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

17 August 2018

The Changing Risk Landscape

This graphic plots the change in the perceived likelihood and impact of various societal, technological, geopolitical and environmental risks between 2012 and 2018. For more on resilience and the evolution of deterrence, see Tim Prior’s chapter for Strategic Trends 2018 here. For more CSS charts, maps and graphics on risk and resilience, click here.

12 August 2018

Vietnam's New Cybersecurity Law Will Hurt Economic Growth

by David Shear

As U.S. Ambassador to Vietnam from 2011 to 2014, I would console myself when faced with a diplomatic setback that Vietnam has always achieved progress by taking two steps forward and one step back. However, the passage of a restrictive cybersecurity law by Vietnam’s National Assembly is a giant step back—one that comes at the expense of Vietnam’s small and medium-sized businesses (SMBs) in particular. In May 2017, the Vietnamese Government released an ambitious directive to guide the country through the Fourth Industrial Revolution (4IR). Directive 16, as it is officially known, instructed government agencies to improve Vietnam’s competitiveness by leveraging digital and communications technology. It warned against falling behind in the development of digital capabilities and exhorted government agencies to “enable people and enterprises to easily and fairly grasp the opportunities for digital content development.”

31 July 2018

BRICS Summit In Johannesburg: Here's What The Five Countries Are Looking For

by Xuebing Cao

All eyes are on Johannesburg for the 2018 BRICS summit, as the likes of Vladimir Putin, Xi Jinping and Narendra Modi take their places at the table. It marks the tenth annual gathering for this international organisation of the leading emerging economies. So what can we expect? The summit of the BRICS countries - Brazil, Russia, China, India and South Africa - started in June 2009 at Yekaterinburg, when Russia hosted the leaders of this bloc, though it did not originally include South Africa. BRIC became a formal institution the following year, aimed at facilitating global political and economic transformation, and South Africa officially joined in 2011.

12 July 2018

Global Economic Prospects, June 2018

Published semiannually, Global Economic Prospects includes analysis of topical policy challenges faced by developing countries. Global activity is firming broadly as expected. Manufacturing and trade are picking up, confidence is improving, and international financing conditions remain benign. Global growth is projected to strengthen in 2018-19, in line with January forecasts. In emerging market and developing economies (EMDEs), growth is predicted to recover in 2017-19, as obstacles to growth in commodity exporters diminish amid moderately rising commodity prices, and activity in commodity importers remains robust. Risks to the global outlook remain tilted to the downside. These include increased trade protectionism; elevated economic policy uncertainty; the possibility of financial market disruptions; and, over the longer term, weaker potential growth. A policy priority for EMDEs is to rebuild monetary and fiscal space that could be drawn on were such risks to materialize. Over the longer term, structural policies that support investment and trade are critical to boost EMDE productivity and potential growth.

11 July 2018

The Problem With Farm Loans

Ashutosh Datar

The government ensures credit to farmers with the best intentions. But they lead to horrible outcomes. In his budget speech every year, the Finance Minister lays down an indicative target of farm credit to banks. Banks have an explicit target for agriculture lending as part of their overall priority sector lending target. Banks must give at least 18% of their total loans to agriculture (and related activities allowed by the RBI). The underlying, unflinching belief is that farmers need more institutional credit as against credit from money lenders. Loans from formal financial institutions are cheaper and they do not resort to unscrupulous recovery practices. Crop loans are generally available at a four percent interest rate due to a subsidy from the central government, and some states provide a subsidy on top of it, making crop loans effectively interest-free.

27 June 2018

How to Get States to Get Their Act Together

Ashutosh Datar

As I write this, the 15th Finance Commission is at work trying to decide the manner in which the taxes levied and collected by the central government–corporate tax, income tax, customs and the central goods & services tax–will be distributed among the states of India. There are two steps in this: the first is determining the share of all states in the central taxes, and the second is the ratio in which the taxes will be distributed among the various states. The previous finance commissions have generally increased the share of central taxes that are distributed among states. (The 14th finance commission increased the share of states in the central taxes from 32% to 42%.) It is quite possible that the current finance commission will do the same, and an even higher share of central taxes will now ‘devolve’ to the states.

25 June 2018

Next Steps in the Merger of the Eurasian Economic Union and the Belt and Road Initiative

By: Gregory Shtraks
Source Link

On June 9th, 2018 the Shanghai Cooperation Organization (SCO) held its annual summit at the Chinese seaside city of Qingdao. The past three summits have been preoccupied with the impending membership of India and Pakistan, but now that the two are full members, the focus has shifted. Both pre- and post-summit statements suggest that one of the highlights of the conference was the unveiling of concrete steps towards the merger of the Eurasian Economic Union (EAEU) and the Belt and Road Initiative (BRI). The initial merger of the two organizations was announced in May of 2015, just four months after the EAEU’s launch, but there has thus far been little visible progress of integration. Still, over the last three years the EAEU and BRI have gradually evolved and the announcement of actual projects can be seen as a victory for both China and Russia.

The Eurasian Economic Onion: Many Layers, Few Nutrients

23 June 2018

Limiting Foreign Investment to Protect U.S. Economic Security: Business Implications

By John Taishu Pitt

On May 23, 2018, legislation to reform the Committee on Foreign Investment in the U.S. (CFIUS) was passed in the House Financial Services Committee and the Senate Banking Committee. There has been broad bipartisan support for the proposed legislation which would reform CFIUS to expand its jurisdiction. While many support the reform to fill the gap in oversight pertaining to foreign direct investment (FDI) into important U.S. sectors, others have raised the broader concern that the increased restrictions may send the world a message that the U.S. is closed for business — especially in light of the Trump administration’s increased unilateral protectionism.

20 June 2018

How Many Countries Are There in the World in 2018?

This Partner Perspective, originally published in 2011, was updated in January 2018. With the permission of Political Geography Now, we have also included supplementary graphics and photographs curated by Stratfor's Creative Department. Interested in learning more about where the countries listed below are heading this year? Check out our 2018 Annual Forecast.

The United States Economy Is Doing Well—Here's Why

Samuel Rines
Source Link

Attempting to parse the U.S. economy is not a simple task due to often competing or contradictory data points. Often, it is useful to take a step back and reassess where the U.S. economy currently sits, and what that means about the potential future of the economy. However, it does not take long to understand the current state of the U.S. economy this time around. While it is highly volatile, the Federal Reserve Bank of Atlanta’s GDPNow tracker puts U.S. gross domestic product growth at a 4.5 percent quarterly annualized increase. This is a significant acceleration from the previous sub-three percent first quarter. Can this estimate be trusted? Probably not. After all, the GDPNow indicator projected the relatively disappointing first quarter to grow at more than five percent in February.

11 June 2018

Brazil Loses Its Appetite for Economic Reforms

Protests and strikes against President Michel Temer's administration, which have exposed the political consequences of Temer's economic liberalization reforms, could continue if fuel prices remain high. Right-wing candidate Jair Bolsonaro, who has been running on a "law and order" agenda, could benefit from the disorder caused by these protests and Temer's perceived inability to deal with them. Social upheaval and the need to find a unity candidate ahead of the October general election will force Brazil's political establishment to slow the pace of economic and trade liberalization reforms in the next quarter.

10 June 2018


The Kremlin’s basic economic strategy is to trade efficiency and growth for political control and a tight rein on Russia’s strategic sectors. Russia’s economy has faced substantial difficulties since 2013, although it is once again performing reasonably well and there is no basis for believing that sanctions will force a change in Moscow’s foreign policy. Confronted with sanctions, low oil prices and reputational risks as a result of its foreign-policy actions, the Russian government responded to the economic crisis of 2014 without pursuing major economic reforms. The Kremlin eschewed potentially disruptive economic policies beneficial for growth but detrimental to the regime’s primary bases of support in favour of cutting budget deficits, reducing public spending and maintaining – and even expanding – political control over the economy. More widely, Russian President Vladimir Putin’s approach since coming to power has been similar, heavily prioritising macroeconomic stability in managing the economy.

Spain’s Uneven Success Story

By Jacob L. Shapiro

By all accounts, Spain should be a European success story. As recently as 2012, the country was teetering on the edge of economic meltdown. Its economy contracted by 3 percent that year. Unemployment climbed to over 20 percent, on its way to a staggering 27 percent by the following year. A banking sector collapse was averted only by a 51 billion euro ($60 billion) bailout package from the European Stability Mechanism that June. There was real fear in Europe that Spain might be the next Greece.

8 June 2018

Italy, Spain: Two New Governments Threaten the Eurozone's Stability

Italy and Spain are the third and fourth largest economies in the eurozone, respectively, which means that political and economic turbulence in Rome and Madrid can have an impact on the entire currency area. In our annual forecast, we said the Spanish government would be weak, and that Italy presented the main source of risk for the eurozone. Both countries appointed new governments on the same day, introducing challenges that align with both our assessments.

What Happened

5 June 2018

Italy’s debt bubble pop heard around the world


Former IMF economist Carlo Cottarelli speaks to the media after being asked by Italy's President Sergio Mattarella to form a new government, after efforts by two populist parties to form a coalition collapsed. This is not a drill. This is the real thing. The giant popping sound you hear is Italian government debt evaporating. The yield on Italian government two-year notes has risen by nearly 3 full percentage points this month, from around -0.35% at the beginning of May to about 2.5% this morning, in response to a populist rebellion by Italian voters. For Italy, that portends disaster: with government debt at 130% of Gross Domestic Product, the additional interest cost at higher yields amounts to 4% of GDP.

28 May 2018

Is cultural knowledge more important than language skills?

Learning the local language might seem an obvious goal for anyone moving abroad. But in an increasingly globalised world, whether this is an effective use of time is increasingly up for debate. Having an adaptability to different communication styles or socialisation norms are perhaps as much or more important Growing numbers of multinationals and start-ups are adopting English as their official company language, even if they’re not based in an English-speaking nation. And internationally, millennials seem to have a much higher tolerance for using the global language than older generations, meaning it’s potentially easier to socialise with young locals by speaking English than in the past. The British Council estimates that by 2020, two billion people will be using it, well over a quarter of the world’s population.

23 May 2018

Building a reliable database of the Indian economy

Sudipto Mundle
Source Link

The ministry of statistics and programme implementation (Mospi) is often in the news for all the wrong reasons. It is criticized for the poor quality of data, gaps in the data or delays in the release of data. However, several initiatives are progressively putting the database of the Indian economy on a much firmer footing than in the past. The results should begin to show by the end of this year. The data on employment and unemployment has been the subject of much controversy lately. Generating data on employment for a country like India, with its dualistic structure, is particularly challenging. Over half the labour force is still dependent on agriculture, where the rhythm of production follows the weather cycle with long periods of seasonal unemployment between crops. Further, thanks to the high pressure of population on land and continuing land fragmentation, the phenomenon of what economists call underemployment or “disguised unemployment” is widespread. To illustrate, a family of five people may be cultivating a tiny plot of land which actually requires only two people working full-time. Everyone is underemployed and the production may be no more than what two people could have produced, i.e., zero productivity for the three superfluous workers.

Macron's Foreign Policy Ambitions Meet France's Realities

The current global context gives France an opportunity to try to shape the European Union according to its needs, and to elevate its role in global affairs. But France still depends on key allies, such as the United States and Germany, to achieve many of its foreign policy goals. France will push to increase the European Union's military and economic autonomy, but its dependency on allies, and factors beyond its control, will limit its room for action. Since taking office a year ago, French President Emmanuel Macron has pursued a busy foreign policy agenda, pushing for greater European integration; visiting the United States, China and India, as well as more than two dozen other countries; authorizing airstrikes in Syria; intervening in a political crisis in Lebanon; and trying to preserve France's influence in its former African colonies. Macron's foreign policy goals — to reform the European Union according to France's views, while elevating France's influence on global affairs — follow France's strategic interests, which are simultaneously European and global.

The world's biggest economies in 2018

Rob Smith
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The United States has the largest economy in the world at $20.4 trillion, according to data from the International Monetary Fund (IMF), which shows the US economy increased from around $19.4 trillion last year. China follows, with $14 trillion, which is an increase of more than $2 trillion in comparison to 2017. Japan is in third place with an economy of $5.1 trillion, up from $4.87 trillion a year previously.

22 May 2018

Society needs a reboot for the Fourth Industrial Revolution

Murat Sönmez,
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Society’s operating system needs an upgrade. The model we have been using is simply not up to the challenges of the Fourth Industrial Revolution. A new era is unfolding at breakneck speed. It has huge potential to address some of the world’s most critical challenges, from food security, to reducing congestion in big cities, to increasing energy efficiency, to accelerating cures to the most intractable diseases. But it also raises a host of social and governance issues that need addressing.