Export Pessimism – Louth Online http://louthonline.com/ Wed, 19 Jan 2022 09:03:15 +0000 en-US hourly 1 https://wordpress.org/?v=5.8 http://louthonline.com/wp-content/uploads/2021/03/louthonline-icon-70x70.png Export Pessimism – Louth Online http://louthonline.com/ 32 32 Is COVID-19 the main reason for declining business confidence among Kiwis? http://louthonline.com/is-covid-19-the-main-reason-for-declining-business-confidence-among-kiwis/ Wed, 19 Jan 2022 03:10:58 +0000 http://louthonline.com/is-covid-19-the-main-reason-for-declining-business-confidence-among-kiwis/

With the ongoing COVID-19 outbreak and resulting lockdowns in Auckland, Kiwi business confidence fell sharply in the fourth quarter ending December 2021. The Institute’s Business Opinion Survey New Zealand Economic Research Institute (NZIER) also showed that demand also fell in the same quarter.

The survey showed that many companies raised prices in the December quarter and 65% planned to do so in the current quarter. Thus, adding to inflationary pressures on the economy in 2022. The survey’s capacity utilization measure fell to 89.5% from
96.1% from the previous quarter.

Image source: © 2022 Kalkine Media New Zealand Ltd

The disruption and uncertainty caused by the Delta Variant outbreak weighed on overall economic activity.

Read also : Report: The world’s richest got richer during the pandemic
Interesting reading: Does Australia face stagflation in 2022?

The survey reflects the continued weak labor market conditions and capacity constraints businesses are facing due to international and national border restrictions. According to the survey, given the uncertainty about the evolution of the pandemic, companies have become cautious about investments.

34% of companies expect general economic conditions to deteriorate compared to 11% of companies feeling pessimistic in the last quarter.

Labor shortages are the biggest problem

Businesses in all sectors are facing severe labor shortages. Most companies looking to hire, there is a shortage of skilled and unskilled labor. The companies have tried to sweeten the deal for the workforce, but this leads to higher costs for the companies.

According to the survey, 61% of companies reported an increase in costs in the December quarter. However, the retail and construction sectors saw the largest cost increases due to global supply chain disruptions due to the pandemic.

Due to high cost pressure, more than half of the companies raised prices in the quarter and others expect to increase in the next. This would lead to higher inflation and lower demand.
Also read: What does 2022 look like for the global housing market?

Sluggish manufacturing and service sectors

Almost all sectors are feeling the heat, but the manufacturing sector was the most pessimistic with 34% of manufacturers expecting the economy to deteriorate in the coming months. The pessimism was driven by slowing domestic and export demand and growing cost pressure.

Also read: The spread of Omicron: how much can it impact the global recovery?

The services sector was also sluggish due to the impact of tighter containment measures and strong cost pressures. The construction sector also reported a continued increase in costs during the December quarter.

Will interest rate hikes help the business climate?

In 2022, the main task of the Reserve Bank of NZ (RBNZ) is to control inflation. When it announces its monetary policy in February, it should raise the interest rate to control inflation. The actual inflation figures will be revealed when Stats NZ releases its December quarter figures next week to see if there has been an increase from the previous quarter’s 4.9%.

Also Read: Uncertainty Over Economic Recovery Deepens Amid Global Supply Chain Crisis

Even though the Central Bank may raise interest rates to calm demand, supply-side constraints remain due to the uncertainty of the COVID-19 pandemic. Even though the Treasury expected the economy to rebound after the Delta variant lockdowns, the new Omicron variant added to the uncertainty and pessimism.

Conclusion: Many analysts are now predicting an economic slowdown and falling prices that would force the RBNZ to halt interest rate hikes.

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Think give-and-take to develop business relationships http://louthonline.com/think-give-and-take-to-develop-business-relationships/ Mon, 17 Jan 2022 16:16:37 +0000 http://louthonline.com/think-give-and-take-to-develop-business-relationships/

Since India turned its back on the China-led Regional Comprehensive Economic Partnership (RCEP), New Delhi has sought to insure us against Asian trade isolation with a renewed focus on free trade agreements (FTAs) bilateral with privileged partners. “Look West” was widely appealing, but progress was slow. With the EU, as both sides agreed to relaunch negotiations, a deal seems a long way off. Talks with the United States, marred earlier by the presidency of Donald Trump who called India a “tariff king”, have not made much headway under US President Joe Biden. Agreements with Australia and Canada have also been slow. The bag is one with the United Arab Emirates, with whom a full trade agreement could soon be finalized. The ongoing talks with the UK should not be breathless over the outcome, given our shared enthusiasm, but the search for a quick interim agreement on sensitive issues. set aside for a final pact later suggests a lack of ambition.

After leaving the EU, the UK under its Brexit chief Prime Minister Boris Johnson has appeared keen to make up for its departure with quick new trade alliances, a program that could be crucial for a considered administration. as having wavered on public health issues and in need of commercial gain. This should push the UK and India to seize every win-win opportunity. Ideally, this is accomplished by lowering import barriers both mutually and widely across borders for the mutual gains of specialization to materialize, with domestic markets only being prohibited with rare exceptions. In the opinion of the World Trade Organization, this is good for free trade in general. The market New Delhi explored with London, however, remains so riddled with hanglists that partial coverage of goods (up to 65%) and services (up to 40%) is the best that appears on the table. While a halfway deal might be an easy way out, it would be a compromise whose piecemeal nature could expose us to charges of trade discrimination under WTO rules. A full-scale FTA in the true spirit of free trade would be preferable. Deals that go too close to sector specifics risk taking too much energy to accomplish too little. In addition, the more fine-tuned the impact analysis, the more likely it is that voices calling for import protection will become stronger.

Proponents of a gradual path advise caution and cite the example of earlier interim pacts – such as with Thailand – which lost local support for their completion once the benefits began to look lopsided. While it is true that some FTAs ​​have fueled export pessimism, this could be because our extent of free trade was insufficient for our global integration gains to materialize. Free trade tends to rattle local markets on either side, but the big bet is on possible net gains for both. This enjoins us to keep our nerves on short-term effects as we prepare for an export surge, which typically depends more on how we sharpen our competitive edge than market access. As our overlaps in value creation with the UK are not too great, import doors can be opened more easily by both. However, accounting concerns often seem to outweigh the dynamism of trade. Our high tariffs on Scotch whisky, for example, serve to fill customs coffers rather than create local jobs through import substitution. Similarly, UK labor market bars fail to protect UK jobs while depriving employers of a wider range of Indian talent. With a few concessions to guide the talks, we should aim for a comprehensive trade package.

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How has Bolsonaro changed Brazil’s role in the world? http://louthonline.com/how-has-bolsonaro-changed-brazils-role-in-the-world/ Sun, 16 Jan 2022 07:04:47 +0000 http://louthonline.com/how-has-bolsonaro-changed-brazils-role-in-the-world/

How long will this last?

In terms of foreign relations, Brazil’s “past” also persists today. His aid to Latin America and Africa and to international organizations continued, although it did not reach the levels attained during the boom years of Lula’s policy. globalism, from 2003 to 2013. Like most other donors, Brazil used most of its aid to help its companies enter new territories. In Angola and Mozambique, for example, infrastructure and mining giants Odebrecht and Vale have become major players thanks to Lula’s forceful South-South diplomacy and the use of Brazil’s state-owned development bank BNDES as a vehicle for foreign aid.

As for multilateralism, Bolsonaro denounced it. But as the Dutch say, soup is never eaten as hot as when it is served. Indeed, his government is showing growing enthusiasm for the main multilateral bodies. He is working hard to secure Brazil’s admission to this old, elite OECD conclave. In Washington DC, Bolsonaro’s finance minister urged the IMF to intervene more vigorously in the affairs of member countries. For Bolsonaro, the World Trade Organization must be strengthened and cooperation between the BRICS intensified. He may denounce the United Nations, but his government continues and has indeed intensified its engagement with various UN agencies.

Would it be an exaggeration to lament Bolsonaro’s repudiation of multilateralism? It is true that his government, unhappy with the IMF’s public pessimism about Brazil’s economic prospects, has demanded that the IMF close its offices in Brazil in 2022. But in many other respects, Brazil continues to follow the orthodoxies of the established multilateral order.

Brazil’s relations with the Pentagon and US arms producers, for example, have never been seriously threatened. Under Lula, military ties were formalized and expanded. Today, relationships are better than ever; in 2019, Trump granted Brazil official “major non-NATO ally” status, allowing it to buy American goods and bid on some American defense contracts. Brazilian companies continue to export arms, sometimes in violation of the International Arms Trade Treaty, which Brazil ratified in 2018, over the objections of then-MP Bolsonaro.

On China, on the other hand, Bolsonaro has strained relations with Washington. Upon becoming president, he abandoned his previous anti-China rhetoric. Conforming to the interests of agribusiness and other businesses, he has made Brazil’s trade and investment relations with China a priority. Today, as yesterday, Brazil’s foreign ministry must seek a balance between the interests of domestic elites (as well as sometimes those of its neighbors) and the interests of the powerful elites who drive policy in Washington. Faced with the pursuit of autonomy and the exaltation of South-South ties, Western diplomats have ridiculed Brazi for acting by sitting down when issues important to Western powers are at stake. As the American drums on China intensify, with or without Bolsonaro, Brazil will face pressure to line up.

Finally, Brazil’s soft power is evident in many parts of the world, including Europe. Here, thanks in part to a vibrant Brazilian diaspora, people flock to hear choirs and the samba, to devour feijoada, marvel at the photography of Sebastião Salgado and appreciate Brazilian films and literature. Yet Brazil also demonstrates another kind of soft power. Articulated by figures such as Paulo Freire and João Pedro Stédile of MST, the movement of landless workers, these are ideas and practices to promote power from below.

Brazilian movements, activist organizations and municipal leaders have shown enormous creativity and courage for decades in testing and producing these ideas. Practices such as “participatory budgeting” may not work perfectly, but they seem to me to be far more beneficial exports than soybeans, weapons, hardwood and oil.


This article was originally published under a different title by CartaCapital and republished with permission. Read the original here.

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capex: Nippon India’s Ashutosh Bhargava picks four major capex games for 2022 http://louthonline.com/capex-nippon-indias-ashutosh-bhargava-picks-four-major-capex-games-for-2022/ Fri, 14 Jan 2022 11:02:00 +0000 http://louthonline.com/capex-nippon-indias-ashutosh-bhargava-picks-four-major-capex-games-for-2022/ “I expect the overall growth momentum to continue, driven by urban consumption and capital expenditure. Areas like roads, urban infrastructure and renewable energy need to be watched,” says Ashutosh Bhargava, fund manager and head of equity research, Nippon India Mutual Fund.


How do you think this year will go? Which space is your top pick for 2022?
Hopefully 2022 will be a year of normalization where the cyclical recovery we saw just before the Omicron wave continues with less disruption on the supply side or disruption due to the pandemic. I think inflation would be subdued in the future. I expect the overall growth momentum to continue, driven by urban consumption and investment spending. Areas like roads, urban infrastructure and renewable energy and then you have private sector investment in areas like China plus one and LIP recipients like electronics, chemicals, pharmaceuticals, metals and some new sectors – these sectors initially lead the investment recovery and last but not least the housing recovery. We are all very excited about this. The housing market is in good shape, even on the household investment spending side, which comes in the form of home registration and housing activity, which would also hold up. So out of the three pillars we’re all familiar with, consumption, exports, and capital spending, we’re the most positive about FY23 capital spending.

How would you play capex? Is it capital goods, road infrastructure, cement or parts of real estate or a mixture of all?
I’m thinking of capital goods, infrastructure, real estate and banking. These are the four ways you can play. In most of these sectors I think what we can expect is a very strong tailwind to earnings and if that happens you will probably see all of these sectors outperform. Obviously, we have to be selective here, but we are quite confident in the ability of these sectors linked to the recovery of domestic investment to post very good results.

What is the shape of the economic recovery and what indicators are you reading to verify this?
Consumption is a bit tricky. It’s a kind of recovery with several rhythms. It’s the K-shaped recovery. I’m sure you’ve heard of it where you have a formal sector that’s more urban, high-income consumers, they’re maybe in the best shape possible and that’s reflected just before the Omicron wave. These are reflected in data points such as SUV demand, retail sales, credit card spending. Even the housing activity is a sign that affluent consumers, rich urban consumers have very good purchasing power and confidence is also high, but you have a larger number of consumers mainly related to the informal sector, the he agricultural economy, to rural India, to their purchasing power has been impacted by COVID and even previous shocks before COVID. So what you’re seeing is pronounced weakness in that segment, the buying power there and the data points that we track like two-wheeler sales or FMCG company feedback, for example, we know that this segment is lagging so on an overall basis the consumption would chug but there are huge disparities within the different consumption segments and as investors we need to be aware of the consumption we are talking about.

We will certainly be affected by global factors such as tapering, tapering shrinkage and rate hikes on the one hand and on the other hand the global economy is also shrinking. Export demand is on the up and global investment spending seems to be taking shape. So how do you also put this piece into perspective?

The global liquidity and demand environment has helped us a lot – whether it’s earnings on the IT side or on the metals side or whether it’s on the valuations side. Our valuations have risen in line with global valuations. It’s a headwind where if the cash withdrawal is there or if the rate hikes are there. But at the same time, we have approached this year with great pessimism regarding global earnings. So I was following the data for the United States or for Europe by adjusting the redemptions that they generally do. We’re talking low single-digit earnings growth. So I think some downgrading is certainly possible, but there is a possibility of surprise that I would personally look for in per se, global benefits, or local benefits. So that’s the kind of tussle we’re facing, the valuation on one side ensures that the return expectation should probably be moderate, but at the same time the attractiveness of the earnings or the possibility of a surprise from the earnings, the low hurdle rate in terms of earnings expectation makes us constructive in the market regardless of higher valuations. So that’s the kind of environment we’re dealing with – a little confusing, I must say.

One of the big events in the short to medium term would be the Union budget. What would be your main control elements in the budget?

The importance of budgetary overtime has declined. So it’s an important event, but overall reform is an ongoing process. So that’s the first thing we have to keep in mind. Second, in this budget the government is using a lot of unspent resources. They couldn’t spend for various reasons. This budget is not lacking in resources. So I expect public spending to increase. The government would show good numbers. The areas that they would probably focus on are the ones that they talked about even last year where the execution was lacking but the intent is there which is infra capex and I think what’s needed is to provide a K-shaped recovery support that I mentioned to provide support to that low-income rural informal segment that has been impacted by COVID or other shocks. I’m sure something would happen in the form of income support or low cost housing for the rural or urban population, but some sort of targeted ad that helps improve the purchasing power of that low-income segment income/rural, I think that’s what it takes.

A word against? As in, for the year, which sector can actually surprise the street? Where should people look for value or good bets or stories backed by profits?

When I look at Nifty earnings, people are positive on a lot of the cyclical sector. I think there has been a lot of pessimism about raw materials. In fact, for FY23, FY24, this is an area where the consensus expects you to know that the Materials sector is dragging earnings rather than contributing to dragging earnings. There is a downturn that people are expecting, which I think might surprise if the demand environment picks up after Omicron and liquidity remains supportive. So, if there is a counterpart trade that one can look for, it is raw materials, energy, metals and chemicals. These can surprise in terms of earnings and therefore stock market performance.

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Ships from the North: Why autarky can’t be New Zealand’s answer to climate change http://louthonline.com/ships-from-the-north-why-autarky-cant-be-new-zealands-answer-to-climate-change/ Thu, 13 Jan 2022 22:57:56 +0000 http://louthonline.com/ships-from-the-north-why-autarky-cant-be-new-zealands-answer-to-climate-change/

DAILY BLOG EDITOR Martyn Bradbury recently warned readers that climate change mitigation is now Aotearoa New Zealand’s only viable option. Reversing the steady rise in global temperatures might have been possible if the major industrial powers had taken action fifty years ago. Tragically, they refused to make the necessary changes, and now it’s far too late. Accelerating climate change is already upon us and its effects will only get worse.

The “vague affiliation of millionaires and billionaires” (to use Paul Simon’s superb expression) who actually run this planet know that it is far too late to save industrial civilization as we know it. Their strange preoccupation with spaceships and interplanetary travel betrays this grim realization.

They want to leave behind the mess they’ve created, spreading the deadly virus of ruthless environmental exploitation across the universe. All nonsense, of course. There is nowhere in our solar system where human beings could establish a sustainable colony remotely, and it is doubtful that the technology necessary for interstellar travel will ever be invented. Physics is physics – and physics says “No”.

All of this begs the question, “Can we live with climate change?” Right here in Aotearoa-New Zealand, is it possible to build an economy and a society capable of supporting a population of five million? Is autarky a serious option?

For those unfamiliar with the term: “Autarky is the characteristic of self-sufficiency, generally applied to societies, communities, states and their economic systems”. (Wikipedia)

Only Maori can speak with authority about the type of economy and society produced by living self-sufficiently in Aotearoa. From the beginning of the 14th century to the end of the 18th century, the inhabitants of these islands lived entirely without contact or outside help. All production of food, tools, and medicine was internal, as was trade in goods and services. For about five hundred years, in a multitude of small communities, the Maori lived entirely alone in these islands at the end of the world. However, at any time between 1300 CE and 1800 CE, it is generally accepted that the combined population of these isolated human communities never exceeded 150,000 individuals.

Can we hope to do better? Our first instinct is to say “Of course!” But a little reflection should be enough to dampen our optimism. New Zealand as we know it would be impossible without a rudimentary global system of transport and trade. If climate change were to fundamentally weaken industrial societies in the northern hemisphere, the supply chains that New Zealanders depend on would be increasingly disrupted. How long could our society last if the ships from the North stopped coming?

Now, at this point, many Kiwis will say that New Zealand is one of the most efficient food producers in the world – so at least we won’t starve. The truth, however, is that New Zealand really isn’t that agriculturally productive. Without the fertilizer we extracted from Nauru and now import from the Kingdom of Morocco, we would miss the grass that our entire primary production sector depends on. These ships of the North are essential to our well-being.

TDB recommends NewzEngine.com

Pharmaceuticals that keep deadly diseases at bay in the world are not the least important elements of all these cargo manifestos. Currently, New Zealand does not have any pharmaceutical production facility worth mentioning. So if the ships stop coming, tens of thousands of people will die for lack of medicines that we currently take for granted.

Among the first priorities of a self-sufficient Aotearoa-New Zealand would therefore be the creation of a basic pharmaceutical industry. The use of the word “basic” is quite deliberate, because in a global economy significantly disrupted by the intensified effects of climate change, acquiring the highly sophisticated technology needed to produce anything other than the simplest drugs would become increasingly difficult, if not impossible. .

This problem: getting your hands on vital machines and the machine parts needed to run them; can only get worse.

If you’ve ever wondered about images of ramshackle, rusty, overgrown tanks in desolate Third World landscapes, then you’ve already encountered the paradox of “parts.” Tanks are extraordinarily complicated machines, always breaking down. If the spare parts needed to operate them become unavailable, these terrifying combat machines become completely useless – mere scrap metal.

What is true of tanks is, of course, also true of John Deere tractors and all the other farm equipment that makes New Zealand cockies so productive.

This issue should give serious thought to anyone who argues that to prevent these islands from being overrun by climate refugees, we will need to arm ourselves to a degree never seen in our history. Defense spending, they say, will have to increase – by a lot. But unless we have the (unrealistically) intention of creating a large, vertically integrated arms manufacturing industry, the ‘Fortress New Zealand’ argument makes no sense.

Any country that arms itself immediately makes itself militarily and diplomatically dependent on the nation-state that supplies it with arms.

Just consider acquiring the most basic military tool, the automatic rifle. Once firing begins, a nation’s stored ammo quickly depletes. What does he do then? Basically, he’s begging his arms supplier for more. If for any reason the US, UK or Australia says “No” to New Zealand. Or, more likely, “Sorry, mate, we can’t spare any right now,” so those automatic rifles instantly become nothing more than expensive metal clubs. Obviously, if the weapons your nation is looking for are fighter jets or warships, then the supply and maintenance issues are multiplied a thousandfold.

“Fortress New Zealand” is a pipe dream – unless, of course, we allow ourselves to become a full-fledged colony of the United States or Australia (the most likely option, if only to ‘a geographical point of view) or, perhaps, from China. Even then, the whole survival scenario hinges on the assumption that armed ships from the North keep coming.

Anthropologists tell us that soon after the first Polynesian travelers made landfall on these islands, the large ocean-going canoes that had carried them here traveled back and forth between Aotearoa and their Pacific island homelands. Eventually, however, the canoes from the North stopped coming. The men and women who had arrived on these, the last significant landmasses to succumb to human occupation, were finally and entirely alone.

Until new sailboats arrive from the North.

If these ships had not arrived, “Aotearoa” would have survived. But, without its constant and extensive connections to the rest of the world: the very connections most threatened by accelerating climate change; “New Zealand” cannot exist.

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This is what the shape of the economic recovery will look like http://louthonline.com/this-is-what-the-shape-of-the-economic-recovery-will-look-like/ Wed, 12 Jan 2022 05:23:06 +0000 http://louthonline.com/this-is-what-the-shape-of-the-economic-recovery-will-look-like/

There are also positive indicators. A huge 83 percent revenue growth in the first seven months of the current fiscal year has provided the government with a significant buffer to spend and support economic recovery. Capital spending, which acts as a growth multiplier, rose 28% between April and October, a four-year high. “We expect tax revenues to exceed the budget target by around 15 percent,” said a finance ministry official, who wished to remain anonymous.

Second, the strength of exports held back the economic recovery this year. “We plan to reach $ 400-420 billion [in exports] and, in fact, what’s been reassuring is that the order-taking position of Indian exporters is pretty good, ”says Ajay Sahai, Managing Director and CEO of the Federation of All Indian Export Organizations (FIEO ). “That is why we hope that the trend will also continue next year.”

Ajay Sahai, Managing Director and CEO of the Federation of All Indian Export Organizations

RBI’s bimonthly survey of consumer confidence for the period October-November 2021 showed that demand remained on “pessimistic ground”. The current situation index, which is the current perception compared to the period of the previous year, improved to 62.3 in November 2021 from 57.7 in September, after hitting a low of 48, 6 in July. The rise was largely due to increased consumer spending, but pessimism persisted over price levels, employment, the economy and incomes. (A reading below 100 indicates pessimism and above 100 indicates optimism.) The One-Year Expectations Index rose to 109.6 in November from 107 in September, supported by heightened optimism for income among households and the employment scenario.

Threats on the way

First threat: the big O. Says Pant of India Ratings: “Omicron has added to the list of uncertainties. Delhi has already announced measures limiting mobility, resulting in reduced demand. If these kinds of measures are announced by other states and remain in effect longer, it will affect consumption and growth in the fourth quarter of the current fiscal year. “Former chief statistician Sen points out that much economic recovery will depend on the political response to Omicron. “The second wave of Covid-19 has taught us that if you apply lockdowns strategically rather than broadly, it is much less disruptive and not all supply chains are not blocked, ”he said.

Many economists agree that MSMEs lost market share from income to large companies during the pandemic

But there are other caveats as well. Inflationary concerns should keep demand subdued. Wholesale inflation in India peaked at 14.23% in November and is expected to stay in double digits for the next several months due to the depreciating rupee, high international crude oil prices and, well, Omicron. fears a disruption of the global supply chain. . Meanwhile, CPI inflation hit a three-month high of 4.91% in the same month. Households expected inflation to harden in the short to medium term, according to the RBI’s Household Inflation Expectations Survey. The proportion of respondents expecting inflation to rise over the next three months and over the coming year increased in November 2021. Inflation expectations for the next three months increased by 150 basis points and that for the period of the coming year of 170 basis points.

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India’s crippled reform path http://louthonline.com/indias-crippled-reform-path/ Mon, 10 Jan 2022 17:20:47 +0000 http://louthonline.com/indias-crippled-reform-path/

Is India a market maker or a market maker? In financial jargon, “takers” buy or sell at the price available in the market while “decision-makers” actively buy and sell, thus shaping the market price and making it liquid. Applied to sovereigns, the United States is certainly a “market maker” like the European Union and China. Together, they represent more than half of the world’s GDP.

The United States, with its array of tech companies and increasingly private space capabilities, are the markets for technology, innovation, and digital creativity. The EU is older and heavier. But he’s taking the lead in shaping international rules – rules to control the power of global technology and stop the spread of inequality, protect privacy, a taxonomy for green investments, and a unique set of rules to incorporate the Europe, which until the 1990s was just a bunch of unruly neighbors who, just eight decades ago, regularly slaughtered each other. It is based on the rules of the depth of its markets and the robustness of its innovations.

China, for all the denigration of democratic idealists, is the undisputed market maker for cheap and efficient manufacturing and for smart and cheaper digital applications (a role that Japan once played against the West in the electronics and cars). The political stability of the Chinese Communist Party is long-standing, though uncertain, in the event of slower growth. Its political architecture is unique – short of individual freedoms but long term collective benefits. Think of it as a “one-party United States” without individual freedoms.

Unsurprisingly, India is not yet among these major issues. It is difficult to move markets if a person’s economic reach is only 3.1% of global GDP. A minimum 10% stake makes others take you seriously, unless you have a military force fueled by fossil fuels and a legacy human capital base like Russia.

The bottom line is that one cannot be a market maker without first being a market participant. Unfortunately, India lacks the economic confidence to integrate with competitive exporters. We took a step back from joining RCEP in 2019 and increased import duties thereafter (2021). Alternative free trade agreements have been slow to take hold. Our conservative trade diplomacy and export pessimism stem from the uncertain response of domestic industry, without subsidies (like the Thirteen Industry Sectors Production Incentive Program 2020), which India can hardly afford – the alternative is to preserve domestic manufacturing at a cost.

Political constraints result in subsidies, such as direct annual transfers to more than 100 million farming families or the distribution of free food through the public distribution system during the pandemic. These services are necessary for some of the beneficiaries. But the lack of targeting is draining public resources and perpetuating expectations of more donations, as a series of elections loom.

Union and State tax revenues have grown at a constant but freezing pace, rising from around 14% of GDP (2000-2004) to 16% (2005-2014) and around 17% thereafter until ‘in 2020-21. The one percentage point increase in GDP in the post-2014 period is commendable given that GDP growth declined significantly from 2017-18.

Certainly, over the past seven decades, access to political and economic power has become more porous. Affirmative action for the less privileged has helped expand the political and bureaucratic elite beyond the numerically smaller upper castes. And the liberalization of the economy has opened up opportunities in the private sector for the deserving and the brave, including as entrepreneurs. Indian “unicorns” are not founded by traditional business elites. And business leaders are sought after not for their lineage, but for their sales, engineering, or financial intelligence. There is much to be proud of in the new India. It’s good news. But that’s in the past. Far-reaching reforms aimed at strengthening social and economic equity through faster economic growth are yet to come.

Reforms aimed at bringing agricultural elites out of their comfortable cocoon of administered grain prices have come to an end in the face of staunch opposition. Similar fears of a political backlash, of crippling public sector reform (banks and industrial units), perpetuating market-distorting regulations, stifling competition, productivity, jobs and increasing subsidies.

The pandemic has pushed the combined public debt to 90% of GDP, the budget deficit to around 7% of GDP (2021-22), against the elusive 2% targeted in 2003, tax revenues are inflated by the excise tax of the Union on petroleum products – revenues 75% higher than in 2018-19 until November 2021, the inflation expectation is 5.7% (RBI Q4 2021-22). This suggests a year 2022-2023 under budgetary constraints. Containing inflation will require lower trade union excise duties on oil and / or higher interest rates. With future real growth of around 6.5% of GDP, the conundrum will be how to match broad populist agendas with the tight tax base while aligning the budget deficit with stability measures.

Municipal taxes are a neglected tax base that generates a fiscal resource of only 0.25% of GDP against a potential of at least 1% of GDP. Bengaluru was able to increase its land tax revenue 2.6 times over three years (2008-2011) thanks to an intensive study of the tax base using GIS mapping of buildings in the city. The incentive for vertical urban growth improves property values ​​and tax revenues. Unfortunately, municipal governance remains hampered by the inherited colonial pessimism about the ability of local self-government to function and in part by the fear of politico-economic transitions induced, if the 44 urban agglomerations of India, where 61% of the population live. urban India, became autonomous from the state. government control – a reform that could trigger a significant growth boost.

A more systematic liberalization and privatization agenda, devolution of government powers and mandates, elimination of costly intergovernmental mandate overlaps (the reason for competitive populism between state and union) can preserve public resources, while reducing tax deductions on income and businesses. can push tax revenues to a sustained level of 20% of GDP.

Yesterday’s soft budget constraint and low-level equilibrium-centered development model have now reached their natural end. Public finances are strained to the breaking point and core sovereign mandates are suffering. Doing nothing over the next two years will gradually degrade measures of growth, stability and equity. Substantial change will hurt the privileged and invite high political risk, albeit with upward economic potential. It’s a choice of Hobson, made more difficult by the persistent dislocations linked to the pandemic.



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United States opens door to negotiations with Russia on missile deployment and military exercises | International http://louthonline.com/united-states-opens-door-to-negotiations-with-russia-on-missile-deployment-and-military-exercises-international/ Sun, 09 Jan 2022 11:28:12 +0000 http://louthonline.com/united-states-opens-door-to-negotiations-with-russia-on-missile-deployment-and-military-exercises-international/

The United States presents itself with one of lime and another of sand before the new round of talks with Russia on Ukraine which takes place this Monday in Geneva. The Joe Biden administration opens the door to negotiations with the Kremlin on issues such as missile deployment and the extent of military maneuvers by both sides in the region if pressure on the country eases, officials said Americans during a phone call this Saturday. with reporters, but he also raises a series of serious economic sanctions if Vladimir Putin intervenes, a fear the Russian leader has encouraged by stepping up the presence of troops on the Ukrainian border.

Washington and Moscow will sit around the table seven months after the Biden-Putin summit, held in the same city last June, which set the tone for what had been the first part of the year: so many interest in not continuing to escalate tension as mistrust between the parties. This time the leaders will not participate. The US delegation will be led by US Under Secretary of State Wendy Sherman and Russian Deputy Foreign Minister Sergei Ryabkov. The context has also changed: the Kremlin has concentrated tens of thousands of troops on the border with Ukraine, and the United States has raised the tone.

“Even if we much prefer to defuse [esta crisis] Through diplomatic channels, if Russia chooses the other route, we are more than prepared, and in agreement with our partners and allies, to impose heavy costs via financial sanctions, export controls targeting key industries, a strengthening of NATO’s positions in allied territory and increased security, support for Ukraine, ”the aforementioned sources from the US administration explained on Saturday.

Russia, however, ruled out on Sunday any “concession” in talks with the United States in Geneva, the deputy foreign minister said. “We will not accept any concessions. It is totally excluded, ”said Sergei Ryabkov, who is to take part in the negotiations, to Russian press agencies.

Some of the restrictions considered by the allies would affect American products that are exported to the country, as well as some manufactured abroad, but which are subject to the jurisdiction of the North American country or others with a specific percentage of American composition. , according to the Reuters agency is a source close to the file. Russia could, in short, be part of the group of countries most penalized by the United States in terms of foreign trade, a club that includes Cuba, Iran, North Korea and Syria.

The dissemination of these details serves to prepare the ground for Monday’s appointment, which Washington claims to arrive with more “realism” than pessimism. Any deal on maneuvers and missiles, yes, the Biden government stresses, would be done on a consensual basis with Ukraine and with NATO allies. Indeed, contacts will continue during the week in an already multilateral field. Following the Geneva talks, a special meeting of the NATO-Russia Council will take place in Brussels on Wednesday and a session of the Organization for European Security and Cooperation (OSCE) in Vienna on Thursday.

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Moscow comes to the table with the demand for legal guarantees that NATO will not carry out military reinforcements at Russia’s European borders, especially those of Ukraine. In a draft proposal made public in mid-December, during a conference call between Biden and Putin, the Kremlin proposes that the Atlantic Alliance assume “the obligation to prevent NATO enlargement to other states, including the accession of Ukraine ”. And renounce military exercises in this region, the Caucasus and Central Asia. Sources in the Biden administration have previously warned that with the first they touched the bone. It is not possible, they stressed this Saturday, that Moscow decides “of which the other countries can be allies”.

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Russian business leaders fear Kremlin pressure will tighten http://louthonline.com/russian-business-leaders-fear-kremlin-pressure-will-tighten/ Thu, 06 Jan 2022 07:55:23 +0000 http://louthonline.com/russian-business-leaders-fear-kremlin-pressure-will-tighten/

Russian businesses have had a record-breaking 2021, but owner frustration remains high, optimism for the future is scarce, and fears of Kremlin intervention are growing.

Business revenues grew by at least a third in 2021, and the turnover of large and medium-sized enterprises is expected to reach their upper ever levels this year. At the same time, for the third year in a row, 87% of CEOs say it is difficult to do business in Russia, according to a recent study survey of business leaders by PwC consultants.

The mood among Russian companies is akin to the lyrics of the popular Soviet song “Moscow Nights”, said Igor Lotakov, Managing Partner of PwC Moscow: “The river moves and does not move. “

In other words, in Russian companies profits may increase, but the fundamental challenges remain the same.

Analysts say the paradox – rising profits and widespread pessimism – can be largely attributed to the strained relationship between the Russian corporate sector and the Kremlin. The government is regularly accused of treating companies as an outstretched arm of the state, pushing up employment levels, paying taxes and investing in its priority areas before innovating, increasing productivity or to increase profits.

“The government does not focus at all on the performance of companies. This is not the government’s priority, ”said Russian analyst Madina Khrustaleva of TS Lombard consultants in London.

This dynamic was fully visible in 2021 – and business owners fear the government’s anti-business turn will only intensify in 2022, especially with economic growth expected to fall back to its sluggish pre-coronavirus trends. .

More than half of the 1,000 CEOs in the PwC survey said they did not trust the government to take the views of business owners into account when making policy.

Corporate responsibility

For many, the coronavirus pandemic marked the start of a more overt government-versus-business turn, both through the modest levels of support offered to businesses and through a shift in policy and rhetoric aimed at pushing businesses to contribute more. to the Russian budget.

The metals sector – booming from soaring world prices – has been to hit with an exceptional tax of $ 2 billion on exports, and pledges to revise tax laws to drive more of their superprofits into government coffers.

Prime Minister Mikhail Mishustin said that “the companies greedWas behind the spike in food prices, imposed price controls and called on federal agencies to increase inspections of supermarket chains to ensure prices stay under control.

The message to businesses was clear: profits come second.

Khrustaleva believes this position enjoys broad support from the Russian public, allowing the Kremlin to target companies more aggressively in the coming year.

“The legislative elections of 2021 showed that there is a very strong feeling of the left in the population. Of households and the electorate, there are pressure for more measures such as price controls and to improve living standards. In this situation, the government will have to take a larger share of corporate profits, ”she said.

As Russia’s political cycle now heads towards the presidential elections of 2024, and after eight years of stagnate living standards and wages as Russian households have largely paid the price for the Kremlin’s ultra-conservative economic policies, this pressure is set to back decisively against the corporate sector in the years to come.

Experts expected the Kremlin to use two key methods to ensure that companies make a larger financial contribution.

First, more taxes on windfall profits, such as those levied on the metals sector. This is seen as a more favorable instrument than the cruder option of price caps or overt export quotas, which have been criticized by economists and are fiercely opposed by the Central Bank.

Second, tax adjustments targeting “Russia’s largest cash-generating and dividend-paying private companies … to encourage them to invest more in public projects,” said Artem Zaigrin of Sova Capital.

All of this is likely to make 2022 difficult for Russia’s giant metallurgical and mining companies, which generate huge profits and have already been politically targeted for what the Kremlin sees as an insufficient tax contribution. They should also come under the crosshairs of the government’s new energy to, at least modestly, green the economy and clean up industrial cities affected by smog.

The government’s ambitious plans to invest in the country’s infrastructure and build many new roads, houses and railroads would also put more pressure on the country’s important metals sector, as it would become an even larger buyer of theirs. building goods while refusing to pay high prices.

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Even when government does not intervene directly, companies will face upward pressure on their bottom line.

Unemployment in Russia is at historic lows and the country has yet to replace most millions migrant workers who left at the start of the pandemic. Combined with long-standing demographic challenges exacerbated by the coronavirus, competition for workers is going to be intense in 2022.

Most worrying, Khrustaleva said, is that the country’s unemployment rate has not increased at the end of the agricultural harvest season, as it usually does.

“It’s going to be a problem, especially in the spring when there is the next big increase in demand for labor. In addition, the government will launch new investment programs, as will state-owned companies like Gazprom and Rosneft, all of which will stimulate demand for labor, but there is hardly any.

Two in three CEOs polled by PwC said they couldn’t find skilled workers, second only to many complaining about high tax rates.

One sector likely to counter these broader trends in 2022 – not least due to an expected increase in government support and subsidies – is Russia’s vital hydrocarbon sector.

The industry will gradually increase production over the next year in accordance with the OPEC + agreement and is also expected to benefit from high energy prices. Zaigrin of Sova Capital estimated that half of the growth of the Russian economy in 2022 will come from the oil and gas sector.

For Russia, the need to tap its vast oil and gas resources now, while demand for fossil fuels is still strong, means other sectors are likely to fall on the priority list.

In particular, the tax breaks awarded to Rosneft for its Arctic oil investment program will further increase the sector’s competitiveness – pushing workers and resources away from other parts of the economy, analysts predict.

For Russian companies that are not in selected sectors or industries likely to receive significant government support, 2021 could prove to have been their peak.

“The high margins are not going to continue. From now on, it will only tighten up, ”Khrustaleva said.

“Things are really bad for business. “


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Q1 2022 Main business opportunities http://louthonline.com/q1-2022-main-business-opportunities/ Tue, 04 Jan 2022 23:06:58 +0000 http://louthonline.com/q1-2022-main-business-opportunities/

(MENAFN – DailyFX)

John kicklighter

USDJPY and Nasdaq 100 – Dow Ratio shorts on the same risk reprieve: Top Trade Q1 2022

Looking at the first quarter of 2022, it looks like the threshold for exuberance is high. This sentiment descriptor (“exuberance”) should relay the difficulty of maintaining the load from which speculative markets benefited after the pandemic.

Ilya Spivak

AUD / USD could fall due to RBA lag and risk aversion: Top Trade Q1 2022

The Australian dollar has struggled to move away from the extreme accommodative policies of the RBA, its home central bank. Governor Philip Lowe and his company have started cutting back on asset purchases related to Covid and unceremoniously ended a three-year bond yield cap policy.

Christophe Vecchio

A new variant welcomes the New Year: Top Trade Q1 2022

As the timeline turns to 2022, the slate is wiped from the sustained enthusiasm that has driven risk markets up through the second half of 2020 and throughout 2021. Aggressive fiscal stimulus is on the way. now in the rearview mirror, while central banks around the world have started rolling back on asset purchases.

James stanley

Long USD: Top Trade Q1 2022

When learning to implement fundamental analysis with a technical approach, one of the most important things is to try to find the path of least resistance. And while we are all used to locating resistance on charts, this can have a fundamental implication as well.

David Song

AUD / USD Short: Aussie Dollar Outlook 2022 Muddled by RBA Waiting Policy: Top Trade Q1 2022

AUD / USD slipped to a new 2021 low (0.6993) after failing to break above the 50-week moving average (0.7511) in October.

Paul robinson

S&P 500 trend is up until proven otherwise: Top Trade Q1 2022

The S&P 500 has seen a strong uptrend since the trough of the pandemic, and on that it’s hard to bet against it even though it sometimes seems too high to buy. This does not mean that we are becoming complacent, however, as a large market can run in a hurry and do so with seemingly little warning.

Daniel Dubrovnik

The US dollar could rise against the yuan, will Chinese export demand slow down in 2022? : Top Trade Q1 2022

Faced with the rise of the US dollar in 2021, the Chinese yuan stood out. The DXY Dollar Currency Index appreciated nearly 7% in 2021. Meanwhile, the offshore renminbi (CNH) gained just under 1% against the US dollar.

Martin essex

GBP / JPY Short on Pandemic Pessimism and UK Political Risk: Top Trade Q1 2022

If you are pessimistic about the impact on the global economy of Covid-19 in general, and the possibility of new variants in particular, then a GBP / JPY sale is a trade worth considering.

Nicolas cawley

CAD / JPY long as the interest rate differential begins to widen: Top Trade Q1 2022

The coming year will see a series of global central banks overturn their loose, pandemic monetary parameters of the decisions of the past two years and begin to normalize monetary policy by withdrawing emergency stimulus measures and raising interest rates.

Justin mcqueen

Long GBP / JPY: Top Trade Q1 2022

Carry trades were not really a top concern for investors in the FX space in the fourth quarter amid a large easing of reflation trades. However, if we see risk sentiment stabilizing in the new year, and GBP / JPY may look again for direction on credit spreads.

Diego colman

ARKK at Risk as Fed Pivots to Higher Interest Rate Regime: Top Trade Q1 2022

The Federal Reserve made a very clear statement at the end of its December meeting: labor market.

Daniel mccarthy

AUD / JPY Forecast: Bullish Yields and Energy Tailwinds: Better Trading in Q1 2022

While other central banks around the world have withdrawn their pandemic stimulus measures, the Reserve Bank of Australia (RBA) and Bank of Japan (BOJ) have maintained relatively loose policies.

Thomas westwater

Lithium to have a good start to the year due to a supply deficit: first trade in the first quarter of 2022

Amid tight supply chains and an already small mining base, lithium prices are likely to continue to rise until the first quarter of 2022, due to growing demand for electric vehicles.

Richard Snow

Long USD / ZAR as major central banks reign in stimuli: Top Trade Q1 2022

The South African Rand (ZAR) is one of the best performing emerging currencies against the dollar for 2021, but risks are mounting as central banks prepare to crack down on stimulus and raise rates.

Tammy da costa

BTC / USD Short – Will bears dominate in 2022? : Top Trade Q1 2022

Bitcoin’s bearish trajectory currently remains intact as market participants continue to consider fundamentals.

Pete mulmat

Japanese Yen: No Relief in Sight: Higher Trade in Q1 2022

The JPY was the worst performing G10 currency this year. The weaker JPY has been a reasonably good environment for risk assets, higher US rates and, more recently, the energy shock.

Ryan grace

Riding The Bull Flattener: Top Trade Q1 2022

Long UST 30YR, UST YC 2s10s Bull Flattener on tightening monetary policy, decelerating economic growth rates. As next year approaches, tightening monetary policy and decelerating economic growth are likely to present a more challenging environment for risky assets.

Katie McGarrigle

Small Short-Term Bets on Stock Indices: Top Trade Q1 2022

Although they are trading near their all-time highs, stock indexes can be a source of volatility and bilateral action, as developments in interest rates, inflation and COVID variants are likely to continue to do so. headlines in early 2022.

James blakeway

Boeing… broken down but not behind? : Top Trade Q1 2022

Boeing’s stock woes began about a year before the pandemic, as the second 737 Max tragedy knocked stock from all-time highs, above $ 437, below 360 $. When the pandemic hit, stocks fell more than 74%, hitting a low price of $ 89 in March 2020.

Mike Butler

Airlines long shares (UAL / LUV / AAL / BA): Top Trade Q1 2022

We are in the midst of yet another variant of COVID-19 and the expected winter wave. This resulted in a massive sell-off in industries that thrive on human participation, namely airline and casino stocks.

Nick battista

MARA for Bitcoin Exposure: Top Trade Q1 2022

Digital assets have been one of the stories of 2021, but have been largely non-tradable outside of spot trading due to the size and lack of availability of options. BTC bitcoin futures trade at a notional value of 5 Bitcoin, while / MBT the micro-contract at 1 / 10th the size may be a bit too small, and neither has an options market. liquid.

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