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Singapore Now In Recession, Q2 GDP Dips 41% 📉
The Singapore Ministry of Trade and Industry released some important data earlier this week. Singapore’s Gross Domestic Product (GDP) is down 41% between April to June on a quarter-on-quarter annualised basis. Many economists predicted the decline would be 37.4%, so it’s turned out to be slightly worse than expected. And now Singapore is officially in a recession. The reported numbers also indicate that construction is the country’s hardest hit industry, which faced a 95% quarter-on-quarter decrease. Other hard hit industries include services and tourism. More data will be coming out next month and the government expects full-year GDP to contract between 7% to 4%.
This is an example of how the coronavirus has affected a major economy. Singapore is a small country and very reliant on trade, but Singapore is also a historically strong economy, has a strong social safety net, and has above average success in containing the coronavirus vs. other developed nations. Singapore was able to provide a recent $72 Billion stimulus and expects Q3 2021 to be the quarter when the economy reaches pre-Covid levels. Let’s wait and see how other countries begin reporting their own macroeconomic data, as many economists predict that similar GDP declines will occur around the world.
India’s Paytm Expands to Mini-Programs 🛍
Paytm is currently the largest fintech company in India. 7 Million merchants across the country use Paytm to process digital payments, connect with 140 million monthly active users, and explore a host of other financial services. They just announced the creation of Paytm mini-programs, which gives businesses a deep integration to connect their currently existing mobile websites or web apps into Paytm. So a small business can then track payments, review analytics, issue refunds from their Paytm app. By subscribing to a Paytm mini-program offered by a retailer, users can also receive push notifications. This all takes huge inspiration from WeChat’s mini-programs in China.
In China, a major innovation from WeChat’s product comes from mini-programs. Companies can build mini-programs to have more immersive, interactive experiences with their customers. They are not fully fledged apps but more light-weight mini-apps that are built on top of the WeChat platform. It worked really well for WeChat, with users spending $119 Billion through mini-programs in 2019. With this move, PayTM is evolving into more of a platform, which increases the future revenue potential of the company.
Alibaba’s New Growth Market = Russia 🇷🇺
Alibaba is looking to Russia as a market that will drive $10 Billion in annual revenue by 2022-2023. Alibaba currently operates in Russia under a joint venture with local Russian partners called AliExpress Russia. Russia’s e-commerce market is worth $28 Billion and around 90% of foreign shipments to Russia come from China. During the coronavirus, AliExpress Russia has seen significant growth and even lowered their transaction commissions to incentivise more merchants onto the platform.
For Alibaba, Russia is turning out to be one of their strongest markets, and the AliExpress Russia CEO Dmitry Sergeev has publicly said that the company could consider an IPO in three to four years. Russia is a huge market with a population of 144 Million. Noticeably, e-commerce giant Amazon does not have a presence in Russia. Instead, there is a local equivalent called Ozon, who has been the rumoured acquisition target of SoftBank and Amazon. If Alibaba continues to press their advantage in Russia, the company could develop a competitive moat.
Update #27 - Singapore's GDP, Paytm Mini-Programs, and Alibaba Russia