Easter Attack Creates Fear & Frustration Comments Off on Easter Attack Creates Fear & Frustration 490

Love and Compassion, was the response to Sri Lankans on the Easter Sunday attacks in several churches in Sri Lanka where people gathered to celebrate the risen Christ through worship and praise during holy mass.

The Arch Bishop of Colombo Malcolm Cardinal Ranjith condemned the Easter Sunday attacks as an insult to humanity and urged people to show kindness, restraint, love and mercy to others as a sign of respect for all the victims. In conducting his mass with an appeal to peace and unity he said that he will pray for this country so that there will be peace and co-existence and understanding each other without division.Easter-Attack-Creates-Fear-&-Frustration-01

“We are not fully aware as to who is actually behind this. Just like the tip of the iceberg, we do not know the whole picture. There might be a more powerful group behind this unfortunate group of youth. Maybe those involved might not belong to the said nationality. Therefore we must not make this an opportunity to harass or assault anyone. If any wrong was committed by anyone, such individuals should be brought before the law. The law must be enforced”.

 

Sanctions on Oil Supply

The US government announced that it would end waivers granted to several countries including China, India, Japan, South Korea, Turkey and several other nations to import Iranian oil. This move could alter the outlook for trade flows, access to financial markets and currency movements.

Easter-Attack-Creates-Fear-&-Frustration-02 The US administration introduced sanctions on Iranian oil last year. The expiry of concessions on May 2nd could reduce the global supply of oil. Asian economies led by India and China are most affected as Asian consumption accounts for more than 35 percent of global demand. China and Turkey have opposed the imposition of unilateral sanctions. Oil supply concerns are also affected by US sanctions on Venezuela.

Oil prices continued their upward trend approaching the Brent crude price towards USD 75 per barrel in the last week of April 2019 – the highest in six months

 

Elections in Two Large Emerging Economies

On April 17th nearly 192 million Indonesians went to cast their election vote. For the first time, the Presidential, and the People’s Consultative Assembly (i.e. Parliament) and regional elections were held on the same day. Official elections results are expected by 22nd May. Indonesia – the world’s most populous Muslim country is projected to become the fourth largest economy by 2030 with a GDP of USD 10 trillion. Experts predict that it will be three times the size of the Australian economy by that time.

Additionally, from April 11th to May 19th about 900 million voters in India are expected to cast their votes in the Indian general elections that take place in seven phases of which already 4 phases have been conducted. The counting is scheduled on 23rd May and results are expected on the same day. India – the world’s most populous democracy is projected to be the third largest economy by 2030 with a GDP of USD 46 trillion. It is projected that India will surpass China as the world’s most populous country.

 

Polarization in Belt and Road Forum

The second Belt and Road Initiative Forum which was concluded on 26th April in Beijing, promising to work together as a global initiative to promote trade and investment is expected to enter the next phase. The first forum held from 14th -15thof May 2017, was attended by 29 Heads of States while the second forum was attended by 45 with Portugal, Austria, UAE, Singapore, and Thailand among new signatories to the joint communiqué.

Easter-Attack-Creates-Fear-&-Frustration-03However, India remained a notable absentee. Germany, France and the United Kingdom did not sent their top leaders and particularly Germany and France have been the most vocal in expressing concerns. Top leaders of Djibouti, Egypt, Ethiopia, Kenya and Mozambique were present at the forum. South Asia remained notable in abstaining with top level representation. India was no show as it was deeply concerned that the China, Pakistan economic corridor passes through territory occupied by Pakistan but claimed by India. Among South Asian countries only Pakistan and Nepal sent their Heads of Governments. The Japanese Prime Minister and South Korean President were notable blank spots. The United States did not send any representation from Washington to this gathering. The newly appointed President to the World Bank too did not attend the forum.

Sri Lanka Tourism to Take a Heavy Toll

The Sri Lanka Government indicated that the income from the tourism industry may suffer by USD 1.5 billion in 2019 or a reduction of earnings by 35pct, following the devastating attack on Easter Sunday. The US, Canada, UK and India have cautioned their citizens about travelling to Sri Lanka. The Hotels Association of Sri Lanka has indicated that about 20% of hotel bookings are being cancelled with more expected.

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The industry has expressed concerns as this is the first time tourist hotels have been targeted in this manner. However, Hiran Cooray Chairman of Jetwing hotels investments said that the tourism industry will come out of the impact of this calamity which even during the 26 years of war Sri Lankan has not experienced. Sri Lanka recorded 2.3 million tourist arrivals with USD 4.2 billion foreign earnings in 2018 – a sharp scale of expansion in comparison to the arrivals of 300,000 with USD 400 million earnings prior to ending the war in May 2009.

By: BiZnomics Special Economic Correspondent

BiZnomics Global Outfront Comments Off on BiZnomics Global Outfront 610

US – China Trade Talks

After months of trade war, the US and China agreed to a 90-day truce to work out their differences. It was scheduled to end on Friday, but President Trump lifted the ultimatum to increase tariffs after he was satisfied by progress made in several rounds of talks in Beijing and Washington.US China Talks

A White House economic official, Larry Kudlow, said on Thursday the two countries were on the brink of a ‘historic’ trade agreement. A meeting between Trump and his Chinese counterpart Xi Jinping, was also expected soon. After the latest round of talks in February, US Agriculture Secretary Sonny Perdue tweeted that China had committed to buying ‘an additional’ 10m tonnes of soybeans as a ‘show of good faith’.

US farmers rely greatly on such trade with China: in 2017 around a third of US soybean production – worth $14bn -– was exported there, where it is used for animal feed.

Chinese tariffs had already hit America’s farming regions hard.  Exports plummeted last summer when China imposed tariffs on US soybeans and other agricultural products.

Donald Trump has requested China to abolish tariffs on US farm produce arguing that it is very important for US farmers.

In the meantime, South China Morning Post on 19th April reported that China regrets WTO ruling that China’s Tariff Freight Quota System for rice, wheat and corn violates international trade rules. The verdict was given in a case filed by the administration of former President Barak Obama in December 2016.

The US government is also seeking a total reforms of the WTO including re-visiting China’s role in the international trading system as the US believes China should no longer designated as a developing country, enjoying favourable trade treatment as China has emerged the world’s second largest economy.  

 

Brexit Deadlock Continues

The British Prime Minister said she would step down if and when her Brexit deal was delivered. There was a desire for ‘a new approach, and new leadership’, she told a meeting of Conservative lawmakers. However, members of the House of Commons voted on a range of measures designed to break the impasse over Brexit — but failed to agree on any of them.

Brexit Deadlock ContinuesThe European Union has requested the UK to accept a six months delay with an option to leave earlier if the UK Parliament can agree to a deal, The European Union leaders agreed to another delay to the UK schedule withdrawal from the EU until October 31. In the meantime, the European parliament election is due in late May and if the UK does not take part in the election process it would be required of the UK to leave on June 01st without a deal as some observed. The Prime Minister of UK has suggested that she could still manage to get her withdrawal agreement passed through parliament, in time to avoid UK taking part in the European elections.

 

New Head at World Bank

Following President Trump’s announcement that Mr. Malpass would be the US candidate for election as the next President of the World Bank, Mr. Malpass won unanimous approval from the executive board of the bank, which has 25 members. The US holds a 16% share of board voting power and has traditionally chosen the World Bank’s leader. Traditionally, the US picks the World Bank President, Europeans choose the IMF Managing Director, and the Japanese do the same for the Asian Development Bank.

David Malpass has been selected as President of the World Bank Group for a five-year term from April 9, 2019. Mr. Malpass previously served as Under Secretary of the Treasury for International Affairs for the United States.  As Under Secretary, Mr. Malpass represented the United States in international settings, including the G-7 and G-20 Deputy Finance Ministerial, World Bank-IMF Spring and Annual Meetings, and meetings of the Financial Stability Board, the Organization for Economic Cooperation and Development, and the Overseas Private Investment Corporation.  

New Head at World BankIn 2018, Mr. Malpass advocated for a capital increase for the IBRD and IFC as part of a larger reform agenda featuring sustainable lending practices, more efficient use of capital, and a focus on improving living standards in poor countries. He was also instrumental in advancing the Debt Transparency Initiative, adopted by the World Bank and IMF, to increase public disclosure of debt and thereby reduce frequency and severity of debt crises. 

Prior to becoming Under Secretary, Mr. Malpass was an international economist and founder of a macro-economic research firm based in New York City. Mr. Malpass served as chief economist of Bear Stearns and conducted financial analyses of countries around the world. 

Earlier in his career, Mr. Malpass served as the U.S. Deputy Assistant Secretary of the Treasury for Developing Nations and Deputy Assistant Secretary of State for Latin American Economic Affairs. In these roles, he focused on an array of foreign policy and development issues, including the United States’ involvement in multilateral institutions; the World Bank’s 1988 capital increase, which supported the creation of the Bank’s environment division; the Enterprise for America’s Initiative; and Brady bonds to address the Latin American debt crisis. He also served as Senior Analyst for Taxes and Trade at the U.S. Senate Budget Committee, and as Staff Director of the Joint Economic Committee of the U.S. Congress.

Mr. Malpass has served on the boards of the Council of the Americas, Economic Club of New York, and the National Committee on US–China Relations. Mr. Malpass earned his bachelor’s degree from Colorado College and his MBA from the University of Denver.  He undertook advanced graduate work in international economics at the School of Foreign Service at Georgetown University.

The World Bank President is Chair of the Boards of Directors of the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The President is also ex officio Chair of the Boards of Directors of the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the Administrative Council of the International Centre for Settlement of Investment Disputes (ICSID).

Some worry that Mr. Malpass, a critic of the bank, will seek to reduce its role. In the past, he has described the World Bank as too big. He has said he would like to lend less to middle income countries like China, which he argues are financially strong enough.

Speaking at an event at the Council on Foreign Relations back in 2017 he said: “Multilateralism has gone substantially too far – to the point where it is hurting US and global growth”. However, when his predecessor Jim Kim asked shareholders for more money, it was David Malpass who – in exchange for reforms at the bank – helped make it happen. Last year, he was part of negotiations over a package of World Bank lending reforms.

Ivanka TrumpThe US agreed to back a plan for shareholders to inject $13bn (£10bn) into the World Bank and its private lending arm, with conditions that aimed to limit the bank’s lending, and focus resources more on poorer countries. The reforms are aimed at pushing more middle-income countries towards private sector lending, and limiting World Bank staff salary growth.

White House Senior Adviser Ivanka Trump speaking during an interview with Associated Press, Wednesday April 17, 2019 in Abidjan, Ivory Coast, where Trump is promoting a White House global economic program for women said her father asked her if she was interested in the job of World Bank Chief but she was happy with her current role in the administration.

President Trump recently told The Atlantic: “I even thought of Ivanka for the World Bank. She would’ve been great at that because she’s very good with numbers.”

Ivanka Trump worked on the selection process for the new head of the 189-nation World Bank, David Malpass. She said he’ll do an ‘incredible job.’

 

US Monetary Policy Normalization

US Monetary Policy Normalization President Trump called on Federal Reserve to lower interest rates and wants return of quantitative easing arguing that the Central Bank’s policies have held back the US economy and there is no inflation.The Federal Reserve, which has increased interest rates numerous times in the last few years, recently signalled that it does not plan to increase interest rates any more for the remainder of this year.

Beyond simply cutting interest rates, President Trump also wants the Fed to bring back its policy of quantitative easing, to increase liquidity in the market and keep interest rates low. In the wake of the financial crisis in 2007/2008, the Fed enacted QE, but that program ended in late 2017.

According to Trump, if the Fed were to undertake those policies, the economy would improve dramatically, despite the fact that in Trump’s eyes, things are already going well.

Global Growth Outlook ‘Precarious’

International Monetary Fund (IMF) Managing Director Christine Lagarde in a preview of the April 12-14 IMF and World Bank Spring Meetings, said that global growth has lost momentum amid rising trade tensions and tighter financial conditions. The IMF Chief explained that the global economy is “unsettled” after two years of steady growth, with the outlook “precarious” and vulnerable to trade, Brexit and financial market shocks. However, she said that the IMF does not anticipate a recession in the near term, and the Federal Reserve’s “more patient pace of monetary policy normalisation” will provide some thrust to growth in the second half of 2019 and into 2020.

Global Growth Outlook 'Precarious'Lagarde cautioned, however, that years of high public debt and low interest rates since the financial crisis a decade ago have left limited room in many countries to act when the next downturn arrives, so countries need to make smarter use of fiscal policy. This means striking a better balance between growth, debt sustainability and social objectives and acting to address growing inequality by building stronger social safety nets.

Lagarde also said that the IMF has revised its analysis of the US-China trade war’s effects, showing that if all trade between the world’s two largest economies were subjected to a 25 percent tariff, US gross domestic product (GDP) would fall by up to 0.6 percent while China’s would fall by up to 1.5 percent.

Nobody wins a trade war,” Lagarde added. “That is why we need to work together to reduce trade barriers and modernise the global trade system.”

Source: News Agencies

The Rise of the Indian Rupee 0 624

  • India’s economy will overtake the US by 2030. And will be the world’s youngest major economy.
  • In just 12 years, India will undergo a startling transformation…
  • By 2030, around 77% of Indians will be under the age of 44… and most of those will be under 25. The country will also have more than 1 billion internet users…
  • Every second, three or more Indians go online for the first time. And by 2030 India will be a middle-class Nation. Consumer spending will quadruple. Rising to nearly $5.7 trillion in 2030.
  • But the economy still faces major challenges. By 2022, more than half of Indian workers will need reskilling. And it still has some of the most polluted cities in the world.
  • India will need to ensure its fast-growing economy is inclusive.

Asian giants securely heading to overtake America

A new world economic order is in the making, with today’s emerging markets, including India, at the heart of it.

India is likely to become the world’s second-largest economy by 2030, next only to China and overtaking the US, according to Standard Charted Bank’s long-term forecast released on January 2008. The UK-based multinational bank also predicts that based on nominal GDP using purchasing power parity exchange rates, China will overtake the US by 2020.

Top 10 countries by nominal GDP in 2020.

Current emerging markets will likely make up the majority of the biggest economies by 2030.

Standard Chartered Bank had raised growth forecast for China and India from its projections in 2013. “India will likely be the main mover, with its trend growth accelerating to 7.8% by the 2020s partly due to ongoing reforms, including the introduction of a National Goods and Services Tax (GST) and the Indian bankruptcy code (IBC),” says the report.

Launched in 2017, the GST attempts to simplify India’s cumbersome tax regime, while the IBC, rolled out in 2016 would strengthen the country’s bankruptcy and insolvency laws.

“Our long-term growth forecasts are underpinned by one key principle: countries’ share of world GDP should eventually coverage with their share of the world’s population, driven by the convergence of per-capita GDP between advanced and emerging economies,” the report said.

Jobs, jobs, jobs

Aging populations are likely to weight on global growth, but India, home to the world’s largest group of young people, will remain unfazed, Standard Chartered Bank notes. Half of the country’s population is under the age of 25.

The bank expects “the rising aspirations of a young population to continue to support consumerism in India’s economy.”

But a young demographic also creates a demand for massive employment. About 100 million new jobs must be created in the manufacturing and services sector by 2030, according to the report. To achieve this, it says, the government needs to close a widening skills gap, raise the participation of women in the workforce, and ease labor laws.

“India needs to train circa 10 million people annually, but currently has the capacity to train just 4.5 million,” the report says.

It also calls for reform to boost spending on infrastructure and reduce growing economic inequality in the country.

Are you optimistic for India’s future?

By : Cameron Blake

Source:  Standard Chartered; Based on predicted nominal GDP