1 IMF warns global economy is vulnerable (BBC) The
International Monetary Fund (IMF) has said the global economy has weakened
further and warned it was "highly vulnerable to adverse shocks". It
said the weakening had come "amid increasing financial turbulence and
falling asset prices".
It said China's slowdown was adding to global
economic growth concerns. China's economy, the second-biggest in the world, is
growing at the slowest rate in 25 years. "Growth in advanced economies is
modest already under the baseline, as low demand in some countries and a
broad-based weakening of potential growth continue to hold back the
recovery," the Washington-based IMF said.
"Adding to these headwinds are concerns about
the global impact of China's transition to more balanced growth, along with
signs of distress in other large emerging markets, including from falling
commodity prices."
The IMF also noted any future prospects for global
growth "could be derailed by market turbulence, the oil price crash and
geopolitical conflicts". Earlier this year, the IMF downgraded its
forecast for global economic growth. It now expects economic activity to
increase 3.4% this year followed by 3.6% in 2017.
2 Brazil stripped of investment grade status (San
Francisco Chronicle) Brazil's battered economy took another blow on Wednesday
when Moody's became the last of the three major credit ratings agencies to
strip the country of its investment grade status.
The agency lowered Brazil's ratings by two notches,
from Baa3 to Baa2 with a negative outlook. Fitch Ratings lowered Brazil into
junk territory in December, mirroring a similar move by Standard & Poor's
in September.
In a note accompanying its decision, Moody's said
the downgrade was driven by worries over an increase in government debt
"in a low-growth environment" and the country's "challenging
political dynamics".
The agency said it expects the government's debt to
exceed 80 percent of gross domestic product within the next three years and for
the economy to contract by an average of 0.5 percent a year through 2018.
Last week, Brazil's central bank published
statistics showing that the economy shrank over 4 percent in 2015. On Thursday
the Organization for Economic Cooperation and Development forecast the
country's GDP would contract by a further 4 percent in 2016. The gloom over the
country's economic prospects is compounded by the poisonous atmosphere in
congress, where the government is struggling to win support for its austerity
measures.
A long-running corruption scandal at the state-run
oil company, Petrobras, has implicated dozens of senior politicians and many of
the country's top business executives. President Dilma Rousseff also faces
impeachment proceedings over claims she used public banks to plug budget gaps,
as well as accusations that she used illicit funds to finance her 2014
re-election campaign.
2 India still blighted by caste issues (Priya
Virmani in The Guardian) It’s now four days since Delhi was paralysed by
members of the Jat caste. Unrest is so common in India that I heard one local
complain, “At least the protestors could have given us the weekend off,” but
the situation has been dire. Most of the city was left without water after
rioters vandalised the Munak canal. Schools have been closed. At home, people
have had to skip bathing and washing clothes.
All this must seem baffling to non-Indians. To the
outside world, the idea of caste belongs firmly in the past. It is no secret
that the dalit caste, once known as “untouchables”, were and still are the victims
of shocking discrimination, but the community at the centre of the current
disturbances, the Jats, are fairly prosperous landowners.
They come from the northern Indian state of Haryana,
which surrounds Delhi on three sides. Though still fairly prosperous, they are
feeling the pinch because of population growth, which has reduced the size of
their farm holdings, and two successive years of drought and failed crops.
They are now demanding that the government give them
the official status of “backward class”. Under India’s system of affirmative
action, colloquially referred to as “reservations” or the “quota system”, this
would allow Jats access to jobs and university places set aside for those from
the lower castes.
Independent India inherited a historically rooted
caste system that was notorious both for its rigidity and for its efficiency in
maintaining the existing power structures. For millennia, an individual’s
socio-economic position could only be inherited and never acquired. It was to
address this long-standing injustice that the Indian constitution, which came
into effect in 1950, incorporated a system of affirmative action.
Over decades the original “backward classes” have
been joined by many better-off castes in politically motivated moves that have
discredited the quota system, as well as reducing its effectiveness. With Jats
comprising more than a quarter of Haryana’s voters, it is hardly surprising
that the state’s politicians have spent 20 years wooing them with promises of
affirmative action.
For now, the government has agreed to the Jats’
demands. This has brought a degree of calm. More than peace, what the
government is attempting to buy here is Haryana’s votes. Jats played a crucial
part in the BJP’s victory in the 2014 general elections. At the same time,
everyone involved knows that India’s supreme court could overturn any change to
the Jats’ status, as they do not fundamentally qualify as a “backward class”.
The execution of affirmative action in India has
been complex, messy and overarchingly politically motivated. What is clear from
this latest debacle is that its current guise is not fit for 21st-century
India.
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