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Overseas Investment Seen Rebounding as U.S. Firms Repatriate Less Profits

Corporate overseas investment will likely rebound this year as U.S. companies repatriate less profits, but will nonetheless continue to be weak by precrisis standards in the face of a darkening economic outlook and uncertainties about trade rules, the United Nations said Monday. The U.N. Conference on Trade and Development said global business investment flows fell sharply in 2018, to $1.2 trillion from $1.47 trillion in 2017. But it said most of that decline was due to U.S. companies sending profits back home in response to changes in the country’s tax ...

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Is China wise to bank on consumer spending to drive economic growth?

China has a grand plan to rebalance its economy by reducing its dependence on state-led investment and exports in favour of increased consumer spending. But after disappointing retail sales figures in recent months and a sharp rise in household debt, questions are being asked about the feasibility of Beijing’s ambitions. According to the National Bureau of Statistics, in the first 11 months of 2018, retail sales – a measure of consumer spending that also includes government purchases – rose 9.1 per cent year on year to 34.5 trillion yuan (US$5.09 ...

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China has ample room for macro policy support – statistics bureau chief

China has ample room for macro policy support, Ning Jizhe, head of the National Bureau of Statistics said on Monday, after the world’s second-largest economy grew at the slowest pace since the global financial crisis in the fourth quarter of 2018. China has confidence and the capacity to achieve reasonable growth this year, Ning said, adding that the slowing economy has shown some signs of stabilization over the past two months. Ning said that while the China-U.S. trade war has affected China’s economy the impact on growth is manageable. China’s ...

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US-China Trade War: Gloomy Exports Give Beijing 3 Reasons To Worry

The dramatic and sharp contraction of China’s exports and imports last month has not only confirmed the downward trend of the Chinese economy, but also further raised the risks to its growth prospects amid the uncertainty over a possible full-blown trade war. China’s export growth in US dollar terms tumbled 4.4 per cent year on year in December, from 3.9 per cent growth in November and 14.3 per cent the month before. Meanwhile, imports fell 7.6 per cent from 2.9 per cent growth in November and 20.3 per cent in ...

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Data dependent? Five questions for the ECB

The European Central Bank holds its first meeting of the year on Thursday as concern grows about weak economic growth at home and risks abroad from global trade tensions and Brexit. Having ended its stimulus scheme in December, ECB chief Mario Draghi is likely to be pressed on how the central bank will address further economic weakness. Here are some of the key questions on the radar for markets. 1. Will the ECB change its assessment of the risks facing the economy? A string of disappointing data, notably from powerhouse ...

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Globalism is dead. Long live globalization

Though belief in globalism – a top-down conspiracy to impose an international system that trumps national sovereignty – may be dead, globalization is alive and well. An effective and resilient international order, comprising strong nation-states, thus remains essential. Will global cooperation finally emerge from the doldrums in 2019? The international community’s recent agreement on a “rulebook” for implementing the Paris climate agreement seems to offer some hope. But opinion polls suggest that many remain concerned that a global economic recession or major geopolitical crisis will test the international system’s resilience. ...

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U.S. economy may face trouble if ‘sideways’ Treasury trade doesn’t end

Don’t be lulled into complacency by a newfound calm in Treasury markets. That’s the warning from Jim Vogel of FTN Financial, who wrote in a Thursday note that if the current “sideways” trading takes hold in government bond trading for too long, that placidity could serve as a more troublesome sign of the economy’s prospects. That’s because if the bond market spends an extended period at the current level of quiescence, it suggests that the usual bounceback in growth after the first quarter of the year may not pan out, ...

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ECB rate hike to be delayed as recession risks rise again – Reuters poll

The European Central Bank is expected to wait until the fourth quarter to raise its deposit rate, later than thought just a month ago, according to economists in a Reuters poll, who also said the chances of a euro zone recession have grown. Reuters polls since June 2018 have predicted that after ending its asset-purchase programme in December, the ECB would follow with a rate rise in the third quarter of 2019, in line with the ECB’s guidance. But a barrage of weak data – including news that Europe’s top ...

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In The ‘Opt-In’ Data Economy, Consumer Confidence Is Key

Know thy customer. It’s a golden rule of business because the better a company understands its target audience, the better they can sell to them, serve them and win their loyalty for life. Today, businesses are getting to know their customers with unprecedented depth, thanks to the constantly flowing river of data that springs from every move they make in the digitally connected world. The last decade was like the Wild West of big data gathering and analysis, as every consumer-facing company joined the gold rush to absorb the minutiae ...

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Central Banks Struggle With Policy Settings

The eurozone’s economic slowdown has taken European Central Bank officials by surprise, potentially disrupting their plans to lift short-term interest rates this year. The shift underlines the difficulties central banks face getting back to growth rates and policy settings that were considered normal before the global financial crisis. In June, the ECB appeared to be on course to end its bond-buying stimulus program at the end of 2018 and follow that with a first rise in its key interest rate some time this year. Right now, it charges banks 0.4% ...

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There’s Not Enough Debt in the World

It may be a cliché, but it’s true that the world’s awash in debt. In its quarterly update, the Institute of International Finance said on Tuesday that the world’s debt pile is hovering near a record at $244 trillion, which is more than three times the size of the global economy. Scary numbers, to be sure, but they didn’t stop one of the world’s most indebted and politically unstable countries from selling more than $11 billion of bonds without breaking a sweat. As proof, Italy was set to price 10 ...

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Where is the world economy heading?

The world economy muddled through 2018 amid harrowing uncertainties caused by rising protectionism, a gradual tightening of global financial conditions and mounting trade tensions among major economies. Where is it heading in 2019? Despite persistent complexities, the global economy is expected to continue its expansion with certainty, but at a slower pace, said Chen Fengying, former director of the World Economy Institute at the China Institutes of Contemporary International Relations, speaking at a press salon held by the All-China Journalists Association on Tuesday. Continued, but slower growth Chen said that ...

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Insight from Shanghai: Waking up from the Chinese dream

There have been better starts to the New Year. The December Caixin Manufacturing PMI, a survey of Chinese manufacturing activity, contracted for the first time in 17 months. Soon after, reports began to emerge that China’s growth target will be lower than that set for 2018. Apple, once the world’s most valuable company, sent shock waves across financial markets. It revised down its earnings for the end of 2018 citing an economic slowdown in China that was significantly greater than they had anticipated due to weak demand and the impact ...

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China slowdown, trade disputes with US weigh heavily on Asian economies

The latest run of weaker Chinese economic data means “things have to get worse before they get better,” according to economists at Bank of America Merrill Lynch. The potential drag on the rest of the region, especially through the trade channel, will likely materialise soon, the economists led by Hong Kong-based Helen Qiao wrote in a report. Indeed, in small open economies export weakness has already curbed growth in domestic demand, especially in manufacturing, they wrote. One example of that was on display in data this week that showed Singapore’s ...

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Fears of excessive debt drive more countries to cut down their Belt and Road investments

Some countries are scaling down or scrapping entire projects that are part of China’s Belt and Road Initiative amid mounting financial concerns over the continent-spanning venture. In recent months, developing nations such as Pakistan, Malaysia, Myanmar, Bangladesh and Sierra Leone have either canceled or backed away from previously negotiated BRI commitments, citing worries over high project costs and their impact on national debt and the economy. That revised stance not only confirms global fears over the terms of BRI financing, it could also indicate that developing countries are now more ...

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