The top threat in Lebanon is the country's economy, not tension between the U.S. and Iran - CBC.ca - Canada News Media
Connect with us

Economy

The top threat in Lebanon is the country's economy, not tension between the U.S. and Iran – CBC.ca

Published

on


“Now we are in a dark tunnel and we don’t know what is happening or where we are going.”

So said an old friend and driver in Beirut as Iran and the U.S. faced each other down in the immediate aftermath of the killing of Gen. Qassem Soleimani, the head of Iran’s elite Quds Force, in a U.S. drone strike in Baghdad a week ago.

He wasn’t referring to that crisis though. Lebanon has too much history perched on the edge of wider regional conflicts to be too rattled by fears of another.

He was talking about Lebanon’s economic and financial crisis, the worst since civil war ravaged the country between 1975 and 1990.

The Lebanese pound has depreciated by more than 30 per cent against the U.S. dollar since September.

And capital controls imposed by the banks are drastically limiting how much money people can withdraw, leaving many struggling to pay rent and put food on the table.

Ask people on the streets here about “the situation” and that’s what they think you’re talking about.

The roundabout leading to Hadi Nasrallah Boulevard in south Beirut, where posters of Iranian general Qassem Soleimani went up immediately after he was killed by a U.S. drone strike in Iraq. (Stephanie Jenzer/CBC)

“The most dangerous thing in Lebanon is economic collapse,” said Makram Rabah, a political analyst, historian and lecturer at the American University of Beirut.

Lebanon has been without a government since the end of October, when protests against corruption and mismanagement forced the resignation of Prime Minister Saad al-Hariri.

The Sunni leader of the Future party, whose father, Rafik Hariri, was assassinated in 2005, is allied with Western nations and the Gulf states.

Sarah Ayoub, a 21-year-old student, says she isn’t confident the protests that ousted Lebanon’s prime minister have solved the country’s corruption problems. (Stephanie Jenzer/CBC)

“They’re acting so selfish — all of them,” said 21-year-old student Sarah Ayoub, referring to the political elite she demonstrated against.

The protests were remarkable in that they crossed the sectarian lines that tend to define Lebanese politics, drawing demonstrators from the Sunni, Christian, Druze and Shia communities. They were united in their opposition to what they see as rampant cronyism, nepotism and influence peddling. 

“We have to change the system and the laws so that there’s less favouritism,” Ayoub said. “And if we’re all equal in that matter, without someone having an advantage because of who they know, then something will improve.”

An anti-government protester shouts slogans during a protest against the ruling elite over corruption and mismanagement, in downtown Beirut last month. (Hussein Malla/The Associated Press)

Rabah focuses the blame on Iran and its Lebanese acolyte, Hezbollah, the Shia paramilitary group and powerful political party that exerts considerable sway in Lebanon.

“Iran has hijacked these states from within, which has exposed their economies,” he said, referring also to Iraq, where anti-corruption protests were fuelled in part by anger over Iranian meddling in the country’s affairs.

Iran has funded militias inside Iraq. It has also helped arm and fund Hezbollah in Lebanon, boosting its power.

Before his death, Soleimani was accused of ordering a deadly crackdown on the protests in Baghdad.

“Soleimani is someone who was spreading chaos and destruction in the region,” said Rabah. “I do not support any kind of assassination, but at the end of the day, he got what he deserved in the sense that you live by the sword, you die by the sword.”

Historian and political analyst Makram Rabah says the top concern in Lebanon isn’t the tension and violence between the U.S. and Iran in the region, it’s the risk of economic collapse. (Stephanie Jenzer/CBC)

But in south Beirut, Hezbollah heartland, there are huge billboards bearing Soleimani’s image hanging from freeway overpasses and on the sides of apartment buildings, sharing the streets with pictures of Iran’s ayatollahs.

“[Soleimani] is a loss because he has been fighting against terrorism and ISIS in Lebanon and Syria and Iran,” said Ahmad Nasser, a father out walking with his nine-year-old daughter on Hadi Nasrallah Boulevard.

The street is named after Hezbollah Secretary General Hassan Nasrallah’s son, who was killed during a guerrilla raid against Israeli forces in southern Lebanon in 1997.

Billboards of Gen. Qassem Soleimani, the leader of Iran’s Quds Force who was recently killed in a U.S. drone strike in Iraq, line the highway leading to Beirut’s international airport. The signs describe Soleimani as ‘the Leader of the Martyrs of the Axis of Resistance.’ (Stephanie Jenzer/CBC)

Nasser is also worried about the country’s economy, but he says Hezbollah must be a part of any solution.

“Hezbollah is a part of the social composition of Lebanon and has to be in government,” he said.

Nasser supported the anti-government protests in the fall but says he has since changed his mind, fearful of a power vacuum developing.

It could also be because the man chosen to lead a new government, Hassan Diab, has the backing of Hezbollah.

Diab has so far failed to win support from al-Hariri, or from Christian factions worried that his association with Hezbollah, already the target of U.S. sanctions, will deter much-needed international investment in Lebanon.

Ahmad Nasser, out for a walk with his daughter, Nagham, says he’s worried about Lebanon’s economy. (Stephanie Jenzer/CBC)

After Soleimani’s death, Nasrallah warned that U.S. soldiers would be returned home in coffins in retaliation.

Earlier this week, Iran launched missile strikes against military bases in Iraq housing U.S. troops, none of whom were injured. Hours later, a Ukraine International Airlines flight crashed shortly after taking off from Tehran, killing 176 people, including 63 Canadians. Both Canada and the U.S. believe an Iranian missile shot down the plane — a claim Iran denies.

Like the United States, Canada considers Hezbollah a terrorist group.

But it is also an important part of the social fabric in large parts of Lebanon.

“They’re not going away. It’s not like there are 10 people and we can deport them,” said economist and political analyst Kamel Wazne.

“They have representatives in parliament and municipalities and they’re a powerful organization and it’s very well structured.”

Economist and political analyst Kamel Wazne says Hezbollah is a powerful force in Lebanon that’s not going away. (Stephanie Jenzer/CBC)

Wazne says Lebanon will count on the Lebanese population abroad to help the country out of its economic crisis.

There have also been calls to create a government of experts to help solve the problem.

But 21-year-old Ayoub doesn’t have much confidence that what’s currently being negotiated is much more than a portfolio shuffle.

“We were on the street for 70 days and we still couldn’t [overthrow] them,” she said.

U.S. President Donald Trump delivers remarks to troops in an unannounced visit to Ain Assad airbase, Iraq, on Dec. 26, 2018. (Jonathan Ernst/Reuters)

When she does turn her mind to the recent escalation of tension between Iran and the U.S., she says American President Donald Trump has done well for himself by putting his country first.

Ayoub says she’d like to see Lebanon’s leaders focus more on putting the country and its people ahead of politics. 

“If politicians in Lebanon were behaving the same way that Trump is behaving, we wouldn’t have revolted against them.”

Let’s block ads! (Why?)



Source link

Continue Reading

Economy

India’s Modi Faces New Challenge: A Slowing Economy – Wall Street Journal

Published

on


Agriculture, a key sector for employment in India, has been part of the nation’s slowdown.


Photo:

Amit Dave/REUTERS

NEW DELHI—Since a landslide victory last year, Indian Prime Minister

Narendra Modi

has pushed through a series of controversial social initiatives that have drawn cheers from supporters but been criticized as part of a divisive Hindu nationalist agenda.

Now, the country’s suddenly flagging economy, which not long ago was the engine driving India’s emergence on the global stage, could become an even bigger challenge.

The government has estimated the growth rate for the current fiscal year ending March 31 at 5%, India’s lowest since 2009 and down from a peak of 8.2% in 2017. The unexpected slowdown in what until recently was the world’s fastest-growing large economy threatens not only to undermine India’s nascent emergence as a global power but to amplify divisions at home as it becomes even harder to create the nearly million jobs a month needed to keep pace with the youth pouring into the job market.

The country’s changing fortunes have dented Mr. Modi’s reputation as an economic reformer since his arrival on the national political scene in 2014. While Mr. Modi grew up within the Hindu nationalist movement that spawned the Bharatiya Janata Party, what set him apart as a politician was a reputation for sound economic management and a global perspective during his years as head of one of India’s most dynamic states.

Economic changes, effective governance, development initiatives and globalization remained at the top of his administration’s national agenda throughout that first term, enhanced by the prominent roles played by several reform-minded, U.S.-trained economists that Mr. Modi brought on board.

Progress was incremental and sometimes flawed, such as Mr. Modi’s overnight elimination of nine-tenths of the value of currency notes in circulation, but an overhaul of the national tax system was generally applauded at home and abroad along with the introduction of a corporate bankruptcy code. Steps were taken to begin tackling a morass of soured loans weighing on the state-led banking system.

#g-DV_INDIAchrt_AI2-box.ai2html_export
max-width: 700px;
width:100%;
margin: 0 auto;

.g-aiImg
margin-top: -1.2px;

.g-_valign
margin-top: -2px;

div[class^=”g-_textoutline-white”] text-shadow: -1px -1px 0 #fff, 1px -1px 0 #fff, -1px 1px 0 #fff, 1px 1px 0 #fff;
div[class^=”g-_textshadow-white”] text-shadow: 1px 1px 2px #fff;
div[class^=”g-_textoutline-black”] text-shadow: -1px -1px 0 #000, 1px -1px 0 #000, -1px 1px 0 #000, 1px 1px 0 #000;
div[class^=”g-_textshadow-black”] text-shadow: 1px 1px 2px #000;

div[class^=”g-_textoutline-grey”] text-shadow: -1px -1px 0 #dddddd, 1px -1px 0 #dddddd, -1px 1px 0 #dddddd, 1px 1px 0 #dddddd;
div[class^=”g-_textshadow-grey”] text-shadow: 1px 1px 2px #dddddd;

@media all and (max-width: 585px)
.at4units .ai2html_export
max-width: 355px !important;

@media all and (min-width: 586px) and (max-width: 665px)
.at4units #g-DV_INDIAchrt_AI2-box.ai2html_export
max-width: 540px !important;

.at8units #wsj-article-wrap .inline .ai2html_export,
.at8units #wsj-article-wrap .offset .ai2html_export,
.at8units #wsj-article-wrap .bleed .ai2html_export
margin: 0 auto;
max-width: 620px;

#g-DV_INDIAchrt_AI2-box .g-artboard
margin:0 auto;

#g-DV_INDIAchrt_AI2-box p
margin:0;

.g-aiAbs
position:absolute;

.g-aiImg
display:block;
width:100% !important;

.g-aiSymbol
position: absolute;
box-sizing: border-box;

.g-aiPointText p white-space: nowrap;
#g-DV_INDIAchrt_AI2-box tspan
position:relative;
overflow:hidden;

#g-DV_INDIAchrt_AI2-box tspan p
font-family:Retina,Helvetica,Arial,sans-serif;
font-weight:300;
font-size:13px;
line-height:17px;
filter:alpha(opacity=100);
-ms-filter:progid:DXImageTransform.Microsoft.Alpha(Opacity=100);
opacity:1;
letter-spacing:0em;
text-align:left;
color:rgb(114.000000804663,114.000000804663,114.000000804663);
text-transform:none;
padding-bottom:0;
padding-top:0;
mix-blend-mode:normal;
font-style:normal;
height:auto;
position:static;

#g-DV_INDIAchrt_AI2-box tspan .g-pstyle0
font-weight:500;
font-size:18px;
line-height:20px;
color:rgb(51.0000007599592,51.0000007599592,51.0000007599592);

#g-DV_INDIAchrt_AI2-box tspan .g-pstyle1
font-size:15px;
line-height:20px;
color:rgb(51.0000007599592,51.0000007599592,51.0000007599592);

#g-DV_INDIAchrt_AI2-box tspan .g-pstyle2
font-weight:500;
font-size:15px;
line-height:20px;
color:rgb(51.0000007599592,51.0000007599592,51.0000007599592);

#g-DV_INDIAchrt_AI2-box tspan .g-pstyle3
font-family:”Retina Narrow”,Helvetica,Arial,sans-serif;
line-height:16px;
height:16px;
text-align:right;
color:rgb(51.0000007599592,51.0000007599592,51.0000007599592);

#g-DV_INDIAchrt_AI2-box tspan .g-pstyle4
font-family:”Retina Narrow”,Helvetica,Arial,sans-serif;
line-height:16px;
height:16px;
text-align:center;
color:rgb(51.0000007599592,51.0000007599592,51.0000007599592);

#g-DV_INDIAchrt_AI2-box tspan .g-pstyle5
font-size:15px;
line-height:20px;
height:20px;
color:rgb(51.0000007599592,51.0000007599592,51.0000007599592);

#g-DV_INDIAchrt_AI2-_300px
position:relative;
overflow:hidden;

#g-DV_INDIAchrt_AI2-_300px p
font-family:Retina,Helvetica,Arial,sans-serif;
font-weight:500;
font-size:15px;
line-height:20px;
filter:alpha(opacity=100);
-ms-filter:progid:DXImageTransform.Microsoft.Alpha(Opacity=100);
opacity:1;
letter-spacing:0em;
text-align:left;
color:rgb(51.0000007599592,51.0000007599592,51.0000007599592);
text-transform:none;
padding-bottom:0;
padding-top:0;
mix-blend-mode:normal;
font-style:normal;
height:auto;
position:static;

#g-DV_INDIAchrt_AI2-_300px .g-pstyle0
font-family:”Retina Narrow”,Helvetica,Arial,sans-serif;
font-weight:300;
font-size:13px;
line-height:16px;
height:16px;
text-align:right;

#g-DV_INDIAchrt_AI2-_300px .g-pstyle1
font-family:”Retina Narrow”,Helvetica,Arial,sans-serif;
font-weight:300;
font-size:13px;
line-height:16px;
height:16px;
text-align:center;

#g-DV_INDIAchrt_AI2-_300px .g-pstyle2
font-weight:300;
height:20px;

#g-DV_INDIAchrt_AI2-_540px
position:relative;
overflow:hidden;

#g-DV_INDIAchrt_AI2-_540px p
font-family:Retina,Helvetica,Arial,sans-serif;
font-weight:500;
font-size:15px;
line-height:20px;
filter:alpha(opacity=100);
-ms-filter:progid:DXImageTransform.Microsoft.Alpha(Opacity=100);
opacity:1;
letter-spacing:0em;
text-align:left;
color:rgb(51.0000007599592,51.0000007599592,51.0000007599592);
text-transform:none;
padding-bottom:0;
padding-top:0;
mix-blend-mode:normal;
font-style:normal;
height:auto;
position:static;

#g-DV_INDIAchrt_AI2-_540px .g-pstyle0
font-family:”Retina Narrow”,Helvetica,Arial,sans-serif;
font-weight:300;
font-size:13px;
line-height:16px;
height:16px;
text-align:right;

#g-DV_INDIAchrt_AI2-_540px .g-pstyle1
font-weight:300;
height:20px;

#g-DV_INDIAchrt_AI2-_540px .g-pstyle2
font-family:”Retina Narrow”,Helvetica,Arial,sans-serif;
font-weight:300;
font-size:13px;
line-height:16px;
height:16px;
text-align:center;

#g-DV_INDIAchrt_AI2-_620px
position:relative;
overflow:hidden;

#g-DV_INDIAchrt_AI2-_620px p
font-family:Retina,Helvetica,Arial,sans-serif;
font-weight:500;
font-size:15px;
line-height:20px;
filter:alpha(opacity=100);
-ms-filter:progid:DXImageTransform.Microsoft.Alpha(Opacity=100);
opacity:1;
letter-spacing:0em;
text-align:left;
color:rgb(51.0000007599592,51.0000007599592,51.0000007599592);
text-transform:none;
padding-bottom:0;
padding-top:0;
mix-blend-mode:normal;
font-style:normal;
height:auto;
position:static;

#g-DV_INDIAchrt_AI2-_620px .g-pstyle0
font-family:”Retina Narrow”,Helvetica,Arial,sans-serif;
font-weight:300;
font-size:13px;
line-height:16px;
height:16px;
text-align:right;

#g-DV_INDIAchrt_AI2-_620px .g-pstyle1
font-weight:300;
height:20px;

#g-DV_INDIAchrt_AI2-_620px .g-pstyle2
font-family:”Retina Narrow”,Helvetica,Arial,sans-serif;
font-weight:300;
font-size:13px;
line-height:16px;
height:16px;
text-align:center;

#g-DV_INDIAchrt_AI2-_700px
position:relative;
overflow:hidden;

#g-DV_INDIAchrt_AI2-_700px p
font-family:Retina,Helvetica,Arial,sans-serif;
font-weight:500;
font-size:15px;
line-height:20px;
filter:alpha(opacity=100);
-ms-filter:progid:DXImageTransform.Microsoft.Alpha(Opacity=100);
opacity:1;
letter-spacing:0em;
text-align:left;
color:rgb(51.0000007599592,51.0000007599592,51.0000007599592);
text-transform:none;
padding-bottom:0;
padding-top:0;
mix-blend-mode:normal;
font-style:normal;
height:auto;
position:static;

#g-DV_INDIAchrt_AI2-_700px .g-pstyle0
font-family:”Retina Narrow”,Helvetica,Arial,sans-serif;
font-weight:300;
font-size:13px;
line-height:16px;
height:16px;
text-align:right;

#g-DV_INDIAchrt_AI2-_700px .g-pstyle1
font-weight:300;
height:20px;

#g-DV_INDIAchrt_AI2-_700px .g-pstyle2
font-family:”Retina Narrow”,Helvetica,Arial,sans-serif;
font-weight:300;
font-size:13px;
line-height:16px;
height:16px;
text-align:center;

Surge and Slowdown

India’s economy initially boomed under Prime Minister Modi, but has flagged recently.

Growth in gross domestic product for fiscal years ending March 31

Growth in two employment-heavy industries for March 31 fiscal years*

10

%

9.0

%

Construction

8

8.0

6

7.0

4

6.0

Agriculture

2

5.0

0

4.0

–2

2013

’14

’15

’16

’17

’18

’19

’20

2013

’14

’15

’16

’17

’18

’19

’20

Growth in gross domestic product for fiscal years ending March 31

Growth in two employment-heavy industries for March 31 fiscal years*

10

%

9.0

%

Construction

8

8.0

6

7.0

4

6.0

Agriculture

2

5.0

0

–2

4.0

2013

’14

’15

’16

’17

’18

’19

’20

2013

’14

’15

’16

’17

’18

’19

’20

Growth in gross domestic product for fiscal years ending March 31

Growth in two employment-heavy industries for March 31 fiscal years*

10

%

9.0

%

Construction

8

8.0

6

7.0

4

6.0

Agriculture

2

5.0

0

4.0

–2

2013

’14

’15

’16

’17

’18

’19

’20

2013

’14

’15

’16

’17

’18

’19

’20

Growth in gross domestic product for fiscal years ending March 31

9.0

%

8.0

7.0

6.0

5.0

4.0

2013

’14

’15

’16

’17

’18

’19

’20

Growth in two employment-heavy industries for March 31 fiscal years*

10

%

Construction

8

6

4

Agriculture

2

0

–2

2013

’14

’15

’16

’17

’18

’19

’20

Note: Fiscal 2020 figures are projected.     *Based on gross value added in constant 2011-12 prices.

Source: India Ministry of Statistics and Program Implementation

The economy picked up pace, surpassing even China’s growth rate, as optimism grew that Mr. Modi was ushering India toward a more globalized future and a modern economy spurred on by one of the world’s largest and youngest populations.

If the Hindu nationalist leanings of Mr. Modi’s Bharatiya Janata Party were also apparent—particularly when halfway through his term Mr. Modi appointed an ideological firebrand priest to head India’s largest state—they mostly took a back seat, especially in international perceptions of India.

As Mr. Modi’s first term progressed, however, the internationally minded economists from Harvard University, Columbia University and the University of Chicago left the administration, replaced with lower-profile advisers from Indian institutions. The appetite for difficult economic changes waned, whether it was privatization of the troubled government-owned airline or tougher regulations on lenders.

The economy began a slow slide, particularly in the construction and agriculture industries that India’s masses of striving but still poor families depend on heavily for income.

Change of focus

Yet just as signs were emerging that India’s economic struggles might undercut the BJP’s political fortunes in last year’s nationwide election, the focus changed dramatically from economics after a military confrontation with archenemy Pakistan early last year. Mr. Modi pivoted to nationalist identity politics on the surge of angry sentiment against Pakistan that accompanied the capture, and then release, of an Indian fighter pilot after an aerial dogfight.

The BJP presented the election as a choice between a forceful Hindu national leader and opponents it decried as weak in opposing India’s Muslim-majority nemesis and supported by India’s own 200 million Muslim minority community. Voters set aside economic concerns and delivered the BJP a large majority in Parliament and Mr. Modi a second term.

Since then Mr. Modi has paused only briefly to address the economy—most notably with a big corporate tax cut after the election—as the BJP has raced to accomplish controversial initiatives long espoused by the party’s most ideological Hindu nationalist supporters.

They banned a special form of divorce that had been allowed under Islamic family law, placed the country’s only Muslim-majority state under direct central government control, and cheered when the supreme court agreed to allow a Hindu temple on a site where a mob of activists had torn down a mosque they believed sat atop the birthplace of an important Hindu god.

Each move sparked criticism and questioning from abroad and increased anxiety among some domestically, particularly Muslims and a wider group of Indians concerned the country’s democracy is turning in a religiously intolerant and majoritarian direction.

Nationwide protests

Most recently, the introduction of a law that extends a new path to citizenship to nearly every religiously persecuted group in South Asia except Muslims has reinforced those fears, prompting nationwide demonstrations even as Mr. Modi and the BJP extol the new law as a humanitarian act that won’t affect Indian Muslims.

Yet even as social discontent rises, the economy’s stubborn sluggishness looms as a largely unaddressed menace that could exacerbate those problems, say many economists.

That’s especially true in areas where the social tensions have been highest, such as the massive state of Uttar Pradesh, which has a history of violent clashes between Muslims and Indian authorities that have resurfaced with the citizenship law.

“The focus of this government is more on the Hindu (nationalist) agenda,” says A.K. Singh, economist and former director of the Giri Institute of Development Studies, a think tank based in Lucknow. “Although they talk of development, agriculture continues to be in quite a bad shape, and industry, particularly in Uttar Pradesh, is very, very sluggish.”

Government officials say they’ve introduced bold economic reforms and are making progress cleaning up bad loans in the banking system.

But

Arvind Subramanian,

a Harvard economist who served as Mr. Modi’s chief economic adviser during much of his first term, has questioned whether the headline economywide measurements may be flawed, meaning even the 4.5% growth rate the government reported for the latest quarter through September 2019 could be overstated by several percentage points.

He notes that imports, exports, consumption and domestic investment are all in outright decline and overall electricity consumption is flat, an almost unprecedented confluence of bad news since the economy was first liberalized during a crisis in 1991.

He argues that the still-festering load of bad loans at the banks is standing in the way of a near-term economic turnaround by crimping lending. The painful task of reforming the financial sector will likely need to be followed by politically difficult changes to bring more flexibility to land use and labor laws.

So far, the Modi government has shown little new inclination for any of that. “The problem with the Modi government is that there is very little understanding among the top leadership of the economic issues, and expert advice is not followed if it does not go to the liking of Modi,” says Satish Misra, a senior fellow with the Observer Research Foundation, a New Delhi-based think tank.

Mr. Spindle is South Asia bureau chief for The Wall Street Journal. Email him at bill.spindle@wsj.com. Krishna Pokharel contributed to this article.

Copyright ©2019 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Let’s block ads! (Why?)



Source link

Continue Reading

Economy

China stocks rise on signs of steadying economy, Hong Kong dips – Ottawa Citizen

Published

on


SHANGHAI — China stocks rose on Monday on signs of a stabilizing domestic economy and increasing expectations of government stimulus to aid growth, while Hong Kong shares dipped.

** The CSI300 index rose 0.5% to 4,176.50 by the end of the morning session, while the Shanghai Composite Index gained 0.4% to 3,088.59.

** In Hong Kong, the Hang Seng index dropped 0.4% to 28,942.57, while the Hong Kong China Enterprises Index lost 0.2% to 11,401.63.

** China is confident of maintaining steady industrial growth this year despite big pressures facing the sector, Minister of Industry and Information Technology Miao Wei said on Monday.

** His remarks came after China’s industrial output topped expectations in December by growing 6.9% from a year earlier, the strongest pace in nine months.

** Investors also expect more government stimulus ahead after China’s economic growth cooled to a near 30-year low of 6.1% in 2019 amid a bruising trade war with the United States.

** Among shares, hotel operators and tourism firms slumped following news that an outbreak of a new coronavirus in China was spreading to other cities, raising concerns around its containment and clouding travel plans of millions of Chinese for Lunar New Year holiday.

** BTG Hotels Group Co and Shanghai Jin Jiang International Hotels Development Co tumbled over 7%, while tourism company Songcheng Performance Development Co slumped over 8%.

** Shares of drugmakers and facial mask producers such as Jiangsu Sihuan Bioengineering Co and Shandong Lukang Pharmaceutical Co jumped. (Reporting by Shanghai Newsroom; editing by Uttaresh.V)

Let’s block ads! (Why?)



Source link

Continue Reading

Economy

Majority say BOJ's negative rate policy has not boosted economy, prices: Reuters poll – TheChronicleHerald.ca

Published

on


By Kaori Kaneko

TOKYO (Reuters) – The Bank of Japan’s negative interest rate policy has had little positive impact on the economy and prices, over half of economists surveyed by Reuters said.

The views underline the mounting challenges facing the central bank in trying to fire up inflation to its 2% target, as years of ultra-loose monetary policy and near-zero rates have had only modest success at the cost of eroding financial institutions’ margins.

That explains why a majority of the polled economists expect the next move by the BOJ would be to taper its massive stimulus, possibly sometime next year.

It also suggests criticism over the controversial policy is spreading beyond Europe, where countries such as Switzerland are under increasing pressure to adjust its ultra-loose policy to address the demerits of negative rates.

Among the 41 economists polled by Reuters Jan. 6-17, 24 said the BOJ’s negative rate policy did not help the economy and prices, while 17 said they did.

“Negative rates may have had some positive effects on financial and property markets. But the side-effects, such as the hit to banks’ earnings, have also been big,” said Mitsumaru Kumagai, chief economist at Daiwa Institute of Research.

“As a whole, we don’t think there has been much positive effect” on Japan’s economy and prices, he said.

The poll also showed 28 of 42 economists, or 67%, expect the BOJ’s next step to be a withdrawal of stimulus, up from 61% in the December poll. Those who predicted such action said it would happen sometime next year or later, the poll showed.

The ratio of those who predict the BOJ’s next move to be an expansion of stimulus stood at 33%, down from the previous month’s 39%.

“We don’t expect the BOJ to ease further in the near term,” said Arata Oto, market economist at Societe Generale Securities Japan.

“The BOJ is expected to maintain its scenario projecting a pick-up in global growth, while sticking to its easy-policy bias to help the economy build momentum to hit its 2% inflation target,” he said.

That view was backed by a Reuters poll predicting that the BOJ will keep monetary policy steady and nudge up its economic growth forecast at a two-day rate review ending on Tuesday, signaling that no immediate easing was forthcoming despite lingering overseas risks.

STAGNANT GROWTH AHEAD

Under a policy dubbed yield curve control, the BOJ guides short-term rates at -0.1% and the 10-year government bond yield around 0% via aggressive asset buying.

Inflation remains distant from the BOJ’s 2% target despite years of heavy money printing, forcing the central bank to maintain a radical stimulus program despite the rising cost such as the hit to financial institutions’ profits.

Analysts polled expect core consumer inflation, which includes oil products but not fresh foods, to hit 0.6% in the current fiscal year ending in March and 0.5% the following year.

They also expect Japan’s economy to have shrunk an annualized 3.6% in the October-December quarter due to the hit from October’s sales tax hike, and rebound by a modest 0.8% in the current quarter.

Japan’s economy will likely expand 0.5% in the fiscal year beginning in April and 0.8% the following year, thanks in part to an expected boost from the government’s $122 billion fiscal stimulus package, the poll showed.

(Reporting by Kaori Kaneko; Polling by Shaloo Shrivastava and Khushboo Mittal; Editing by Leika Kihara & Shri Navaratnam)

Let’s block ads! (Why?)



Source link

Continue Reading

Trending