MarketLine Blog

Posts tagged to Economy

Namibia: NEEEF is not the solution. New policy would be bad for the economy

MarketLine

NEEEF is not the policy the Namibian economy requires at present. Businesses, however big or small, would be required to be at least 25% owned by people described as ‘disadvantaged persons’ and occupy half of board and management positions. The suggested legislation appears to be an effort towards what amounts to forced redistribution of wealth and has similarities with the land redistribution attempted in Zimbabwe. Ownership is not the only target: spending and investment would be subject to new controls too. Problems regarding implementation are legion. Given approximately 40% of… Read more

Spring Budget 2017: Budget statement to address Brexit effect and to impact business rates

MarketLine

The economic forecasts released by the UK government before and after the referendum, are astounding in how much they have changed: from an optimistic positive outlook quoted by George Osborn, to a more bleak negative picture for the next five years. Uncertainty playing a major part has led to the outcome of more borrowing for the UK government in order to cover the worst case scenario of lower valued tax receipts in the future. With the Spring statement being the first and last one this April (there will only be… Read more

Gig Employment: Not a smooth ride

MarketLine

The number of individuals defined as self-employed is growing aided by the latest trend of gig-employment. These self-employed individuals serve to increase competition between those seeking full time employment and those who prefer to work contract to contract. A recent change in the mindset of the gig-employment workers has caused a shift in working patterns with these workers now beginning to seek out full time employee status and the benefits which accompany this. Businesses which previously exploited these gig workers (e.g. Deliveroo and Uber) are now under scrutiny and face… Read more

Chinese Foreign Direct Investment Liberalization

MarketLine

Reducing the number of markets foreign investors are prevented from entering – down to 62 from 93 – marks a useful step in the right direction and should encourage investment into China, reducing the gap to the outflow. Investors should become more comfortable with China given the proposed new rules, but there is much to be done and reasons for pessimism. The proposals appear to be hobbled by caution and need to go much further to create a lasting impact. More worryingly, the problems that the changes aim to tackle… Read more

Donald Trump: Incoming president likely to create bigger mess than his hair

MarketLine

Donald Trump’s policy detail is rather thin, but based on multiple and contradictory things he has said on the campaign trail, shrinking of the state via both reduced tax income and federal spending while promising to build a border wall and renovate infrastructure, protectionist stances on international trade agreements while promising a Brexit Britain a comprehensive deal, an expansion of dirty industries at the expense of environmental regulation, and undermined central bank independence. Donald Trump’s election to the Oval Office was considered one of the most divisive and bitter elections… Read more

Trump’s win is good news for US economy

MarketLine

Donald Trump’s whole mantra during his campaign (as evidenced by his rather natty headwear) has been to ‘Make America Great Again.’ In order to do this, he knows he must make the US competitive on the global stage. He has pledged to reduce taxes heavily for low and middle income Americans and also to make sure that the wealthy (including corporations) do not pay too much as that undermines jobs. This should help boost the currently questionable level of job creation and to increase spending power, which should in turn… Read more

An inconvenient truth about the euro area

MarketLine

The creation of the euro area was a mistake. Top ranks of business and political classes in Europe were expecting an explosion in trade and economic activity following the creation of the single currency area in 2002. The euro would lubricate the integration of the newly formed euro area. It would be possible to achieve higher levels of growth and long-term prosperity. Unfortunately, the real GDP of the euro area increased only by 1.8% per year between 2001 and 2006 and by merely 0.2% per year within the 2007 -2015… Read more

EU before Brexit – looking underneath the headlines

MarketLine

Data from eurostat puts the number of unemployment in the Euro area at 16 million in 2016, close to 10% of its population aged between 18 and 74 years of age. This is equivalent to the entire population of the Netherlands or 8 times the population of Paris. Clearly, the number of Europeans struggling on a daily basis is much higher than the official figure coming from the eurostat. This is because any person that works at least one hour per week is considered to be employed. The failure to consistently reduce… Read more

UK Economy – held back by euro area Treaty

MarketLine

The Maastricht Treaty has been slowly asphyxiating any possibility of sustained economic recovery in Britain. It has been partially responsible for the erratic recovery of manufacturing, production and construction industries. The Gross Domestic Product (GDP) of Britain peaked back at pre-crisis level in the second quarter of 2013 driven mainly by the growth of the services industry. This industry is 13 per cent larger in value compared to 2009 (figure below). Production, construction and manufacturing industries are on average 7% smaller than their pre-crisis levels. The majority of UK industries… Read more

Brexit – Taking a positive approach

MarketLine

Should the British citizen choose to leave the EU structures, the whole process will take place gradually as per Article 50 of the Lisbon Treaty. Over the next two years parties will have to reach agreements on the conditions for the exit, otherwise the UK would return to the default position, when it comes to trade with the EU, as defined by the rules of the WTO The possible savings of not having to contribute towards EU structures for 2016 are expected to reach about £9.6bn (about $14.7bn). This amount… Read more

Negative Interest rates: Desperate times, desperate measures

MarketLine

Central banks across the developed world have taken to Negative Interest Rate Policies (NIRP) in a radical attempt to stimulate demand- the idea being that those sitting on assets will be penalized in an attempt to either lend the capital or spend it. The UK’s Monetary Policy Committee (MPC) has not ruled out the idea, but Japan, the European Central Bank, Denmark, Sweden and Switzerland have enacted NIRP already for a variety of reasons; Japan and the ECB in last ditch efforts to stimulate demand, Denmark, Sweden and Switzerland in… Read more

British Economy – structurally damaged?

MarketLine

Large-scale lending has become a key component for the economic growth of Britain’s economy since the 1980s. It has aimed to incentivise British consumers to permanently increase their borrowing rates and consumption. This practice has boosted the profitability of the British financial system by an unimaginable scale. It has generated a permanent stream of cash flowing from consumers to the banking system based on the acquisition of mortgages and consumer credit to purchase durable and nondurable goods. It has also helped households to navigate through a prolonged period of house… Read more

Gas and Electricity in Great Britain – Competitive market illusion

MarketLine

A nationalized energy industry had operated in the United Kingdom for more than 40 years but it was gradually reformed with the introduction of market liberalization in the 1980s. Market liberalization was followed by a large-scale industry privatization fully completed in 1998. The competition injected in the industry through these reforms has been concentrated on generation and supply of gas and electricity. However, evidence from the Office of Gas and Electricity market (Ofgem), the body responsible for the regulation of the system, shows that the market is far from competitive…. Read more

Volkswagen: Diesel duping scandal

MarketLine

Car manufacturing giant, Volkswagen, has admitted that approximately 11 million vehicles worldwide are effected by the recent scandal involving the rigging of car emissions test results. The discovery was initially made public by the Environmental Protection Agency (EPA) in the US which led to the US government ordering the recall of around 500,000 vehicles. This then led to the admission from Volkswagen that this issue is far more widespread and not limited to the US, but is a global issue. Volkswagen is now in a state of panic and is… Read more

A new dynamism for major European economies

MarketLine

The expansion of household debt in Europe in the 1980s, 1990s and 2000s was unprecedented by historical standards and the economic growth of European countries has become partially dependent on it. The numbers from the Bank of International Settlements (BIS) and Marketline analysis reveal that the outstanding credit from the banking system to European households increased more than 170%, in nominal values, from US$4tn in 1995 to more than US$ 11tn by the end of the 2000s. In the UK alone, household debt is running at US$2.4tn which represents an… Read more

Keep calm and take advantage. Deflation, good for the consumer, not so good for business

MarketLine

On Tuesday, May 19, 2015, it was announced by the Office for National Statistics (ONS) that the UK had fallen into deflation for the first time since 1960. The Consumer Price Index (CPI) fell by 0.1% in the year to April 2015, compared to no change (0.0%) in the year to March 2015. According to the ONS, this is the first time the CPI has recorded a decline over a year since official records began in 1996, and is the first instance of deflation when using comparative data since 1960…. Read more

Mapping Global Innovation

MarketLine

Technological innovation, often regarded as ‘the great growling engine of change’, has long been synonymous with powering economic development. Equally, through necessity, industrial growth helps to drive innovation and the creation of new technologies. Thus in theory at least, both economic and technological growth feed off each other to sustain and accelerate development. Yet in recent years the opposite has been the case; the global economy has gone through the pains of a financial crisis at a time when patent applications, which are a reasonably good measure of the level… Read more

Menswear – Industry Analysis

MarketLine

Introduction Clothing is an essential item, with consumer choice being influenced by factors such as fashion and a desire to signal social status. Demand patterns are susceptible to branding and advertising, which, despite the lack of significant switching costs, tends to weaken buyer power. Industry figures The global menswear market had total revenues of $423.2bn in 2013, representing a compound annual growth rate (CAGR) of 4.8% between 2009 and 2013. The Asia-Pacific and Middle East and African markets showed particularly strong growth, in comparison to Europe over this period, with… Read more

Childrenswear – Industry Analysis

MarketLine

Introduction: The performance of the childrenswear market has been considerably more resilient than that of both the womenswear and menswear markets during the difficult economic climate. Children quickly outgrow clothes and therefore the purchase of new children’s clothing is a necessity, whereas adults can delay the purchase of new clothes for themselves. Industry figures: The global childrenswear market had total revenues of $216.2bn in 2013, representing a compound annual growth rate (CAGR) of 5.5% between 2009 and 2013. The Asia-Pacific and Middle East and African markets showed particularly strong growth,… Read more

Turkey: An uncertain investment opportunity

MarketLine

There is an old Chinese curse that says: ‘may you live in interesting times.’ Some would argue that the whole world is experiencing such times as a result of the financial crisis and political upheaval across the Middle East in particular. Yet no country is in the midst of a political and financial watershed like Turkey. Once known as the sick-man of Europe, Turkey has experienced a decade of unprecedented economic growth that has paved the road for greater ambitions. It currently boasts a youthful population with a well trained… Read more

US government shutdown could cost as much as $300m a day

MarketLine

At midnight on the night of September 30th/October 1st, the US government entered a partial shutdown following a disagreement between rival parties over how it should be funded over the next year. Early estimates indicate the shutdown could cost as much as $300m a day. The first shutdown in 17 years came as the Republican-led House of Representatives insisted on delaying President Barack Obama’s healthcare reform, known colloquially as Obamacare, as a condition for passing the budgetary bill. It means that several government departments have had to shut down completely,… Read more

Merkel celebrates election win, seeks grand coalition

MarketLine

Bundeskanzlerin Angela Merkel and her Christlich Demokratische Union Deutschlands party (CDU) are celebrating an astounding election win that saw them narrowly miss out on securing an absolute majority. Angela Merkel herself described the result, which saw the CDU and its sister party the CSU (Christlich-Soziale Union in Bayern) increase their combined share of the vote by 8%, as “superb”. It was a more chastening result for the Freie Demokratische Partei (FDP) and Chairman Philipp Rösler has resigned following an outcome which means that the junior coalition partner will be without… Read more

Spain: Behind the glitz and glamor lies a sad tale of economic woe

MarketLine

If you spent this past weekend glued to the TV, you would be forgiven for thinking that Spain is a country with no worries and awash with cash. As Spanish trio Jorge Lorenzo, Marc Marquez, and Dani Pedrosa were racing round Silverstone on motorbikes that cost around €5m ($6.4m), Real Madrid were proudly announcing the €100m ($128.5m) purchase of the world’s most expensive footballer, Gareth Bale, taking their summer spending to an estimated €163.5m ($210.1m). However, behind the glitz and glamor of elite level sport lies a sad tale of… Read more

Less scope for free market economics

MarketLine

The Prudential Regulation Authority was created to be an arm of the Bank of England and to promote the safety and the soundness of individual banks, building societies, credit unions, insurers and major investment firms. Ultimately, PRA will keep a very close eye on financial institutions to ensure that the bank bailouts of the last few years won’t happen again. The authority set up a 3% leverage ratio threshold, which forces banks and building societies to have at least £3 of own capital to support £100 of lending. Interestingly, after… Read more

Bundestagswahl 2013: Angela Merkel looks set to retain position as Chancellor

MarketLine

On the 22nd September 2013, Europe’s largest economic power, Germany, goes to the polls to determine the 598 members of the Bundestag, the main federal legislative house of Germany. If early indications are anything to go by, current Bundeskanzlerin (Chancellor) Angela Merkel will remain in place as head of government. Polls from five leading survey companies (Allensbach, Emnid, FG Wahlen, Forsa, and Infratest) place the Christlich Demokratische Union Deutschlands’ (CDU) share of the vote at between 39% and 42%, as compared to 22%-25% for Peer Steinbrück’s Sozialdemokratische Partei Deutschlands (SPD)…. Read more

Egyptian economy suffers after prolonged political uncertainty and instability

MarketLine

Hosni Mubarak being thrown out of power by a people hell bent on determining its own political future might have had a positive emancipative effect, but, wholly in terms of Egypt’s economy, the event was most definitely a negative one. First, the original revolution in 2011 took immediate negative effect on the Egyptian economy. GDP slumped as events in Tahrir Square and the fight for control of the country obviously diverted attention and effort from economic production: output fell nearly 4% in the first quarter of 2011, and it took… Read more