Africa’s prosperity increasingly depends on China. Given recent signs of a slowdown in the world’s largest economy, Africa’s short- and long-term outlooks seem precarious. The latest sign arrived on October 23 when China cut two benchmark interest rates to spur growth. It was the sixth time since November that China’s central bank has lowered rates and came after a report revealed that its economy grew at the slowest pace in six years.
On 14 August, the day before the 70th anniversary of the end of the Pacific War, Japanese Prime Minister Shinzo Abe issued a long-awaited statement on Japanese memory of the war and his vision for the future. In it, he emphasised that the apologies given by previous Japanese cabinets ‘will remain unshakable into the future’. Abe’s statement received mixed responses from around the world.
Every nation deserves a visionary leader, from whom its citizens can expect real results. India has had its share of visionary leaders. Mahatma Gandhi and Jawaharlal Nehru, to name two, held views on the economy that were not only diametrically opposite but also influential in shaping the trajectory of Indian political and economic independence.
EM starts the week off on a mixed footing. On the one hand, hints of ECB stimulus and actual PBOC stimulus last week suggest a more supportive global liquidity backdrop for EM and risk. On the other hand, they are taking those moves due to downside growth risks. For now, a tug of war between the two is likely to keep EM trading volatile. Perhaps the final straw will be the US rate outlook, but expect nothing from the Fed this week.
After soaring on Friday, global equities continue to roar this week after China’s decision to cut interest rates for the sixth time in a year. The People’s Bank of China announced a 25 bp interest rate cut, down to 4.35% for one-year durations. The purpose of the move is to help China reach its 7% growth target for 2015, after official figures showed 6.9% GDP growth in the 3rd quarter of 2015.
India has pulled ahead of China and United States as the most favoured destination for foreign direct investment (FDI). According to the Financial Times (FT), India received US$31 billion in FDI in 2015, which is US$3 and US$4 billion more than China and the United States respectively. Moving from fifth place in 2014 to first certainly reiterates that India is a bright spot in the world economy today.
We just learned America’s rental affordability crisis is as bad as it has ever been. Unfortunately, it is about to get a whole lot worse. The American Community Survey for 2014, released a few weeks ago, found that the number of renters paying 30% or more of their income on housing – the standard benchmark for what’s considered affordable – reached a new record high of 20.7 million households, up nearly a half-million from the year before. Despite the improving economy, the increase was nearly five times bigger than last year’s gain.
The burst of Japan’s massive financial bubble in 1990 caused the value of stocks, land and other assets to plummet. Japanese banks had financed their asset purchases using them as collateral. Many banks failed due to a combination of the collapse of asset values and their clients’ inability to pay back loans.
The Bank of England has entered the EU referendum debate. Its report, along with comments from Governor Mark Carney, emphasise the benefits that membership of the EU brings the UK. Carney says membership makes the UK more dynamic, giving it greater potential for growth, and more resilient to shocks. However, he also warned of the need to safeguard the UK against further Eurozone integration.
Conservative Prime Minister Stephen Harper was voted out of office during October elections, including many Parliament officials. Liberal Party leader Justin Trudeau, a former teacher and seven-year Parliament member, was elected prime minister. Members of his party won 184 national seats, comprising a new majority in Parliament.
