Once Indonesia has finally got through counting the votes and has separated the two presidential candidates, it will have a new leader. That puts the nation of 250m people in good company. In Asia, in the last 18 months, countries with approaching a total of 3bn inhabitants – including China, India, Japan and South Korea – have changed their leadership. Even the Thais have a new man in charge, though he had to organise a coup to get there.
One country that has not altered its leadership is the Philippines. Benigno “Noynoy” Aquino, has been president for four years. By the standards of his perennially disappointing country of nearly 100m people, his time in office has been a roaring success. Growth has stabilized above 6 per cent, inflation is low and debt and budget deficits have been brought under firm control. The economy is even creating jobs – something it has sorely lacked for years – in the booming outsourcing sector. Call centres in the Philippines employ more people than ones in India. Ratings agencies have responded to improving macroeconomic conditions, upgrading sovereign debt to investment grade. Philippine conglomerates have started investing significant sums at home. Read more
For those expats bemoaning the cost of a burger in Geneva or rent in Tokyo, it could be worse. They could be living in Luanda.
The tight supply of international standard housing in Luanda has put the Angolan capital top of the list of the most expensive cities in the world, according to a survey by consultants Mercer of the costs of living abroad. It held the same position last year as the oil boom continues to suck in expats. Read more
It was a fateful moment in Colombia’s long and troubled history of drug-fueled violence. On July 2 1994 Andrés Escobar, captain of the national football team, was shot six times in the chest in the parking lot of a bar in Medellín.
The killing was supposedly retribution for Escobar scoring an own goal days earlier, which hastened the team’s departure from the World Cup in the US. As a historian friend says, there was always a lame excuse to kill someone in Colombia in those days. Read more
At a recent show at the British Library in London showcasing pre-Columbian gold, a Colombian diplomat noted that his countrymen were “very concerned about their image and public relations.”
Until a decade ago, Colombia was mostly associated with guerrillas and drug kingpins such as Pablo Escobar. All of that has changed.
But the country still suffers from a public relations failure at the local level. As Colombia’s image abroad continues to improve, thanks in large part to the main players in the current election campaign, the view Colombians have of their own nation is growing ever more negative, partly because of those same men. Read more
Containers sit stacked on a cargo ship berthed at Qingdao Port in Lianyungang, China
According to the latest estimates from the International Comparison Program, hosted by the World Bank, China is poised to overtake the US as the world’s largest economy later this year, toppling it from a perch it has held since 1872.
That is several years ahead of all previous estimates and reflects just how much more important the Chinese economy is now to the rest of the world. Read more
The news that Greece is returning to the markets as an issuer of sovereign-debt is symbolic of the resurgence of interest in Europe among international – and particularly US – investors. As ever there is a circular logic in play here.
Because most investors no longer fear a collapse of the euro, Greece can come back to the markets. And the sight of Greece returning to the markets will confirm the prejudices of those who argue that the crisis in the eurozone is over.
But just as international investors were, in retrospect, too panic-stricken about Europe in 2012 – I suspect they are probably too relaxed now.
Greece’s return to the markets is one striking sign of this. Another is the fact that 5-year Spanish bonds now have a lower yield than their US equivalent – despite the fact that Spain is barely growing, that its budget-deficit continues to bust EU rules, while unemployment is more than 25 per cent. Read more
Could the UK go it alone in the cut-throat world of global trade?
Iain Mansfield, the 30-year-old British diplomat awarded a €100,000 prize by the eurosceptic Institute of Economic Affairs for his plan for a British exit from the EU, certainly thinks so. At the centre of his plan is the case for the UK to go it alone in negotiating trade agreements with big players like China and the US. Read more
Imagine you are the boss of a multinational company with a long-planned meeting with an authoritarian leader of a vital trading partner. Then just before the scheduled get-together, he decides to invade one of his neighbours. What do you do?
That, roughly, was the position of Joe Kaeser, chief executive of Germany’s Siemens, as he decided to go through with a meeting with Vladimir Putin this week at the Russian president’s nineteenth century country residence on the outskirts of Moscow. Read more
Here is an addendum to our post on Friday on what might come next for trade sanctions on Russia. I spent part of the weekend playing with the data on MIT’s brilliant Observatory of Economic Complexity. It is a fabulous place for visualisations of trade data. The underlying data are a few years out of date. But the overall trend still holds true and so these interactive charts on Russia seem worth sharing given the current debate. Read more
By Gideon Rachman
In 1996 a friend of mine called Jim Rohwer published a book called Asia Rising. A few months later, Asia crashed. The financial crisis of 1997 made my colleague’s book look foolish. I thought of Jim Rohwer (who died prematurely in 2001) last week as a I listened to another Jim – Jim O’Neill, formerly of Goldman Sachs – defending his bullish views on emerging markets in a radio interview.
I had the privilege this week of listening to a lecture by Hans Rosling, professor of global health at Sweden’s Karolinska Institute. Many will have seen his engaging performances on Youtube or in Ted talks . He’s the one with the endearing Swedish accent – he says “yust” for “just” – and the animated charts that show nations as variously sized, coloured bubbles moving dramatically over time. He also uses a pointer with a little hand attached to the end.
His message is basically an optimistic one: that poor countries are rapidly converging on richer ones as their birth rates fall to sustainable levels and as their victory over preventable disease and premature death allows them to advance economically. Most of the world is now between what he calls “light bulb” and “washing machine” – in other words advancing up the lower rungs of the “middle classs”. Read more
By Gideon Rachman
Faced with a dangerous political threat, governments the world over tend to place their faith in the same magic medicine – economic growth. When world leaders try to address the roots of terrorism, for example, they instinctively assume that prosperity and jobs must be the long-term answer. And when a regional conflict threatens to get out of control – in east Asia or the Middle East – the standard political response is to call for greater economic integration. From Europe to China, governments place their faith in economic growth as the key to political and social stability.
Every year, there is debate at Davos about what is hot – and what is decidedly not. This year, the emerging markets are definitely in the second camp.
Never mind the fact that the streets of Davos are full of cheery posters proclaiming the joys of Malaysia, India or Brazil – or that Nigerian food was being served to Davos delegates at lunch (complete with snail stew.) Also ignore the determinedly upbeat messages emanating from a host of officials from the BRICs nations.
Behind the chirpy smiles, a new mood of anxiety is stalking the emerging markets delegations, amplified by the recent dramas around Argentina. And that marks a stark contrast to recent years, when the emerging markets were regarded as the new saviours of global growth – and their leaders strutted around the Davos corridors with pride. Read more
UK Chancellor George Osborne and former US Treasury Secretary Lawrence Summers have just locked horns at Davos on the UK’s economic recovery. Whilst Summers didn’t directly use the words “you blew it” as some reported, FT reporters on the ground say that was the clear sentiment.
According to the Kübler-Ross model, there are five stages of grief: Denial, anger, bargaining, depression and acceptance. Jamie Dimon still seems a long way from acceptance.
The JPMorgan Chase chairman and chief executive waded into controversy again at the World Economic Forum in Davos on Thursday by saying that the $20bn legal costs the US bank has paid for alleged wrongdoing before the financial crisis were “unfair”. Read more
FTChinese.com editor-in-chief Lifen Zhang says the focus is not just on China’s economic power but its foreign relations. He also says Chinese business remains cautious about spending its cash piles.
(c) World Economic Forum
By Martin Arnold, Banking Editor
Two of the world’s most senior bankers sought to rebuff the charges of their critics by arguing the industry had become safer since the financial crisis thanks to higher capital levels, lower leverage, reformed pay structures and a tougher regulatory scrutiny.
Douglas Flint, chairman of HSBC, said of the financial crisis: “Nobody in that room [the HSBC boardroom] ever wants to take the risk of ever being in that situation again.”
Speaking on a panel at the World Economic Forum in Davos, he added that the HSBC board was spending half to two-thirds of its time “dealing with the aftermath of the crisis”.
Antony Jenkins, chief executive of Barclays, said: “Where the system failed and where institutions failed within that was where they mis-priced risk.” Arguing that banks had increased the levels of capital they held and reduced their leverage, he added that “changes
in conduct” had also reduced the chances of the 2008 crisis being repeated. Read more
The West is forever petrified of Chinese and Indian growth that might destroy advanced economy standards of living. Politicians fuel that fear. In the UK, David Cameron, prime minister, talks repeatedly about a “global race” and the need for sacrifices so Britain can succeed in that race. His predecessor Gordon Brown used to repeat one of his favourite statistics that there were 4 million graduates a year coming out of China and India and only 250,000 in the UK.
In a panel on the world of work, business leaders with experience in working in both advanced and emerging markets had a very different story to tell. There was a huge shortage of skilled workers, they all agreed, and a surfeit of unskilled. Emerging economies education systems were not up to scratch and there was still a need for ex pats and a lot of investment in basic education in emerging markets. Read more
Here is a startling prediction from the European Commission. In the absence of comprehensive economic reforms, living standards in the eurozone, relative to the US, will be lower in 2023 than they were in the mid-1960s.
This forecast, contained in the Commission’s latest quarterly report on the euro area economy, deserves to be displayed prominently on the wall of every president and prime minister’s office in Europe.
It is a sobering prediction for two reasons. First, it contrasts starkly with the comforting tales of economic recovery and financial market stability on which Europe’s leaders are congratulating themselves in these early weeks of 2014. Second, it raises profound questions about Europe’s relative weight in the world and, in particular, about its military alliance and economic partnership with the US. Read more