https://www.scmp.com/rss/312348/feed David Brown is the chief executive of New View Economics. Over a career spanning four decades in London, David held roles as chief economist in a number of international investment banks. en https://assets.i-scmp.com/static/img/icons/scmp-meta-1200x630.png https://www.scmp.com Deflation in China, or the risk of negative consumer price inflation, is no reason for Beijing to panic. If China’s headline inflation rate does dip down into negative territory or stays close to zero per cent, where it’s been stuck over recent months, it’s simply the flip side of higher energy prices unwinding from last year, a statistical phenomenon that economists call base effects, when slower price rises this year are compared with faster price gains 12 months ago. If anything, zero per... https://www.scmp.com/comment/opinion/article/3227958/unlike-us-and-europe-china-can-keep-its-economy-steady-without-rushing-lower-interest-rates?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3227958/unlike-us-and-europe-china-can-keep-its-economy-steady-without-rushing-lower-interest-rates?utm_source=rss_feed Mon, 17 Jul 2023 14:00:13 +0000 It’s always hard to call a stop when you are getting too much of a good thing. The temptation is to overindulge and binge too freely. But enough is enough when it comes to China’s interest rate easing cycle. It’s clear the economy is awash with too much cheap and easy money, misallocating key resources and leaving the nation riddled with debt. It’s time to draw a line under monetary super-stimulus, avoid the mistakes Western economies made with years of near-zero interest rates, and get China... https://www.scmp.com/comment/opinion/article/3226384/china-must-not-be-tempted-repeat-easy-money-mistakes-west?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3226384/china-must-not-be-tempted-repeat-easy-money-mistakes-west?utm_source=rss_feed Mon, 03 Jul 2023 14:00:12 +0000 Britain’s economy is in a mess, flirting with recession while lumbered with both high inflation and interest rates that are reaching their highest level in 15 years. British mortgage borrowers are shell-shocked after base rates hit 5 per cent last week, well above levels that many homeowners thought possible when they cashed in on cheap, fixed rate deals with interest rates running close to zero not so long ago. Britain’s economic underperformance is often blamed on Brexit but in truth the real... https://www.scmp.com/comment/opinion/article/3225368/how-save-uk-economy-spend-big-industry-china?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3225368/how-save-uk-economy-spend-big-industry-china?utm_source=rss_feed Mon, 26 Jun 2023 14:00:13 +0000 The US dollar-China yuan currency divergence trade is in full flow. Unless Beijing gets a grip on the exchange rate soon, the yuan could hit 15-year lows very soon. It’s a dilemma for the government as a weaker yuan might be good news for China’s hard-pressed exporters, but it could also open Beijing up to fresh accusations from Washington of currency manipulation. This would be bad timing, especially after US Secretary of State Antony Blinken’s visit to China this week for talks to help... https://www.scmp.com/comment/opinion/article/3224571/us-dollar-yuan-divergence-trade-could-spin-out-control-without-intervention-china-soon?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3224571/us-dollar-yuan-divergence-trade-could-spin-out-control-without-intervention-china-soon?utm_source=rss_feed Mon, 19 Jun 2023 22:15:07 +0000 Central banks are supposed to be trusted guardians to promote the right conditions for sustainable growth and financial stability, but are they taking needless risks in their haste to drive down inflation? The undue speed at which global interest rates have been ramped up in the past year suggests they are turning a blind eye to global growth hitting the skids again. The euro zone witnessed this first-hand last week, sinking into recession while the European Central Bank (ECB) has carried on... https://www.scmp.com/comment/opinion/article/3223771/raising-interest-rates-central-banks-are-playing-russian-roulette-global-economy?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3223771/raising-interest-rates-central-banks-are-playing-russian-roulette-global-economy?utm_source=rss_feed Mon, 12 Jun 2023 13:30:19 +0000 Are the glory days over for China’s growth? It’s not just a recent slump in China’s factory confidence or lacklustre consumer demand that is the problem. It’s how to keep the world’s second-largest economy growing at a rate which exceeds expectations and defies the longer-term drift to slower growth, a problem which many mature economies are having to contend with. China’s post-Covid recovery could be running out of steam, at a critical time when the global economy is facing greater... https://www.scmp.com/comment/opinion/article/3222948/can-china-spend-its-way-back-glory-days-economic-growth?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3222948/can-china-spend-its-way-back-glory-days-economic-growth?utm_source=rss_feed Mon, 05 Jun 2023 13:15:13 +0000 US President Joe Biden has reportedly struck a tentative deal with Republican House Speaker Kevin McCarthy to hopefully avoid a devastating debt default before the government runs out of money in little more than a week’s time. The deal still needs approval from a divided US Congress. However, the markets should be relieved that a truce has been reached in principle on raising the government’s US$31.4 trillion debt ceiling limit. It’s a crisis that should never have happened in the first place.... https://www.scmp.com/comment/opinion/article/3222157/even-tentative-us-debt-ceiling-deal-washington-needs-reform-or-dollar-will-suffer?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3222157/even-tentative-us-debt-ceiling-deal-washington-needs-reform-or-dollar-will-suffer?utm_source=rss_feed Mon, 29 May 2023 12:15:15 +0000 Recently, there was a shocking instance of how insensitive central bankers can be to the plight of ordinary folk facing extreme economic difficulties. With consumers still struggling to come to terms with the Covid-19 pandemic and the cost of living crisis, Bank of England chief economist Huw Pill made an unfortunate choice of words when he suggested Britons needed “to accept that they’re worse off” and stop bidding up wages and prices. The Goldman Sachs alumnus’ words sounded out of touch with... https://www.scmp.com/comment/opinion/article/3219740/central-banks-mustnt-forget-human-cost-their-war-inflation?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3219740/central-banks-mustnt-forget-human-cost-their-war-inflation?utm_source=rss_feed Mon, 08 May 2023 14:00:15 +0000 There’s a very good chance the world is sleepwalking into another global financial crisis. With Capitol Hill still effectively gridlocked over the US debt ceiling, the clock is ticking and it’s only a matter of time before markets hit the crash barriers. Short-term disaster might have been avoided by last week’s vote in the Republican-dominated House of Representatives agreeing to raise the US$31.4 trillion debt ceiling by US$1.5 trillion, but it won’t pass muster in the Democrat-controlled... https://www.scmp.com/comment/opinion/article/3218992/economic-turmoil-looms-us-debt-ceiling-crisis-drags?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3218992/economic-turmoil-looms-us-debt-ceiling-crisis-drags?utm_source=rss_feed Mon, 01 May 2023 13:00:11 +0000 China has made great progress opening up its financial markets to the world but still needs to speed up the process. Beijing wants broader acceptance of the renminbi as an international medium of exchange and for it to become a more popular reserve currency, but its share of the global official reserves market still only stands at a meagre 2.7 per cent. The challenge is how to break into the big time and take on the euro’s share at 20 per cent of the market, let alone challenge the US dollar’s... https://www.scmp.com/comment/opinion/article/3218116/investor-confidence-chinas-yuan-and-financial-markets-hangs-stability?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3218116/investor-confidence-chinas-yuan-and-financial-markets-hangs-stability?utm_source=rss_feed Mon, 24 Apr 2023 13:30:17 +0000 It’s not a question of if, but when. Recession is an inevitability in the United States and in several other major industrial nations which are on the brink of two successive quarters of negative growth this year. The problem is that the scope for remedies is limited, with global monetary policy given over to fighting inflation and government budgets severely overstretched from the Covid-19 pandemic. For a major manufacturing country such as China, which hopes for healthy world trade growth to... https://www.scmp.com/comment/opinion/article/3217310/looming-us-recession-puts-pressure-others-get-growth-policies-right?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3217310/looming-us-recession-puts-pressure-others-get-growth-policies-right?utm_source=rss_feed Mon, 17 Apr 2023 13:30:09 +0000 The world has entered into a new phase of global instability, making it imperative again for investors to batten down the hatches against the spectre of rising risk. The aftermath of the Covid-19 pandemic, the effects of the Ukraine war, the recent inflation spike and now the latest banking crisis are making it that much harder for investors to choose where they should ideally lie on the investment curve to mitigate their risks. For large sovereign investors such as China, the challenge is made... https://www.scmp.com/comment/opinion/article/3215802/us-banking-woes-compound-chinas-need-us-treasury-alternatives?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3215802/us-banking-woes-compound-chinas-need-us-treasury-alternatives?utm_source=rss_feed Mon, 03 Apr 2023 07:45:10 +0000 New crisis? What new crisis? It’s too easy to write off the current banking crisis as just another unfortunate event in a long series of setbacks suffered by the world since the 2008 global financial crash. In truth, we still haven’t emerged from the aftershock of 2008. The world has subsequently been battered by the pandemic, the Ukraine war, the inflation shock and the current banking crisis, but they are all genetically linked by the failure of policymakers to deal with contingent risks... https://www.scmp.com/comment/opinion/article/3214950/understand-2023-banking-crisis-look-back-2008-financial-meltdown?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3214950/understand-2023-banking-crisis-look-back-2008-financial-meltdown?utm_source=rss_feed Mon, 27 Mar 2023 13:30:16 +0000 With all the damage being inflicted on financial markets right now, it begs the question whether the activities of hedge funds should be severely reined in or even banned altogether. Hedge funds might make a lot of money for a tiny, privileged few but it has to be weighed against the carnage they cause in terms of increased market volatility and the suffering they wreak when they go for the jugular of the businesses, banks and governments which they target. Highly leveraged short-selling, risky... https://www.scmp.com/comment/opinion/article/3214121/wake-svb-credit-suisse-and-other-bank-troubles-should-hedge-funds-be-banned-avert-financial-meltdown?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3214121/wake-svb-credit-suisse-and-other-bank-troubles-should-hedge-funds-be-banned-avert-financial-meltdown?utm_source=rss_feed Mon, 20 Mar 2023 17:00:08 +0000 The United States needs to mend its ways and get back to basics on growth. There are suggestions that a US recession could be on the way, a self-fulfilling prophecy if the Federal Reserve has its way and comes down even harder on inflation with higher-than-expected interest rate increases in the next few months. US stock markets are already on edge after last week’s collapse of Silicon Valley Bank. Consumer confidence remains fragile and inflation-busting interest rate rises could be the last... https://www.scmp.com/comment/opinion/article/3213330/reversing-decades-us-industrial-decline-needs-domestic-investment-more-effective-fiscal-policies?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3213330/reversing-decades-us-industrial-decline-needs-domestic-investment-more-effective-fiscal-policies?utm_source=rss_feed Mon, 13 Mar 2023 14:30:10 +0000 The world is still facing major challenges but are forecasters being too downbeat on China’s growth potential in 2023? The strongest reading in China’s manufacturing business confidence in over a decade suggests that mainland factories are booming again post-lockdown as the economy catches up with pent-up demand, not just domestically but from abroad too. In a repetition of 2021, when the economy boomed in the wake of the 2020 Covid-19 crisis, China could easily surprise on the upside this year... https://www.scmp.com/comment/opinion/article/3212467/chinas-economy-could-easily-defy-naysayers-year?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3212467/chinas-economy-could-easily-defy-naysayers-year?utm_source=rss_feed Mon, 06 Mar 2023 07:45:09 +0000 Don’t get your hopes up that the US dollar is enjoying a sea-change in fortunes. In fact, there is every chance dollar bulls are skating on thin ice after recent speculation that the US Federal Reserve is adopting a tougher guard against inflation. The Fed seems set to take the key funds rate to a peak between 5 to 5.25 per cent in the next few months, but there’s still scope to ease policy before the end of the year to give the US economy a boost as the Fed’s focus switches from inflation to... https://www.scmp.com/comment/opinion/article/3211668/us-dollar-bulls-could-be-skating-thin-ice?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3211668/us-dollar-bulls-could-be-skating-thin-ice?utm_source=rss_feed Mon, 27 Feb 2023 13:30:09 +0000 It looks like China’s investors are giving US investments a wider berth as the outlook on US financial stability clouds over. It is not exactly a fire sale right now, but investor confidence is ebbing away with China reducing its holdings of US Treasury securities by 17 per cent in 2022 to US$867 billion, its lowest level since 2010. There is a lot at stake with international investors becoming more cautious about the US outlook, especially the deepening bear market for bonds, the rise in US... https://www.scmp.com/comment/opinion/article/3210807/chinese-investors-are-backing-us-assets-economic-storm-clouds-gather?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3210807/chinese-investors-are-backing-us-assets-economic-storm-clouds-gather?utm_source=rss_feed Tue, 21 Feb 2023 05:00:16 +0000 It’s a tale of two economies, one full of promise for the future and the other beset with problems. US President Joe Biden’s recent upbeat State of the Union address was in stark contrast to a UK government struggling to free Britain from the grip of recession. Biden is committed to ramping up domestic investment to bolster US growth. Meanwhile, a cash-starved UK government is desperately spending its way out of trouble. The secret to sustainable recovery is stronger investment, and the UK... https://www.scmp.com/comment/opinion/article/3210017/promise-us-economy-shows-brexit-britains-need-investment?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3210017/promise-us-economy-shows-brexit-britains-need-investment?utm_source=rss_feed Mon, 13 Feb 2023 14:00:09 +0000 There’s a long way to go before the US-China trade war ends and time is running short before the 2024 US presidential elections, when trade relations between Washington and Beijing are bound to sour. The US is on course for a bumper US$400 billion trade deficit with China in 2022. It’s not as big as the record US$418 billion in 2018, but still big enough to set off alarm bells that trade frictions could soon be on the rise again and despite recent hopes for a political thaw between the two... https://www.scmp.com/comment/opinion/article/3209213/us-must-increase-its-own-productivity-reduce-its-trade-deficit-china?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3209213/us-must-increase-its-own-productivity-reduce-its-trade-deficit-china?utm_source=rss_feed Mon, 06 Feb 2023 14:00:14 +0000 Are we heading into a new central bank regime for tougher monetary policy? After 40 years of falling inflation, interest rates and bond yields, it’s very unlikely that global monetary policymakers are about to change their spots. Sure, we have an inflation crisis on our hands, but it’s just a blip, a transient shock that will pass as global energy prices continue to fall and the world adjusts to the cost-of-living crisis. We are not in a global wage-price inflation spiral and all we are seeing... https://www.scmp.com/comment/opinion/united-states/article/3207386/high-interest-rates-will-not-become-new-normal-2023?utm_source=rss_feed https://www.scmp.com/comment/opinion/united-states/article/3207386/high-interest-rates-will-not-become-new-normal-2023?utm_source=rss_feed Mon, 23 Jan 2023 19:30:10 +0000 We are in the midst of a full-blown bull market for global stocks. The bottom was reached in mid-October and the outlook for global recovery is much more sanguine than the bears would have you believe. Global liquidity levels remain high, the appetite for risk is still strong and stocks should have the capacity for at least a further 20 per cent rally this year, on top of the 16 per cent gains already seen in the past three months. Global recovery is still unwinding from the 2020 Covid-19 crisis... https://www.scmp.com/comment/opinion/article/3206960/global-recession-look-forward-good-stock-market-rally-instead?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3206960/global-recession-look-forward-good-stock-market-rally-instead?utm_source=rss_feed Mon, 16 Jan 2023 09:45:10 +0000 Could we be heading into a sweet spot of stronger recovery, better job creation and lower inflation in the next year? It might be hard to swallow considering the wall of negative views coming from economy watchers, but in the United States at least there are some clues to better times ahead. Last week’s US employment data for December showed improving labour market conditions with positive hints that wage inflation might be on its way down. This comes against a backdrop of the US economy... https://www.scmp.com/comment/opinion/article/3206082/us-germany-data-suggests-world-economy-not-doomed-recession-2023?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3206082/us-germany-data-suggests-world-economy-not-doomed-recession-2023?utm_source=rss_feed Mon, 09 Jan 2023 21:45:12 +0000 The New Year is meant to signify a time of change and hope for better times ahead. 2023 will be full of challenges for world policymakers, facing the spectre of global recession, coping with tighter monetary conditions and dealing with higher inflation. Perhaps the greatest challenge of all in the short term is how to bring the war in Ukraine to a peaceful end. It will be a tough task but imperative as the war has wreaked so much damage, not just in terms of the devastating human cost, but also... https://www.scmp.com/comment/opinion/article/3205288/peace-ukraine-would-give-financial-markets-boost-they-need-2023?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3205288/peace-ukraine-would-give-financial-markets-boost-they-need-2023?utm_source=rss_feed Mon, 02 Jan 2023 14:00:10 +0000 Investors have some tough choices ahead in 2023, and it’s all down to whether the global economy rallies or succumbs to recession in the coming months. The markets are divided, with optimists hoping for an early end to the Ukraine war and global interest rates levelling out while pessimists see more gloom from the cost-of-living crisis and world economic activity suffering more duress. Stocks and bonds have both endured tough times in 2022, the US dollar’s strong run has come unstuck and... https://www.scmp.com/comment/opinion/article/3204358/china-recovery-and-policy-easing-could-make-2023-year-remember-investors?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3204358/china-recovery-and-policy-easing-could-make-2023-year-remember-investors?utm_source=rss_feed Mon, 26 Dec 2022 08:45:08 +0000 One of life’s golden rules is that you should never say never again. Britain’s departure from the European Union on January 31 in 2020 might have had a note of finality about it, but could the unthinkable really happen and might a future UK government consider rejoining the EU again? Since the so-called Brexit, UK growth has suffered, Britain’s trade deficit has worsened, public sector finances are in a dire state and the economy is crying out for new regional investment which has dried up from... https://www.scmp.com/comment/opinion/article/3203785/could-return-eu-fix-britains-broken-economy?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3203785/could-return-eu-fix-britains-broken-economy?utm_source=rss_feed Mon, 19 Dec 2022 14:00:18 +0000 We will know at the end of the two-day Federal Open Market Committee (FOMC) meeting on Wednesday whether the US Federal Reserve is intent on keeping up the pressure on inflation, or whether the much-vaunted Fed policy pivot has finally arrived. The market’s money is on a 0.5 percentage rise in the Fed funds rate this week after four straight 0.75 percentage jumbo hikes. If this happens, it will be an encouraging sign that the US monetary tightening cycle could end sometime in 2023. It could be a... https://www.scmp.com/comment/opinion/article/3202947/markets-are-holding-out-fed-policy-pivot-2023?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3202947/markets-are-holding-out-fed-policy-pivot-2023?utm_source=rss_feed Mon, 12 Dec 2022 14:00:10 +0000 It’s no wonder people are fretting about the future, but are we being too pessimistic about growth next year? We seem to be talking ourselves into trouble given the prevailing economic headwinds, but it doesn’t feel like a steep recession is imminent while global stock markets are looking reasonably robust and investors still moderately upbeat. Are stock markets our best leading indicator telling us to look beyond the near-term blues and begin factoring in brighter times ahead? After all, the... https://www.scmp.com/comment/opinion/article/3202069/we-may-not-be-headed-global-recession-gloom-after-all?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3202069/we-may-not-be-headed-global-recession-gloom-after-all?utm_source=rss_feed Mon, 05 Dec 2022 14:00:19 +0000 The dominant US dollar will be a tough act to follow. The strong dollar trade continues to unravel as the US Federal Reserve winds down its aggressive interest rate campaign against inflation and investors ponder the possibility of an early US rate easing in 2023. The quandary for investors now is choosing which is the best currency bet instead. Has all the bad news been factored into the euro, making it a prime time for investors to buy again? The European Central Bank (ECB) is still... https://www.scmp.com/comment/opinion/article/3201245/oversold-euro-has-better-days-ahead-us-dollar-strength-starts-unwind?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3201245/oversold-euro-has-better-days-ahead-us-dollar-strength-starts-unwind?utm_source=rss_feed Mon, 28 Nov 2022 14:00:14 +0000 Spare a thought for the mass of hard-pressed consumers struggling to contend with the pandemic, a global slowdown, the cost-of-living crisis and rising borrowing costs. It hardly sets the scene for sustainable recovery any time soon and the odds are that large parts of the global economy are heading for much tougher times and perhaps even recession in 2023. At the end of the day, someone has to pay for the cost of the Covid-19 crisis and the energy price spike and the buck generally stops with... https://www.scmp.com/comment/opinion/article/3200401/why-fed-should-go-easy-world-economy-2023?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3200401/why-fed-should-go-easy-world-economy-2023?utm_source=rss_feed Mon, 21 Nov 2022 14:00:15 +0000 In the foreign exchange markets, there is no such thing as a forever trade and what goes up must inevitably come down. It’s the fundamental law of gravity that once sure-fire bets ultimately reach their zenith, they tend to go into reverse. The same fate awaits the market’s most-favoured currency bet over the last few years as the strong US dollar trade looks like it has reached the end of the road and it’s just a matter of time before it heads south again. The war in Ukraine, the deteriorating... https://www.scmp.com/comment/opinion/article/3199514/why-strong-us-dollar-should-start-coming-down-earth-soon?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3199514/why-strong-us-dollar-should-start-coming-down-earth-soon?utm_source=rss_feed Mon, 14 Nov 2022 14:00:13 +0000 It is often claimed that UK policymakers have taken leave of their senses and Britain’s present state seems no exception. The UK is in dire straits and the British government and the Bank of England (BOE) seem to be digging a deeper hole for the economy with a brutal simultaneous tightening of monetary and fiscal policy. Policymakers can raise interest rates to combat inflation, or squeeze budget policy to repair badly battered government finances, but not at the same time without unleashing the... https://www.scmp.com/comment/opinion/article/3198682/no-long-term-economic-strategy-uk-policymakers-are-jumping-one-crisis-next?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3198682/no-long-term-economic-strategy-uk-policymakers-are-jumping-one-crisis-next?utm_source=rss_feed Mon, 07 Nov 2022 14:30:09 +0000 How much money do you really need to thrive or, more critically, to survive in the modern age? Oxfam, the international charity focusing on the alleviation of global poverty, has said the world’s 26 richest people own as much as the poorest 50 per cent. It’s an unfortunate sign of our times that global inequality is getting worse, poverty and malnutrition are becoming more acute and world welfare levels leave much to be desired. There is a critical need for a global levelling up across nations,... https://www.scmp.com/comment/opinion/article/3197821/tax-rich-and-big-oil-avoid-global-recession?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3197821/tax-rich-and-big-oil-avoid-global-recession?utm_source=rss_feed Mon, 31 Oct 2022 14:00:13 +0000 The world is heading into a new financial crisis unless global policymakers take evasive action soon. Since the 2008 financial crash and the 2020 Covid-19 pandemic, there has been a huge explosion of debt to pay for the crises and help soften the blow to the global economy. The world has ended up bulging at the seams with record levels of debt and left investors stuffed to the gills with bonds when global sentiment is diving. The 40-year bull market for global debt has collapsed, and it couldn’t... https://www.scmp.com/comment/opinion/article/3197006/hard-choices-global-growth-fiscal-austerity-needed-now-avoid-new-debt-crisis?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3197006/hard-choices-global-growth-fiscal-austerity-needed-now-avoid-new-debt-crisis?utm_source=rss_feed Mon, 24 Oct 2022 05:30:10 +0000 The global economy has an uphill struggle to avoid recession over the next year. The war in Ukraine, the energy price spike, tighter monetary conditions and a slowdown in world trade are throwing growth projections into disarray. World recession may be avoided but it will require a mighty effort on the part of global policymakers, when time and resources are running out. China will avoid recession but the odds are that this year’s growth will come well below earlier plans for 5.5 per cent, after... https://www.scmp.com/comment/opinion/article/3196019/how-china-can-protect-economic-growth-world-recession-risks-rise?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3196019/how-china-can-protect-economic-growth-world-recession-risks-rise?utm_source=rss_feed Mon, 17 Oct 2022 14:00:09 +0000 The markets are gripped with a growing sense of dread that the Federal Reserve is about to push the US economy over the edge into a deeper recession in its quest to stamp out inflation. However, there is another side to debate – the question of whether the central bank should do this at the expense of economic confidence, sustainable recovery and global financial stability. After all, the US economy is already in recession, borrowing costs have shot up in recent months and market confidence is... https://www.scmp.com/comment/opinion/article/3195395/us-federal-reserves-inflation-fight-could-ruin-economy-its-trying?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3195395/us-federal-reserves-inflation-fight-could-ruin-economy-its-trying?utm_source=rss_feed Mon, 10 Oct 2022 14:00:11 +0000 Former British prime minister Harold Wilson famously quipped during one of the UK’s never-ending crises in the 1960s that “a week is a long time in politics”. Newly appointed UK Prime Minister Liz Truss and novice Chancellor Kwasi Kwarteng could justifiably lament that 24 hours is an eternity in the markets, after unleashing an unparalleled financial storm for the UK. Global investors gave a resounding thumbs down to the new government’s bunker-busting mini-budget on September 23, which left the... https://www.scmp.com/comment/opinion/article/3194629/truss-plan-jump-start-uk-growth-rehashing-reaganomics-was-always?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3194629/truss-plan-jump-start-uk-growth-rehashing-reaganomics-was-always?utm_source=rss_feed Mon, 03 Oct 2022 17:30:11 +0000 The world is no picture of health at the moment, and it’s no surprise that investors are running for cover from stocks, bonds and peripheral currencies. Recession is beckoning, inflation and interest rates are heading higher and global economic confidence is ebbing away. With whispers of nuclear sabre-rattling emerging from Russia over the Ukraine crisis, it is no wonder that global financial stability is suffering and markets are flinching. Investors can hardly be blamed for thinking the world... https://www.scmp.com/comment/opinion/article/3193791/global-recession-fears-and-collapse-confidence-could-turn-dash-cash?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3193791/global-recession-fears-and-collapse-confidence-could-turn-dash-cash?utm_source=rss_feed Mon, 26 Sep 2022 06:30:11 +0000 Central banks have the bit between their teeth to take down inflation. Later this week, the US Federal Reserve looks set to announce another steep 0.75 percentage-point interest rate rise, the same as at the past two monetary policy meetings, in June and July. Clearly, the Fed favours shock therapy to contain inflation and, in doing so, risks a harder landing for the US economy. The Fed is not alone, as the European Central Bank and Bank of England both appear to be following suit with tougher... https://www.scmp.com/comment/opinion/article/3192957/us-federal-reserve-and-other-central-banks-must-be-proactive?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3192957/us-federal-reserve-and-other-central-banks-must-be-proactive?utm_source=rss_feed Mon, 19 Sep 2022 17:30:09 +0000 There will be winners and losers from the global energy crisis, but it’s a less than zero-sum game for the world economy as it slides towards possible recession in the next year. Oil producers are reaping bumper revenues from the spike in global oil and gas prices, but it’s the net-energy-consuming countries that represent the bulk of the world economy that pose the greatest risk to recovery prospects as higher inflation takes its toll on global confidence. With the US dollar on a roll from... https://www.scmp.com/comment/opinion/article/3192172/biggest-loser-energy-crisis-global-economic-recovery?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3192172/biggest-loser-energy-crisis-global-economic-recovery?utm_source=rss_feed Mon, 12 Sep 2022 14:00:22 +0000 Britain’s economy is in a mess. Recession looms, inflation is rife and interest rates are going up. It’s a situation that is quickly running out of control and UK policymakers seem at a loss over how to solve it. Consumers are already struggling with surging energy prices, and that is even before winter has started. Industrial action is on the rise from workers struggling to keep pace with rampant cost-of-living rises, while political uncertainty surrounds the UK government lurching from one... https://www.scmp.com/comment/opinion/article/3191348/recession-risk-inflation-energy-crisis-britains-economy-going-bad?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3191348/recession-risk-inflation-energy-crisis-britains-economy-going-bad?utm_source=rss_feed Mon, 05 Sep 2022 17:30:21 +0000 There is a well-known market adage that, when the United States sneezes, the world catches a cold. The same could be said about the impact Germany has on its European partners. If the German economy is in trouble, Europe feels the fallout. The Ukraine war and the global energy crisis are stacking up a pile of problems for Germany, and Europe as a whole. The economy is slowing, headline inflation is rising and the spectre of recession is looming large. With no prospect of Russia’s invasion of... https://www.scmp.com/comment/opinion/article/3190513/energy-crisis-ukraine-war-could-leave-germany-and-rest-europe?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3190513/energy-crisis-ukraine-war-could-leave-germany-and-rest-europe?utm_source=rss_feed Mon, 29 Aug 2022 19:30:26 +0000 Is the Federal Reserve easing its grip on US monetary policy? After the release last week of the minutes of the Fed’s July 26-27 policy meeting, there is a growing sense the US central bank will back off from a more aggressive interest rate tightening in the next few months. Instead, it may be favouring a more gradual approach while it tries to rationalise the conflicting policy signals between the US recession, the spike in inflation and global supply-side price pressures beyond its control. US... https://www.scmp.com/comment/opinion/united-states/article/3189709/federal-reserve-backing-interest-rate-overkill?utm_source=rss_feed https://www.scmp.com/comment/opinion/united-states/article/3189709/federal-reserve-backing-interest-rate-overkill?utm_source=rss_feed Mon, 22 Aug 2022 16:30:21 +0000 With heightened geopolitical tensions in Europe, should China consider diversifying its currency risks away from the euro? The euro has already tested parity against the US dollar in recent weeks, and the big question is how much lower it might go as the odds stack up against it. The war in Ukraine, global energy crisis and the risk of another European credit event could easily sink the euro back to its historic low versus the dollar if sentiment flounders again. But Beijing is stuck for choice... https://www.scmp.com/comment/opinion/article/3188890/euro-no-safe-haven-china-seeks-reduce-its-dependence-us-dollar?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3188890/euro-no-safe-haven-china-seeks-reduce-its-dependence-us-dollar?utm_source=rss_feed Mon, 15 Aug 2022 17:30:18 +0000 When is a US recession not a recession? Certainly not when the US economy is in the thick of a very dynamic jobs boom. After two successive quarters of negative growth in the first half of the year, the US economy has entered a technical recession. Meanwhile, the US labour market is racing away with the jobless rate close to a 50-year low and inflation alarm bells sounding. We have entered the realm of bizarro economics, and it’s no surprise that investors are confused about whether the outlook... https://www.scmp.com/comment/opinion/article/3188099/us-recession-or-not-federal-reserve-caught-between-rock-and-hard?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3188099/us-recession-or-not-federal-reserve-caught-between-rock-and-hard?utm_source=rss_feed Mon, 08 Aug 2022 16:30:20 +0000 Who would blame anyone for thinking that Europe is finished? Russian President Vladimir Putin might have achieved his aim to crack European unity, with the economy suffering on a number of fronts. The war in Ukraine, the energy crisis and political turmoil in Italy are throwing the European Union into chaos and it’s no surprise that the euro is in deep trouble. The recent test below parity for the euro against the US dollar is the least of its problems and could mark the first step towards the... https://www.scmp.com/comment/opinion/article/3186443/ukraine-war-energy-crisis-and-italys-political-turmoil-call-euros?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3186443/ukraine-war-energy-crisis-and-italys-political-turmoil-call-euros?utm_source=rss_feed Mon, 25 Jul 2022 19:30:23 +0000 Who would have thought the world could receive so many blows as the global economy struggles to recover from the Covid-19 catastrophe? But having suffered a succession of further shocks from the global supply chain shortage, the Ukraine war, the inflation crisis and tighter monetary conditions, it’s no wonder pessimists think we could be heading into another slump. The global economy is running ragged right now. The last thing it needs is another potent shock, just at the point when the recovery... https://www.scmp.com/comment/opinion/article/3184012/why-us-and-european-central-banks-could-be-source-next-global?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3184012/why-us-and-european-central-banks-could-be-source-next-global?utm_source=rss_feed Mon, 04 Jul 2022 14:00:12 +0000 There are glimmers of hope that an end to the US-China trade war is in sight. At least officials in Washington and Beijing seem to be talking again and it could be a precursor to a much needed easing of trade tensions between the two countries. A resolution is long overdue and it could pave the way for better relations and stronger bilateral trade flows. With global economic confidence on the back foot, it’s the moment when the world’s biggest powers could heal their differences and put the... https://www.scmp.com/comment/opinion/article/3182332/us-china-trade-truce-needed-lift-global-economic-gloom?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3182332/us-china-trade-truce-needed-lift-global-economic-gloom?utm_source=rss_feed Mon, 20 Jun 2022 05:15:12 +0000 Storm clouds have been gathering for quite a while, headwinds continue to build and global economic confidence is being badly buffeted. The hangover effects from the Covid-19 pandemic and the fallout from the war in Ukraine have taken their toll on global recovery prospects, and it’s no wonder fears about an imminent recession are rising. It’s early days, but there are signs of light at the end of the tunnel. Global manufacturing surveys are still operating in positive territory and, despite... https://www.scmp.com/comment/opinion/article/3181466/recession-fears-are-growing-global-growth-outlook-isnt-all-bad?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3181466/recession-fears-are-growing-global-growth-outlook-isnt-all-bad?utm_source=rss_feed Mon, 13 Jun 2022 05:30:12 +0000 What happens next for China’s monetary policy as the outlook for global growth continues to soften? Has Beijing reached the end of the road on monetary easing or is another interest rate cut on the cards? While China’s economy needs as much support as possible to keep the government’s 2022 growth target of 5.5 per cent within reach, another interest rate cut may be risking too much for China’s currency when global monetary conditions are already tightening. Beijing can’t afford to jeopardise the... https://www.scmp.com/comment/opinion/article/3180545/fiscal-spending-better-tool-monetary-easing-boost-chinas-economic?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3180545/fiscal-spending-better-tool-monetary-easing-boost-chinas-economic?utm_source=rss_feed Mon, 06 Jun 2022 06:34:23 +0000