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Omicron dashes China’s hopes of winter Olympics boosting economy – National Post

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The investment was expected to bring long-term benefits to the region. Ticketing revenue was estimated at the time to reach $118 million, which is unlikely to be recovered now.

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(Bloomberg) — China’s Winter Olympics may be more of a drag on Beijing’s regional economy than a boost, as virus flare-ups and pollution curbs weigh on consumer and industrial activity.

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A ban on public spectators means there won’t be the usual bump up in tourism and consumption that a city hopes to gain from hosting the international games. Tighter controls to contain the outbreaks of two virus variants are keeping holidaymakers away. And restrictions on polluting industries to ensure there are clear skies over the capital during the games means steel plants are curbing output.

“The Winter Olympics will affect industrial production and infrastructure construction in the first quarter,” said Lu Ting, chief China economist at Nomura Holdings Inc. “It won’t boost consumption either because of virus outbreaks.”

Beijing is battling a growing cluster of coronavirus infections, which rose to 96 cases since mid-January. It’s the last thing authorities want in the face of a world event, especially with its resolution to maintain a Covid Zero strategy.

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The outbreak prompted authorities to decide not to sell Olympics tickets to the general public but only allow certain invited spectators to watch the game. Athletes and staff, on the other hand, will be moving within a vast bubble of transportation, accommodation and venues.

The games, which are jointly held in Beijing and the adjacent city of Zhangjiakou in Hebei province, will run from Feb. 4 to 20. The Winter Paralympics will follow from March 3 to 13.

To contain the recent flare-up, the city has put in place more stringent virus control measures, such as requiring residents who buy anti-fever medicine to get Covid tests and increasing the testing of inbound travelers.

Eric Zhu, a China economist at Bloomberg Economics, said Beijing is likely to keep restrictions largely in place through the first quarter, given the Winter Paralympics and the annual national legislative sessions scheduled in March. That will continue to dent the already-struggling tourism and service sectors, he wrote in a report.

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In addition, cities around Beijing have curbed the output of industries like steel, in order to improve air quality in the capital. That’s after the Ministry of Ecology and Environment expanded the annual winter campaign to improve air quality to over 60 cities this year from the 28 cities previously.

Each of these cities, spanning from the eastern province of Shandong to the central province of Shanxi, have targets to meet in terms of the level of PM2.5 particles in the air and the number of clear air days.

“I expect some mild disruptions to industrial production from factory closures ahead of Winter Olympics, but the overall impact to growth may be temporary and limited,” said Liu Peiqian, China economist at NatWest Group Plc.

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The positive effects of the games may only be evident over the longer term. It could help China achieve its ambitious target of making sports into a 5 trillion yuan ($786 billion) industry by 2025, a 70% increase from 2019 levels. Authorities say they’ve already more than met their target of involving 300 million Chinese in skiing, hockey and other cold-weather pastimes.

“Similar to Tokyo’s Summer Games, the timing of global sport events are less than ideal due to the pandemic,” said Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group Ltd. “However, such an event is seen to spark a ‘white economy’ meaning that more people will be interested in winter sports domestically. That’s the long term benefit to the economy.”

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China had estimated in 2014 the Winter Olympics and the Paralympics would cost $1.56 billion in operational spending, according to a report from the International Olympic Committee. The city budgeted for capital investment of $1.51 billion, with 65% funded by the private sector and 35% by various levels of government.

The investment was expected to bring long-term benefits to the region. Ticketing revenue was estimated at the time to reach $118 million, which is unlikely to be recovered now.

The economic drag of the games will likely be temporary and probably won’t result in any significant impact on China’s first-half growth, Nomura’s Lu said.

“Unfortunately it won’t drive consumption demand this time because of the pandemic,” he said. “Overall, there is some short-term impact, but don’t exaggerate the impact on the first half and full year.”

©2022 Bloomberg L.P.

Bloomberg.com

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Charting the Global Economy: Factories Slow Down From US to Asia – BNN

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(Bloomberg) — Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast.

Manufacturing from the US to Asia is very much in a slowdown as factories continue to struggle with supply snarls, labor shortages and elevated materials costs.

A measure of US manufacturing activity weakened in June to a two-year low, and several regional Federal Reserve surveys indicated business activity shrank. Factory purchasing managers’ gauges across Asia eased, with South Korea, Thailand and India among those showing the biggest declines, according to S&P Global.

Similar indexes in Poland, Spain and Italy also showed weaker activity compared to May.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

US

Consumer spending fell in May for the first time this year and prior months were revised lower, suggesting an economy on somewhat weaker footing than previously thought amid rapid inflation and Fed interest-rate hikes.

Regional Fed manufacturing surveys have taken on a grimmer tone, with four of five indicating business activity shrank in June. Separately, a measure of overall manufacturing slid to a two-year low as new orders contracted, restrained by lingering supply constraints and some softening in demand.

The pandemic housing boom is careening to a halt as the fastest-rising mortgage rates in at least half a century upend affordability for homebuyers, catching many sellers wrong-footed with prices that are too high.

Europe

Confidence in the euro-area economy slipped as households become more pessimistic amid fears a Russian energy cutoff will spark a recession. At the same time, they’re less worried about inflation than they were a month ago, though there’s a split between core and peripheral euro-area countries.

After suffering from unprecedented shocks in recent years, the UK is succumbing to more intractable problems marked by plodding growth, surging inflation and a series of damaging strikes.

Asia

China’s economy showed some improvement in June as Covid restrictions were gradually eased, although the recovery remains muted. That’s the outlook based on Bloomberg’s aggregate index of eight early indicators for this month. The overall gauge returned to the neutral level after deteriorating for two straight months.

Japan’s factory output shrank at the fastest pace since the height of the pandemic as the lagged impact of China’s virus lockdowns continued to disrupt supply chains and economic activity in the region. The weakness in manufacturing extended across Asia, particularly in South Korea, Thailand, India and Taiwan.

Emerging Markets

Colombia’s central bank delivered its biggest interest rate increase in over two decades. Policy makers are bracing for another spike in annual inflation that’s already above 9%. 

Two years after Argentina emerged from its latest default, a debt crisis in brewing once again. This time, the immediate trouble is in the local bond market, where creditors have become reluctant to roll over maturing government bonds.

Zambia’s inflation rate dropped below 10% for the first time in almost three years in June, bucking a global trend of record consumer-price growth. Optimism over the nation’s economy since the election of Hakainde Hichilema as president in August, a potential debt restructuring and a $1.4 billion bailout package from the International Monetary Fund has seen a rally in the local currency, which has helped contain prices.

World

Differences in underlying inflation trends call for different policy outlooks among the world’s top central banks, according to Bloomberg Economics. The Fed will have to go well into restrictive territory, the Bank of England may go a little above neutral and the European Central Bank might not even get that far.

©2022 Bloomberg L.P.

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Quarterly Investment Guide 3Q 2022: US economy on shaky ground – CNBC

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Minister Of The Economy Franz Fayot On Luxembourg’s Transition Towards A Green Economy – Forbes

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Just last week, Luxembourg’s Minister of the Economy, Franz Fayot, came to the cities of Toronto and Montreal as part of an economic mission organized by the Luxembourg Chamber of Commerce in close cooperation with the Ministry of the Economy. I had the opportunity to sit down with Minister Fayot at the InterContinental Toronto Centre, and get some insights into the Grand-Duchy’s economic transition towards sustainability.

A transitioning economy

With up to one-third of its GDP related to the finance sector, Luxembourg’s economy is widely dominated by the financial sector. However, the past 20 years have been characterized by a push for economic diversification, and increased transparency and regulations following the financial crisis, said Minister Fayot.

“What we are trying to do is diversify [the economy] even more into new sectors to make us less dependent on the financial sector and adaptable to new circumstances,” he said. “We are also more and more developing a green finance sustainable finance sector, which is doing very well.”

A green state responsibility

Minister Fayot, whose guiding principles are a strong welfare state and sustainability, firmly believes that the government must assume its pivotal role in shifting the economy towards sustainability — “both in terms of environmental sustainability, but also social sustainability,” he added.

In June 2020, an international consultation was launched to gather strategic spatial planning project ideas considering the climate-related challenges and social issues, and support for the country’s ecological transition towards a zero-carbon territory by 2050.

“We need to understand that we have to help businesses innovate, and invest in the future,” said Minister Fayot.

A rising startup ecosystem

Luxembourg has seen a steady growth in startups over the past decade.

Earlier this year, the Ministry of the Economy launched a strategic initiative aimed at providing a thorough understanding of the startup ecosystem based on data analysis and interviews with key stakeholders.

Luxinnovation, the national innovation agency, identified over 500 active startups offering innovative digital and data-driven solutions in its latest mapping.

These assessments will also provide relevant comparisons with international markets, and aim to identify the necessary next steps for development opportunities in the upcoming years.

“Our innovation agency is there to guide startups, but also other more established businesses, to get access to grants,” explained Minister Fayot. “We have a state aid framework in Europe which we have to comply with, but the main message is that there is an obvious need to co-finance innovation, particularly in times when we are in this transition towards a more green economy.”

Going above the limits of territory

Surrounded by Belgium, France and Germany, Luxembourg is one of the smallest countries in the world — slightly smaller than Rhode Island. Yet, despite its dependence on its neighboring countries’ energy supplies, it is making continuous efforts to increase its share of renewable energy by also investing in projects across its borders, said Minister Fayot.

“We don’t have that much sun in Luxembourg, and we don’t have an unlimited space to build wind power,” he said. “It’s a bit of a limiting factor, but it shouldn’t excuse anything.”

“We are investing a lot into energy efficiency,” he added. “We are trying to get people to e-mobility and pushing for geothermal heating and energy in new constructions.”

A growing space sector

Luxembourg might not be the first to come to mind when we think of space, but, the country owns one of the world-leading satellite operators, and is increasing its investment into space resources.

“The SpaceResources.lu is an initiative that we launched about six years ago, and it is very much focused on the space resources segment of the space industry,” he said. “We are not launching anything in space out of Luxembourg, but focusing on services like space traffic management.”

As part of the economic mission, a group of space companies participated in a distinctive program set up by the Luxembourg Space Agency in collaboration with the Canadian Space Agency. This included on-site company visits, workshops and B2B opportunities that led to the signing of a Memorandum of Understanding between the two national space agencies.

Stephanie Ricci contributed to this story.

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