globalEDGE Blog - Page 112

Global interest rates currently span a wide range; from Switzerland, at a negative 0.75%, to Belarus at 28.5%. Overall, 45% of the world’s central banks lowered their rates in the last year, 29% increased their rates, and the remaining 26% left their rates unchanged. Central banks are often nationalized institutions that are usually independent from the government, but whose privileges are established and protected by law.

On the brink of recession, the small, trade-dependent country of Singapore is on track to log its slowest growth rate since 2009. Government analysts expect this year’s growth rate to be between 1 and 2 percent. This grinding halt in economic growth caused the shutdown of an estimated 42,000 businesses in the first six months of 2016. In comparison, 2015 saw the shutdown of only 49,000 businesses.

At the turn of the century in 1800, only 2% of the world’s population lived in cities. Today that percentage is nearly 54%, meaning a majority of the world’s population lives in cities and urban areas. This rapid urbanization, a significant portion of which has occurred in the last 50 years, has created a unique set of challenges and opportunities unlike anything mankind has ever faced.

Medical breakthroughs have sparked the rise of the robotics industry in the arena of medicine. Through technological advancements, robots have been gaining popularity. There are various types of robots, some are made for personal assistance or social use, but they have seen the most significant growth and evolution in industrial automation. Companies in China have been on the rise to implement the use of robotics in the medical industry to develop new products and to meet consumer demands in order to keep up with medical advancements.

While globalization itself is not reversing, according to the Financial Times, it has “definitely lost its dynamism”. In September, trade was interrupted between Asia and the U.S. after South Korean shipping line, Hanjin, filed for bankruptcy. As a result, the company left several dozen of its cargo ships at sea. While it is not being noticed by most people, trade is no longer rising across the globe. Statisticians in the Netherlands found that the volume of global trade was flat in the first quarter, then fell by 0.8% in the second quarter. The total value of U.S. exports and imports fell by over $200 billion last year. So far this year, the amount of trade has fallen by an additional $470 billion. There are a variety of opinions on why the amount of global trade has fallen, but the International Monetary Fund concluded that is it due to the synchronized economic slowdown in both advanced and emerging markets.

The United Kingdom's High Court has ruled that in order for the British government to trigger Article 50, it must receive approval from Parliament. In late June, the U.K. voted in a referendum 52% to 48% to leave the European Union, but does this ruling have the potential to discredit more than 30 million voters?

Valeant Pharmaceuticals International Inc., a corporation based in Quebec, is currently in talks to sell Salix Pharmaceuticals Ltd., a company that manufactures gastrointestinal drugs. Valeant originally acquired Salix in March 2015 for $14.5 billion. The purchase was part of a growth strategy of buying pharmaceutical businesses with reputable products and cutting their research costs to maximize profits. However, Valeant lost much stock value over the past year due to unethical business activities, including price hikes, unreliable accounting, and secret collusion. Recently, the company undertook major efforts to change its leadership, settle its legal suits, pay off its debts, and re-establish growth. Selling Salix could be instrumental to these plans; just this week, news of the potential sale increased Valeant's stock by 34%. While prospective clients have been mostly kept anonymous, Japan's Takeda Phamaceutical Co. Ltd. has expressed public interest.

In 2016 much of the world’s focus has been on turmoil in the Middle East, the rise of populist governments in the western world, and Brexit. While all of these massive movements have been taking place, one of the biggest economic stories of last year seems to be on the back burner for now, the Greek debt crisis. It wasn’t so long ago that Grexit was a much more real possibility than Brexit. With the overleveraging of almost every aspect of the Greek economy and the rise of a socialist government, many were worried that Greece would be the first southern European domino to fall in a rush of indebted countries leaving the European Union. Although things are quieter in Greece for now, things are still unsteady, and it is not definitive whether Greece will experience an economic resurgence or fall further.

Through October, the Eurozone’s economy grew at the fastest pace of the year. The rally in in United Kingdom government bonds and a higher chance of inflation has caused 10 year government bonds in the UK to now yield more than double the levels they did in August. Due to the interconnected global bond markets, the yields in Eurozone bonds rose as a result. The raise eased pressure on the European Central Bank, whose quantitative easing program prevents it from buying any debt that yields under the deposit rate of -0.4 percent.

The Trans-Pacific Partnership (TPP) is a major trade deal meant to strengthen economic ties among its twelve member nations (United States, Japan, Vietnam, Malaysia, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Peru, and Chile). If the TPP were to pass in every country involved in the trade deal, it would give the countries with smaller economies the opportunity to grow at a rapid pace. This trade deal would eliminate tariffs between the member nations. Countries with cheap manufacturing labor like Malaysia and Vietnam would benefit immensely from being able to export to the massive consumer markets in the United States and Canada without any tariffs being imposed. Many of the smaller countries are looking to see if the United States will ratify the TPP.  Singapore’s Prime Minister has said that America must ratify the Trans-Pacific Partnership to show it is serious about doing business in the Asian-Pacific market. Currently, it seems unlikely that the TPP will be ratified by the US Congress during Barack Obama’s presidency and both of the major US presidential candidates oppose the TPP in its current form.