Sunday, October 25, 2015

Oil price decline lowers remittances out of Gulf countries; Perhaps India, not China, should be target of Britain's charm offensive; Conservatives win in Poland

1 Falling oil price lowers remittances out of Gulf countries (Babu Das Augustine in Gulf News) The decline in oil prices and their impact on economic growth is expected to have a dampening effect on remittances from Gulf Cooperation Countries (GCC), according to the latest regional economic outlook of the International Monetary Fund (IMF). The GCC’s economic growth is projected to slow to 3.25 per cent this year. It will further slow to 2.75 per cent next year.

The region’s non-oil growth is projected at just below 4 per cent for both 2015 and 2016, a reduction of 1.75 per cent per cent compared with 2014. Remittances from the GCC are an important source of income for Egypt, Jordan, Lebanon, Pakistan and Yemen.

The Gulf region is one of the largest sources of migrant remittances in the world. Some 29 million foreign workers sent home more than $100 billion in remittances in 2014, about one-third of which was sent to the Mashreq region, Pakistan and Yemen.

Historically, remittances have been much less volatile than oil prices. This is mainly because the GCC countries had accumulated large buffers, which allowed them to maintain their fiscal spending, even in periods of temporary declines in oil prices.

2 Perhaps India, not China, should be target of Britain’s charm offensive (Ian Jack in The Guardian) According to Steve Hilton, former chief strategist to David Cameron, Britain is humiliating itself unnecessarily by “sucking up” to China when instead it could be “rolling out the red carpet” for India. “We should prioritise our relationship with India because that’s where the opportunity is,” he said.

Parliamentary democracy, a free media, the English language, tea with milk: however ruthless and greedy British imperialism may have been, its 250-year history in India left that country with several of the imperfect institutions, beliefs and habits that Britain finds familiar and admirable.

But where is the money in all this – the investment in the nuclear power plants and high-speed railways that Britain allegedly needs? The brute truth is that China has piles of cash looking for a return abroad and India doesn’t. It will overtake China in the next 10 years to become the world’s most populous country, and yet it’s still only the world’s seventh-largest economy.

Its gross domestic product lies between those of France and Italy in a league table that has the UK in fifth place with a GDP a quarter of China’s. Of course, these positions aren’t fixed. This year India overtook China in its growth rate, and it may well replace Japan as the world’s third-richest country during the next 10 to 15 years. In the long term, then, Hilton may be right about India as the greater opportunity.

In a speech 10 years ago, India’s then prime minister, Manmohan Singh, quoted the work of the English economic historian, Angus Maddison, to show how India’s share of world income collapsed from 22.6% in 1700, which was almost equal to the whole of Europe’s share at that time, to as low as 3.8% in 1952. “There is no doubt that our grievances against the British Empire had a sound basis,” Singh said, adding that the so-called “brightest jewel in the British crown” was by 1900 the poorest country in the world in terms of per capita income.

Today the UK no longer makes the list of India’s top 15 trading partners; neither does India appear in such a British list. China matters far, far more to both countries than they do to each other. So, Xi Jinping or Narendra Modi? We must try to imagine an Indian peasant being confronted with a similar question in 1700, when India had a quarter of the world’s income. Colonial armies are gathering over the horizon. Who would you rather rule you, Britain or France?

3 Conservatives win in Poland (BBC) Poland's conservative opposition Law and Justice party has won parliamentary elections. Exit polls suggest it has enough seats to govern alone, with an anticipated 39% of the vote.

Its eurosceptic leader Jaroslaw Kaczynski has claimed victory, and the outgoing Prime Minister, Ewa Kopacz of the centrist Civic Platform party, has admitted defeat. Law and Justice has strong support in Poland's rural areas.

If the numbers suggested by the exit poll are confirmed, it will be the first time since democracy was restored in Poland in 1989 that a single party has won enough seats to govern alone. "We will exert law but there will be no taking of revenge. There will be no squaring of personal accounts," said Mr Kaczynski. "There will be no kicking of those who have fallen through their own fault and very rightly so."

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