economy

Tony Barber

Orient Express

I was passing through eastern Croatia the other day and found myself in Vinkovci, a pleasant town not far from the Danube river border with Serbia. As any Agatha Christie enthusiast will tell you, Vinkovci is the place in Murder on the Orient Express whereSamuel Ratchett, a shady American traveller, is bumped off while the famous train is stuck in a snowdrift. 

A house by Tacloban airport (Getty)

By Amie Tsang and Luisa Frey
The Philippines is no stranger to natural disasters. But in just a few days, it has been transformed from emerging market star – its economy grew at annual rate of 7.6 per cent in the first half of 2013, faster than China – to a “state of national calamity”.

Typhoon Haiyan will cause inevitable damage to the country’s economy, but loss of output will be dwarfed by the devastating loss of life.

The Asian Development Bank estimates that losses from typhoons and earthquakes cost the Philippines around $1.6bn each year. The World Bank estimates the annual typhoon season typically shaves 0.8 percentage points off annual GDP growth. 

(DOMINIQUE FAGET/AFP/Getty)Austerity appears to be an increasingly dirty word in Europe. The past week alone has seen European Commission President José Manuel Barroso, Bill Gross of Pimco and Italy’s new prime minister Enrico Letta calling for an easing of austerity.

Spain’s surpassing of the 6m unemployed mark on Thursday added fuel to the debate. But even in Germany, the austerity police of the eurozone, cracks are beginning to show ahead of the elections with the emergence of an anti-euro party.

a) Are there any austerians left? Yes. Here are some of them.

- UK: Chancellor George Osborne hit back at criticism over his apparent excessive austerity by claiming there is no other alternative. And after a tough week when he was criticised by the IMF over the excessive pace of his austerity programme, this week has brought better fortunes for his stance as figures showed a lower deficit and the economy expanded 0.3 per cent in the first quarter.

- Germany: Chancellor Angela Merkel’s view as articulated this week couldn’t be clearer: “I call it balancing the budget. Everyone else is using this term austerity. That makes it sound like something truly evil.” Germany is the only eurozone country with a 2012 budget surplus.

- US: The situation here is different because of sequestration, which triggered automatic spending cuts and tax rises. And the White House faces a July deadline to raise the borrowing limit or default on its debt.

- Latvia: The tiny Baltic state is emerging from a state of uber austerity – part of its bid to join the euro later this year – and it could end up being seen as a poster child for successful deficit cutting implementation, with real growth of more than 5 per cent in 2011 and 2012, despite the broader recession in Europe.

- Spain: The push by Europe’s fourth-largest economy to cut spending and raise taxes has led to record unemployment topping 6m for the first time in its recent history. The government of Mariano Rajoy announced economic reforms and structural measures on Friday.

- Italy: The technocrat government of Mario Monti has been steadfast in carrying out fiscal consolidation. All eyes will be on Mr Letta, who has already said: “Europe’s policy of austerity is no longer sufficient”.