Fashion
US reconciliation act to raise real potential output: CBO
Real GDP is the nation’s economic output adjusted to remove the effects of changes in prices.
In the near term, the net effects of the 2025 reconciliation act, higher tariffs and lower net immigration on aggregate demand and the labour supply drive most of the changes in the agency’s forecast. The reconciliation act reduced taxes for the vast majority of US households.
US growth in 2026 would be 0.4 pp higher than in the last projections by the non-partisan CBO, reflecting the 2025 reconciliation act’s boost to consumption, private investment and federal purchases and the reducing impact of uncertainty about US trade policy.
In 2027 and 2028, the effects of reduced net immigration and the waning of the reconciliation act’s near-term boost to demand would drag growth.
In 2025, the growth of real GDP is projected to be 0.5 percentage points lower in CBO’s current projections than it was in the agency’s January 2025 projections, primarily because the negative effects on output stemming from new tariffs and lower net immigration more than offset the positive effects of provisions of the reconciliation act this year.
In 2026, the reconciliation act’s effects boosting growth dominate the effects slowing it that stem from the reduction in net immigration. Waning of the elevated uncertainty about trade policy provides modest support to economic growth next year as supply chains begin to adjust to the higher tariffs.
Growth next year would be 0.4 percentage points higher than in the previous projections, reflecting the reconciliation act’s boost to consumption, private investment and federal purchases and the diminishing effects of uncertainty about US trade policy.
In 2027 and 2028, the effects of reduced net immigration on the labour force and the waning of the reconciliation act’s near-term boost to demand would act as a drag on growth.
Partially offsetting those effects, an increase in domestic production, driven by higher tariffs, provides a boost to economic growth. As a result, real GDP growth in those years is roughly the same as it was in CBO’s January 2025 projections.
In addition to boosting aggregate demand in the near term, the reconciliation act will, in CBO’s assessment, raise real potential output by increasing the supply of labour, the capital stock and the and total factor productivity (TFP), the average real output per combined unit of labour and capital, excluding the effects of cyclical changes in the economy.
Meanwhile, the CBO estimated that President Donald Trump’s tariffs would shrink the US economy and add to inflation while reducing the federal deficit by $2.8 trillion.
In a published letter to Senate Democrats, the CBO estimated the budgetary and economic effects of tariff increases that were implemented through executive actions between January 6 and May 13.
The analysis found that shrinking of the US economy would vary but said that tariffs would reduce GDP growth by 0.06 per cent each year, adding that real GDP will be 0.6 per cent lower in a decade than CBO’s earlier forecasts.
“In CBO’s assessment, the changes in tariffs will reduce the size of the US economy—in part because of tariffs imposed by other countries in response to the increases in US tariffs. After accounting for that change in the size of the economy, CBO estimates that the changes in tariffs will reduce total federal deficits by $2.8 trillion,” the letter said.
“Reductions in investment and productivity stemming from higher tariffs will be partially offset by increases in resources available for private investment resulting from the reduction in federal borrowing. CBO estimates that, on net, real (inflation-adjusted) economic output in the United States will fall as a result,” it added.
Fibre2Fashion News Desk (DS)
The Ministry of Finance is giving the final touches to a draft resolution that lays out an initial road map to achieve these numbers.
Vietnam’s National Assembly recently approved several socio-economic targets for next year that include GDP growth of at least 10 per cent, GDP per capita of $5,400-$5,500, a rise in consumer price index of around 4.5 per cent and labour productivity gains of 8.5 per cent.
Exports are expected to rise by about 8 per cent in 2026, while retail sales of goods and services are targeted to rise by 11 per cent.
Total social investment is projected at nearly 4.93 quadrillion VND ($189 billion)—up by 18.7 per cent year on year (YoY) and equivalent to 33-33.7 per cent of GDP.
Exports are expected to rise by about 8 per cent in 2026, delivering a trade surplus of around $28 billion, while retail sales of goods and services are targeted to rise by 11 per cent, with a stretch target of 12 per cent.
Industrial hubs like Hanoi, Ho Chi Minh City, Hai Phong, Quang Ninh, Da Nang and Dong Nai are also chasing double-digit gains.
Less affluent provinces like Son La, Gia Lai, Dak Lak, Vinh Long, Dong Thap and Ca Mau are also targeting 8-per cent or better regional GDP growth, a domestic news agency reported.
The National Assembly has outlined 11 key task groups and solutions. The government has instructed relevant agencies to break these down into concrete, actionable plans under the resolution.
Core focuses include accelerating institutional reforms for greater transparency, consistency and equity in investment and business rules to unlock productive forces and pool resources; advancing a new growth model and economic restructuring; and ensuring timely delivery of strategic and critical infrastructure projects.
Fibre2Fashion News Desk (DS)
Power use rose 6.2 per cent year on year (YoY) to 835.6 billion kilowatt-hours in November. Electricity consumption in the secondary industry increased by 4.4 per cent, reflecting stable industrial activity.
China’s electricity consumption grew steadily in November, indicating resilient economic activity, as per official data.
Power use rose 6.2 per cent YoY to 835.6 billion kilowatt-hours, with secondary industry consumption up 4.4 per cent.
Residential demand increased 9.8 per cent.
In the first eleven months, total electricity consumption climbed 5.2 per cent YoY to about 9.46 trillion kilowatt-hours.
Residential electricity uses also remained robust, rising 9.8 per cent to 105.7 billion kilowatt-hours during the month, as per Chinese media reports.
In the first eleven months of the year, China’s total electricity consumption grew 5.2 per cent YoY to approximately 9.46 trillion kilowatt-hours, pointing to sustained demand despite broader economic challenges.
Fibre2Fashion News Desk (SG)
This translates to a 22-per cent reduction in export earnings versus a climate-adaptive scenario.
The apparel industries in Vietnam, Cambodia, Pakistan and Bangladesh may lose up to $65.8 billion in export earnings by 2030 and create a million fewer jobs due to the impact of climate changes if they make no efforts to manage heat stress and higher flooding, a study revealed.
Under the no-adaptation scenario, estimates for export earnings by 2050 are 68.8 per cent lower than in the adaptation scenario.
The estimates for 2050 are even worse. With the compounding effect of slower growth under the no-adaptation scenario, estimates for export earnings are 68.8 per cent lower than in the adaptation scenario.
The analysis also predicts that in these four countries, the employment levels in a no-adaptation scenario would be 8.64 million lower in 2050 than in the adaptative scenario.
The International Labour Organization’s Better Work team offered inputs for the study.
Extreme weather is already disrupting production, delaying orders and threatening workers’ health and incomes. As heat waves and floods become more severe and frequent, worker health, productivity, job creation, and earnings are increasingly at risk, Better Work said in a release.
Despite these challenges, there is reason for optimism. Action is under way across the apparel sector. Governments are introducing and enforcing new standards on workplace heat, ventilation, rest breaks, and access to water.
Global brands are adopting voluntary standards to better manage extreme heat and flooding risks across their supply chains. Manufacturers are training workers to identify and respond to heat stress and related illnesses.
Fibre2Fashion News Desk (DS)
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