China has leeway to tackle local debt mountain 7 Mar 2017 Authorities say cutting the $2.2 trln local government debt pile is a 2017 priority. Past attempts failed. An improving economy gives Beijing room to address the issue, in part by boosting local tax power. Possible higher interest rates and lower land prices argue for haste.
Northern Ireland vote sends Brexit warning shot 4 Mar 2017 Nationalist party Sinn Fein made surprise gains in snap elections, buoyed by discontent with the ruling unionist DUP. That puts the duo, who must govern together, on a more equal but confrontational footing. The result may be a bumpier path for Britain’s EU exit negotiations.
China regulator reshuffle leaves turf intact 24 Feb 2017 The People's Republic is shaking up top financial and economic positions, with veteran watchdog Guo Shuqing poised to take charge of supervising banks. Yet there is still no sign of the much-discussed super-regulator, and central bank chief Zhou Xiaochuan remains in place.
Hong Kong budget is missed chance to spread wealth 22 Feb 2017 The city's new finance chief rolled out new spending and said occasional deficits might be permitted. The shift away from stinginess comes weeks before Hong Kong chooses a new leader. But it's unlikely to placate the protest movement; the massive $120 bln reserve stays untouched.
Italian election delay swaps uncertainty for limbo 14 Feb 2017 Matteo Renzi’s centre-left party is holding a leadership contest, making it hard for the former prime minister to call an early election. Though a messy vote is avoided, a prolonged period of temporary government will only add to Italy’s slow growth and anti-establishment mood.
Switzerland shoots itself in foot on tax reform 13 Feb 2017 Voters rejected a government plan to balance low corporate rates with global reforms. That might make sense if international cooperation on tax fails. But the Swiss are mainly hoping to avoid higher personal taxes. If multinationals flee, these will happen anyway.
Chinese FX reserve crosses risky line in sand 8 Feb 2017 The country's foreign currency stash fell below $3 tln in January, the lowest in nearly 6 years. That matters less than the line that might get crossed next: the yuan weakening past 7 per dollar. That would mean eating into the reserves still further, or risking U.S. wrath.
Ireland could join Britain in EU departure lounge 6 Feb 2017 Dublin’s unequivocally pro-Brussels stance may be tested if politics unmoors it from key trading partners like the UK and U.S. A tough Brexit deal, along with an inflated EU budget bill caused by tax inversions, could raise tricky questions about Ireland’s true interests.
Greece is in a mess but not at the brink 3 Feb 2017 The government, its European creditors and the IMF are all being unreasonable in their own way over a bailout needed by July. The most sensible option would be for the IMF to withdraw. More likely is that if a compromise can't be found, the ruling Syriza party calls an election.
India state firm fusion is marriage of convenience 3 Feb 2017 A push to create national champions starting with the oil sector pairs industrial logic with Prime Minister Narendra Modi’s propensity for grand gestures, and desire to compete globally. Selling off small stakes in bigger players will also be easier than full privatisations.
India favours poor with damage-control budget 1 Feb 2017 Finance Minister Arun Jaitley is relaxing a bit on deficit reduction, while taxing the rich more to fund big outlays for the rural poor. There are few benefits for corporate India. But the budget will help to limit the political fallout from India's big currency experiment.
Merkel ignores dark side of job boom at her peril 26 Jan 2017 Rises in employment and real incomes mask the problem of growing income inequality in Germany. Chancellor Angela Merkel’s ability to fend off an election challenge from the rebooted centre-left Social Democrats may hinge on how she proposes to stop the poor becoming poorer.
Turkish lira will stick with FX underdog role 24 Jan 2017 Rate-setters passed up the chance to give the battered currency even a brief respite. Investors’ doubts about the central bank’s independence show how political concerns are breeding economic ones. Steep market losses can entice bargain hunters, but not when worse may lie ahead.
Europe leaves Italian bullying to markets 18 Jan 2017 The European Commission wants Italy to cut its budget deficit. But the cut looks gentle compared with Brussels' rules, probably because elections are looming and anti-establishment forces gathering. In any case, as ECB bond-buying ends, markets will be less lenient.
Britain’s Brexit cliff: how big is the drop? 16 Jan 2017 As Theresa May prepares to reveal details of the UK’s post-EU objectives, the risk of a clean break in 2019 has risen. Such an outcome is suboptimal. But Britain’s negotiating position is far from hopeless, and the scale of the pain from “hard Brexit” can be overstated.
Politics could flatter or flatten global growth 16 Jan 2017 Last year the world economy grew at its slowest rate since 2009, the IMF reckons. Stimulus in China and the promise of Donald Trump’s tax cuts mean the next two years should be better. However, increased risks of protectionism make forecasts even more tentative than usual.
Hadas: The new autocratic economics is still fuzzy 12 Jan 2017 Muscular leaders have diverging concerns. Oil-dependent Putin does little to promote Russian growth. China’s Xi puts expansion above financial stability, while Turkey’s Erdogan risks the economy for political strength. The common factor is state control, greased with corruption.
India’s next big experiment could be basic income 10 Jan 2017 A direct cash transfer to citizens could replace a plethora of subsidies and benefits. That would reduce corruption and waste, especially if the handout only goes to the poor. But identifying the worthy will be tough, even with India’s impressive biometric identity database.
Euro zone revival carries sting in tail 4 Jan 2017 After years in the doldrums, increased business activity and slightly rising prices are good news for the single currency area. Besides, inflation is still a long way below the European Central Bank target. But a sustained pickup would expose the euro zone's two-speed recovery.
Trump stimulus will only delay next U.S. recession 3 Jan 2017 The president-elect inherits an economy that's in fairly good shape. His planned tax cuts and infrastructure spending will give growth an added short-term boost. Though that may postpone an overdue downturn, Trump is still likely to face a crunch before the next election.