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☆ The Global Turn Away From Free-Market Policies Worries Economists
▼ + stars: | 2024-04-17 | by ( Patricia Cohen | ) www.nytimes.com time to read: +1 min

Meeting outside Paris last week, top officials from France, Germany and Italy pledged to pursue a coordinated economic policy to counter stepped-up efforts by Washington and Beijing to protect their own homegrown businesses. The three European countries have joined the parade of others that are enthusiastically embracing industrial policies — the catchall term for a variety of measures like targeted subsidies, tax incentives, regulations and trade restrictions — meant to steer an economy. More than 2,500 industrial policies were introduced last year, roughly three times the number in 2019, according to a new study. And most were imposed by the richest, most advanced economies — many of which could previously be counted on to criticize such tactics. The measures are generally popular at home, but the trend is worrying some international leaders and economists who warn that such top-down economic interventions could end up slowing worldwide growth.

Locations: Paris, France, Germany, Italy, Washington, Beijing

☆ Poor Nations Are Writing a New Handbook for Getting Rich
▼ + stars: | 2024-04-02 | by ( Patricia Cohen | ) www.nytimes.com time to read: +1 min

For more than half a century, the handbook for how developing countries can grow rich hasn’t changed much: Move subsistence farmers into manufacturing jobs, and then sell what they produce to the rest of the world. The recipe — customized in varying ways by Hong Kong, Singapore, South Korea, Taiwan and China — has produced the most potent engine the world has ever known for generating economic growth. It has helped lift hundreds of millions of people out of poverty, create jobs and raise standards of living. And with that, doubts are growing about whether industrialization can still deliver the miracle growth it once did. For developing countries, which contain 85 percent of the globe’s population — 6.8 billion people — the implications are profound.

Persons: China — Organizations: Asian Tigers, Governments Locations: Hong Kong, Singapore, South Korea, Taiwan, China, Kalamazoo, Kuala Lumpur

The European Union’s upcoming ban on imports linked to deforestation has been hailed as a “gold standard” in climate policy: a meaningful step to protect the world’s forests, which help remove planet-killing greenhouse gases from the atmosphere. The law requires traders to trace the origins of a head-spinning variety of products — beef to books, chocolate and charcoal, lipstick and leather. To the European Union, the mandate, set to take effect next year, is a testament to the bloc’s role as a global leader on climate change. Developing countries have expressed outrage — with Malaysia and Indonesia among the most vocal. Together, the two nations supply 85 percent of the world’s palm oil, one of seven critical commodities covered by the European Union’s ban.

Organizations: European Union Locations: Malaysia, Indonesia

☆ Malaysia Rises as Crucial Link in Chip Supply Chain
▼ + stars: | 2024-03-13 | by ( Patricia Cohen | ) www.nytimes.com time to read: +1 min

Construction cranes still surround the brand-spanking new plant in Kulim’s industrial park in Malaysia. But inside, legions of workers hired by the Austrian tech giant AT&S are already gearing up to produce at full capacity by year’s end. The American chip giant Intel and the German corporation Infineon are each investing $7 billion. Nvidia, the world’s leading maker of chips powering artificial intelligence, is teaming up with the country’s utilities conglomerate to develop a $4.3 billion artificial intelligence cloud and supercomputer center. Texas Instruments, Ericsson, Bosch and Lam Research are all expanding in Malaysia.

Organizations: Intel, Infineon, Nvidia, Texas, Ericsson, Bosch, Lam Research Locations: Malaysia, Austrian

☆ Eurozone Inflation, at 2.6%, Continues to Ease
▼ + stars: | 2024-03-01 | by ( Patricia Cohen | More About Patricia Cohen | ) www.nytimes.com time to read: +1 min

The bank also keeps a close eye on core inflation, which strips out volatile food and energy prices. That annual figure dropped to 3.1 from 3.3 percent, but it is still significantly above the headline number. In Spain, the annual rate dropped to 2.9 percent from 3.5 percent in January. Italy and Latvia had the lowest inflation rates, below 1 percent. Bottom Line: It’s all about energy prices.

Persons: ” Carsten Brzeski Organizations: ING Locations: Central, Germany, France, Spain, Italy, Latvia, Austria, Croatia, Estonia

☆ War Has Already Hurt the Economies of Israel’s Nearest Neighbors
▼ + stars: | 2024-01-21 | by ( Patricia Cohen | ) www.nytimes.com time to read: 1 min

In the Red Sea, attacks by Iranian-backed Houthi militants on commercial ships continue to disrupt a crucial trade route and raise shipping costs. Despite the staggering death toll and wrenching misery of the violence in the Middle East, the broader economic impact so far has been mostly contained. Oil production and prices, a critical driver of worldwide economic activity and inflation, have returned to pre-crisis levels. International tourists are still flying into other countries in the Middle East like Saudi Arabia, the United Arab Emirates and Qatar. Yet for Israel’s next-door neighbors — Egypt, Lebanon and Jordan — the economic damage is already severe.

Persons: Israel’s, Jordan Organizations: Pakistan ratchets, United Arab Locations: Iranian, Lebanon, Iraq, Syria, Yemen, Iran, Pakistan, East, Saudi Arabia, United Arab Emirates, Qatar, Egypt

☆ Risk of a Wider Middle East War Threatens a ‘Fragile’ World Economy
▼ + stars: | 2023-11-01 | by ( Patricia Cohen | More About Patricia Cohen | ) www.nytimes.com time to read: +2 min

“We are in one of the most fragile junctures for the world economy.”Mr. Gill’s assessment echoes those of other analysts. Tensions between the United States and China over technology transfers and security only complicate efforts to work together on other problems like climate change, debt relief or violent regional conflicts. If the conflict stays contained, though, the ripple effects on the world economy are likely to remain limited, most analysts agree. At the moment, the United States is the world’s largest oil producer, and alternative and renewable energy sources make up a bit more of the world’s energy mix. “It’s a highly volatile, uncertain, scary situation,” said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University.

Persons: ” Mr, Gill, Mr, Jamie Dimon, JPMorgan Chase, Jerome H, Powell, ”, Jason Bordoff, Bordoff Organizations: JPMorgan, Hamas, Federal Reserve, Center, Global Energy, Columbia University Locations: Gaza, United States, China, Israel, Egypt, Syria, U.S, Europe, Iran, Persian

☆ How West Africa Can Reap More Profit From the Global Chocolate Market
▼ + stars: | 2023-09-28 | by ( Patricia Cohen | More About Patricia Cohen | ) www.nytimes.com time to read: +1 min

Fairafric, which buys beans from roughly 70 small farmers in the eastern region of Ghana, goes further, paying a premium for its organically grown beans — an additional $600 per ton above the global market price. Farmers harvest the ripe yellow pods by hand, and then crack them open with a cutlass, or thick stick. Attendance is down, the principal said, because the school has not been included in the government’s free school feeding program. Fairafric also installed a free canteen so all the factory shifts can eat breakfast, lunch or dinner on site. But “if you want to get the full benefit,” he said, “you have to go beyond just selling beans.”

Persons: Fairafric, Marmon, Halm, ” Organizations: Farmers Locations: Ghana, Budu

☆ Crisis and Bailout: The Tortuous Cycle Stalking Nations in Debt
▼ + stars: | 2023-09-18 | by ( Patricia Cohen | More About Patricia Cohen | ) www.nytimes.com time to read: +1 min

Before interest, he said, the back payments add up to 50 billion cedis, roughly $4.4 billion. “Most of the contractors are home,” Mr. Cherry said. Like many others in this West African country, the contractors have to wait in line for their money. Teacher trainees complain they are owed two months of back pay. Independent power producers that have warned of major blackouts are owed $1.58 billion.

Persons: Emmanuel Cherry, ” Mr, Cherry, Nana Akufo, Addo Organizations: Independent, International Monetary Fund Locations: Accra Children’s Park

☆ A Rush to Build Defenses in Europe, but Little Consensus on How
▼ + stars: | 2023-09-12 | by ( Patricia Cohen | More About Patricia Cohen | ) www.nytimes.com time to read: +1 min

At Saab’s sprawling combat production center in Karlskoga, Sweden, the 84-millimeter shells that can take out a battle tank in a single stroke are carefully assembled by hand. One worker stacked tagliatelle-shaped strips of explosive propellant in a tray. Outside the squat building, one of hundreds in the guarded industrial park, construction is underway on another factory. The enlargement is part of a titanic expansion in military spending that every country in Europe has undertaken since Russia invaded Ukraine 18 months ago. “Investing more in an uncoordinated manner will only marginally improve a dysfunctional status quo.”

Persons: Alfred Nobel, —, ” Organizations: Center for Strategic, International Studies Locations: Karlskoga, Sweden, Europe, Russia, Ukraine

☆ Why One Country Is Struggling to Break Away From Russian Gas
▼ + stars: | 2023-07-31 | by ( Patricia Cohen | More About Patricia Cohen | ) www.nytimes.com time to read: +1 min

In the 17 months since Moscow ordered soldiers into Ukrainian territory, countries across Europe have moved with surprising speed to reduce their longstanding dependence on cheap Russian gas. Germany, which got 55 percent of its supply from Russia before the war, now imports zero. And Italy has been steadily trimming imports, and pledges to be free of Russian natural gas by the end of this year. As long as Russia is selling gas, Austria will buy it, the chief executive of the Austrian energy company OMV Group said this month. The government’s difficulties in weaning itself off Russian gas, which it has pledged to do, have drawn complaints from critics who say Austria’s gas payments are helping to finance Moscow’s war machine.

Organizations: OMV Locations: Moscow, Europe, Germany, Russia, Poland, Bulgaria, Czech Republic, Italy, Austria, Austrian

Monday’s attack, which was carried out by drone, threw those options into doubt. An executive whose ocean transportation company operates a ship waiting to load grain at Reni said he was waiting to hear whether Monday’s attack would affect insurance premiums, which were already high. Given Russia’s withdrawal from the deal that guaranteed safe passage for commercial vessels through the Black Sea, insurance premiums are likely to be prohibitively expensive for shipowners, analysts said. But some shipowners may decide to travel to Ukrainian ports even with the elevated risk, if they receive assurances from the Turkish and Ukrainian governments, said Yoruk Isik, an analyst with the consultancy Bosphorus Observer, in Istanbul. In recent days, Russia has launched a series of aerial assaults on Odesa, a Black Sea port in Ukraine.

Persons: Reni, Yoruk Isik, Isik Organizations: Turkish, Bosphorus Observer Locations: Ukrainian, Istanbul, Russia, Ukraine

☆ The Economic Fallout From Extreme Heat Will Rise Over Time
▼ + stars: | 2023-07-18 | by ( Patricia Cohen | More About Patricia Cohen | ) www.nytimes.com time to read: +1 min

But over the longer term, the economic fallout caused by climate change is likely to be profound. Researchers have found that extreme temperatures reduce labor productivity, damage crops, raise mortality rates, disrupt global trade and dampen investment. An analysis by researchers associated with the Centre for Economic Policy Research found that in Europe, France, Italy, Spain, Romania and Germany have been most affected by climate-related disasters over the past 20 years. Such developments put added pressure on public spending, as governments are called on to replace damaged infrastructure and provide subsidies and relief. The analysis notes that tax revenues could also shrink when climate changes disrupt economic activity.

Organizations: Northern, Centre for Economic Policy Research Locations: Europe, United States, France, Italy, Spain, Romania, Germany, Central, Eastern

☆ The Ukraine War Changed This Company Forever
▼ + stars: | 2023-07-05 | by ( Patricia Cohen | ) www.nytimes.com time to read: +1 min

Yellow and orange excavators slowly danced around a maze of muddy pits, swinging giant fistfuls of dirt as a chorus line of trucks traipsed across the landscape. This 50-acre plot in Oradea, Romania, close to the border with Hungary, beat out scores of other sites in Europe to become the home of Nokian Tyres’ new 650 million-euro, or $706 million, factory. Like an industrial-minded Goldilocks, the Finnish tire company had searched for the just-right combination of real estate, transport links, labor supply and pro-business environment. Geopolitical risk “was the starting point,” said Jukka Moisio, the chief executive and president of Nokian. That was not the case before Russia invaded Ukraine on Feb. 24, 2022.

Persons: ”, Jukka Moisio Organizations: Nokian Tyres, European Union, Atlantic Treaty Organization, Nokian Locations: Oradea, Romania, Hungary, Europe, Russia, Ukraine

☆ Eurozone Inflation Slows, but Underlying Price Pressures Persist
▼ + stars: | 2023-06-30 | by ( Patricia Cohen | ) www.nytimes.com time to read: +4 min

Growth is expected to pick up, but further increases in interest rates could act as a brake on the economy. France’s annual inflation rate fell to 5.3 percent in June, from 6 percent in May. Germany, the largest economy in Europe, saw a rise in its annual inflation rate to 6.8 percent, up from 6.3 percent in May. Inflation rates in Germany are expected to resume their fall in September. After adjusting for inflation, profits were above their prepandemic level while workers’ compensation was 2 percent below the trend in the first quarter of this year.

Persons: Gita Gopinath, Christine Lagarde, ’, Giorgia, “, Lucrezia Reichlin, Riccardo Marcelli Fabiani, Price, Lagarde Organizations: International Monetary Fund, London Business School, Oxford Economics, Ukraine — Locations: Sintra , Portugal, France, Italy, Russia, Ukraine, Germany, Europe

☆ In Poorer Countries, Obesity Can Signal Financial Security
▼ + stars: | 2023-06-26 | by ( Patricia Cohen | ) www.nytimes.com time to read: +1 min

In the world’s wealthiest countries, the richer people are, the thinner they tend to be. It’s not surprising that in places where food is scarce, obesity serves as a significant marker of wealth. But what the new study points out is that in poor countries, information is also scarce. And in those situations, loan officers use whatever bits of evidence they can find to help make critical economic decisions. “Given the scarcity of readily available hard information in poor countries, wealth signals, including obesity, play a crucial role in economic interactions where individuals seek to evaluate someone’s wealth,” said Elisa Macchi, an assistant professor of economics at Brown University.

Persons: It’s, “, ”, Elisa Macchi Organizations: Economic, Brown University Locations: Uganda

☆ It’s a War-Themed Restaurant, but There Is No Need to Pretend
▼ + stars: | 2023-06-23 | by ( Patricia Cohen | ) www.nytimes.com time to read: +1 min

Sievda Kerimova had recently arrived in Lviv from Kyiv for a happier reason. She had come to meet her husband, a 26-year-old military officer who had 10 days off. Kryivka is one of several themed restaurants and gift shops operated by !FEST, a Ukrainian restaurant group. Upstairs is another one, The Most Expensive Galician Restaurant, decorated as a masonic clubhouse. Around the corner is the Lviv Coffee Mine, an enormous underground coffee house and shop where patrons can wear a miner’s helmet and dig for coffee beans and sip lattes.

Persons: Sievda Kerimova, Kerimova, Vladimir V, Putin Organizations: ! FEST, Ukrainian Insurgent Army Locations: Lviv, Kyiv, Russia, Ukrainian, Kryivka, Ukraine

☆ The U.K. moves to use frozen Russian assets to help Ukraine rebuild.
▼ + stars: | 2023-06-20 | by ( Patricia Cohen | ) www.nytimes.com time to read: +1 min

As Russia’s ruinous attacks on Ukraine mount, Britain’s government is proposing legislation that would enable it to divert frozen Russian assets to the rebuilding of Ukraine and keep sanctions in place until Moscow pays compensation to its war-torn neighbor. While governments have the power to freeze assets, the European Central Bank has privately warned Brussels that confiscating Russian funds or giving the earned interest on those accounts to Ukraine could undermine confidence in the euro and shake financial stability, according to a report in The Financial Times. Investors might be reluctant to use euros as a reserve currency if they fear their funds could be grabbed. Ukraine’s reconstruction costs are estimated to top $411 billion, according to the most recent numbers from the World Bank, the European Commission and the United Nations. The ravaged landscape of the eastern city of Bakhmut, which President Volodymyr Zelensky of Ukraine laid out at the G7 meeting, is just one sign of the damage.

Persons: Britain —, Volodymyr Zelensky, Mr, Zelensky, “ Organizations: European Central Bank, Financial Times, Investors, World Bank, European Commission, United Nations Locations: Ukraine, Moscow, Hiroshima, Japan, Britain, Russia, Brussels, Bakhmut

☆ Why It Seems Everything We Knew About the Global Economy Is No Longer True
▼ + stars: | 2023-06-18 | by ( Patricia Cohen | ) www.nytimes.com time to read: +1 min

When the world’s business and political leaders gathered in 2018 at the annual economic forum in Davos, the mood was jubilant. The global economy, declared Christine Lagarde, then the managing director of the International Monetary Fund, “is in a very sweet spot.”Five years later, the outlook has decidedly soured. “Nearly all the economic forces that powered progress and prosperity over the last three decades are fading,” the World Bank warned in a recent analysis. And inflation, thought to be safely stored away with disco album collections, returned with a vengeance. But as the dust has settled, it has suddenly seemed as if almost everything we thought we knew about the world economy was wrong.

Persons: Christine Lagarde Organizations: International Monetary Fund, World Bank Locations: Davos, Europe, United States, China

☆ Turkey’s Lira Falls to New Low as a New Economic Policy Forms
▼ + stars: | 2023-06-07 | by ( Patricia Cohen | ) www.nytimes.com time to read: +2 min

A change in the country’s economic policy could reverse what several economists argue has been an unsustainable and reckless course. The president has repeatedly flouted conventional economic wisdom by maintaining that high interest rates fuel inflation. Most economists argue the opposite: Higher interest rates makes borrowing more expensive, which slows down investment and spending and, in turn, reins in price increases. When central bankers resisted pressure to lower interest rates, Mr. Erdogan fired them. That is why the government did everything it could to protect the lira’s value before the presidential election, Mr. Tastan said.

Persons: Mr, Erdogan, Goldman Sachs, Kadri Tastan, Tastan, “, ” Organizations: German Marshall Fund Locations: Turkey, Brussels

☆ For Turkey, Erdogan Victory Brings More Risky Economic Policy
▼ + stars: | 2023-06-02 | by ( Patricia Cohen | ) www.nytimes.com time to read: +1 min

Critics of the president’s economic approach were somewhat heartened by reports that Mr. Erdogan is expected this weekend to appoint Mehmet Simsek, a former finance minister and deputy prime minister, to the cabinet. Mr. Simsek is well thought of in financial circles and has previously supported a tighter monetary policy. Mr. Barkey argues that Mr. Erdogan will have no choice but to make a U-turn on policy by winter, when energy import costs rise and some debt payments are due. Others are more skeptical that Mr. Erdogan will back down from his insistence that high interest rates fuel inflation. To deal with the large external deficit and depleted central bank reserves, Mr. Erdogan has been relying on allies like Russia, Qatar and Saudi Arabia to help bolster its reserves by depositing dollars with the central bank or extending payment deadlines and discounts for imported goods like natural gas.

Persons: Mr, Erdogan, Mehmet Simsek, Simsek, ”, Henri Barkey, Simsek’s, Barkey, Kadri Tastan, didn’t, “ Organizations: Lehigh University ., German Marshall Fund, Capital Economics Locations: Turkey, Brussels, Russia, Qatar, Saudi Arabia

☆ The ‘Peace Dividend’ Is Over in Europe. Now Come the Hard Tradeoffs.
▼ + stars: | 2023-05-03 | by ( Patricia Cohen | Liz Alderman | ) www.nytimes.com time to read: +1 min

But the crucial question of how to pay for the momentous shift in national priorities remains. In France, for instance, government spending as a percentage of the economy, at 1.4 trillion euros ($1.54 trillion), is the highest in Europe. Debates over competing priorities are playing out in other capitals across the region — even if the trade-offs are not explicitly mentioned. It was just one in a series of walkouts by public workers who complained that underfunding, double-digit inflation and the pandemic’s aftermath have crippled essential services like health care, transportation and education. Romania, which has been running up its public debt over the years, has pledged to lift military spending this year by 0.5 percent of national output.

☆ How Freeing Ukraine’s Trapped Grain Rankled Farmers Elsewhere in Europe
▼ + stars: | 2023-04-20 | by ( Patricia Cohen | ) www.nytimes.com time to read: +1 min

In Britain, food prices were up 19 percent last month from the previous year. In Spain, farmers are worried that a lack of rainfall will irreversibly damage wheat and barley production. Now, to quell the rising discord, the European Union is considering a temporary ban on grain imports to five nations. The combination of spiraling prices for consumers in one part of the world and plummeting incomes for farmers in another illustrates the maddening complexities of the global food market. But the war in Ukraine threatened to seriously worsen the crisis by reducing the country’s grain exports and driving up food and fertilizer prices.

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