Wednesday, September 2, 2015
China crisis could keep global interest rates low; Australia retail sales slip, first time in 14 months; Big parade in China, ordinary folks can't watch
1 China crisis could keep global interest rates low (Phillip Inman & Heather Stewart in The Guardian) The recent turmoil in financial markets and the struggling Chinese economy could combine to hit global economic growth this year and force central banks to keep interest rates low, the International Monetary Fund has said.
In a downbeat report that charted the increasing risk of a global slowdown, the IMF said finance ministers attending a conference in the Turkish capital needed to maintain government spending despite the still high public-sector debts left over from the 2008 banking crash.
It said emerging economies reliant on the sale of oil and basic commodities would be especially vulnerable to a decline in trade with Beijing, which has soaked up much of the world’s resources in the last decade.
Analysts said the figures suggested that turmoil in the financial markets and worries about faltering growth in China have not yet had much impact on the US job market. A solid performance for the UK construction sector had also boosted investor confidence.
Fears that higher interest rates in the US will send the dollar soaring, raising the costs to emerging economies of financing their massive dollar debts, have dogged financial markets all year. Figures showing a sharp slowdown in China’s manufacturing output further spooked markets last month.
2 Australia retail sales slip, first time in 14 months (Gareth Hutchens in Sydney Morning Herald) Retail sales fell 0.1 per cent in July, the first nationwide decline in Australia since May last year. The surprisingly-weak data follows news that Australia's economy has slowed to a crawl, with annual growth now just 2 per cent.
It also comes as Myer shareholders endure a horror day on the market, with the company's share price plunging 22 per cent after returning to the bourse on Thursday morning. The big retailer had suspended trading on Monday after revealing a 21 per cent slide in its 2015 full year net profit.
Treasurer Joe Hockey struggled to explain why Australia's economic growth had slowed so much in the three months to June, but he pointed to retail sales and household consumption as two bright spots. Now the first of those examples has taken a hit, with the decline in retail turnover in July taking economists by surprise.
Food retailing did not grow at all. And there were falls in household goods retailing (-1.9 per cent) and other retailing (-0.6 per cent) following rises in both industries in June. Retail sales provide a useful update on consumer spending because retail volumes comprise over 30 per cent of consumption.
3 Big parade in China, ordinary folks can’t watch (San Francisco Chronicle) China’s massive military parade through the heart of its capital, cannot be watched by ordinary folks. Authorities obsessed with security and leery of any possible hitches will virtually shut down central Beijing on Thursday, keeping most people out of eyeshot for the parade commemorating the defeat of Japan in World War II.
Residents who live along the parade route have received notices ordering them to stay off balconies, keep windows shut, invite no guests and — at some buildings — snap no pictures.
The neighborhoods around Tiananmen Square, the main venue where President Xi Jinping will inspect the troops with foreign dignitaries, will be under curfew, and Beijing has mobilized 850,000 neighborhood watchers to report anything even slightly out of the ordinary.
City roads will be closed, public bus service suspended and many subway stops sealed, while cordon tape will keep members of the public away from the parade. Authorities also are shutting down office buildings, shops, restaurants and even hospitals along the route for at least 24 hours. Some buildings are staying shut for three days.