As climatic and environmental changes increase the accessibility of the Arctic, opening up the possibility of shorter shipping lanes and the ability to tap into large natural resource deposits, states within the region and beyond are beginning to look north.
Global growth has been tepid since the global financial crisis broke out almost 10 years ago, having declined from an average of 4.5 percent during the five years preceding the crisis to 3.5 percent over the past five years. Both advanced economies and emerging markets have suffered. Given that global trade was growing significantly faster than global gross domestic product (GDP) in the pre-crisis period on the back of global production chains, the extent of its decline is particularly surprising.
The EU leaders’ summit on refugees begins tomorrow. A conclusive agreement will likely be elusive. There are three main obstacles. First, the effort to reinforce the external borders to allow free internal movement requires Turkey’s cooperation, but it will not be represented. Second, that is important because Cyprus is demanding more concessions by Turkey. Third, others such as Spain are concerned that the strategy contravenes EU and international law by abridging the right to asylum.
Economic growth is weakening in America as consumers have less money to buy things, causing retail sales and prices to fall.
The Atlanta Federal Reserve’s GDPNow model has revised downwards its 1st quarter GDP growth expectations, down from 2.2% to 1.9%, driven by weak retail sales in the United States. The GDPNow has been more accurate, and less optimistic, in predicting economic growth by using a large data set of various economic metrics, whereas the Federal Reserve’s chairs have been significantly more cheerful about America’s prospects.
Over the past three decades, global interest in emerging markets has soared, and when the financial crisis of 2008 hit, emerging markets were largely thought to be the next engine of global growth.
Insofar as they have complied with this investor aspiration over the past few decades, they have also adopted a negative aspect of the developed economies to which they aspired: corporate leverage. As the corporate emerging giants of the developing world have grown, so too have they issued debt at disproportionately faster rates.
If UK Chancellor of the Exchequer Osborne wants to position himself to be the next Prime Minister, the budget to be unveiled tomorrow may not be particularly helpful. There is little room to relax fiscal policy, given the self-imposed constraints.
The deficit for the current fiscal year was projected to be GBP73.5 bln, but through January, the deficit has been GBP66.5 bln. This suggests the deficit will be closer to GBP80 bln. The budget deficit was 4.4% of GDP last year, down from 5.5% in 2014 and 10.4% in 2009.
The Sri Lankan economy appears to exist in a system that can evolve only through crisis. Optimistic policymakers, predicting that the country’s economic trajectory would self-correct, received a collective wake-up call in February with a sovereign rating downgrade by Fitch, even as the country made a formal approach to the IMF for a bailout package.
The Bank of Japan had a difficult start into 2016. The latest data shows that inflation in the last quarter of 2015 was lower than expected. Furthermore, doubts are increasing about the recovery of the economy. At the end of January, BOJ Gov. Haruhiko Kuroda surprised markets by announcing negative interest rates for specific commercial bank deposits at the BOJ. On March 1, Japan started to sell government bonds with a yield below zero. Market observers expect even bolder steps later this year.
According to the International Monetary Fund (IMF) Indonesia’s economy should grow at a slightly faster rate in 2016 after slowing for several years. The growth comes because of higher public investment and improving sentiments around the world toward the Southeast Asian nation’s economy, the largest in the region.
After two weeks of recovery, the Chinese yuan is expected to fall after further data shows Asia’s largest economy continues to slow. Production in China’s industrial sector rose just 5.4% in the first two months of 2016, a disappointment that has led many analysts to warn that the country’s new sub-7% GDP growth target is still too optimistic.
