#IMF economist Program 2022

[9jacompass]

Apply Now:International Monetary Fund Economist Program for Young Graduates - 2023

Apply Now:International Monetary Fund Economist Program for Young Graduates – 2023

Are you a young economist interested in acquiring hands-on exposure to a cross-section of InteInternationalrnational Monetary Fund (IMF) work and an opportunity to apply your research and analytical skills? Then the International Monetary Fund Economist Program is for you. The Economist Program offers participants a well-rounded experience of the IMF’s work and provides a unique foundation for a…

[reasoningdaily]

The IMF believes authorities are more serious about carrying out an ambitious sale of state assets following a handful of high-profile deals, said the people, speaking on condition of anonymity as the deliberations haven’t been made public.

As talks with the IMF intensify, the fund is now focusing on how Egypt manages its currency as well as trying to get more clarity on public spending that includes major projects, according to the people briefed on the discussions. With the vote now set for Dec. 10-12, Egyptian authorities are unlikely to heap more pressure on cash-strapped consumers by devaluing the pound in the run-up, leaving the timing of any eventual accord up in the air.

The piecemeal progress means a narrowing window of opportunity for a breakthrough this year on the already-delayed review. At stake is an agreement critical to restoring investor confidence in the $470 billion economy that remains caught up in a debilitating foreign-currency crunch almost a year after the IMF and Egypt reached their deal.

Egypt is the IMF’s second-biggest borrower after Argentina, and the deal with the North African nation is also a test of the lender’s ability to broker and see through delicate programs in major emerging markets.

The pace of the IMF program is shaping up as a bellwether of Egypt’s ability to emerge from its worst crisis in years. A successful review would unlock about $700 million in postponed loan tranches, allow access to a $1.3 billion resilience fund and potentially spur major Gulf investments.

The government and the IMF are discussing options and both sides are keen to keep up dialogue to send a positive signal to the market, the people said. While Egyptian officials told Bloomberg they’re confident progress can be made on the review this year, they didn’t specify if or when the pound would be allowed to depreciate.

The currency has already been devalued three times and lost half its value since early 2022, sending annual inflation to a record 37.4%. But despite a commitment to move to a “durably flexible exchange rate regime,” the pound has traded at a stable level at local banks at about 30.9 per dollar for the past six months.

Authorities are looking to build up significant foreign-exchange buffers before devaluing, which would allow them to clear a backlog of currency requests and eliminate the black market, where the pound is available for about 40 per dollar.

What Bloomberg Economics Says...

“With inflation already at a record high, Egypt is unlikely to devalue the currency before the presidential election in December. But the country doesn’t have the means to sustain the status quo for much longer. After the vote, authorities will either let the pound weaken, or impose draconian import restrictions.”

— Ziad Daoud, chief emerging markets economist.

President Abdel-Fattah El-Sisi, who’s widely expected to seek a third term and extend his rule until 2030, in June appeared to reject another imminent devaluation, warning of the toll rising prices would take on Egypt’s 105 million population.

The IMF said in response to questions that it’s closely engaged with Egypt “including on policy advice and technical assistance” and would announce updates related to the 46-month program “in due course.”

Among the suggestions floated during recent talks are that Egypt and the IMF reach a staff-level agreement on the review — the first step in the process — thereby signaling there’s been movement, according to the people. Currency reform would then take place after the vote, paving the way for the IMF board’s approval of the review and then the disbursal of the loan tranches, they said.

This time, however, the IMF is seeking something much closer to true flexibility that reflects supply and demand, in line with the text of an agreement reached last October, rather than another managed depreciation of the pound, the people said.

Progress has lately been more evident in the divestment of state-held shares in local companies.

The government announced in July it was selling $1.9 billion of assets to local firms and Abu Dhabi wealth fund ADQ, although it has yet to receive all the funds. Earlier in September, it sold 30% of Egypt’s largest cigarettes company to a United Arab Emirates investor for $625 million.

Those transactions — and others from the list of more than two-dozen assets the state is looking to offload — will boost dollar liquidity, but won’t be enough to meet all currency demand. Authorities are exploring multiple options to raise dollars, including a range of unspecified new securities that could be attractive to investors, according to the people.

Given the lack of official statements on the status of March’s delayed review or the one due for September, market watchers are keenly awaiting any signs of movement.

With a weaker currency unlikely before elections, it’s possible the delays “could push the IMF to combine the first, second and third reviews in the first quarter of 2024,” according to Jean-Michel Saliba, Middle East and North Africa economist at Bank of America Corp.

All the same, there’s a chance an IMF mission could visit Cairo in mid-October as part of Article IV consultations “and to reassure markets about the continued dialog with authorities,” he said.

Another looming deadline for Egypt comes from Moody’s Investors Service and its November review of the nation’s debt rating, which is already at B3 or six steps below investment grade.

Authorities will be making serious efforts to avoid a downgrade into the equivalent of CCC territory — a step that “could bring forced selling into hard-currency bond markets,” Saliba said.

[marwahstudios]

Augusto Lopez Claros Discussed World Financial Position at Asian Education Group

Noida: A powerful workshop was designed by Karem Samandari advisor Asian Business School to bring in the awareness about the World Financial Condition to the knowledge of Students of Asian Business School, recently.

Global inflation is expected to reach 8.8% in 2022. However, some countries are being much more harshly impacted than others. Inflation rates are soaring throughout the world. Many economies are experiencing double or triple digit rises in prices,” informed Dr. Sandeep Marwah initiating the session.

Other factors adversely impacting the economy were bottlenecks in supply chains, rising freight costs and the shift in the composition of private consumption towards goods. Following the invasion, the food and energy prices have escalated globally,” explained Augusto Lopez Claros.

Augusto Lopez Claros from Spain, is Executive Director of the Global Governance Forum.. He is an international economist with over 30 years of experience in international organizations, including most recently at the World Bank. For the 2018/2019 academic years, Augusto Lopez-Claros was on leave from the World Bank as a Senior Fellow at the Edmund Walsh School of Foreign Service at Georgetown University.

Previously he was chief economist and director of the Global Competitiveness Program at the World Economic Forum in Geneva, where he was also the editor of the Global Competitiveness Report, the Forum’s flagship publication. Before joining the Forum he worked for several years in the financial sector in London, with a special focus on emerging markets. He was the IMF’s Resident Representative in Russia during the 1990s.

Educated in England and the United States, he received a diploma in Mathematical Statistics from Cambridge University and a PhD in Economics from Duke University.

Dr Sandeep Marwah honoured Augusto with Memento and presented him with membership of International Business and Management Research Centre. The event was supported by International Chamber of Media and Entertainment Industry & Indo Spain Film and Cultural Forum.

[coinprojects]

New Post has been published on https://coinprojects.net/el-salvador-resumes-it-bitcoin-buying-spree-once-again/

El Salvador Resumes It Bitcoin Buying Spree Once Again

In the latest development, El Salvador Nayib Bukele announced that they will resume their Bitcoin purchases once again. In his recent tweet, President Nayib Bukele wrote: “We are buying one Bitcoin every day starting tomorrow”. However, he hasn’t suggested how long they will continue with this buying program. 

We are buying one #Bitcoin every day starting tomorrow.

— Nayib Bukele (@nayibbukele) November 17, 2022

El Salvador’s Bitcoin Law came into effect last year on September 7, 2021. The country has acquired nearly $375 million worth of Bitcoins, however, has been sitting at more than $60 million in unrealized paper losses.

President Nayib Bukele has been the biggest proponent of Bitcoin and believes that the crypto would be good for the country’s financial health. Furthermore, he has gone against all odds for their Bitcoin bet despite repetitive warnings from the IMF and the World Bank to withdraw from their Bitcoin bet.

The last year’s BTC price decline has certainly been a deadly blow for El Salvador. The unfolding of the FTX episode over the last week has also put BTC under huge selling pressure. But it seems that President Nayib Bukele has amassed enough confidence to take a long-term bet on fresh Bitcoin purchases.

El Salvador and the China Axis

In addition to acquiring Bitcoins, President Nayib Bukele has been working on creating an entire Bitcoin economy infrastructure. He also shared plans of floating Bitcoin volcano bonds and establishing a Bitcoin City which hasn’t materialized yet.

While President Bukele has been relying on Bitcoin-denominated volcano bonds to pay off their national debt, things haven’t turned in his favor so far. Luis Membraño, a Salvadoran economist said:

“If Bukele dreamed that he could create a different and innovative political economy, against the advice of the IMF, that dream has failed. There are no easy alternatives, no short-cuts.”

Due to its ambitious Bitcoin plans, every top rating agency has downgraded El Salvador’s credit line. Rating agency Fitch expects that the country could default on its debt in the coming January. On the other hand, a looming recession, rising inflation, and the worsening fiscal situation are likely to hurt the country’s economy further.

Economist Membraño said that El Salvador could fall into the financial axis of China asking it for debt financing. “It would represent a total realignment of El Salvadoran foreign policy,” he said.

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

Source link By Bhushan Akolkar

#Altcoin #Bitcoin #BlockChain #BlockchainNews #Crypto

[orbemnews]

Ecuador and Peru signal political divides that could trouble the region South American politics are frequently interconnected, sometimes with shared political trends. Across the region, political and economic reforms are urgently needed due to the dramatic economic impact of the pandemic — which has disproportionally affected informal and low-income workers who have seen their sources of income all but disappear in the last year. But Peru’s and Ecuador’s presidential votes this weekend suggest that the road towards a national consensus in either nation is still long and complicated. Peru’s landscape appears split after the first round of voting. Preliminary election results indicate that voters favored candidates on the far ends of the political spectrum, including union leader Pedro Castillo, whose electoral program calls for an embrace of Marxist economic theory, and the security-focused right-winger Keiko Fujimori — the daughter of disgraced former Peruvian leader Alberto Fujimori. The two will square off in June for a second round, though the race could be complicated by the fact that Fujimori is also facing charges of corruption. Ecuador took a turn to the right, electing a multimillionaire conservative — former banker Guillermo Lasso — after almost fourteen years of left-wing rule in the country. But his victory was also the result of another clash of extreme candidates, after facing off against hard-left economist Andres Arauz. Lasso who had previously run in 2013 and 2017 but fell short, won this time only by 5 points, a sign of how divided the electorate was. He had promised to run a free-market, pro-investment government, which is expected to bring Ecuador closer to US interests in the region. His rival Arauz, in contrast, had promised a hike on taxes and a dispute with the IMF over a September loan to the country. Lasso was quick to say that his government intends to repay the loan in full and within four years. In both elections, what was mostly absent was a central figure who could win voters across the political spectrum, something that is not new in South America, a region notorious for colorful, firebrand candidates. In other nations, the pandemic has highlighted the need for a national consensus, agreements between political forces who decide to implement measures needed to put the virus under control. One such example is Italy, where a “national unity government” has formed under the leadership of prime minister Mario Draghi and supported by almost every political force in the nation. In the US, the Biden administration has also expressed the need to work across the aisle to steer the nation in the face of the pandemic. But a push toward unity now looks unlikely in Ecuador or Peru, a trend which could also emerge regionally. In Colombia and Brazil, where elections loom, the political center has also failed to rally around a convincing candidate. A warning to other leftist candidates in South America While Peru’s preliminary results have put a left-wing candidate in the pole position, Lasso’s victory in Ecuador does not look good for South America’s traditional left. The losing candidate Arauz ran his campaign under the shadow of former president Rafael Correa, who ruled the country from 2007 to 2017 on a leftist, populist platform. The support of the former leftist leader gave Arauz a strong base — he led the first round of the elections with 31.5% 32% of the vote — but also meant only a few undecided voters turned out for him in the second round. “This election was yet another referendum on Correa and a reflection of his polarizing legacy,” said John Polga-Heicemovich, a professor of comparative politics at the US Naval Academy who writes extensively on Ecuador. “Many Lasso voters seem to have celebrated the defeat of correismo more than the victory of their candidate. The fact that Arauz placed third in five provinces–behind Lasso and the null vote–also reflects Correa’s divided legacy among the ideological left and poor record with the indigenous and the environment,” he said. Arauz’s shortcoming is a warning to other South American left-leaning candidates who may try to replicate the success of the left-leaning “Pink Tide” leaders who were in power during the commodity boom of the early 2000s. That generation of leftist leaders oversaw a temporary boost to consumption due to expanded public investment but fell short of ending South America’s chronic inequality or creating structural reforms. A series of corruption scandals in many countries in the region over the past decade have also tarnished the legacy of that period. The gridlock to come Overall, the political landscape remains a jumble across the region, and divided politics and recent history indicate that governability will be a challenge in both Ecuador and Peru in the next few years. Future leaders of both countries may struggle to pass legislation through their respective Congresses, at a time when the Covid-19 pandemic is reaching a new peak. Lasso’s party, CREO, commands a small number of seats in Ecuador’s Congress, where Arauz’s party will be the biggest force. And in Peru, preliminary results suggest the new Congress will have up to 11 parliamentary groups — none commanding a majority. “The parties remain fragile,” Denisse Rodriguez-Olivari, a Peruvian political scientist at Humboldt University in Berlin, Germany, had told CNN even before the vote took place. “They are born, they grow during one election and then they die, so they are quite ephemeral.” The threat of political gridlock could not come at a worse time for either country. Both are lagging behind in their vaccination campaigns. At current rates, it would take years before Peru and Ecuador reach herd immunity. With 170.9 deaths per 100,000 inhabitants, Peru has the worst coronavirus death rate in Latin America, according to Johns Hopkins University data, while Ecuador has the sixth highest ratio of Covid-19 deaths to cases in the world. Their economies are in similar need of intensive care. According to the IMF, Peru’s economy suffered the most among major countries in Latin America and the Caribbean, shrinking 12% in 2020 due to the impact of the pandemic on global markets which purchase Peru’s raw material, and the tough lockdown policies imposed by the government to try to reduce the spread of the virus. Ecuador’s loan request to the IMF last year, meanwhile, is a testament to the country’s recent shortfalls in foreign income. Other political parties in the region could learn a lesson from the results in Ecuador and Peru: a victory for Arauz, for example, would have been a boost for politicians like Luis Ignacio Lula da Silva, who’s tipped to run again for President of Brazil in 2022. The complicated scenarios that these results anticipate are also a warning for Colombia, which is also heading for elections next year and where the political scene is deeply polarized as when economic woes sharpen the need for ambitious reforms. “Even as the Covid-19 pandemic ravages the region, there is an urgent need to consider structural reforms that will put Latin America on a long-term path of economic growth and upward social mobility,” said Gonzalo Schwarz, General Manager of the Center for Latin America at Atlas Network, a liberal think tank in Washington, DC. “Only with a dual agenda of reforms can the region break its current cycle of economic stagnation and inequality.” Source link Orbem News #Divides #Ecuador #Peru #Political #Region #Signal #trouble

[whittlebaggett8]

Gender Inequality Makes South Korea Poorer

Japan’s Wellness, Labor and Welfare Minister Takumi Nemoto stirred controversy not long ago when he claimed that putting on heels “is socially recognized as something that falls in the realm of currently being occupationally important and appropriate” in response to a petition to ban substantial heels from the formal business enterprise costume code in Japan.

The worries that women deal with in the workforce are not confined to Japan. The two South Korea and Japan often rating poorly in the World Economic Forum’s Gender Hole report, most recently position 115 and 110, respectively. According to the Planet Economic Discussion board, South Korea ranks 124 out of 149 nations in the planet in conditions of financial participation and chance for females.

In South Korea, women of all ages routinely confront issues about their relationship standing and options for acquiring youngsters when implementing for a career, or solutions that positions in fields this sort of as product sales aren’t appropriate for women of all ages.

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These issues, and scrutiny of their appearance, are technically illegal in South Korea, but key corporations generally face minimum fines for discriminating versus women of all ages. When KB Kookmin Bank was discovered guilty of discriminating versus 112 feminine task candidates, it was only fined $4,500. Some of the hiring personnel have been offered suspended jail sentences.

South Korea ranks past in The Economist’s annual Glass Ceiling Index. It notes that amid OECD nations around the world South Korea has the biggest pay out hole at 35 %. The OECD normal pay gap is 13.8 percent.  The glass ceiling extends to company boards and leadership. Only 2 % of South Korean firms’ company board of directors are feminine. Only just one in 10 managerial positions in South Korea are held by women.

When ladies in the workforce have young children they usually confront societal strain to depart their employment, or if they do return to do the job deal with a long run with reduce pay as numerous are typically forced to get irregular do the job relatively than return to entire-time positions.

In federal government, the situation are equivalent. Women only make up 17 percent of the Associates of the National Assembly. This spots South Korea sixth from the bottom in the OECD. In conditions of female ministers in federal government, South Korea has the third least expensive percentage in the OECD. In contrast, women make up the the vast majority of ministers in the Macron federal government in France.

Though the Moon administration has sought to address the gender hole in federal government, it has established modest ambitions: Girls accounting for 10 percent senior federal government positions and 20 percent of community business executives by 2022.

Past the toll on women of all ages in culture, the failure to more equitably combine women of all ages into the workforce has extensive-term economic implications for South Korea as a total.

Whilst South Korea’s general inhabitants is nonetheless growing, it is anticipated to start off declining as quickly as 2028. South Korea’s functioning age population has by now begun to decline. With the total fertility fee falling underneath 1 for the very first time in 2018, there seems tiny prospect for a shift to possessing far more kids in the close to long term.

Based on UN estimates, South Korea’s functioning age populace could decline by 7.5 million persons between today and 2040. The resulting drop in South Korea’s doing the job age populace could thrust South Korea’s opportunity progress level to as minimal as 1 per cent by 2030 in accordance to a the latest estimate.

1 option would be to far better combine women into the workforce. Considering the fact that 1990, feminine participation in the labor force has risen from 47 percent of operating age females to 52.8 % in 2018. Around that very same time period, male participation in the labor force has risen from 64.1 p.c to 72 per cent.

In its latest Posting 4 report, the IMF located that if feminine participation in the labor power ongoing to improve at the identical charge it has over the very last decade to 2035 that the overall financial output of girls in South Korea would drop as the growing share of females in the workforce would not make up for the general drop in the amount of girls operating as the populace shrinks.

However, if South Korea was equipped to increase female labor force participation to the amount of male labor force participation by 2035, it would see true GDP advancement of 7 p.c in accordance to the IMF. This is not an insignificant volume, as it is roughly equivalent to what South Korea spends on healthcare.

Failure to integrate ladies much better into the workforce could have other long-phrase implications for financial competitiveness. Just one particularly worrying problem is the result of South Korea’s gender gap on Synthetic Intelligence (AI).

The Korean federal government is concentrating efforts in parts these as 5G, large details, and other locations similar to AI. The selection of AI patents from South Korean companies has developed noticeably because 2004 and right now South Korea’s patent place of work trails only China, the United States, and Japan for patent filings outside of the Environment Mental Home Firm and the European Patent Business.  

Regardless of the government’s heavy investment decision, a UNESCO review identified that South Korean females make up only 18 percent of scientists, in contrast to 52 per cent in the Philippines and Thailand, and just 10 per cent of engineers. Feminine graduate in laptop or computer science have declined due to the fact 2000.

AI associated technologies are likely to generate long run financial development and could be critical to address economic and social issues in international locations with rapidly getting older and declining populations such as South Korea. Experiments have shown that AI tends to incorporate biases of those people creating the code. A lack of gender range between coders signifies that South Korea is considerably less likely to establish reducing edge long term systems.

These biases are now actively playing out in common manufacturing. Gals are 47 per cent a lot more most likely to put up with injuries from a motor vehicle crash for the reason that vehicle security capabilities are built for men. In the situation of AI, the UN has identified that AI plans these as Siri and Alexa boost gender bias.

A South Korean AI subject that is dominated by males could socially reinforce gender designs and be a fewer worthwhile commercial item for sale overseas as their competitors operate to address difficulties of bias in AI programing.

The Moon administration has taken actions to decrease the disincentive for companies to make use of females. It has prolonged paid paternal leave, designed it easier for each mother and father to consider go away at the similar time, and produced incentives for organizations to allow for both mother and father to get the job done reduced hours. It has also taken actions to grow afterschool treatment, even though reducing the highest hrs labored in a week to 52 hours will assistance doing the job moms.

Further than the ways that the Moon administration has taken, South Korea could transfer towards a blind software system and increase the fines on corporations that discriminate versus females in the selecting course of action. But the most substantial ways need to have to be taken by firms in South Korea. Some like SK have moved to additional versatile operating hrs, while Samsung actively recruits women of all ages has and has extra female personnel than Apple. But more than time the endeavours need to have to unfold over and above the leading chaebol to companies in South Korea additional broadly.

As South Korea’s population proceeds to decline, narrowing the gender gap in South Korea will be significantly significant for social and economic reasons. Beyond lost GDP expansion, gender inequality tends to make working with social issues these as South Korea’s outdated age poverty far more complicated and restrictions South Korea’s capacity to provide significant financial assistance to North Korea should it dismantle its weapons courses or collapse at some issue in the long run.

Whilst ways by the authorities to relieve the burdens of childcare for operating mothers, and do the job flexibility will be important for drawing much more females into the workforce it will take time to modify the social mores that have underpinned discrimination from women in the workforce. Even so, as the IMF research shows, it is in South Korea’s economic interest to proceed to get the job done towards bigger gender parity.

The post Gender Inequality Makes South Korea Poorer appeared first on Defence Online.

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[debtconsolidationcom-blog]

Tsakalotos: Greece has means to make debt relief deal work

New Post has been published on http://www.ddebtconsolidation.com/tsakalotos-greece-has-means-to-make-debt-relief-deal-work/

Tsakalotos: Greece has means to make debt relief deal work

Greek Finance Minister Euclid Tsakalotos speaks during an interview with Reuters at his office in the Finance ministry in Athens, Greece, July 4, 2018. [Alkis Konstantinidis/Reuters]

Greece has the capacity to finance itself unaided under a debt relief deal linked to its exit from an international bailout, but the agreement’s long-term fiscal targets may need reviewing, the country’s finance minister said.

As he prepares for meetings with investors in New York and Boston in coming days and in Asia in September, Euclid Tsakalotos said Greece had honored its promises to creditors.

The deal that euro zone finance ministers agreed in June to smooth next month’s exit from its third bailout offered clarity and reassurance to investors in Greece. That applied “whether we are talking about a 10-year government bond or whether we talk about foreign direct investment,” he told Reuters.

Tsakalotos took over in 2015 pledging to implement Greece’s third rescue package since 2010.

His euro zone counterparts agreed last month to extend maturities and defer interest payments on 96 billion euros worth of Greek debt, about one third of the country’s overall debt pile.

Greece has the highest debt-to-GDP ratio in the euro zone, at almost 180 percent of its national output.

“I had told them (potential investors) that all pieces of the puzzle would all come together … and they did,” Tsakalotos said, referring to a previous trip to the United States.

“(This time)… I just want to go through with them their views, my views, on why we should be much more confident on Greece after the 21st of August when we leave the program.”

Asked if Greece would need further debt relief to sustain market access and to be able to service its debt in the long run, as the International Monetary Fund suggested in a report last week, Tsakalotos said that a 2017 promise by European lenders to do more if needed was a further safety net.

“As things stand now and if we have serious government policy from now on, which has sustainable growth and does treat our growth strategy seriously… then I think everything is in place for sustainability,” he said.

He said the government’s goal was to tackle the debt burden through reforms and sustained higher growth as well as relief measures.

Greece has so far exceeded its fiscal targets. But the country has committed to implement more austerity in the next two years and achieve primary surpluses – which exclude debt-servicing costs – of 3.5 percent of GDP annually up to 2022, and 2.2 percent of GDP from 2023 to 2060.

The IMF called those targets “very ambitious”.

Tsakalotos said that the level austerity is much higher than he would like but the issue could be revisited in the long run.

“The fiscal surplus, if you ask me as an economist, is too high,” he said. “The European economies in general have got a framework which puts too much emphasis on fiscal austerity.

“The Greek government will look at this and so will the finance ministers, to see whether the IMF is right, whether there is a problem with sustainability. I mean it’s an empirical question, not an a priori (one).”

Greece is set to beat its targets again this year, giving it leeway to distribute a fiscal dividend to those who need it the most. Tsakalotos’ team will shortly propose where the extra funds should be spent.

He acknowledged there should be better fiscal targeting and that reducing income and property tax was under discussion. Greece wants to reinstate collective salary agreements and increase the minimum wage, and may also cut social security contributions, he said.

“What is the real problem…is who pays those taxes that’s what we will be concentrating on, that’s why I said that we were perhaps thinking of reducing social security contributions. Because there are clearly quite a lot of self-employed and small businesses, who have been hit both by an increase in taxes and social security.” [Reuters]

Online

This content was originally published here.

[silviajburke]

Trump’s Currency War Battle with China Goes Live

This post Trump’s Currency War Battle with China Goes Live appeared first on Daily Reckoning.

Welcome to the currency wars. The Trump administration has entered a new low in relations with China. The change comes after the White House announced it is officially beginning to take aim at China’s economic strategy.

As friction between the world’s greatest economic powers deteriorates toward a high stakes currency war, the global economy could see spillover in financial, geopolitical and trade arenas.

The White House recently announced its plan to open up fresh investigations into Chinese trade and intellectual property practices. Now that China’s 100 days are up following Trump’s meeting with President Xi Jinping, the White House is no longer holding back on contempt for China.

President Trump campaigned on a hardline message on China, but seemingly backed off of rhetoric after entering office. That approach changed after his geopolitical targeting on Twitter that lashed out at the Chinese government and the lack of action toward North Korea.

I am very disappointed in China. Our foolish past leaders have allowed them to make hundreds of billions of dollars a year in trade, yet…

— Donald J. Trump (@realDonaldTrump) July 29, 2017

//platform.twitter.com/widgets.js

Conditions on the Korean peninsula appear as though they will continue to escalate, and as they do the expectation is that it will drive a major wedge between the U.S and China. What that means is conditions are extremely ripe for a trade and currency war between the respective economic powers and their global trade operations.

All hope is not lost, yet. That is primarily because a significant amount of pressure has been placed on the North Korean regime. Seemingly, as goes the China-North Korean relationship so swings the pendulum of the Trump administration.

The latest round of United Nations Security Council sanctions that had unanimous votes from China, Russia and the United States shows progress. The achievement at the U.N was as much about North Korea as it was about the ability of the U.S and China signaling bi-lateral cooperation.

However, within the current system, regardless of ongoing negotiations, both governments appear destined for conflict. One can only imagine how, in such a nationalist based system, a currency war could detrimentally impact those at the lower end of the economic spectrum. That’s why those in government leadership — even those who might not be directly involved — have major reason to try and work together.

Here are the major issues and repercussions looming in the U.S-China divide:

Trade Wars

Currently, to do business in China foreign companies are required to disclose technology with the government and any foreign subsidiary involved with the agreement. This requirement is largely where issues of intellectual property, technology and trade problems have arisen.

Under the leadership of Trump’s appointed U.S. Trade Representative, Robert Lighthizer, the administration is expected to roll out a significant policy overhaul. For Lighthizer, a strong critic of free trade, this opportunity allows for the administration to bring penalty measures against China for “unreasonable or discriminatory and burdens U.S. commerce.” It is expected that the investigation details will be unrolled in the days and weeks ahead and signal that significant trade practices are due to change.

The reaction from any such moves will not be lost on the Chinese government. The move would negatively impact China’s technology sector. It would hit at the heart of hardware and software built and exported from the country – especially when much of that innovative science is largely brought into the country via foreign research and development.

In 2016 China imported an estimated $1.5 trillion from major U.S allies that include South Korea, Japan and Germany. To put that into perspective that’s more than China spends on energy imports to the country by over $50 billion dollars.

What’s even more compelling to the currency war factor is that it is a bipartisan supported issue. Upon the announcement of a trade inquiry into China, Senate Democratic leader Schumer (NY) along with Senators Wyden (OR) and Brown (OH) came out in direct support.

They cited that U.S industrial benchmarks including aircraft, automotive and semiconductors have ben caught in the crosshairs of Chinese policy infractions.

Jim Rickards is a former member of the Committee on Foreign Investment in the United States, or CFIUS. The committee is responsible for reducing the threat of foreign acquisitions to American companies that could present national security issues. CFIUS could become an even greater tool in pushing back Chinese investments in the U.S.

Rickards’ offers his analysis on the concern over trade wars noting, “Soon Trump will announce steel and aluminum tariffs. After that, more action will be taken to punish Chinese banks that help North Korea finance its weapons programs.”

“By November, the U.S. will label China a currency manipulator, which will start another review process, leading to still further sanctions. China will not take any of this lying down but will retaliate with its own sanctions, tariffs and bans on U.S. investment in China.”

The CFIUS expert and author of the book Currency Wars levels that, “This trade and currency war will shake markets and be a major headwind for world growth.”

Regional Conflict

The North Korean threat is one that continues to escalate and raise tensions around the Korean Peninsula.  A nuclear threat and the missile capability that comes with it is something that could potentially bring about a very real shooting war or worse.

Whether there is credibility or not in the Chinese ability to dampen Korean aggression does not matter.  The Trump administration has clearly perceived that no action from the Chinese will be met with U.S reaction.

As we saw in June with the Chinese restriction on fuel sales to the North, Beijing is willing and able to place pressure on North Korea, but the question remains – how far are they willing to go?

The issue extends beyond Washington politics as usual. Sen. Chuck Schumer recently sent a letter to the Trump administration offering that, “It is my assessment that China will not deter North Korea unless the United States exacts greater economic pressure on China.” The leading Democratic Senator from New York wrote to Trump, “The U.S. must send a clear message to China’s government.”

As the 19th National Congress of the Communist Party of China held in early fall approaches, Xi Jinping’s rule will either rise or fall based on regional conflict, economic standing and North Korea.  The Congress is held twice every decade and is largely a rebalance of leadership and shuffling of party members.

It is largely expected that President Xi will be able to consolidate power, making him one of the most powerful rulers since Mao, and an opening to whether he stays beyond 2022.

If regional tensions blend with economic maneuvers from the Trump administration, a true test of power in the Asia-Pacific could begin. The start of such regional saber rattling could be seen preliminarily through currency wars but will not be isolated to tit-for-tat financial tactics.

China, Currency Wars and Special Drawing Rights

An article run by a Chinese state media outlet offered a grim, but very realistic measure of what policy leaders in the country are watching.

A major headline featured in the South China Morning Post in August:

Distractions over, Beijing revives its global currency ambitions

The article cited, “Central bank governor Zhou Xiaochuan argued publicly in 2009 that the world needed a new global monetary system to dethrone the dollar, with one solution to create a “super sovereign” currency based upon Special Drawing Rights, an accounting unit of the IMF.”

The potential for the SDR, or new world money, to supersede the dominance of the U.S dollar as the standard reserve currency is now underway.

The Chinese media outlet reported that since the country entered the SDR currency basket, “China has promoted the use of its currency in cross-border trade and investment, signed currency swap deals with dozens of central banks and created several offshore yuan markets, including in Hong Kong, Singapore and London.”

This move confirms that Chinese regional power ambitions will continue as it increases the use of the SDR in contrast to the dollar based system.  While that change in itself is not a landmark shift toward currency war skirmishes, the fact that China continues to internationalize the SDR is noteworthy.

Economist Nomi Prins, a central banking expert and historian has noted that, “China’s power ambitions go well beyond the Special Drawing Rights (SDR). They include international diplomacy, sustainable energy dominance, and becoming a focal point for alliances through Europe, Russia and the ASEAN states.”

Beijing is deploying a range of tools in pursuit of its overall strategic plans for Asia.  Its ability to pump money into investment funds, spread the SDR system into offshore market accounts and continued emphasis on business policies guided by Communist Party leadership will all be factors that could give way a potential currency war.

The Communist Party in China has maneuvered its financial position so that any negative speculation against the yuan can be deflected by its participation in the SDR.

2017 and Beyond

Trump is highly expected to issue a memo directing his trade representative to investigate Chinese intellectual property infringement against the U.S. The move would enact Section 301 of the Trade Act of 1974 and open up a significant downturn in relations.

All of this comes as the dollar continues to struggle after recently hitting a 15-month low.  That is not good for a U.S economy facing mounting pressures from Asia.

At the signs of any weakness, capital markets tend to move fast.  The evolving state of affairs between the U.S and China, especially when looking in the face of a currency war showdown, will be crucial to monitor.

The markets have not priced in the stark reality of a currency war between these two global powers. Soon, they may have no choice but to do just that.

Thanks for reading, Craig Wilson, @craig_wilson7 for the Daily Reckoning

The post Trump’s Currency War Battle with China Goes Live appeared first on Daily Reckoning.

[lovacedon]

IMF warns of growing risks to improving global recovery

Washington: The global economic recovery is improving and picking up steam, but still faces a series of threats that could erode the improvements, especially the rise of protectionist rhetoric, the International Monetary Fund warned Tuesday.

The fund´s semi-annual World Economic Outlook report revised global growth up to 3.5 percent for this year, one-tenth higher than the January forecast.

It was a rare upward revision to the growth forecast -- the first in two years -- which has been consistently disappointing. For 2018, growth is expected to rise to 3.6 percent, and to 3.8 percent by 2022.

"The global economy seems to be gaining momentum -- we could be at a turning point. But even as things look up, the post-World War II system of international economic relations is under severe strain," IMF chief economist Maurice Obstfeld said.

The report warns of the "significant downside risks" to the outlook, which have gotten worse since January -- among them, "the turn towards protectionism, leading to trade warfare," Obstfeld said in the foreword of the report.

Many of the concerns -- including rolling back financial regulation, pulling away from the multilateral trading system and restricting immigration -- are centerpieces of US President Donald Trump´s policy program, but also are issues visible in the bitter French election campaign, as well as in Britain´s planned exit from the European Union.

The anti-trade, anti-immigration attitude in advanced economies is to some degree understandable, given "the failure of growth gains in rich economies to substantially reach those in the lower parts of the income distribution in recent decades," he said.

However, Obstfeld warned: "Capitulating to those pressures would result in a self-inflicted wound," which would harm countries by pushing prices higher and eroding household income, prompt retaliation, and worsen the global economy."

In its report, the Washington-based IMF said "hundreds of millions" of people were lifted out of poverty through economic integration and technological progress, "helping to reduce global income inequality."

But Obstfeld said the benefits of growth and the burden of economic adjustments too often have been unequally shared, so it will be up to the governments to "address these disparities head-on to ensure the stability of an open, collaborative trading system that benefits all."

The IMF recommends "well-targeted initiatives" to help workers adversely affected by free trade and other economic changes to "find jobs in expanding sectors" as well as "social safety nets to smooth the loss of income," and improved education and training in the longer term.

"Similarly, curbing immigration flows would hinder opportunities for skill specialization in advanced economies, limiting a positive force for productivity and income growth over the long term," the report said.

The IMF report stressed that risks to the outlook "remain tilted to the downside," meaning that while growth could turn out to be faster than expected -- particularly if there is a large US government spending program -- there are more negative possibilities on the horizon.

The threat of protectionism is the most worrying, but others include as-yet undetermined US policies and their impact on the global economy, especially the possibility for a rising deficit and tearing down of financial regulations erected in the wake of the 2008 global crisis.

"A wholesale dilution or backtracking on important steps taken since the global financial crisis in enhancing the resilience of the financial system would raise the probability of costly financial crises in the future, " the IMF warned.

China´s "dangerous dependence on rapidly expanding credit" is another area of concern, as is weak demand in Europe, and a series of noneconomic factors, including geopolitical risks and corruption.

The IMF put China growth this year at 6.6 percent, up a tenth of a point. Its 2018 prediction was for 6.2 percent growth, up two tenths.

"Global economic activity is picking up speed, but the potential for disappointments remains high, and momentum is unlikely to be sustained in the absence of efforts by policymakers to implement the right set of policies and avoid missteps," the IMF said.

  IMF warns of growing risks to improving global recovery