Economics

Saudi megafund’s success rests on fuzzy local bets

5 Nov 2024

The kingdom’s $950 bln Public Investment Fund is best known for outlandish construction schemes and flashy foreign forays. But its biggest and fastest-growing division houses young domestic firms. While some may thrive, it’s less clear they can guarantee the vital pivot from oil.

Making sense of China’s big economic reboot

5 Nov 2024

Officials have taken dramatic steps to boost confidence and growth in the world’s second-largest economy. In this episode of The Big View podcast, Arthur Kroeber, head of research at Gavekal, explains why he sees the People’s Republic turning into a high-tech, low-growth country.

China consumer is epitome of delayed gratification

4 Nov 2024

Beijing says it wants to boost consumption’s 53% share of GDP as investment-led growth fades. Yet central planning is hard to square with free-spirited spending. Rebalancing without a period of stagnation is not easy. Recent policies also suggest the old model is hard to ditch.

Saudi’s Davos is no longer such a desert

1 Nov 2024

Around 8,000 CEOs and financiers flocked to the Future Investment Initiative in Riyadh, twice the number at its inception in 2017. Western bosses were keener to talk about artificial intelligence than investing in the kingdom. But Saudi’s progress suggests that may yet change.

Companies bear brunt of Britain’s fiscal trade-off

30 Oct 2024

New finance minister Rachel Reeves raised 40 bln pounds through higher levies, mostly on employers, to fund public services like health. She also changed debt rules to borrow more. It’s a bet that fiscal rectitude will help revive growth. But the ailing UK has few other options.

China is reshaping, not choking, private business

30 Oct 2024

Tech giants and property developers have tumbled, while party support lifted electric carmaker BYD and solar powerhouse Longi. A blurred line between state-backed and private firms does not preclude innovation or competition in the $18 trln economy. Disdain for market forces can.

Voters and markets put left-wing leaders in a bind

29 Oct 2024

The world must reduce debt by 3.8% of GDP by 2029 – four times more than planned – the IMF says. That’s bad news for social democratic governments, which lose elections when they are fiscally tough. But if they keep running chunky budget deficits, investors will make them pay.

Many roadblocks delay journey to zero carbon world

28 Oct 2024

While solar power and battery supply have grown massively, the same is not true of electricity grids, green hydrogen and carbon removal. Money is more expensive. This means demand for oil, gas and coal has not yet peaked. The setback will cost the planet dearly.

Election throws Japan into turbulent waters

28 Oct 2024

The ruling LDP's drubbing at the polls means whichever party forms the government will have to rely on rivals. That will add pressure to boost fiscal spending and make it harder for the central bank to raise rates, slowing the country's economic transformation.

Debt rule tweak can help UK avoid moron premium

25 Oct 2024

Two years ago, former Prime Minister Liz Truss’ unfunded tax cuts sent 10-year gilt yields surging to 4.5%. Now, new Chancellor Rachel Reeves can avoid a similar debacle with small changes to the fiscal rules in next week’s Budget. With yields at 4.2%, there is no room for error.

Why stablecoins will entrench dollar’s supremacy

25 Oct 2024

A Russian plan to break the greenback’s grip met a cool reception at the BRICS summit in Kazan. The more important monetary news was Stripe’s $1 bln acquisition of digital-currency group Bridge. Dollar-pegged blockchain currency will keep Uncle Sam on top of the monetary order.

UK budget is a tightrope walk over a black hole

24 Oct 2024

Finance Minister Rachel Reeves is due to set out tax and spending pledges while hemmed in by campaign promises and economic reality - even if debt rules are tweaked. In this Viewsroom podcast, Breakingviews columnists discuss the tall task of selling it to the public and markets.

China pins stimulus on money merry-go-round

23 Oct 2024

Beijing plans to swap some of its $9 trln of local government debt into bonds with full, rather than implicit, state backing. The rejig will lower rates of interest, lengthen maturities and allow provinces to issue more debt to banks. That will juice spending for a while.

Trump stumbles onto a useful globalist policy

22 Oct 2024

The protectionist presidential candidate floated an exemption for 4.4 mln US citizens living abroad from paying some $12 bln of income tax at home. It would streamline an unwieldy patchwork system for expatriates. And if structured properly, it might even help prevent evasion.

China can help itself with a stronger stock market

22 Oct 2024

President Xi Jinping wants companies worth some $11 trln to deliver better returns. Boosting long-term value would reassure anxious savers and help bring down government debt. Taming volatility, though, will require Beijing to cede some control.

UK’s bad tax on share trading looks hard to kill

18 Oct 2024

Britain’s stamp duty on equity transactions hampers and distorts investment. Yet abolishing it probably won’t revive the fortunes of the country’s shrinking stock market. Chancellor Rachel Reeves has little cash to spare, and cheaper ways to boost domestic share ownership.

Inflation is not dead, it’s just resting

18 Oct 2024

Annual price increases are returning to the subdued 2% level targeted by many central banks. Official interest rates are falling too. Yet there’s a long history of policymakers prematurely celebrating the end of inflation. The experience of the 1970s offers a cautionary tale.

China’s growth reprieve will be short-lived

18 Oct 2024

Third quarter output slowed to 4.6% on subdued retail sales and property investment but Beijing's target pace of "around 5%" needs sustaining to achieve developed economy status by 2035. Unless policymakers move their own goalposts, they'll have to contort themselves a lot more.

Lagarde struggles to dispel market’s gloomy vibes

17 Oct 2024

The European Central Bank lowered its key interest rate to 3.25% but didn’t commit to further cuts. Markets fear a recession and expect borrowing costs to be below 2% in 12 months. President Christine Lagarde may be forced to loosen policy faster – and reassure investors of that.

Coldplay gives Hong Kong rush of blood to the head

17 Oct 2024

The UK band’s sold-out concert suggests the struggling economy’s affluent locals have plenty to spend. Yet city leader John Lee reckons policies like streamlining mortgages and IPOs will foster growth. He’d do better finding ways to help the less well off boost consumption.