1 Global economy to grow this year (Muzaffar Rizvi
in Khaleej Times) The global economy will continue to grow at a steady pace in
2016 and there is no need to worry about falling oil prices, volatile Chinese
market and a collapse in the stocks and bonds of commodity-producing emerging
nations, says an expert.
The global strategist of Societe Generale's private
banking arm Xavier Denis said low oil prices will continue to give a boost to
US consumers. However, consumer price index is expected to rise as wage
pressures begin to emerge in the US and the impact of the slump in energy
prices fades.
He said private consumption remains robust and
should be the main driver of US growth in coming quarters. Denis said world
trade continues to slow. Global trade growth has been anchored below its
historical average since the 'great recession', offering further evidence of
tepid world economic recovery.
He said low commodity prices should continue to
weigh on inflation, and central bank monetary policy should remain
accommodative overall. To a question about 'recession fear' this year, he said
it is unlikely that 2016 is a repetition of 2008 crisis as most of the legacy
of the financial crisis has been addressed by policymaking, cleaning up of
banks' balance sheets and household balance sheets.
About the eurozone, he said single currency bloc has
begun to recover from the slowdown in late 2014, helped by the weaker euro,
lower energy prices and less fiscal tightening - we anticipate real GDP growth
around 1.6 per cent in 2016. With banks easing credit standards, lending
activity is finally showing signs of recovery. Lending to the private sector is
edging further up.
Denis said zero interest policies in the developed
world have bolstered debt issuance from emerging markets corporates. "India,
currently our top pick within emerging markets, should be driven by ambitious
economic plans, strong profit outlook and accommodative monetary
policies," Denis said.
2 Japan’s ‘Abenomics’ on the ropes (Straits Times) Japan's
bid to revive its once-soaring economy is on the ropes as an equity market
bloodbath and resurgent yen threaten to knock Prime Minister Shinzo Abe's
growth plan to the canvas.
Mr Abe met with his hand-picked central bank chief
Haruhiko Kuroda for an emergency meeting on Friday (Feb 12) amid huge
volatility on global markets, which is wiping out the gains Abenomics has
achieved since the premier swept to power in late 2012.
All eyes will be on Japan's fourth-quarter GDP data
on Monday, with many economists expecting a contraction of about 0.7 per cent
in the world's No. 3 economy. That could deal a near fatal blow to Mr Abe's
easy money policies, which he hailed as the answer to beating the deflation
blamed for holding back growth in the fast-ageing nation, analysts warned.
"The risk is not that Japan faces an imminent
financial crisis or that the Abe administration could collapse, but rather that
the government's economic programme simply fails to achieve its goals,"
said Mr Tobias Harris, political risk analyst at consultancy Teneo. That would
leave "Japan no more capable of reckoning with the implications of
demographic decline than before Abe took power".
Mr Abe's plan - big government spending, central
bank monetary easing and reforms to the highly regulated economy - appeared to
bear fruit at first. The yen weakened sharply, which boosted Japanese
exporters' profits and sparked a huge stock market rally that bolstered Mr
Abe's claim that "Japan is back".
But sustained growth in the economy has been elusive
and Mr Abe's efforts to overhaul the economy have been widely criticised as
half-hearted. "(The plan) actually worked, but now it is moving in
reverse," said Mr Takuji Okubo, director of Japan Macro Advisors in Tokyo.
3 Time to update tired image of India (Jason Burke
in The Guardian) New figures released by Indian authorities last week put
economic growth in the emerging power at 7.5% in 2015, the highest in the
world, and up from 6.9% the year before. Growth in China is heading in the
opposite direction – predicted to be only 6.3% in 2016 – while the US will
expand by a mere 2.6%.
So, after several disappointing years, the elephant
has once again begun to dance. And, in a world shaken by a series of rolling
crises, anything remotely cheerful gets noticed. India’s economy is the 10th or
11th biggest in the world and is forecast to reach third, after the US and
China, in less than 15 years.
This leads to two important questions: is India’s
rise, which looked to be slowing, really back on track? And if so, what will
India’s eventual emergence as a major economic power actually mean? The answers
to both challenge many of the easy assumptions often made in the west.
To dismiss the rise of India would be wrong.
Whatever the doubts, it is difficult to deny the huge wealth generated over the
past 30 years, and the powerful motors of urbanisation and aspiration. It is
likely that the coming years will see more of the same.
So what does this mean for the rest of the world? So
far India has not converted its new-found wealth into commensurate global
clout. This vast nation has always punched below its weight on the
international stage, other than perhaps during the 1950s, when Jawaharlal
Nehru, the independence leader and prime minister, converted moral prestige
into influence.
This lack of power projection also means India is
badly misunderstood. The image of the US overseas incorporates hard elements (a
willingness to use military force or to impose trade agreements favouring US
businesses) with softer elements (film and TV, music, hamburgers).
One of the consequences of India’s profound lack of
hard power is that its image is defined almost entirely by soft elements:
Bollywood, Mahatma Gandhi, curry, films such as the Last Best Marigold Hotel or
Slumdog Millionaire, and the country’s reputation as a global information
technology hub. This distorts the reality.
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