Dismal new year for global economy; China is 'world's largest trader'; India slowdown chains millions to the farm

1 Dismal new year for global economy (Joseph Stiglitz in The Guardian) It is possible, even likely, that US growth in 2014 will be rapid enough to create more jobs than required for new entrants into the labour force. But we should curb our euphoria. A disproportionate share of the jobs now being created are low-paying – so much so that median incomes continue to decline. For most Americans, there is no recovery, with 95% of the gains going to the top 1%.

America's new problem is long-term unemployment, which affects nearly 40% of those without jobs, compounded by one of the poorest unemployment-insurance systems among advanced countries, with benefits normally expiring after 26 weeks. As 2014 begins, the roughly 1.3 million Americans who lost their unemployment benefits at the end of December have been left to their own devices. Happy new year.
So, with Europe's Great Malaise continuing in 2014 and the US recovery excluding all but those at the top, count me dismal. On both sides of the Atlantic, market economies are failing to deliver for most citizens. How long can this continue?

http://www.theguardian.com/business/economics-blog/2014/jan/08/dismal-global-economy-unemployment-us-eurozone

2 China is 'world's largest trader' (Linda Yueh on BBC) China's latest trade figures show it is "very likely" to have overtaken the US as the world's largest trader. It would topple the position that the US has held for much of the last century and cross another milestone in rivalling the biggest economy in the world.

For some, it is perhaps surprising that China didn't already hold this position. After all, four years ago, China became the world's largest exporter of goods. But it's the surge in imports that has propelled Chinese trade - exports and imports - to hit a record $4.16 trillion in 2013 ($2.21 trillion in exports plus $1.95 trillion in imports). Although the full-year US trade data isn't yet available, the first 11 months saw US trade at $3.57 trillion. This is why it seems that China has probably overtaken America.

The increase in imports is notable. It implies a greater opening of Chinese markets, which is what matters for the rest of the world seeking new consumers and sources of demand. So far, China's markets are still frustratingly closed in certain segments, which is why the rise in imports is so important.

Plus, the bulk of Chinese trade is in goods and not services. Trade in services is less than half of that of the US, which exceeded $1 trillion in 2012. As China is seeking to increase the size of its services sector, it implies there is much more potential growth in the relatively closed sector. Even with its relatively closed markets, China has grown its tradable sector quickly. Export-orientation was one of the main targets of market-oriented reform in 1978. 

According to economic historian Angus Maddison, China was the dominant economy in the early 19th Century but fell behind after the 1820s when it didn't experience an industrial revolution like the ones seen in Britain, America and Germany. It could be the dominant economy once again. But, as nations which have been felled by crisis know all too well, size isn't the only determinant of economic might or resilience.

http://www.bbc.co.uk/news/business-25682149

3 India slowdown chains millions to the farm (Debiprasad Nayak in The Wall Street Journal) India’s economic slowdown is changing the future of millions of unskilled workers, chaining them to low-wage farm work. After a sharp decline during India’s boom years, the number of people working on farms is rising again according to a report by Crisil Research.

Between March 2005 and March 2012, the agricultural workforce fell by a whopping 37 million people as faster growth and better paying jobs in industrial and service sectors sucked workers out of the countryside. With the economy slowing over the past two years, the need for former agricultural laborers has tapered. Crisil estimates that the agricultural workforce will grow by 12 million people in the period between fiscal 2012 and fiscal 2019.

India’s industry and services sectors added 52 million jobs between fiscal 2005 and 2012. In the next seven years, around 25% fewer jobs will be created by the industrial and services sectors, Crisil said, leaving millions unable to find work outside the farm. Crisil expects Indian economy to grow at 6% per year during the seven years to March 2019, compared with an average of 8.5% in the previous seven years. India's annual growth rate fell to a decade low of 5% in the fiscal year that ended March 31, from an enviable 9.3% expansion as recently as 2011.

If India wants to see its economy expand and the lives of its citizens improve faster, it needs to create more jobs in its megacities, Crisil said. “It is desirable to pull more and more people out of agriculture since it is a low-productivity sector, with only a 14% share in GDP, but around 49% share in employment,” said Mukesh Agarwal, president of Crisil Research. Indian agriculture is inefficient because it depends on monsoon rains due to a lack of irrigation infrastructure. Farmers use age-old methods to grow crops and their access to market s is affected by excessive regulation and poor infrastructure.

http://blogs.wsj.com/indiarealtime/2014/01/12/indian-slowdown-chains-millions-to-the-farm/?mod=WSJBlog&mod=irt