Category: Economics

Eurozone growth?

  • Currently outperforming UK and US.
  • France & Italy leading (pushed by consumer spending off low energy prices).
  • Germany lagging.

China interest rates down?

  • Interest rates being cut as central bank tries to boost growth (3rd cut in 6 months).
  • Rates expected to continue lower this year.
  • Growth slowing as China economy makes inevitable move from export-led smokestack industries to domestic-demand-led (consumption & services).

Macrosnap Japan fiscal plan?

  • Big new fiscal plan anticipated - relies on economy growing solidly (i.e. Abenomics working).
  • The plan envisages only modest spending cuts but limited tax increases.
  • So as to avoid a ballooning budget deficit, the plan relies on robust growth to ensure tax revenue stays high.

Macrosnap US inflation?

  • Seems that inflation expectations up.
  • Oil price appears to have troughed.
  • Lower energy prices were main factor bringing US inflation < 0% earlier this year.

US trade position and party politics?

  • Obama administration hoping to soon seal massive Pacific trade pact (TPP) - geopolitically significant to counter China's growing regional influence.
  • But majority of Democrats against it (trade pacts tend to threaten US manufacturing jobs).
  • So Obama relying on Republicans (who are supportive) to get TPP through Congress (Republicans hold majorities in both houses).

Japan economy macrosnap?

  • Disappointing start to year - growth & inflation will be lower than expected.
  • But government insists stimulation package (Abenomics) on track.
  • Early signs that deflationary mindset is subsiding.

Macrosnap Chile economy?

  • Recession for most countries in region as commodity boom over (due to slower China growth).
  • But Chile recovering faster than anyone, and most macroeconomic indicators improving.
  • Regarded as best-run regional economy due to strong institutions, free-trade ethos & minimal state intervention.

Macrosnap China/Pakistan?

  • Rapidly strengthening economic & military ties as US influence wanes & China becomes Pakistan's biggest ally.
  • China's President Xi pledges $45bn of infrastructure investments.
  • China sees Pakistan and neighbours as a market for its exports, so is trading investment and aid for access.

Explain China’s “One Belt, One Road” plan?

  • To build vast network of railways, roads, ports and pipelines across Asia, financed by the new institutions it leads.
  • Industrial overcapacity at home.
  • Therefore aim is to create demand for China's industrial exports across the region.

Why is China growth slowing?

  • China growth down (but still very strong at around 7% p/a).
  • Has slowed because China morphing from export-driven economy to domestic-demand-driven economy.
  • This is seeing a shift away from 'smokestack" industries to domestic consumption and services.
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