Monday, September 14, 2015
Brazil cuts spending, raises taxes; Japan business mood sinks on China worry, weak demand; Refugee crisis as a business opportunity
1 Brazil cuts spending, raises taxes (BBC) The Brazilian government has announced a $7bn package of spending cuts aimed at plugging a huge black hole in the country's 2016 budget. At the same time, it unveiled plans to raise another $8bn by bringing back an unpopular financial transactions tax that was abolished eight years ago. The government is struggling to pull the country's economy out of recession.
It has also been hurt by the slump in President Dilma Rousseff's public approval rating, which is now just 8%. The measures include reducing the number of government ministries from 39 to 29, as well as cutting 1,000 public-sector jobs and freezing the pay of remaining state employees.
The axe would fall on some big public infrastructure projects. But projects designed to benefit poorer Brazilians, such as the social housing programme Minha Casa Minha Vida (My House My Life), will also be hit.
Brazil's economy has been depressed by the end of the global commodities boom, while a corruption scandal centred on state oil giant Petrobras has damaged investor confidence. Last week, Brazil lost its investment-grade credit rating following a downgrade by Standard & Poor's to "junk" status.
2 Japan business mood sinks on China worry, weak demand (Straits Times) Japanese manufacturers' confidence slumped the most in a year in September to an eight-month low and is forecast to worsen further as fears of a China-led global economic slowdown grow, a Reuters poll showed.
Domestic demand also looks increasingly fragile as service companies reporting the weakest sentiment since March and predicted further deterioration in the coming three months. The loss of confidence added to a recent run of soft indicators, keeping policymakers under pressure to offer fresh stimulus to rev up growth in the world's third largest economy.
Boding ill for private consumption, which accounts for about 60 per cent of the economy, the survey showed retailers are struggling to lure customers. The Reuters Tankan sentiment index for manufacturers fell to 9 in September from 17 in August. The index is seen worsening further to 7 in December.
3 Refugee crisis as a business opportunity (Lucy P Marcus in The Guardian) In the face of the largest influx of refugees into Europe in decades, one group’s voice has been conspicuous by its absence: business. At a time when business is more powerful than ever, with multinational corporations stretching around the world, the private sector must work with governments and NGOs to help address the short-term and long-term challenges posed by the massive refugee inflows.
Indeed, industry leaders in all sectors owe it to themselves to be involved from the start. Only by turning the challenges into opportunities can social, political, and economic risks be mitigated. There has been one notable exception to the pattern of private-sector silence. Just as the German chancellor, Angela Merkel, has been at the political forefront of the migration crisis, the Federation of German Industries (BDI) has been at the business forefront.
The BDI has spoken clearly and decisively about the benefits of refugees for business and has proposed changes to Germany’s labour laws and regulations, including fast-tracking the newcomers’ right to work. In order to make business engagement and investment sustainable, the BDI has also sought assurances that migrants who find employment will not be deported.
The challenge, everyone agrees, is not confined to managing the huge inflows and processing asylum applications. In the coming months and years, destination countries must lay the foundations for integrating refugees into their workforces. To wait too long is to miss an important opportunity to be involved in developing a strategy that works for businesses, governments, and societies alike.
The benefits are clear. The refugees arriving on Europe’s shores are often young, well-educated, skilled, and eager to integrate quickly into society. They are an antidote to ageing populations and low birth rates, and many come ready to work. By collaborating with the public sector, business can help to ensure that they get the training and jobs they need.
Europe’s refugee crisis continues to be viewed solely as a political problem, in part because that is how the media portray it. The only business coverage tends to focus on the financial impact caused by the disruption of transport links such as the port of Calais. But Europe’s refugee crisis is also a business problem. By addressing it now, business can turn that problem into an opportunity for all.