Month: August 2018

Federal Reserve Chairman Jerome Powell signaled Friday that he expects the Fed to continue gradually raising interest rates if the U.S. economic expansion remains strong. Powell added that while annual inflation has risen to near the Fed’s 2 percent target rate, it doesn’t seem likely to accelerate above that point. That suggests that he doesn’t foresee a need for the Fed to step up its rate hikes. Late next month, the Fed is widely expected to resume raising rates. Speaking to an annual conference of central bankers in Jackson Hole, Wyoming, Powell said the Fed recognizes that it needs to strike a careful balance between its mandates of maximizing employment and keeping price increases stable. He said a gradual approach is the best way for the Fed to navigate between the risks of raising rates too fast and “needlessly shortening the expansion” and moving too slowly and risking an overheated economy. “My colleagues and I,” the Fed chairman said in his speech, “are carefully monitoring incoming data, and we are setting policy to do what monetary policy can do to support continued growth, a strong labor market, and inflation near 2 percent.” Powell made no mention of the recent public criticism from President Donald Trump, who has said he’s unhappy with the Fed’s rate hikes. The president has complained that the Fed’s tightening of credit could threaten the continued strong growth he aims to achieve through the tax cuts enacted late last year, a pullback of regulations and a rewriting …

The United States and China imposed more tariff hikes on billions of dollars of each other’s automobiles, factory machinery and other goods Thursday in an escalation of a battle over Beijing’s technology policy that companies worry will chill global economic growth. The 25 percent increases took effect as envoys from both sides held their first high-level talks in two months in Washington. No details were released about the two-day meeting that started Wednesday. The penalties, previously announced, apply to $16 billion of goods from both sides including automobiles and metal scrap from the United States and Chinese-made factory machinery and electronic components. They follow last month’s first round of tariff increases of the same size by both sides on $34 billion of each other’s imports. The Chinese government criticized the U.S. increase as a violation of World Trade Organization rules and said it would file a legal challenge.  Beijing has rejected U.S. demands to scale back plans for state-led technology development that its trading partners say violate its market-opening commitments and American officials worry might erode the United States’ industrial leadership. With no settlement in sight, economists warn the conflict could spread and knock up to 0.5 percentage points off global economic growth through 2020. …

A new set of tit-for-tat tariffs imposed by the United States and China on each other’s goods took effect Thursday. The U.S. announced earlier this month that it would impose 25 percent tariffs on $16 billion worth of Chinese goods, on top of the 25-percent tariffs it imposed on $34 billion worth of Chinese products in early July. Beijing has followed suit in each case with an identical percentage of tariffs in retaliation. China’s commerce ministry issued a statement Thursday criticizing the U.S. tariffs as a violation of World Trade Organization rules, and says it will file a legal challenge under the WTO’s dispute resolution mechanism. The new round of tariffs took effect the day after delegations from both nations met in Washington for first of two days of talks aimed at resolving the dispute, the first such formal discussions since June. U.S. President Donald Trump told Reuters in an interview this week he does not expect much progress from the discussions. When asked about the issue at Wednesday’s news briefing by VOA, White House Press Secretary Sarah Huckabee Sanders said, “As you said, these conversations are continuing. I don’t have any announcements on them. They’re ongoing. Certainly, what we’d like to see is better trade deals for the United States. he president wants to see free, fair, and more reciprocal trade between other countries, particularly with China, and we’re going to continue in those conversations.” The Trump administration is demanding that Beijing change its practice of heavily subsidizing its …

French President Emmanuel Macron will make the tough political choices needed to meet his deficit commitments, his government spokesman said, as he looked to put a bodyguard scandal behind him at his first Cabinet meeting after the summer break. Macron and his ministers in all likelihood need to find savings in next year’s budget, to be presented to parliament next month, if they are to prevent the deficit from ballooning once again. The president faced his first crisis in the summer when video surfaced of bodyguard Alexandre Benalla beating a protester. Macron’s own aloof response fanned public discontent. Now the 40-year-old leader returns to work facing difficult political choices as he embarks on a new wave of reforms to reform the pensions system, overhaul public healthcare and shake-up the highly unionized public sector — tasks complicated by forecasts that economic growth is slower than expected. “A budget is not only figures, but a strategy, and strong political choices,” Griveaux said, without giving details on the budget negotiations. “There will be [spending] increases and then we will require efforts from other sectors.” The French economy eked out less growth than expected in the second quarter as strikes and higher taxes hit consumer spending, official data showed in July. Macron has linked fiscal discipline to restoring France’s credibility in Europe, and while the budget deficit — forecast at 2.3 percent of GDP this year and next — should not surpass the EU-mandated 3 percent limit, it is still expected to be one of the highest …

Saudi Arabia has called off both the domestic and international stock listing of state oil giant Aramco, billed as the biggest such deal in history, four senior industry sources said on Wednesday. The financial advisors working on the proposed listing have been disbanded, as Saudi Arabia shifts its attention to a proposed acquisition of a “strategic stake” in local petrochemicals maker Saudi Basic Industries Corp., two of the sources said. “The decision to call off the IPO was taken some time ago, but no-one can disclose this, so statements are gradually going that way — first delay then calling off,” a Saudi source familiar with IPO plans. Saudi Aramco did not immediately respond to an emailed request for comment. The Saudi Royal Court had no immediate comment. The proposed listing of the national champion was a central part of Crown Prince Mohammed bin Salman’s reform drive aimed at restructuring the kingdom’s economy and reducing its dependence on oil revenue. The prince announced the plan to sell about 5 percent of Aramco in 2016 via a local and an international listing, predicting the sale would value the whole company at $2 trillion or more. Several industry experts however questioned whether a valuation that high was realistic, which hindered the process of preparing the IPO for the advisors. Stock exchanges in financial centers including London, New York and Hong Kong had been vying to host the international tranche of the share sale. An army of bankers and lawyers started to fiercely compete to …

Disney is offering to pay full tuition for hourly workers who want to earn a college degree or finish a high school diploma. The Walt Disney Co. said Wednesday it will pay upfront tuition to workers who want to take classes starting in the fall. Disney initially will invest $50 million into the “Disney Aspire” program and up to $25 million a year after that. Other large corporations have begun paying tuition for workers in a job market with low unemployment. In May, Walmart said it will offer workers the chance to get a college degree at three universities with online programs. Disney is rolling out its program in phases, with the first limited to online classes. It is being administered by Guild Education, the same firm operating Walmart’s program. …

The U.S. economy likely created 43,000 more jobs in the 12 months through March than previously estimated, the Labor Department said on Wednesday. The marginal increase, which the Labor Department said represented less than a 0.05 percent gain versus current estimates, is a preliminary estimate of the government’s annual “benchmark” revision to nonfarm payrolls data. Job growth in the U.S. economy remains relatively strong despite the labor market being near full employment. Once a year, the government compares its nonfarm payrolls data, based on monthly surveys of a sample of employers, with a much more complete database of unemployment insurance tax records. A final benchmark revision will be published in February along with the employment report for January. Government statisticians will use the final benchmark count to revise payrolls data for months both prior to and after March 2018. …

When reforms began in Myanmar in 2011, its tourism sector was considered as one of those most likely to take advantage of the economic opportunities as the country looked to reconnect with the outside world.  Authorities and businesspeople were confident that foreign tourists would be drawn to Myanmar, eager to see such sites as the ancient temples of Bagan, the unique culture of Inle Lake, or the picturesque beaches overlooking the Bay of Bengal.  For a while it worked, as Myanmar’s international reputation improved in-line with the reforms happening at the time, the country was at the top of many visitors’ wish lists. Official figures showed that more than 4.68 million tourists visited the country in 2015, up from 816,000 in 2011. In 2017, 3.4 million tourists visited.  But the situation has changed again. The tourism sector has been heavily impacted by the crisis in Rakhine State, which has seen 700,000 Rohingya cross into Bangladesh to flee a brutal army crackdown. Myanmar’s military has been accused of ethnic cleansing the Rohingya, leading many tourists to stay away because of ethical concerns.  Myanmar’s government recognizes the need to take action, and in early August held a meeting for stakeholders to discuss what measures can be taken to improve the situation.  At that event, de facto leader Aung San Suu Kyi said the country should focus on measures such as improving rail and water transport, providing clean accommodation and developing more community-based tourism projects. “Tourists can get many opportunities such as viewing …

Following Seoul’s announcement that South Korean companies have illegally imported North Korean coal, U.S. experts are worried about North Korean trade that contravenes international sanctions. The Korea Customs Service (KCS) announced earlier this month that three South Korean companies illegally imported North Korean coal that was transshipped at Russian ports, in violation of United Nations resolutions. The U.N. Security Council adopted a resolution on August 5, 2017, banning North Korea from exporting coal, iron, lead and other materials. Another resolution later that year, on December 22, called for U.N. members to seize and inspect vessels suspected of transporting prohibited items.  According to the KCS, in seven shipments between April and October of last year, three South Korean companies imported a total of 35,038 tons of North Korean coal and pig iron with a combined worth of $5.81 million. North Korean coal on ships registered under a third country set sail either from its ports of Songlim, Wonsan, Chongjin and Daean, and the cargoes were transshipped via the Russian ports of Kholmsk, Vladivostock and Nakhodka before arriving at the South Korean ports of Dangjin, Pohang, Masan, Incheon and Donghae. Action by Seoul The South Korean government is now seeking the prosecution of the three companies for the illicit import of the materials and forging customs documents to state the coal and pig iron were of Russian origin. It also banned four ships – the Sky Angel, Rich Glory, Shining Rich and Jin Long – that transported the coal to South Korea from …

Chilean President Sebastian Pinera said on Tuesday that his overhaul of the country’s tax structure would “modernize” Chile’s revenue system and stimulate investment by local and foreign companies. The conservative leader said in a televised address that reform would, among other proposals, calibrate taxes paid by conventional companies with those paid by digital technology companies. The reform aims “to create a simpler and more equitable and fully integrated tax system for all Chilean companies.” Digital commerce companies with local operations like Netflix and Uber are likely to be affected under the reform. E-commerce is gaining traction in Latin America after a slow start. Last month, an Amazon Web Services vice president met with Pinera to discuss Amazon investing in the country as part of a longer-term regional expansion plan. Pinera, a billionaire second-term president, whose first term as president was marred by protests over rising inequality, in June detailed a $26 billion spending plan and called for unity as Chile continues its “vigorous march towards development.” …