The Economist - 1 октября 2022

Год выпуска: октябрь 2022

Автор: The Economist Newspaper and The Economist Group

Жанр: Экономика/Политика

Издательство: «The Economist Newspaper Ltd»

Формат: PDF (журнал на английском языке)

Качество: OCR

Количество страниц: 76

• Liz Truss’s new government may already be dead in the water: leader, page 11.
• The chancellor’s budget has spooked markets, page 28.
• How Britons dislike growth, page 30.

Making sense of Xi Jinping

• China’s enigmatic ruler poses a threat at home and abroad: leader, page 12.
• What shapes the thinking of the most powerful Chinese leader since Mao: briefing, page 18.
• The example of Prohibition in America should worry China’s rulers: Chaguan, page 50.

The global rate shock

• Markets are reeling from higher interest rates: leader, page 13.
• What the shock means for the world economy, page 61.
• The impact of simultaneous rate rises may be bigger than anticipated, page 62.
• How governments underwrite the entire economy, page 63.
• A reckoning looms for corporatedebt monsters, page 53.

Nuclear threats in Ukraine

• Phoney polls do not make Ukrainian land Russian, whatever Vladimir Putin says: leader, page 13.
• Russia stages four fake referendums in occupied Ukraine, page 23.
• Six decades after the Cuban missile crisis, the world is again worried about nuclear war, page 51.

The world this week Politics

• Italy’s nationalist right triumphed at a general election. An alliance of three parties headed by Giorgia Meloni’s Brothers of Italy won a solid majority in both houses of parliament. Ms Meloni is all but certain to become Italy’s first female prime minister. Though her party has neofascist roots, she has tried to present a reassuring face to voters. She promises not to ban abortion or gay civil partnerships, and to stick broadly with Italy’s economic reform plans as agreed with the European Commission in Brussels. The markets seemed relaxed about her victory.
• Russia staged sham referendums in four partly occupied provinces of Ukraine. Residents were asked, sometimes at gunpoint, whether they wanted their land to be annexed by Russia. The Kremlin’s local puppets announced that nearly everyone voted Yes. If Vladimir Putin formally annexes the provinces, he could then claim that Ukrainian troops defending their own country are on “Russian” soil. Ukraine dismissed Mr Putin’s theatrics and vowed to keep fighting. Ukrainian forces were reportedly close to surrounding the occupied town of Lyman, a supply hub.
• Russian men desperate not be sent to fight and die in Ukraine fled from Russia. Hundreds of thousands have left so far. The Kremlin has not yet banned the exodus, but security officers were posted at some border crossings to serve call-up papers to fugitives. Protests against the draft erupted all over Russia, fuelled by revelations that new recruits were being asked to bring their own supplies. At least 20 recruiting centres were attacked.
• Explosions caused leaks from two underwater gas pipelines linking Russia and Germany, Nord Stream 1 and 2. The supply of Russian gas to Europe was unaffected, since Mr Putin had already halted deliveries via Nord Stream 1 and Nord Stream 2 had never won permission to operate. Russian media blamed sabotage by America or Ukraine. Others suspect the Kremlin was behind it, perhaps in the hope of frightening Europeans into reducing their support for Ukraine.
• Japan held a state funeral for Abe Shinzo, a former prime minister who was assassinated by a lone gunman in July. The funeral divided Japan. Though Abe was a giant on the world stage, he was not universally liked at home. Many Japanese were angry at the cost of the funeral, and at links between the ruling Liberal Democratic Party, to which Abe belonged, and the Unification Church, a religious group that some describe as a cult, to which his killer attributed his anger.
• Pakistan replaced its finance minister as inflation soared, driven by fuel and energy prices and a weak currency. The new man, Ishaq Dar, has held the job three times before. He promised to control prices and cut interest rates.

Storm watch

• Hurricane Ian bore down on western Florida. More than 2m households lost power as surges of water caused flooding. Ian had earlier hit Cuba, knocking out electricity across the entire island. It came a week after Hurricane Fiona crossed the Caribbean. In Puerto Rico an estimated 244,000 people are still without power. Fiona’s remnants battered Canada’s Atlantic provinces and eastern Quebec, causing widespread damage.
• The imf predicted that Guyana’s economy would grow by 57.8% this year. The discovery of oil in 2015 has enriched the small South American country, which borders Venezuela. The imf thinks that oil production will double this year.
• Days before voting starts, polls indicated that Luiz Inacio Lula da Silva, a leftist former president, will win Brazil’s presidential election. Some polls suggest he could defeat the incumbent, Jair Bolsonaro, a right-wing populist, in the first round on October 2nd.
• Protests continued in dozens of towns across Iran, following the death in police custody of Mahsa Amini, a young woman accused by morality police of being improperly dressed. Women sick of pious strictures joined men fed up with being ruled by corrupt theocrats. The authorities said at least 41 people had died; human-rights groups said the true figure was at least twice as high. Ebrahim Raisi, the ultra-conservative president, said that Ms Ahmini’s death was “tragic”, but indicated that he would not tolerate further unrest.
• King Salman of Saudi Arabia, mindful of his frail health at the age of 86, appointed his son, Crown Prince Muhammad, already the country’s de facto ruler, to be prime minister, a post previously held by the monarch. He also made another son, Prince Khaled, minister of defence.
• The International Criminal Court in The Hague started hearing a case against Maha-mat Said Abdel Kani, who is accused of war crimes and crimes against humanity in the Central African Republic. Mr Kani, who pleaded not guilty, is alleged to have been a leader of the Seleka, a mainly Muslim militant group that toppled the government and seized power in 2013.
• Niger stopped the transit of fuel shipments to Mali, apart from those going to a un peacekeeping mission. The fuel embargo adds pressure on Mali, which is growing increasingly isolated in the region since its government was overthrown by army officers in two coups. The junta has angered its neighbours by steadfastly refusing to hand power to civilians and, more recently, by detaining soldiers from Ivory Coast who were supporting the un mission.
• The American Senate broke an impasse to approve a bill that will temporarily fund the government and keep it running past the end of the fiscal year. Trying to avoid a government shutdown has become an annual game of brinkmanship between Democrats and Republicans.

A separation of powers

• Mitch McConnell, the Republicans’ leader in the Senate, endorsed a bill that would change the rules for counting electoral votes in Congress after a presidential election. The bill aims to prevent events like the protests of January 6th 2021, when supporters of Donald Trump stormed the Capitol. It would clarify that the vice-president’s role in the count is ceremonial, a response to Mr Trump’s demand that Mike Pence overturn the voters’ wishes.
• Hong Kong ended its covid-19 quarantine policy for arriving international travellers, which had been in place for two and a half years. Testing and monitoring measures still apply. The city’s business leaders want other restrictions lifted, too. Some fear that Hong Kong, Asia’s main financial centre, will be eclipsed by Singapore.

The world this week Business

• Markets took fright at the British government’s announcement of huge tax cuts. The cuts, laid out by Kwasi Kwarteng, the new chancellor of the exchequer, include reductions to payroll taxes, income taxes and stamp duty. Investors were perturbed by the amount of borrowing required to pay for the cuts, the biggest for half a century. Mr Kwarteng had disregarded common practice by not asking the Office for Budget Responsibility, an independent watchdog, for its assessment. The Treasury tried to reassure markets by announcing that he would unveil a medium-term fiscal plan, but not until November 23rd.

An omnishambles

• “The markets will react as they will,” said Mr Kwarteng after producing his tax cuts. The pound was hammered, dropping briefly to its lowest level on record against the dollar. It also fell sharply against other currencies. The cost of British government debt soared; the yield on ten-year bonds rose to 4.3%, up by one percentage point over a week. Banks withdrew hundreds of mortgage products because of the uncertainty. Citing a “material risk” to Britain’s financial stability, the Bank of England intervened. It said it would buy long-term government bonds for 13 days on whatever scale is necessary “to restore orderly market conditions”.
• The rout in British gilts was the most dramatic element of a wider sell-off in government bonds. Yields have been rising as the Federal Reserve talks tough on inflation. The yield on the us ten-year Treasury bond touched 4% before falling back. Stockmarkets also had a rollercoaster week. The s&p 500 fell to its lowest level in nearly two years and the Dow Jones Industrial Average entered bear territory when it reached 20% below its peak in January.
• The imf urged Britain to reevaluate the tax cuts. It said it was monitoring the situation and was “engaged with the authorities”, statements it would normally make when a developing economy faces a sudden crisis. The fund said it would not recommend introducing a “large and untargeted” fiscal package, “given elevated inflation pressures”.
• Sterling is not the only currency to have tumbled against the dollar this year. The euro and the yen have also fallen. The Chinese yuan dropped this week to a near 14-year low, threatening to break its trading range around the dollar, despite interventions by China’s central bank. The Indian rupee sank to a new low.
• The World Bank forecast that China’s economy will expand by just 2.8% this year, in part because of the country’s stringent covid lockdowns. The bank projected that average growth in the rest of East and South-East Asia would outpace that of China for the first time.
• House prices in America rose by 15.8% in July, year on year, according to the s&p CoreLogic Case-Shiller Index. In June prices rose by 18.1%. The decline of 2.3 percentage points in the growth rate was the largest ever for the index. With interest rates on the rise, mortgage finance has become more expensive, which could see home prices continue to cool.

Electric milestones

• America’s Department of Transportation approved plans to develop infrastructure for electric vehicles in all 50 states, and build a network of charging points covering 75,000 miles (120,700km) of highway across the country. Meanwhile Hertz struck a deal with bp’s ev charging business to build a network of stations for its rental cars. Hertz is aiming for 25% of its fleet to be electric by the end of 2024.
• Porsche made its stockmarket debut on the Frankfurt exchange. Volkswagen priced the stock at €82.50 ($79.80) a share, the top end of the price range it had laid out. The ipo is the biggest in Europe for a decade, making Porsche one of the largest carmakers worldwide by market value.
• A pre-trial hearing was held on Elon Musk’s decision to withdraw his takeover offer for Twitter. The hearing deliberated over which documents will be allowed as evidence. Twitter’s lawyers said Mr Musk had not provided them with any research backing his claim that the platform hosts more fake and spam user accounts than it acknowledges, which is the thrust of Mr Musk’s case for ditching the deal. The trial starts on October 17th.
• Unilever announced that Alan Jope will retire as chief executive at the end of 2023. Mr Jope’s tenure saw much upheaval at the consumer-goods giant, which ended its Anglo-Dutch dual structure and based its single headquarters in London. Earlier this year it abandoned plans to buy GlaxoSmithKline’s consumer healthcare business. Mr Jope believes that brands “without a purpose” have no future at Unilever. The company’s purpose-driven approach was lambasted in January by Terry Smith, an investor, who said that "repeating corporate gobbledegook is not a solution” to improving performance.

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