1 Five threats to American prosperity (Phillip Inman
in The Guardian) Janet Yellen sits down with her colleagues on the Federal
Reserve’s interest rate-setting committee this week. The combination of
turbulent financial markets and an uncertain outlook for the global economy as
China slows and Europe contemplates the possible fallout from a Brexit vote,
calls for cool heads, and a wait and see approach.
Yellen’s worries can be divided into five main
categories. First, the jobs market. The most recent jobs figures appeared to
show that employers felt confident about the future. Unemployment benefit
claims were low, indicating that redundancies were being shelved in the
expectation of more work.
Second, US manufacturing: Looking back, it is
possible to see that much of the growth in US manufacturing after 2011 was tied
to the shale gas boom. The collapse in the oil price from the summer of 2014
signalled the end of the boom.
Third, China’s slowdown: There is a bigger worry
when it comes to China than yo-yoing economic data – and that is the source of
its growth. A record surge in credit in the first quarter came after an already
worrying longer-term rise in borrowing, especially in the property sector. China
will have to rely on domestic demand to secure Beijing’s goal of growth at
between 6.5% and 7% for the year.
Fourth, currency wars: A rise in US interest rates
would encourage international investors to buy US assets, and to do this they’d
need to exchange their own currency for dollars, increasing the demand for and
price of the US currency. A higher dollar would only increase the gap with the
euro and the yen and force the Chinese to devalue the yuan, further loosening
its ties to the dollar.
Five, Brexit: The Organisation for Economic
Cooperation and Development recently asserted that a British departure from the
EU posed as big a threat to the global economy as a “hard landing” in China.
The Paris-based thinktank said Brexit would have significant costs not just for
the UK and Europe, but for the rest of the world. Is this a world that could
cope with the destabilising effects of higher borrowing costs in the US? It is
to be hoped Yellen will judge it is not.
2 Saudi Arabia plans solar power plants (Gulf News) Saudi
Arabia’s state electricity utility is seeking bids from international
developers to build two solar-power plants in the kingdom’s northern region. The
plants will each generate as much as 50 megawatts using photo-voltaic
technology, which produces power directly for solar cells, according to a
tender announcement that Saudi Electricity Co.
The tender is the first by Saudi Arabia to seek
international partners to cooperate in building and operating renewable-energy
facilities, according to the Middle East Solar Industry Association. The
country is scaling back its ambitions for renewable energy and currently seeks
to generate 9,500 megawatts by 2030 from sources such as solar and wind power.
Saudi Arabia is developing renewable energy to take
advantage of its ample sunlight and to diversify energy supply amid rising
demand. Yet renewable resources will only account for about 10 per cent of
total power capacity compared with the previous target of about 50 per cent,
Energy Minister Khalid Al Falih said last week during a presentation of the
kingdom’s long-term strategy to overhaul the economy. The government is now
counting on increased output of natural gas to help cut its reliance on crude
oil.
3 Exit interviews lead to few changes (Dawn) According
to a global survey of more than 200 executives in 35 countries, about 75pc said
that their companies conduct exit interviews when employees leave.
Of those, about 71pc said that human resources
departments handle the interviews, while about 19pc said that they’re handled
by the employees’ supervisors. But when researchers asked respondents to name a
specific change that resulted from feedback collected during the exit
interviews, less than a third could.
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