Crypto News: Economics Daily: A free lunch

I'm Malcolm Scott, international economics enterprise editor in Sydney. Today we're looking at Indonesia's incoming president. Send us feedback and tips to ecodaily@bloomberg.net or get in touch on X via @economics. And if you aren't yet signed up to receive this newsletter, you can do so here.

China's economy likely grew at its weakest pace in six quarters.
The math says it's getting harder to break into the American middle class.
Coming up: The ECB is set to lower interest rates for a second straight meeting. Earlier, data showed euro-area inflation slowed more than initially reported. Follow our TopLive blog here.

Ex-general Prabowo Subianto, who remade his image from fiery nationalist to affable grandpa, will take office as Indonesian president on Sunday, beginning what's set to be one of the world's boldest economic experiments.

His predecessor Joko Widodo prioritized roads, rail and bridges and the mineral export industry, with GDP growth averaging 4.2% in his 10 years as president.

Prabowo is switching the focus to soft infrastructure — his signature policy is a $30 billion a year free school-lunch program. The goal: improve nutrition, boost educational outcomes in a nation where almost a quarter of the population is under the age of 15 and power up economic growth to 8% a year.

Economists and investors applaud the ambition; it's the price tag and risks in delivering the program without waste and corruption that has them concerned.

As the saying goes, there's no such thing as a free lunch.

Finance Minister Sri Mulyani Indrawati has set aside 71 trillion rupiah ($4.6 billion) for the lunch program in the 2025 budget, with costs set to climb as the rollout broadens. The eventual $30 billion-a-year outlay is equivalent to 14% of the entire 2024 budget and about 2.5 times its yearly health expenditure. It's also five times the amount India, which runs the world's largest midday meal scheme, spent in 2023.

Angst among investors over the cost and other policies eased somewhat this week as reports suggested the widely respected Indrawati — a former World Bank managing director — has been asked to stay on as finance minister.

Risk Perceptions

"We see a reduction of medium-term fiscal risk perceptions following the likely reappointment of the incumbent finance minister," Citigroup said in a note. There's now a lesser chance that the next government could abolish the legal limit on the budget deficit or ramp up public debt ratios to finance its priority programs, it added.

If all goes to plan, the lunch program will boost farmers' incomes and therefore their spending, improve health and education outcomes for the millions of school kids, and help Indonesia become one of the world's key growth drivers.

Economies that have "escaped the middle-income trap such as Singapore, Korea, and Taiwan all have pretty good soft infrastructure," said Rob Subbaraman, head of global macro research at Nomura Holdings. "So, it's a good move by Indonesia, but they shouldn't suddenly forget about the physical infrastructure."

The Atlanta Fed president sees the US economy slowing but staying robust.
China's government set a new year-end target for loans to so-called "white-list" property projects after disbursing 2.23 trillion yuan as of Oct. 16. The measure, aimed at ensuring home completion, was part of a basket of initiatives announced on Thursday.
Australia's labor market powered on in September, prompting a rise in the currency as traders scaled back bets on the Reserve Bank's first interest-rate cut.
Whether Japan can sustain its wage growth momentum is likely to be a key factor affecting the longevity of Prime Minister Shigeru Ishiba's administration and the timing of the central bank's next interest rate hike. Separately, Japan's exports declined by the most since February 2021.
A fresh bout of US dollar strength risks throwing a spanner in the works for Asian central bankers mulling further easing of interest rates.

Individual philanthropy has reached some $1.3 trillion a year, according to Citigroup estimates. And that may undercount the true number, because many high or ultra-high net-worth individuals use foundations, which fall under institutional giving, a team at the bank says.

Citigroup, in a report released this month, tallied individual monetary donations at $770 billion, with an additional $559 billion value imputed for the donation of time by individuals. That leaves charitable giving by individuals at around 1% of global GDP.

Source: Citigroup

The US is the world champion of giving, both in total dollars and as a share of GDP, while New Zealand comes in at No. 2 relative to economic size. India has emerged as a new global philanthropic power, Karen Kardos — global head of philanthropic advisory at Citi private bank — and Citigroup's Andrew Pitt and Amy Thompson wrote in their report. Data was collected in countries with a developed non-profit ecosystem.

Bloomberg New Economy: The world faces a wide range of critical challenges, ranging from ongoing military conflict and a worsening climate crisis to the unforeseen consequences of deglobalization and accelerating artificial intelligence. But these challenges are not insurmountable. Join us in Sao Paulo on Oct. 22-23 as leaders in business and government from across the globe come together to discuss the biggest issues of our time and mark the path forward. Click here to register.