Showing posts with label Economic. Show all posts
Showing posts with label Economic. Show all posts

16 October 2019

The world economy’s strange new rules

Rich-world economies consist of a billion consumers and millions of firms taking their own decisions. But they also feature mighty public institutions that try to steer the economy, including central banks, which set monetary policy, and governments, which decide how much to spend and borrow. For the past 30 years or more these institutions have run under established rules. The government wants a booming jobs market that wins votes but, if the economy overheats, it will cause inflation. And so independent central banks are needed to take away the punch bowl just as the party warms up, to borrow the familiar quip of William McChesney Martin, once head of the Federal Reserve. Think of it as a division of labour: politicians focus on the long-term size of the state and myriad other priorities. Technocrats have the tricky job of taming the business cycle.

15 October 2019

Automation and economic disparity: A new challenge for CEOsOctober 2019 | Article

By André Dua and Susan Lund

As intelligent machines take over a wider variety of tasks, many global companies are doubling down on workforce retraining. And rightly so—the next wave of automation technologies promises to alter the nature of work further across a range of industries. But beyond these thorny organizational challenges around what work is—and what work will become—is another, less-explored management consideration: Where will this work happen?

New McKinsey Global Institute research on the future of work in the United States holds some clues. Economic disparity in the United States is high, and the health and trajectory of US local economies differ sharply from place to place—meaning that the forces of automation will affect localities in vastly different ways. How local economies respond will therefore have big, long-term implications for companies in where they hire, where they locate operations, where they invest, and even where they will find their customers.
Shifting fortunes

Our new research looks at how the future of work may play out across 315 US cities and more than 3,000 US counties. The study finds that just 25 urban areas and their peripheries have accounted for a majority of the country’s job growth since the Great Recession, and these areas are poised to generate 60 percent of job growth in the decade ahead (exhibit). These megacities and high-growth hubs, including Houston, Los Angeles, New York, and Seattle, are the most dynamic economies in the country, with a disproportionate share of high-growth industries and high-wage jobs. By contrast, 54 trailing cities and roughly 2,000 rural counties that are home to one-quarter of the US population have older and shrinking workforces, higher unemployment, and lower educational attainment. These areas could be facing a decade of flat or even negative employment growth.

A visual guide to remittances, the lifeblood of developing economie

John Letzing, Andrew Berkley

When Amnesty International interviewed Santhosh, a migrant worker from Kerala, India about his experiences in Saudi Arabia, he described 18-hour days at a metal fabrication company punctuated by beatings. After months of unpaid work, he fled without any money to send home to his wife, son and ageing parents.

Santhosh and others like him are willing to put themselves at risk because their loved ones rely so heavily on their foreign earnings. According to Amnesty, remittances account for nearly a third of Kerala’s net domestic product. While the individual amounts are often small, remittance payments can add up in a big way.

People working abroad sent more money home to low- and middle-income countries in 2018 than ever before, and the biggest individual chunk went to India: a total of $79 billion, equal to nearly 3% of the country’s GDP. The Philippines, meanwhile, received an equivalent of about 10% of its GDP in remittances. Excluding flows to China, remittances to low and middle-income countries in 2018 were significantly larger than the $344 billion in total foreign direct investment flows that year. This year, these remittances are poised to grow even further, to $550 billion - making them the single biggest source of external funding for recipient economies.

5 trends in the global economy – and their implications for economic policymakers


The Global Competitiveness Report 2019 is a much-needed economic compass, building on 40 years of experience of benchmarking the drivers of long-term competitiveness and integrating the latest learnings about the factors of future productivity.

The Global Competitiveness Index 4.0 is organized into 12 pillars: institutions; infrastructure; ICT adoption; macroeconomic stability; health; skills; product market; labour market; financial system; market size; business dynamism; and innovation capability. The index has a scoring system ranging from 0 to 100, with the frontier (100) corresponding to the goal post for each indicator.

Singapore is the nation closest to the competitiveness frontier. Among large economies, the United States ranks highest and continues to be an innovation powerhouse. Among the BRICS, China ranks highest. The lowest places in the rankings are occupied by African economies who have not yet crossed the halfway mark to the competitiveness frontier.

11 October 2019

An Energy Crisis Is Putting Cuba’s Post-Castro Leadership to Its First Test

William M. LeoGrande 

Venezuela’s economic collapse and Washington’s new sanctions on companies shipping Venezuelan oil to Cuba have plunged the island nation into its most severe energy crisis since the collapse of the Soviet Union in the early 1990s. In response, Havana is looking to its old ally Russia to plug the hole in energy supplies left by the decline in Venezuelan shipments. But the crisis is hampering plans to implement economic reforms that Havana hopes will respond to popular demands for economic liberalization while retaining the Communist Party’s political dominance.

Visiting Cuba last week, Prime Minister Dmitry Medvedev promised that Russia would help Cuba through the current crisis. But the long-term challenge for Havana is how to develop energy security, locking in stable sources of supply that don’t depend on shifting political winds. ...

ASEAN’s Digital Economy: Getting The House In Order – Analysis

By Amalina Anuar*
Source Link

Thailand’s ASEAN chairmanship in 2019 saw the kingdom laying down several blueprints to unleash the oft-touted US$240 billion potential of ASEAN’s digital economy. This included, among others, the Digital Integration Framework Action Plan (DIFAP).

Thisdigital framework built upon last year’s dual ratification of the ASEAN e-Commerce Agreement and ASEAN Framework on Digital Data Governance (FDDG). As 2019 nears its close, what progress has ASEAN made so far in realising its digital ambitions, and how can the grouping move forward from here?

The House We Live In

For the digital economy, the importance of both physical and institutional infrastructure cannot be understated. So far, ASEAN member states have made unanimous commitments to providing and improving the quality of its information infrastructure.

No Disguising The Economic Slowdown Now. Take A Look


Only last spring, as the country was gearing up for elections, we were hearing about a growth rate of 7 per cent, the highest in the world. Various new statistics were trotted out to suggest that the growth rate since 2014 had been higher than that under the previous regime. Those of us who looked at other economic indicators such as the unemployment rate and growth in tax revenue sensed the clear signs of the onset of an economic slowdown, but were dismissed as compulsive contrarians.

Yet, as winter approaches, the debate is no longer about how high the growth rate is, but about whether we are in a structural recession or a cyclical one, with clear signs of growth dropping sharply across sectors. Even the government's spokesmen and sarkari economists are not singing the "all izz well" tune.

But the chronicle of this economic downturn was foreshadowed even by official statistics. Take the successive rounds of revised estimates of GDP put out by the Central Statistical Organisation (CSO). On January 7, when the CSO released the first advance estimate of GDP for 2018-19, the yearly growth rate was reported as 7.2 per cent. On February 28, when the second advanced estimate was published, the number was revised down to 7 per cent. By May 31, when the provisional estimate for the 2018-19 GDP was published, the number had fallen to 6.8 per cent. When the CSO published its first quarter estimate of GDP for 2019-20 in late August, the reported quarterly growth rate was 5 per cent, the lowest quarterly figure in more than six years.

7 October 2019

What the private sector can do for India's economic growth


The private sector’s role in encouraging a country’s growth and economic development cannot be overstated. Private enterprises are the chief agents in creating employment, providing funds, building competitiveness and driving innovation - all essential instruments for growth.

The private sector, in particular, takes entrepreneurial risks, which is central to how it translates investments into wealth creation and income generation. This role takes on further significance in the current context, as rising uncertainties in a rapidly changing global landscape cause economic growth concerns, particularly for emerging nations.

In the past, India has shown strong resilience in the face of global volatility and has continued to grow steadily, placing it among the world’s fastest-growing economies. The Indian economy grew at a rate of 6.8% during 2018 and is projected to grow at a rate of 7% and 7.2% during 2019 and 2020, respectively. The private sector has played a huge role in India’s development and is largely responsible for the phenomenal growth registered by the country since the economy was opened up in 1991.

6 October 2019

The Geoeconomic Superstorm Threatening the Globe’s Three Financial Hubs

Michael B. Greenwald
Source Link

For close to four decades, New York, London, and Hong Kong have dominated the international financial system as first among equals relative to their peers. All three cities are characterized by extensive financial services, ranging from boutique advisory to liquid capital markets, attracting firms from across not only their respective continents, but the globe as a whole. Since the early 1980s, the reputation of these cities has been bolstered by an iron-clad rule of law and stable political environments that has underpinned their financial prowess. Yet of these cities, London and Hong Kong are increasingly threatened by not only external trends, like the rise of China, but also internal political strife, best encapsulated in the Brexit debate and the Extradition Bill protests. In the long-term, it is clear that while these cities will continue to play outsized roles in international business, their current privileged status may be more precarious than it seems.

Since China’s early market reforms, Hong Kong has served as the go-to financial hub for the Mainland. Early on, Beijing listed many of its behemoth state-owned enterprises, including Sinopec, Industrial & Commercial Bank of China, and China Telecom, on the Hong Kong Stock Exchange. The exchange’s owner, Hong Kong Exchanges and Clearing (HKEX), has also played a vital role in facilitating foreign access to Mainland markets. To preserve its system of capital controls, Beijing tightly regulates foreign access to the country’s financial markets but has allowed for some regulatory schemes to be developed in Hong Kong. Through HKEX’s Stock Connect and Bond Connect programs, foreign investors can trade Mainland debt and equity markets, subject to some limitations. All in all, Hong Kong has made a fortune facilitating access to the Mainland.

BARRON’S FEATURE ARTICLE ON “THE FUTURE OF BIOTECH”


Lauren R. Rublin has a feature article in this weekend’s (September 30, 2019) Barron’s, “The Future Of Biotech,” which is quite lengthy/several pages long — so, I will do my best to highlight the key points/takeaways. I refer you to this weekend’s Barron’s for the full article.

Ms. Rublin begins, “recent advances in biotechnology, from data-driven diagnostics, to game-changing gene therapies, suggest we’re on the cusp of a golden age in which many feared diseases will become treatable, or even cured.” Ms. Rublin interviewed five members of Barron’s first biotech roundtable of analysts and investors to discuss “what excites them about the coming disruption in health care — and, how to invest in and profit from them, too.”

How Can Nonspecialists Identify The Industry’s Disruptive Innovators? 

Ziad Barki, [fund] manager of the $12.5B T. Rowe Price Health Sciences Fund (ticker: PRHSX), told Barron’s/Ms. Rublin that “It’s difficult to differentiate among early stage opportunities. We look for therapies that have achieved some level of proof of concept, whether in terms of survival benefit, or other clinical benefit. If they are without competitors, that is the holy grail. Recently, there has been so much innovation that multiple companies are coming to the market to treat the same conditions. When that happens, you see new competition. The migraine space is a good example,” he said.

5 October 2019

Innovation and National Security: Keeping Our Edge

James Manyika and William H. McRaven

The United States leads the world in innovation, research, and technology development. Since World War II, the new markets, industries, companies, and military capabilities that emerged from the country’s science and technology commitment have combined to make the United States the most secure and economically prosperous nation on earth. This seventy-year strength arose from the expansion of economic opportunities at home through substantial investments in education and infrastructure, unmatched innovation and talent ecosystems, and the opportunities and competition created by the opening of new markets and the global expansion of trade. It was also forged in the fire of threat: It was formed and tested in military conflicts from the Cold War to the war in Afghanistan, in technological leadership lost and regained during competition with Japan in the 1980s, and in the internal cultural conflicts over the role of scientists in aiding the Pentagon during the Vietnam War. Confronted with a threat to national security or economic competitiveness, the United States responded. So must it once again.

This time there is no Sputnik satellite circling the earth to catalyze a response, but the United States faces a convergence of forces that equally threaten its economic and national security. First, the pace of innovation globally has accelerated, and it is more disruptive and transformative to industries, economies, and societies. Second, many advanced technologies necessary for national security are developed in the private sector by firms that design and build them via complex supply chains that span the globe; these technologies are then deployed in global markets. The capacities and vulnerabilities of the manufacturing base are far more complex than in previous eras, and the ability of the U.S. Department of Defense (DOD) to control manufacturing-base activity using traditional policy means has been greatly reduced. Third, China, now the world’s second-largest economy, is both a U.S. economic partner and a strategic competitor, and it constitutes a different type of challenger.1 Tightly interconnected with the United States, China is launching government-led investments, increasing its numbers of science and engineering graduates, and mobilizing large pools of data and global technology companies in pursuit of ambitious economic and strategic goals.

25 September 2019

Oil and Rentier States: How Falling Oil Prices Will Affect the Middle East

Kevin Butler
Source Link

Introduction

Less than a decade after weathering massive geo-political upheavals from the Arab Springs, the Middle East is on the verge of yet another crisis; the plummeting price of crude oil. “Rentier states” in the Middle East, have for several decades, secured their status-quo by building an overwhelming portion of their economy dedicated to the sale of crude oil.[i] While the rentier system has been successful in propping up Middle Eastern governments for decades, the downside to this system is the economic and political uncertainty created by the rapidly changing value in a single commodity.[ii] With an anticipated drop in the price of crude oil, the recent stability of the Middle East is likely to become vulnerable as governments begin to experience a significant economic downturn.

Background

The term “rentier state” comes from the sale of “rents”, or single commodities, established to fuel a state’s economy and overall political structure.[iii] For example, a form of universal basic income exists in Kuwait; while this placates the middle class and prevents upheaval, it is only made possible through the sale of massive amounts of its country’s natural resources.[iv] Conventional wisdom suggests the primary recipients of these consequences will be the oil exporting countries such as Saudi Arabia, the UAE, and Kuwait. However, non-rentier states such as Jordan and Egypt find themselves at large risk for upheaval as well; oil profits from rentier states have been subsidizing major parts of the economies of neighboring nations in order to foster alliances and stability.[v] Thus, an oil crisis is set to affect not just rentier countries, but virtually the entirety of the Middle East. The purpose of this project is to analyze the consequences of a possible permanent drop in oil prices, and the possible follow-on effects to the stability of Middle Eastern governments. It is important to note that the Middle East isn’t just facing an immediate crisis from the immediate drop in prices, instead it is a long term problem that will take decades to return from.

23 September 2019

The Return of Fiscal Policy

JIM O'NEILL
LONDON – As we enter the last quarter of 2019 (and of the decade), cyclical indicators point to a slowing world economy amid wide-ranging structural challenges. There are plenty of issues to keep one up at night, be it climate change, antimicrobial resistance (AMR), societal aging, strained pension and health systems, massive debt levels, and an ongoing trade war.

But as the old adage goes, one should never let a crisis go to waste. Among the countries feeling the worst effects of the global trade tensions is Germany, where policymakers finally are waking up to the glaringly obvious need for productivity-enhancing, investment-based fiscal stimulus. Similarly, beneath all the chaos caused by Brexit, the United Kingdom is also looking at its fiscal-stimulus options. So, too, is China, as it searches for measures to reduce its vulnerability to disrupted trade and supply chains.

Policymakers around the world are coming to realize that it is neither wise nor feasible to rely constantly on central banks for economic-policy support. In today’s environment of low – and in some cases negative – interest rates, the case for shifting the burden from monetary to fiscal policy is more apparent.

The Economic Consequences of Automation

ROBERT SKIDELSKY

LONDON – While Brexit captures the headlines in the United Kingdom and elsewhere, the silent march of automation continues. Most economists view this trend favorably: technology, they say, may destroy jobs in the short run, but it creates new and better jobs in the longer term.

The destruction of jobs is clear and direct: a firm automates a conveyor belt, supermarket checkout, or delivery system, keeps one-tenth of the workforce as supervisors, and fires the rest. But what happens after that is far less obvious.

The standard economic argument is that workers affected by automation will initially lose their jobs, but the population as a whole will subsequently be compensated. For example, the Nobel laureate economist Christopher Pissarides and Jacques Bughin of the McKinsey Global Institute argue that higher productivity resulting from automation “implies faster economic growth, more consumer spending, increased labor demand, and thus greater job creation.”

The future of Asia: Asian flows and networks are defining the next phase of globalization


Asia is increasingly the center of the world economy. By 2040, the region could account for more than half of global GDP and about 40 percent of global consumption. Global cross-border flows are shifting towards Asia on seven of eight dimensions, and the region’s growth is becoming more broad-based and sustainable as its constituent economies increasingly integrate with each other.

This is a diverse region, but its different parts have complementary characteristics, and powerful networks are developing within Asia. Patterns of globalization are shifting, and these shifts are occurring faster in Asia than elsewhere, suggesting that more than any other region, Asia could shape the way globalization unfolds in the years to come.

This new paper builds on the McKinsey Global Institute’s research on globalization in January 2019 by examining Asia’s rise on eight dimensions incorporating 16 types of flow, looking at the increasing integration of the economies of the region, and highlighting the development of three powerful new Asian networks: industrialization, innovation, and culture and mobility, and the rising cities that are pivotal components of those networks. The paper is one of a series on the Future of Asia, a multi-phase research project that aims to decipher the many facets of Asia.

22 September 2019

In Argentina, an Economic Crisis Portends Political Chaos


Argentina's worsening financial crisis has increased the chances that a protectionist opposition government will successfully unseat President Mauricio Macri's pro-business administration in the country's Oct. 27 presidential election. 

To prevent capital flight amid the peso's slide, the Argentine government may tighten currency controls in the weeks leading up to the election, a measure that would likely remain in place after the vote. 

If opposition leader Alberto Fernandez wins the presidency, he will try to renegotiate the austerity measures tied to Argentina's rescue program with the International Monetary Fund. 

A return to protectionist policies under a Fernandez-led government would put the future of the Mercosur-EU free trade deal at risk, as well as strain Brazilian-Argentine trade ties. 

21 September 2019

About Time The RBI And States Are Also Blamed For The Economic Slowdown

Karan Bhasin

It’s about time the state governments get their act together and work as ‘Team India’ to build a dynamic and robust economy.

Recently, many people highlighted the inordinate delays in payments by state governments for power projects. There was a 57 per cent increase in outstanding dues to power sector in the month of July, taking the total value to Rs 73,000 crore.

These developments have raised concerns about the impact that state governments can have on non-performing assets (NPAs). These would eventually have to then be cleaned up by the central government.

States such as Rajasthan, Bihar, Haryana, Andhra Pradesh and Madhya Pradesh are on top of the list when it comes to delay in payment of outstanding dues.

Limited state-level reforms, lack of adequate state capacity and other constraints are acting as bottlenecks to our growth and there’s a need to realise that most of these issues have to be addressed by the states and not the central government.

Money Alone Won't Solve Germany's Economic Problems


Germany's slowing economy will force its government to introduce tax cuts and spending hikes to generate growth. But in doing so, Berlin will likely take a more cautious approach by gradually rolling out measures one at a time, instead of a potentially contentious stimulus package that could increase tensions in the country's governing coalition. Meanwhile, trade disputes between the United States and China, along with Brexit-related uncertainty and looming U.S. tariffs on EU auto exports, will continue to generate headwinds for the German economy. 

Editor's Note: This assessment is part of a series of analyses supporting Stratfor's upcoming 2019 Fourth-Quarter Forecast. These assessments are designed to provide more context and in-depth analysis on key developments over the next quarter. 

19 September 2019

Exploring the Complications of Counting Casualties After Natural Disasters

By Stephanie Miceli 

There are many gray areas when collecting data on how and why people died in a disaster.

A National Academies of Sciences, Engineering, and Medicine study that is now underway aims to identify best practices for collecting, recording, and reporting death and illness data during and immediately after large-scale weather disasters.

Sometimes, it can take months or even years for a disaster death toll to become fully known. Death counts can include drowning, or factors like disruptions to medical care, infections from contaminated water, or an injury from hurricane-proofing the roof in the days before the storm.

Collecting this information is critical for informing recovery efforts and for preparing for the next disaster. However, the challenges have become ever apparent in the aftermath of Hurricane Dorian in the Bahamas. First responders have to balance addressing people’s fundamental needs (food, water, shelter, and clothing) with counting fatalities - often in vast areas of devastation.

The economic policy at the heart of Europe is creaking


The health of the single market is vital for the future of Europe’s economy
Hello kitty, a Japanese cat-girl with a bright pink bow, is an unusual mascot for European integration. But in July the cartoon character inadvertently became one. Sanrio, Hello Kitty’s owner, admitted to the European Union (eu) that it had granted trademark licences to business partners on the condition each would sell the ensuing Hello Kitty merchandise—from school bags to pencil cases and duvet covers—only in specified eu states. This attempt to treat Europe as a disjointed bundle of countries breaches an article of economic faith: that the eu’s 28 members are one single market. The European Commission doled out a €6.2m ($6.8m) fine.