggests that not only has activity at Man Maw not resumed, but that the country's other smaller mines are experiencing some sort of disruption, possibly due to the earthquake which rocked the country in March. Year-to-date imports from Myanmar have fallen by 77% year-on-year to just 14,200 tons. By way of comparison, monthly imports averaged 15,000 tons in both 2022 and 2023, when Man Maw was still pumping out tin. The latest concrete news from the Wa State came in July, when the International Tin Association reported , opens new tab that the first new permits had been granted for mining to resume at Man Maw. The Association warned that it would take time for actual tin production to resume and export flows to recover. So it has proved. NO SCARCITY China's tin smelters have had some success in compensating for the loss of what was their main supply source until Man Maw was suspended in August 2023. The Democratic Republic of Congo has emerged as the largest single supplier of tin concentrates this year, while imports from both Australia and Nigeria have also risen sharply. But total concentrate imports of 73,000 tons through July are still down by 32% year-on-year. Chinese smelter margins have been squeezed and capacity utilisation was below 70% in many parts of the country last month, according to local data supplier Shanghai Metal Market. Many operators are carrying less than 30 days of concentrate stocks and taking maintenance downtime in the hope that raw materials availability will improve by the time they return. Yunnan Tin (000960.SZ) , opens new tab, the world's largest producer of refined tin, has just powered down , opens new tab its Gejiu smelter for 45 days for its annual overhaul. Yet to date the loss of Man Maw hasn't caused any tangible tightness in the refined metal segment of the supply chain. Global exchange inventory has been stable above the 11,000-ton level for the last three months, a far cry from the days of genuine scarcity in 2021 when stocks dwindled to just 1,000 tons. It helps that exports from Indonesia have recovered from last year's permitting disruption. Outbound shipments of 30,000 tonnes through July were up by 64% on the same period of 2024. It probably also helps that demand from the electronics sector, where tin is used to solder circuit-boards, has been impacted by the escalation in trade tensions between the United States and China. BULLS RETURN Tin bulls are undeterred. Funds have lifted their bets on higher prices to 4,515 LME contracts (22,575 tons), while short positions have been slashed to just 610 contracts. Net positioning is now as long as it's been since March, when the price spiked to a three-year high of $38,395 per ton on news the M23 insurgent group had briefly seized control of the Bisie tin mine in the Congo. Bisie swiftly returned to normal operations after the withdrawal of M23 as part of a U.S.-brokered peace deal between the Congo and Rwanda. Man Maw, however, remains conspicuous by its absence. Funds seem to be betting that a return to pre-closure production levels is not going to happen any time soon. Whether that's a correct assumption is unknowable, given the almost complete lack of information flow out of the Wa State. The answer will become apparent if and when the flow of raw materials over the border to China shows signs of returning to something close to historical norms. The opinions expressed here are those of the author, a columnist for Reuters. https://www.reuters.com/markets/commodities/tin-market-still-beholden-fortunes-myanmar-mine-2025-09-05/

MUMBAI, Sept 5 (Reuters) - The Indian rupee slipped to a record low on Friday as traders remained jittery over news related to U.S. tariffs on India, while likely dollar-selling intervention by the Reserve Bank of India curbed sharper losses, traders said. The rupee fell to 88.36 against the U.S. dollar, eclipsing its previous all-time low of 88.33 hit on September 1. Sign up here. The currency was last at 88.2750, down 0.1% on the day. Traders cited strong buying from foreign banks amid speculation about ongoing tariff pressures on India from the U.S. The "spike on USD/INR was caused by worries of higher tariffs on India but state-run banks stepped in over 88.30 to cap losses, most likely on behalf of the Reserve Bank of India," a senior trader at a bank said. Merchant flows are relatively muted today so activity is skewed towards the dollar buying side, the trader added. MUFG said the rupee could weaken to 89 by the first quarter of calendar year 2026 under the assumption that the steep tariffs remain for now but are eventually lowered to 25% sometime next year. Foreign portfolio investors have continued to withdraw from Indian equities with net sales of $1.4 billion so far in September, taking the total outflow so far this year to over $16 billion. https://www.reuters.com/world/india/indian-rupee-slips-record-low-likely-central-bank-intervention-caps-losses-2025-09-05/

TOKYO, Sept 5 (Reuters) - Australia and Japan on Friday said they would deepen cooperation to address increasing security challenges in the Indo-Pacific region, including assisting each other in evacuating citizens at risk overseas. "We agreed to further strengthen our collective deterrence capabilities and to activate discussions on potential contingencies that could affect the security of both countries and the region," Japan's Foreign Minister Takeshi Iwaya said. Sign up here. His comments came after a meeting in Tokyo that also included Japanese Defence Minister Gen Nakatani and their Australian counterparts, Penny Wong and Richard Marles. Japan and Australia, both close allies of the United States, are forging closer ties as China's regional influence expands. Their cooperation includes joint military training and a reciprocal access agreement signed in 2023 that allows their forces to operate on each other’s territory. Japan and Australia are also members of the Quad grouping alongside the United States and India. Last month, Japan clinched a landmark A$10 billion ($6.5 billion) deal to build warships for Australia, marking Tokyo's most consequential defence sale since it ended a ban on military exports in 2014. Japan is seeking more defence industry collaboration in areas such as advanced unmanned systems, Nakatani said. Australia's Wong said Canberra aimed to expand economic cooperation with Tokyo beyond its role as a major supplier of energy, including liquefied natural gas. "We want the next stage of this to be economic security in the area of critical minerals. And we see that as of great importance," she said. (This story has been refiled to fix the day of the week to Friday in paragraph 1) https://www.reuters.com/world/china/japan-australia-pledge-closer-security-ties-counter-indo-pacific-risks-2025-09-05/