It is no secret that China is the largest and one of the fastest growing economies in the world. Its enormous population and low labor rates are the reason thousands of American and European businesses have expanded operations or moved production to China. However, recent reports show that foreign companies in China are experiencing some speed bumps.
globalEDGE Blog - Page 158
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At a recent G20 finance ministers’ meeting, the main topic of conversation was economic growth and policies to implement. The OECD was in attendance, and expressed the need for countries to focus on policies that won’t just establish economic growth, but that will foster global recovery. The desire for economic growth needs to be coupled with a focus on combating growing inequality around the world.
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As foreign investors realize China is becoming more expensive for manufacturing, they are turning their eyes to countries in Southeast Asia. Vietnam, for example, saw its foreign direct investment (FDI) grow 60% year over year in the fourth quarter of 2014. A large proportion of the FDI has gone to the high-tech industry. While people are expecting the technology boom to continue into the future, Vietnam is preparing a series of regulations for the technology industry, which may slow down the growth of IT business in the country.
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The aphorism “you can catch more flies with honey than with vinegar” is now being internalized by the financial world. In a league of their own, activist investors are taking great measures to rebrand themselves as “engagement” funds. Typically, this designation is reserved for an individual or group that purchases a significant stake of a publicly traded company and tries to implement major changes within said company’s business model.
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McKinsey & Company, an international consulting firm, has released a report containing information on the debt of over 47 different countries. The numbers show that total global debt has increased by $57 trillion since the 2007 financial crisis, making current global debt a record high of $199 trillion. Debt is now 286 percent of global economic output, a 17 percent increase from what it was during the financial crisis. These figures expose weaknesses and trends present in all markets and countries, and also imply that many of these economies might be headed on rocky roads toward bankruptcy or severe crisis, affecting the economy on a global level. Here is a closer look.
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A new report estimates that Africa is losing $60 billion each year from illegal outflows of capital. The Illicit Financial Flows report was released by a panel run by the United Nations and the African Union, and it delves into the sources of the fraudulent activity and offers solutions to remedy this ongoing problem. Because of these illegal outflows, Africa is missing out on valuable tax revenue as well as development opportunities.
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Ask and you shall receive. The Greek population decided it was time for a change in government and just last week, Greece elected and swore in its new prime minister, Alexis Tsipras. The prime minister represents a leftist party and reflects the desire of the Greek people for reform just years after a major bailout. Tsipras ran his campaign based on the issue of renegotiating the ensuing debt that citizens have blamed for large increases in unemployment and a recession.
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January was the first time in 6 months that the MSCI Emerging Markets Index outpaced the S&P 500 as it gained 0.6%. Investors sent $18 billion into emerging market stocks and bonds, after an outflow of $11 billion in December. Analysts note that low commodity prices allow for quick growth in these emerging economies. As emerging markets go through reforms in order to stabilize their currencies or stimulate growth in their economies, investors see this as an opportunity to obtain higher returns.
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Recently, Hershey blocked Cadbury's products from being imported to the United States by reaching a settlement with Let’s Buy British Imports, or L.B.B. These agreements forced L.B.B. to stop exporting Cadbury chocolates made overseas to the United States.
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An increase in the national sales tax sent Japan into a recession in the middle half of 2014, but increased exports have Japan poised for growth in the New Year. Japanese exports grew 13% in December from a year prior, while imports only increased 2% over the same period. This growth in exports reduced Japan’s trade deficit, which was at its highest level since data became available in 1979.