1 India as the world’s next big trading bloc (Dawn) A
new Common market is being formed. It has a bigger economy than the whole of
sub-Saharan Africa, more states than the European Union has members, and twice
the population of North America. It’s called India.
For more than six decades since independence,
India’s 29 states have operated almost as separate countries. They set their
own taxes, charged import duties on goods from neighbouring states, had their
own politics, culture and even languages. Prime Minister Narendra Modi is
trying to change that, with a single goods-and-services tax by next April,
leaning on state governments to amend labyrinthine labour and land laws, and
revamping the Soviet-style Planning Commission.
Given the size of India’s states and a predicted
growth rate of at least 7.5 per cent over the next five years, the potential
benefits of integration for investors are huge. In population terms, Uttar
Pradesh is equivalent to Brazil, Maharashtra would be Mexico, while Bihar is on
par with the Philippines. Telangana, India’s 12th-largest state, is comparable
to Canada.
Should Modi succeed in forging a single market, the
biggest winners could be some of the poorest states. Like the boom for EU
newcomers from Central Europe in 2004, growth in laggard states may
consistently outpace the national average as India’s lopsided economy begins to
balance out.
The infighting, corruption and endless regulations
have tarnished the country’s image for investors. India fell to 71st from 60th
among 144 nations in the World Economic Forum’s Global Competitiveness Index
2014/15, behind Rwanda and Romania. On the World Bank’s latest Ease of Doing
Business Index, India’s position worsened to 142nd out of 189.
2 Why China slowdown matters (Andrew Walker on BBC) After
a long period of stunning growth, China's economy is now slowing. The economy
grew at an average rate of 10% a year for the three decades up to 2010. Last
year, the Chinese economy grew 7.4%. The International Monetary Fund (IMF)'s
most recent forecast is 6.8% for this year and 6.3% for 2016.
The government wanted a slowdown, and has encouraged
it because there are long-term forces that mean it was inevitable sooner or
later. China's very fast economic growth was based on some factors that could
not last forever. Very high levels of investment have been part of the story. High
investment rates have been important factors in other Asian economic success
stories. But you can have too much of a good thing.
So the government's aim is to get spending by
Chinese consumers to take a bigger role in driving the economy, and it has the
support of, for example, the IMF in that. Exports of cheaply made goods have
been central to China's stunning growth. Since 2011, the export growth figures
have been more modest, slowing to 6.4% last year.
China has an important role as a buyer of oil and
other commodities, and the slowdown has been a factor in the decline in the
prices of those goods. So even if China's more moderate growth is a good thing
in the long term, it has had an adverse impact on some countries, especially
commodity exporters.
There is also the possibility of financial instability
spreading from China. Depending on how you crunch the numbers, China’s economy
is either the biggest or second biggest on the planet. China's slowdown will be
a major issue hanging over the big international economic policy events of the year:
the G20 summit in Turkey in November and the annual meetings of the IMF in
October, this year being held in Peru.
3 EU to propose migrant quotas (Straits Times) The
executive body of the European Union will propose that countries share
responsibility for housing thousands of refugees arriving in Europe from across
the Mediterranean.
European Commission president Jean-Claude Juncker
will propose a "mandatory migrant quota system" under which the EU's
28 member states will share responsibility for migrants during times of
emergency.
"To ensure a fair and balanced participation of
all member states to this common effort... the EU needs a permanent system for
sharing the responsibility for large numbers of refugees and asylum seekers
among member states," the proposal reads, it is reported. The number of
refugees sent to each country would be decided according to a
"redistribution key" based on GDP, population size, unemployment rate
and past numbers of asylum seekers.
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