Economy

Mohammad Anas Wahaj | 10 dec 2015

According to the recent Morgan Stanley Research report, 'Can Demographics Reverse Three Multi-Decade Trends?', by Prof. Charles Goodhart of London School of Economics, Manoj Pradhan of Morgan Stanley, and Pratyancha Pardeshi of Morgan Stanley, the age of the abundant labor available to the global economy for the last few decades is coming to an end, spelling the end of the deflationary super-cycle and the era of zero interest rates. The demographic 'sweet-spot' was the result of plummeting birth rates and longer life spans from 1970 onwards. Moreover the collapse of the Soviet Union and China's entry into the global trading system made the conditions even sweeter. The working age cohort was 685 million in the developed world in 1990. The work pool of globalized market was more then doubled by China and eastern Europe together adding 820 million. Prof. Goodhart says, 'It was the biggest 'positive labour shock' the world has ever seen. It is what led to 25 years of wage stagnation.' But now the shift is expected to happen leading to scarcity of labor and rise in wages. The balance of power will shift towards workers and there would be a reversal in the rise of inequality that has been happening within economies. 'We are at a inflection point,' says Prof. Goodhart. The report explains that healthcare and ageing costs will drive fiscal expansion, while scarce labour will set off a bidding war for workers, all spiced by a state of latent social warfare between the generations. Prof. Goodhart comments, 'We are going back to an inflationary world.' In a recent speech, Andrew Haldane of The Bank of England, cautions that we may be stuck in a zero-interest trap for as far as the eye can see, with little left to fight the next downturn. Mr. Haldane said, 'Central banks may find themselves bumping up against the 'Zero Lower Bound' (ZLB) constraint on a recurrent basis.' The report made few assumptions. It discounts the role of automation and robots in offsetting the labor shortages. It also doubts the effects of demographic dividend of India and Africa, with increasing working age population, by citing lack of infrastructural support to repeat the 'China Phenomenon'. The report also debunks the claims made by French economist Thomas Piketty in his book 'Capital in the 21st Century', that the return on capital outpaces the growth of the economy over time, leading ineluctably to greater concentrations of wealth in an unfettered market system i.e. the rich will further gain from investments while the condition of the poor will continue to worsen. Read on...

The Telegraph: The world economy as we know it is about to be turned on its head
Author: Ambrose Evans-Pritchard

Mohammad Anas Wahaj | 10 nov 2015

Prof. Nouriel Roubini, an economist at New York University, came to fame as 'Dr. Doom' when he predicted the US housing bubble crash of 2007-2008. Following are seven ideas about the global economy that he shared in a recent event - (1) Aging population and the end of the 'golden era': Worldwide economic slowdown; Governments and private sector is saving more and spending less; Aging population is changing consumption model; Individuals are inclined towards saving. (2) China - expect a "bumpy landing" but no crash: Slowdown but no complete collapse; 5-6% potential growth next year. (3) On Silicon Valley: Localized technological and scientific innovation at specific hubs like Silicon Valley; Not leading to productivity growth, that is key to the growth of global economy. (4) Are robots taking over our jobs?: Shrinks demand for labor; Will bring changes to labor force structure and therefore structure of the economy. (5) The central banks are broken: Government policies are not optimal; Instruments of monetary policy seem ineffective; Fiscal policy instruments are not used to their full potential; Need for structural reforms globally, which is a challenging task. (6) The hyped-up Grexit: Lot of attention to Greek exit; Greece is only 2% of European GDP; Grexit will have political implications and potential to transform Eurozone. (7) Commodity super cycle: End of commodity super cycle; Economic slowdown in China; Supply issues like innovative shell gas, oil tech, and significant reserves in Latin America and Africa; Low demand for raw materials. Read on...

FinBuzz: 7 ways the global economy is going to change, according to Nouriel Roubini
Author: NA

Mohammad Anas Wahaj | 20 oct 2015

To transform cities into 'HUBs' of something requires deliberate collaborative efforts and partnerships between the people and government. There are numerous examples from US and around the world where residents, local businesses, city administration, civil society and governments have come together to create ideas and concepts, developed a concrete roadmap, and carefully executed strategy, that lead to the evolution of a city or region to become great at doing something and attract other people, businesses and investments that helped develop and grow its economy. They worked relentlessly as a team towards the shared vision and goal. Kansas City in United States is one such example where the city and its citizens built upon its strength and made it into a hub of 'Social Entrepreneurship.' Josh Schukman (Founder of Social Change Nations), explains five essential elements that helped transform Kansas City and how other cities can replicate and implement this model - (1) Capitalize on the strengths of area universities. (2) Rally local foundations. (3) The effort must be driven by the social entrepreneurs themselves. (4) Embrace the startup culture. (5) Remember this is a long term play. Read on...

Huffington Post: How to Make Your City a Hub For Social Entrepreneurship
Author: Josh Schukman

Mohammad Anas Wahaj | 10 oct 2015

According to Global Impact Investing Network (GIIN), 'Impact investments are investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return...The growing impact investment market provides capital to address the world's most pressing challenges in sectors such as sustainable agriculture, clean technology, microfinance, and affordable and accessible basic services including housing, healthcare, and education.' The recent report by Wharton School of the University of Pennsylvania, 'Great Expectations: Mission Preservation and Financial Performance in Impact Investments', based on the evaluation of financial performance of 53 impact investing equity funds that include 557 individual investments, explores the two most important aspects of impact investing - financial returns and long-term impact. The study suggests that - in certain markets segments - investors might not need to expect lower returns as a tradeoff for social impact. According to authors of the report, Wharton finance professors David Musto and Chris Geczy, certain market segments of funds in the sample yield returns close to those of public market indices. Prof. Geczy explains, 'Our research fills a near-void of rigorous analysis of private investment and social impact outcomes and most importantly the link between the ideals of doing well and doing good. The study examines the tension between profits and purpose, also bringing to bear analyses characterizing relative performance as well as statistical certainty about the result. It represents an exciting initial advancement in our ongoing social impact research agenda.' Read on...

GlobeNewswire: New Wharton Research Shows "Doing Well While Doing Good" Is Viable Investment Strategy, Investors Seeking Social Impact Can Receive Comparable Returns
Author: Peter Winicov

Mohammad Anas Wahaj | 30 sep 2015

India's Central Statistics Office (CSO) recently revised the methodology to calculate the Gross Domestic Product (GDP). The new growth numbers brought a bit of surprise, both in the local as well as the global economic circles, as they made India the fastest growing economy in the world, beating China to take the top spot. According to recent WSJ survey of US economists, China's GDP figures are often seen with skepticism. But when India Real Time asked about India's official GDP numbers to a group of international economists, they seem generally comfortable with its economic direction, even though they haven't fully figured out the official data. Following are the views of some global economists - (1) Shaily Mittal of MNI Indicators (London): 'Although reliability of data can be questioned to some extent, there is no denying the fact that India seems to be growing at a much healthier pace. Overall we remain positive on India.' (2) Chua Han Teng of BMI Research (Singapore): 'The repeated surprises under the new GDP series for the past two quarters and the subsequent revisions to previous data have given rise to more questions than answers regarding India's economy.' (3) Jeremy Schwartz of WisdomTree (New York): 'Overall there has been a big boost in investor attitudes towards India. Recent changes have helped steer India in the right direction.' (4) Kilbinder Dosanjh of Eurasia Group (London): 'Brazil, Russia and South Africa are virtually in recession. If you look at the components within BRICS, India is actually doing very well regardless of the methodology.' (5) Vishnu Varathan of Mizuho Bank (Singapore): 'GDP numbers probably leave unanswered questions about mis-stated growth. But the broader macro-stability objectives of the RBI dilute the direct risks.' Read on...

The Wall Street Journal: What Do International Economists Really Think of India's Rosy GDP Readings?
Author: Anant Vijay Kala

Mohammad Anas Wahaj | 21 sep 2015

The United Nations Sustainable Development Summit 2015 will be held in New York from 25 to 27 September 2015, to adopt the post-2015 agenda for sustainable development. The 2030 agenda includes 17 Sustainable Development Goals (SDGs) that will replace the eight Millennium Development Goals (MDGs) that were adopted by 193 UN member states in 2000 to root out poverty from the world. The 17 SDGs continue to build upon MDGs to end poverty alongwith fighting inequality and injustice. These goals will also include tackling the concerns of climate change, global health and hunger. Helen Clark, UNDP Adminstrator and former Prime Minister of New Zealand, says on the UNDP.org, 'World leaders have an unprecedented opportunity this year to shift the world onto a path of inclusive, sustainable and resilient development...If we all work together, we have a chance of meeting citizens' aspirations for peace, prosperity, and wellbeing, and to preserve our planet.' The 17 SDGs are - (1) End poverty in all its forms everywhere (2) End hunger, achieve food security and improved nutrition and promote sustainable agriculture (3) Ensure healthy lives and promote well-being for all at all ages (4) Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all (5) Achieve gender equality and empower all women and girls (6) Ensure availability and sustainable management of water and sanitation for all (7) Ensure access to affordable, reliable, sustainable and modern energy for all (8) Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all (9) Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation (10) Reduce inequality within and among countries (11) Make cities and human settlements inclusive, safe, resilient and sustainable (12) Ensure sustainable consumption and production patterns (13) Take urgent action to combat climate change and its impacts (14) Conserve and sustainably use the oceans, seas and marine resources for sustainable development (15) Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss (16) Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels (17) Strengthen the means of implementation and revitalize the global partnership for sustainable development. Read on...

UN Sustainable Development: Transforming our world - The 2030 Agenda for Sustainable Development
Author: NA

Mohammad Anas Wahaj | 16 aug 2015

A facilitating environment is required for innovation and entrepreneurship to flourish. Cities and their administrations can work towards building and developing this ecosystem through proper policies and infrastructure and attract investments and talent. A recent report 'CITIE' (City Initiatives for Technology, Innovation and Entrepreneurship) by UK-based innovation charity Nesta, in collaboration with Accenture and Future Catapults, provides suggestions for policy makers and city administrators to create best possible environment for innovation and entrepreneurship in urban context. Following are some characteristics of cities that provide such an environment - (1) They act as customers: Open up their procurement processes to make them accessible to young city firms and small businesses. Provide them with public sector contracts. (2) They make for great hosts: Integrate the needs and requirements of startups into their development plans and have excellent infrastructure and collaborative spaces like accelerators and incubators to attract talent. (3) They advocate for startups and innovation: Provide visibility to local businesses by branding themselves as startup or innovative locations or hubs and attract international investors and corporations. (4) They act as connectors: Facilitate digital and physical connectivity through high speed internet networks and sustainable physical mobility solutions. (5) They have a long-term strategy: Provide consistency through a clear long-term strategy by having a focused public official overseeing technology, innovations and entrepreneurship. Moreover they should also have a public set of KPIs (Key Performance Indicators) to measure the success of their strategy. Read on...

Forbes: What Are The Key Traits Of Innovation-Friendly Environments? Some Cities Have Figured It Out
Author: Federico Guerrini

Mohammad Anas Wahaj | 07 aug 2015

UN 'Millennium Development Goals' will now be replaced by a set of development objectives termed as 'Sustainable Development Goals' in September'2015. These include ending poverty, reducing child mortality and tackling climate change. Recent report by the 26-member Scientific Advisory Board to UN Secretary General points out that Science, Technology and Innovation (STI) can help alleviate poverty, reduce inequalities, increase income and improve health. The report further highlights that countries with strong and effective STI systems invest upto 3.5% of their GDP (Gross Domestic Product). Thus governments have to set up a sufficient national minimum target investment for STI and achieve development. Specific investment areas that scientists recommended are - alternative energy solutions, water filters that reduce pathogens at the point-of-use and nanotechnology for health and agriculture. According to the report, 'A better informed and educated society would help establish policies that help long-term well-being over decisions that favour short-term economic and political interests.' According to the UNESCO website, UN Secretary-General's Scientific Advisory Board (2014) includes the following scientists - Tanya Abrahamse (South Africa); Eva Kondorosi (Hungary); Susan Avery (USA); Sir Hilary McDonald Beckles (Barbados); Joji Cariño (Philippines); Rosie Cooney (Australia); Abdallah S. Daar. (Oman); Gebisa Ejeta (Ethiopia); Vladimir Fortov (Russian Federation); Fabiola Gianotti (Italy); Ke Gong (China); Jörg Hinrich Hacker (Germany); Maria Ivanova (Bulgaria); Eugenia Kalnay (Argentina); Reiko Kuroda (Japan); Dong-Pil Min (Republic of Korea); Carlos Nobre (Brazil); Rajendra Kumar Pachauri (India); Shankar Sastry (USA); Hayat Sindi (Saudi Arabia); Wole Soboyeyo (Nigeria); Laurence Tubiana (France); Judi W. Wakhungu (Kenya); Ada E. Yonath (Israel); Abdul Hamid Zakri (Malaysia); Ahmed Zewail (Egypt). Read on...

Reuters: Investing in science can be "the game changer" for development - experts
Authors: Magdalena Mis, Leslie Gevirtz

Mohammad Anas Wahaj | 10 jul 2015

Over the years economists have used different terms to represent economic downturn or slow down in economic activity like 'Stagnation', 'Contraction', 'Recession', 'Depression' etc. Often these words have different perceptions and may have different impact on public's sentiments. Alfred Kahn, one of President Jimmy Carter's economic advisors and professor at Cornell University, even called 'recession' a 'banana'. In 1930s, Keynesian economist and professor at Harvard University, Alvin Hansen, outlined the term 'Secular Stagnation' in his book 'Full Recovery or Stagnation?'. According to him, 'American economy would never grow rapidly again because all the growth ingredients had played out, including technological innovation and population growth. The only solution, he argued, was constant, large-scale deficit spending by the federal government.' Although the term lost its prevalence during the economic boom of 1940s and 1950s, but recently Professor Lawrence Summers of Harvard University used the term to represent slow pace of the current economic expansion. He himself is an advocate of deficit-financed government spending. Ed Yardeni, President and Chief Investment Strategist of Yardeni Research, explains how the current economic situation is leading to 'Secular Stagnation' and what are the main reasons behind it. He says, 'I think it is mostly attributable to too much fiscal and monetary intervention by our governments. More of these policies will make things worse, not better.' He explains that global economic growth slowed down in June with contraction in emerging market economies. While Japan and Eurozone posted growth and US above global average, BRIC economies were the weakest. Only positive sign is the rise in employment m/m for the overall index. Read on...

Investing.com: Global Economy - More Secular Stagnation Ahead
Author: Ed Yardeni

Mohammad Anas Wahaj | 05 jun 2015

'Correspondent Banking' allows a local bank (respondent) to give its customers access to a faraway institution's services, such as currency exchange or sending money to an account abroad. Developing economies, in addition to such services, also get linked to the global banking system. Due to occasional misuse and illegal activity related to such a system some correspondent banks have retreated from certain regions or exited the line of business. According to Mark Carney, Chairman of the Financial Stability Board (FSB), and Bertrand Badré, Chief Financial Officer of the World Bank Group, 'Anecdotal reports suggest that charities, and companies involved in remitting funds from overseas, are feeling the pinch. It would be wrong for regulators to ignore such consequences. Doing so would neglect the purpose of financial reforms by the Group of 20 leading nations intended to underpin an open and resilient global financial sector that serves real economies across the world.' Such an action by correspondent banks may even promote hidden illegal channels for financial transactions. The steps are now being taken to further investigate the situation and understand its scale and causes. Authors suggest, 'Authorities must ensure that they provide a clear and consistent interpretation and enforcement of international standards. They should work with the financial industry to pursue technical measures, such as the global Legal Entity Identifier system, which standardises identification, and Know Your Customer platforms that help avoid duplicating due diligence work...The financial abandonment of whole groups of customers - or even countries - is not something that can be ignored by the members of the G20...This is important not only for the countries directly affected, but for all of us as we seek to build a global financial system that can support growth for all.' Read on...

The Financial Times: Keep finance safe but do not shut out the vulnerable
Authors: Mark Carney, Bertrand Badré

Latest             ⊲ Newer Posts             Economy             Older Posts ⊳             Last