Archive for August, 2015

UK Only Article: 
standard article

Issue: 

The Great Fall of China

Fly Title: 

China and the world economy

Rubric: 

Stockmarket turmoil in China need not spell economic doom. But it does raise questions far beyond the country’s shores

Location: 

SHANGHAI

Main image: 

20150829_FBP001_0.jpg

THE ability to make stockmarkets boomerang is usually reserved for central bankers. But on August 24th, hours into a global market rout that had started in Asia and was sweeping its way through Europe and then America, Tim Cook, the boss of Apple, turned his hand to it. “I can tell you that we have continued to experience strong growth for our business in China through July and August,” he wrote in an e-mail to CNBC, a financial-news channel. “I continue to believe that China represents an unprecedented opportunity over the long term.”
By the time Mr Cook felt it necessary to opine on the state of the world’s second-biggest economy, plenty had …

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UK Only Article: 
standard article

Fly Title: 

"Black Monday"

Rubric: 

China is sneezing. Will the world catch a cold?

Main image: 

20150829_blp501.jpg

IT BEGAN innocently enough, with a fall in markets in China that might, at the outset at least, have been mistaken for the healthy clearing of froth from the world's frothiest stockmarket. Yet the plunge that started in Asia (and which followed a nasty drop in American markets on Friday) has continued to gather momentum. It now looks very worrying indeed. When markets in Shanghai closed on Monday, stocks were down 8.5%—the Shanghai Composite’s worst single-day fall in eight years and, given the daily limits on how far individual stocks can fall, very nearly the biggest possible decline. The People's Daily, the Communist party's mouthpiece, declared the day "Black Monday". The nervousness has radiated outward from China. The Nikkei index in Japan slipped by 4.6%. European bourses are down 4-5%. The Dow opened down more than 1,000 points; stocks have since regained some ground but the main indices …

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Jeb Bush is (mostly) right when he says the number of people in poverty increased by 6 million under Obama. But it wasn’t Obama’s fault.

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UK Only Article: 
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Fly Title: 

Global markets

Rubric: 

The rupiah and ringgit plumb depths unseen since the Asian financial crisis

Byline: 

J.F.

Location: 

SINGAPORE

Main image: 

20150815_woc434.png

This article was originally published in last week's print edition. However, since Tuesday, many south-east Asia currencies, as well as China's, have fallen sharply in value (see chart). Since this article is so relevant to the events of the past week, we decided to republish it on the blog:
NOT since Bill Clinton was president and Barack Obama was a law professor with a sideline in local politics have the beaches of Bali and Langkawi looked so inviting to Americans. Four years ago, a dollar fetched just over 8,500 Indonesian rupiah, and just under three Malaysian ringgit. Today a dollar is worth nearly 14,000 rupiah and almost four ringgit. Both currencies hit 17-year lows this summer, and kept falling (see chart).

In …

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IN 2009, in the middle of the financial crisis, global economic growth fell to zero. China and other emerging-market economies had added exactly as much to global GDP—1.5% in purchasing-power-parity terms—as America and the rest of the rich world had lost. Since the crisis, everyone has lowered their expectations. Global growth has flattened out to just above 3% for the last few years. And the International Monetary Fund’s five-year forecasts of potential growth—or how much economies can expand without overheating—are lower everywhere than they were in the decade before the crisis.The balance between countries has also changed. In the 1980s the United States and the rich world contributed almost twice as much to global GDP growth as China and the developing world. By the 2000s this was reversed. In the years before the crisis, China and the emerging economies were adding up to three times as much to global output each year as rich ones. And in the past five years the gap has narrowed again. The rich world’s contribution to global growth (half of which comes from the United States) has rebounded, albeit to a meagre 1 percentage point. Meanwhile the emerging world’s contribution has sharply fallen, from 4% to 2.5%. All this has dented hopes that emerging economies might prop up global growth. China, by far the biggest single contributor, is showing …

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TODAY’S figures for GDP in the second quarter of 2015 from Eurostat are disappointing. The consensus among economists was that the 19-strong currency club would grow by 0.4%, the same as in the first quarter. Instead the pace of quarterly growth slowed a little, to 0.3%, leaving output 1.2% higher than a year ago.The French outcome was the main setback. Output had been expected to rise by 0.2% following growth of 0.7% (revised up from 0.6%) in the first quarter. Instead it stagnated mainly because of an abrupt slowdown in consumer spending. Italian GDP continued to expand but by 0.2% compared with 0.3% in the first quarter, leaving output only 0.5% higher than a year ago.The feeble economic performance of France and Italy is the principal reason why the overall recovery of the euro area since the spring of 2013 has been a pallid affair. Given the stimulus from lower energy prices and the policy of quantitative easing (purchasing assets by creating money) pursued by the European Central Bank (ECB) since March, the renewed weakness in the euro zone’s second- and third-biggest economies is troubling.Their unsatisfactory performance contrasts with the strong upswing in the Spanish economy, the fourth-biggest in the euro area. The pace of quarterly growth strengthened from an already robust 0.9% in the first quarter to 1.0% in the second quarter, among the highest in the …

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SINCE the recovery gained speed, opposition politicians in Britain have taken pleasure in accusing the government of overseeing an economy based on long hours and low pay. Between 2008 and 2014, the number of Britons in work rose by 2m. But average weekly earnings fell by 8% in real terms, in spite of a rise in working hours. Economists have labelled this the “productivity puzzle”, referring to the fact that, in spite of an otherwise strong recovery, output per worker per hour has fallen.But there are now signs that these job-market trends are going into reverse. At first glance this may not appear to be unalloyed good news. After several years of rapidly falling joblessness, figures published by the Office for National Statistics on August 12th showed that unemployment grew by 25,000 in the three months to the end of June, to 1.85m. Worse, the number of people in work fell by 63,000 over the same period. That decline, which started in January, has lasted longer than any since the recovery began.Yet there was better news on the wages front. After years of stagnant earnings, Britons are now getting a pay rise. Wages rose by 2.4% year-on-year in the second quarter. That appears to be fuelled by productivity rising overall, says Michael Saunders at Citi, a bank. During that period GDP rose by 2.6%, while Britons spent 0.2% less time working. This implies that productivity …

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