1 China interest rate cut fuels fear over economy
(Phillip Inman in The Guardian) China fuelled fears that its ailing economy is
about to slow further after Beijing cut its main interest rate by 0.25
percentage points. The unexpected rate cut, the sixth since November last year,
reduced the main bank base rate to 4.35%. The one-year deposit rate will fall
to 1.5% from 1.75%.
The move follows official data earlier this week
showing that economic growth in the latest quarter fell to a six-year low of
6.9%. A decline in exports was one of the biggest factors, blamed partly by
analysts on the high value of China’s currency, the yuan.
The rate cut sent European stock markets higher as
investors welcomed the boost from cheaper credit in China, together with the
hint of further monetary easing by the European Central Bank president, Mario
Draghi, on Thursday. Investors were also buoyed by the likelihood that the US
Federal Reserve would be forced to signal another delay to the first US rate rise
since the financial crash of 2008-2009 until later next year.
Some economists have warned that the world economy
is about to experience a third leg of post-crash instability after the initial
banking collapse and eurozone crisis. The slowdown in China, as it reduces
debts and a dependence for growth on investment in heavy industry and property,
will be the third leg.
World trade has already contracted this year with
analysts forecasting weaker trade next year. The International Monetary Fund
(IMF) in July trimmed its forecast for global economic growth for this year to
3.1% from 3.3% previously, mainly as a result of China’s slowing growth. The
Washington-based fund also warned that the weak recovery in the west risks
turning into near stagnation.
Corporations considered bellwethers of the global
economy have also warned of a sharp slowdown. Caterpillar, the industrial
equipment manufacturer, has seen profits slide over the last year. AP
Moller-Maersk, the shipping firm cut its 2015 profit forecast by 15% on Friday,
blaming a slowdown in the container shipping market.
2 South Africa announces 0% university education fee
hike (Johannesburg Times) "We agreed that there will be a zero increase of
university fees in 2016," President Jacob Zuma has said. His address comes
after a meeting with student leaders and university officials following a
nationwide protest against increased fees.
Thousands of students had travelled from around
Pretoria and Johannesburg to attend the demonstration, which gradually
degenerated into violent scenes at a fence erected on the south lawn separating
the students from the Union Buildings.
Students who had come to protest peacefully were
overshadowed by a minority of students at the fence, many of them wearing
T-shirts bearing the branding of the Economic Freedom Fighters, the SA Students
Congress, ANC Youth League, and the Pan Africanist Movement of Azania.
Those at the front of fence antagonised riot police
by tearing down the fence, and throwing stones, bricks and other objects at
police and even media. Police used stun grenades, tear gas and a water cannon
to disperse some of them.
3 Weather’s too hot for global economy (Khaleej
Times) With each upward degree, global warming will singe the economies of
three-quarters of the world's nations and widen the north-south gap between
rich and poor countries, according to a new economic and science study.
Compared to what it would be without more global
warming, the average global income will shrivel 23 per cent at the end of the
century if heat-trapping carbon dioxide pollution continues to grow at its
current trajectory, according to a study published in the scientific journal
Nature.
Some countries, like Russia, Mongolia and Canada, would
see large economic benefits from global warming, the study projects. Most of
Europe would do slightly better, the US and China slightly worse. Essentially
all of Africa, Asia, South America and the Middle East would be hurt
dramatically, the economists found.
"What climate change is doing is basically
devaluing all the real estate south of the US and making the whole planet less
productive," said study co-author Solomon Hsiang, an economist and public
policy professor at the University of California Berkeley. "Climate change
is essentially a massive transfer of value from the hot parts of the world to
the cooler parts of the world. This is like taking from the poor and giving to
the rich," Hsiang said.
Lead author Marshall Burke of Stanford and Hsiang
examined 50 years of economic data in 160 countries and found what Burke called
"the goldilocks zone in global temperature at which humans are good at
producing stuff" - an annual temperature of around 13 degrees Celsius or
55.4 degrees Fahrenheit, give or take a degree.
For countries colder than that economic sweet spot,
every degree of warming heats up the economy and benefits. For the US and other
countries already at or above that temperature, every degree slows
productivity, Burke and Hsiang said.
The 20th-century global average annual temperature
is 57 degrees, or 13.9 degrees Celsius, according to the National Oceanic and
Atmospheric Administration. Last year - the hottest on record - was 58.24
degrees and this year is almost certain to break that record, according to
NOAA.
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