1 Japan savings rate turns negative (Linda Yueh on
BBC) For the first time since records were collected in 1955, Japan's
population is drawing down its savings and the savings rate, calculated as
savings divided by disposable income plus pension payments, was negative 1.3%. It's
a dramatic change from when the Japanese saved nearly a quarter of their income
(23.1%) when the savings rate peaked in 1975.
Japan had the highest household saving rate in the
OECD in the 1960s until it fell to the lowest. After all, an aging population
draws down savings and Japan is the fastest-aging country in the world; its
population has been shrinking for a decade. It's another blow to the Japanese
Prime Minister Shinzo Abe. On the campaign trail, he said that Abenomics aimed
to raise wages and employment to revive the economy and defeat deflation or
price falls.
Yet, earnings (adjusted for inflation) dropped 4.3%
from a year earlier in November. It's the steepest decline since the 2009
global crisis and marks the 17th month of falls. Unsurprisingly, households are
spending less. The average spend has dropped by 2.5%, which is the eighth
consecutive drop - a trend that won't help boost domestic demand and prices.
Inflation has clocked in at a 14 month low. There's
no price pressure on nominal yields on government bonds. The 10 year bond yield
has fallen to a record low of below 0.3%. Such low borrowing costs will help
the highly indebted country, but it also reflects an expectation that the
economy and inflation won't be getting going, and ultimately lead to rate
rises.
One lesson to draw is that an aging population will
dis-save, so high-saving countries now - like China and Germany - may soon find
that they are heading down a similar road to Japan.
2 Russia scraps New Year holidays for ministers (San
Francisco Chronicle) Russian President Vladimir Putin has
scrapped New Year's holidays for government ministers because of the unfolding
economic crisis. Russian company employees are entitled to holiday from Jan. 1
to Jan. 12 when Russians celebrate the New Year, the main holiday in Russia, as
well as Orthodox Christmas on Jan. 7.
Putin told a televised government session on
Thursday that Cabinet ministers should not take this time off. "For the
government, for your agencies we cannot afford this long holiday, at least this
year - you know what I mean," he said. Russia's economy, battered by low
oil prices and Western sanctions, is set to enter recession next year for the
first time in six years, while the ruble is now worth less than half of its
value.
The Russian Central Bank announced on Thursday that
the country's currency reserve has dropped below $400 billion for the first
time since August 2009, as the government has been selling the currency on the
market to support the ruble. The Central Bank in past weeks raised its key
interest rate to 17 percent and said it will offer dollar and euro loans to
banks so they can help major exporters that need foreign currencies to finance
operations.
Many Russian companies have been locked out of
Western capital markets following the sanctions imposed on the country for its
involvement in Ukraine.
3 Uganda takes on the chocolate market (Khaleej
Times) On a sprawling, lush cocoa plantation in Mukono outside the Ugandan
capital Kampala, farmers have been sampling chocolate for the first time ever.
“When we gave our farm manager the first product to
taste his face was so amazing, he was saying ‘really this is coming out from
what we are doing?’” said Felix Okuye, 28, the executive director and co-founder
of startup Pink Food Industries. In the east African nation, chocolate is a
luxury product bought by people in the medium and upper income bracket.
The chocolate on the shelves of Kampala’s major
supermarkets is usually from Switzerland, Belgium, Brazil, Malaysia and Turkey.
However since May this year, Okuye and Pink Foods founder and CEO Stephen
Sembuya have been selling their own “Uganda” brand of chocolate to Kampala
restaurants and hotels who use it for deserts, pastries and in ice-cream.
Uganda is said to have about 20,000 hectares (50,000
acres) of land under cocoa cultivation, mostly in the country’s west and
centre, but its fortunes in the industry have fluctuated over time as the
government has focused more on coffee.
Charles Ocici, executive director of Enterprise
Uganda, which provides business development services, including training, said
the start-up was creating jobs while bringing technology and resources in terms
of foreign currency resources into Uganda, therefore “improving the country’s
overall economic strength.”
He said the entrepreneurs would have to work hard to
break a “psychological barrier” relating to preconceived ideas Ugandans had
about “good chocolate” coming from overseas. “You’ve got to be ready to give it
a long-term or medium to long-term outlook,” said Ocici.“ But once they know
how good a local product is they are on your side.”
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