The Economist - 8 March 2025

Год выпуска: March 2025

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: 86

The revised economic outlook

• Donald Trump's economic delusions are already hurting America: leader, page 11, and analysis, page 67.
• The impact on America's carmakers, page 61.
• Lessons from the 1930s: Free exchange, page 73.

Can Winston Starmer pull it off?

• Britain's prime minister has found new purpose abroad. He must become radical at home, too: leader, page 12, and analysis, page 53.
• Labour may be about to waste its best chance of economic success, page 55.

Germany rearms

• The incoming chancellor acts boldly: leader, page 14.
• Europe is coming to terms with the fact that only it can now help Ukraine, page 47, and Charlemagne, page 51.

Time to lift Syria’s sanctions

• Giving its Islamist new president relief seems mad, until you consider the alternative: leader, page 16, and, page 19.
• Syria's economy is on its knees, page 21.

RIP foreign aid

• Help to poor countries is ending in a brutal, chaotic way. What should come next? Leader, page 13.
• The impact in Africa, page 43, and Asia, page 36.
• Why development spending is unable to produce economic growth, page 69.

The world this week Politics

• European leaders frantically tried to repair relations between Donald Trump and Volodymyr Zelensky following a very public bust-up at a meeting in the White House, which led to America suspending military aid and intelligence-sharing with Ukraine. During a big speech to Congress, Mr Trump mentioned an “important letter” that he had received from the Ukrainian president that talked of working together to achieve peace with Russia, which Mr Trump said he appreciated. In a socialmedia post Mr Zelensky admitted that the White House meeting did not turn out as intended, and offered to suspend long-range drone attacks, if Russia does the same.

Conflict solutions

• European leaders and Canada held an emergency summit after that now infamous encounter in the Oval Office, to discuss a plan, led by Britain and France, to stop the fighting in Ukraine. The European Commission later proposed the creation of a €150bn ($162bn) fund for EU countries to spend on defence. Emmanuel Macron suggested European allies could also be protected by French nuclear weapons and called another summit.
• In Germany Friedrich Merz, the probable next chancellor, announced plans to loosen the country’s constitutional “debt brake”, which curtails government borrowing, and proposed that defence spending be exempt from the debt limits. In reaction, the yield soared on the German government’s ten-year bonds, pushing up its borrowing costs in the market.
• In his big speech to Congress Mr Trump defended the whirlwind policies of his first six weeks in office. “We are just getting started,” he said. A few days earlier the president signed an executive order making English the official language of the United States for the first time, although federal agencies can still continue to provide documents in other languages.
• The Supreme Court rejected Mr Trump’s emergency request to freeze $2bn in foreign aid. The court will be busy over the next few years hearing legal challenges to the president’s many orders and decrees.
• The Kurdistan Workers’ Party (PKK) said it would laydown its arms after a 40-year conflict with Turkey. The PKK, which is designated as a terrorist group in Turkey, made the announcement following calls from its imprisoned leader, Abdullah Ocalan, for a ceasefire. The Turkish government gave the news a cautious welcome.
• Austria’s new government was sworn in, six months after an election. Christian Stocker of the conservative People’s Party becomes chancellor heading a coalition that also includes the centre-left Social Democrats and the liberal Neos party. Despite gaining the most votes at the election, the right-wing, pro-Russian Freedom Party was shut out of power after its attempt to form a government failed.
• The government of Thailand defended its decision to send 40 Uyghurs it had held back to China. The Uyghurs are a Muslim ethnic group who face repression in China’s Xinjiang region. The deportations have been criticised by many countries, including America, but Thailand’s defence minister claimed the Uyghurs had returned voluntarily.
• Separately, 100 criminals were arrested in Thailand for tricking people into working in scam centres across the border in Cambodia. There has been a crackdown across South-East Asia in recent weeks against such centres, which lure people online with promises of job offers, only for them to end up in slave-like captivity.
• At least 18 people were killed in a suicide-attack on a security facility in north-west Pakistan. The Pakistani Taliban are active in the area. Meanwhile, Pakistani security forces arrested Mohammad Sharifullah, a commander in the local chapter of Islamic State, who was allegedly behind a bombing that killed 13 American troops during America’s withdrawal from Afghanistan in 2021.

Harbouring intentions

• A consortium led by Black-Rock, an investment company, agreed to acquire CK Hutchison’s majority stake in Panama Ports. Hong-Kong based Hutchison has a contract to run the Balboa and Cristobal ports at either end of the Panama Canal until 2047. Following his visit to Panama in February, Marco Rubio, America’s secretary of state, warned that its ownership of the shipping hubs was “unacceptable”, suggesting it amounted to Chinese control of the canal, and that America would take action if the status quo was maintained.
• The American Treasury revoked a licence that allowed Chevron to export oil from Venezuela. It has given the company a tight deadline of April 3rd to wind down its operations. The decision is expected to hit the Venezuelan economy hard. Chevron’s joint ventures with the state-controlled PDVSA represent about a quarter of the country’s entire oil output and its dollar earnings. The regime of Nicolas Maduro, which stole last year’s presidential election, condemned the decision.
• Germany joined Britain in restricting aid to Rwanda over the conflict in the eastern Democratic Republic of the Congo, which is evolving into a wider regional war. M23, a militia backed by Rwanda, continued its advance south of Lake Kivu as more troops from neighbouring Uganda and Burundi entered the fray. Thousands of people have been killed and more than half a million have been displaced by the fighting since January.
• The security forces in South Sudan arrested the petroleum minister, the deputy army chief and other officials allied with Riek Machar, the country’s senior vice-president. The arrests came as troops surrounded Mr Machar’s house and followed an attack on an army base by a group loyal to Mr Machar, raising concerns about the stability of a peace deal. The agreement in 2018 ended a bloody civil war in which Mr Machar and Salva Kiir, the president, led opposing parties.
• Donald Trump demanded that Hamas release its remaining hostages, threatening that “it is over for you ” if the terrorist group does not comply. It emerged that America has been negotiating with Hamas, marking a shift in long-standing American policy not to hold direct talks with terrorists. Israel cut off aid to Gaza to put more pressure on Hamas. Meanwhile, Arab leaders endorsed a proposal put forward by Egypt for the reconstruction of Gaza, a riposte to Mr Trump’s plan, which involves the relocation of the territory’s population. The Arab proposal did not lay out the details of who would govern Gaza, how to secure the territory or the future of Hamas.

The world this week Business

• Donald Trump carried out his threat to impose tariffs of 25% on most goods imported to the United States from Canada and Mexico (he gave the car industry a one-month reprieve). He also increased the tariffs America imposes on Chinese exports from 10% to 20%, which are in addition to US trade duties that China is already subjected to. The American president warned that he would soon also introduce “reciprocal tariffs” on any country with “unfair” trade imbalances. Canada’s prime minister, Justin Trudeau, said the tariffs were “a dumb thing” and imposed retaliatory levies on a range of American products, including peanut butter. China also applied counter-measures and Mexico said it would react soon.

GDP deflator

• Mr Trump says his tariffs policy will bring only “a little disturbance” to the American economy. Markets think otherwise. The S&P500 and NASDAQ Composite fell sharply and are back to where they were when Mr Trump was elected, wiping-out their gains since November. The Stoxx Europe 600 and German DAX also fell heavily. Various companies, including Target, warned that the tariffs would lead to higher costs and hurt profits. Meanwhile, some economists weighed the risk of recession from the trade war.
• Mr Trump suggested that TSMC, based in Taiwan and a global powerhouse in chipmaking, would avoid tariffs, after it decided to invest an extra $ioobn in America and open three new factories in addition to the one that is set to start full production this year. TSMC describes it as the single largest foreign direct-investment ever in America. Mr Trump used the announcement to call forditching Joe Biden’s CHIPS Act, arguing that the subsidies it provides are a “horrible, horrible thing”.
• Anthropic, the startup behind the Claude generative artificial-intelligence models, raised $3-5bn in its latest round of fund-raising, tripling its valuation to $61.5bn. Anthropic is backed by Amazon and Google as well as venture capitalists. It recently released Claude 3.7 Sonnet, which it describes as the “first hybrid reasoning model on the market”, allowing users to choose when it should answer normally and when it should “think” longer before answering.
• A federal judge rejected Elon Musk’s request for a preliminary injunction to stop OpenAl’s attempt to change its status from non-profit to for-profit, but said she would fast-track his case this year. Mr Musk was one of the startup’s founders but has been feuding with it for years over what he claims is a shift away from its original intention to work for the good of humanity.
• Apple reportedly started a legal challenge in Britain to the government’s order to create a back-door for British intelligence to its encrypted cloud services. The company recently withdrew its Advanced Data Protection tool for the iCloud from the British market rather than accede to that order.
• Donald Trump has likened the British request to access private data of Apple users to the practices of the Chinese state.
• Microsoft is shutting down Skype, the video-calling service that it bought in 2011. Skype came to market in 2003 and was a pioneer in enabling video chats across the globe, but it has since been eclipsed by smartphones, Google Meet, Zoom and the like.
• Oil prices tumbled to three-year lows, as markets speculated that Mr Trump’s trade war would hurt the global economy. Another factor was the unexpected decision by OPEC+ to proceed with a plan to raise output in April. The cartel had hitherto placed curbs on production to boost prices. Its announcement maybe designed to pre-empt another clash with Donald Trump, who wants to see a big drop in the commodity’s price.
• The new chairman of the Federal Communications Commission, Brendan Carr, sent a letter to Verizon warning it about its promotion of diversity, inclusion and equity practices, linking it to a veiled threat about Verizon’s “pending transactions” at the FCC. The telecoms giant is seeking regulatory approval for its takeover of Frontier Communications. Mr Carr’s letter drew a sharp rebuke from a fellow commissioner at the FCC. Geoffrey Starks said it set a “dangerous precedent” that could “chill investment”.

A fro thy market

• Mixue’s share price soared by 43% on its first day of trading on the Hong Kong stock exchange. The Chinese company sells flavoured teas and soft-serve ice-cream and is the best known purveyor of bubble tea, a milky brew containing chewy tapioca balls. Its growth over the past few years has been phenomenal. Mixue now has over 45,000 franchised stores across Asia and Australia, more than McDonald’s or Starbucks have worldwide.

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