Globalisation grinding to a halt?; Trumponomics and markets; India’s diverse protests

1 Globalisation grinding to a halt? (Larry Elliott in The Guardian) His speech was like one normally expected of an American president. Countries must resist the temptation to retreat into harbour, the world leader said to a packed and admiring audience, but instead have the courage to swim in the vast ocean of the global market.

This was China’s president, Xi Jinping, in Davos last week, making it clear that he was prepared to fill the vacuum if Donald Trump went ahead with the sort of protectionist policies he had proposed in his election campaign.

The new US president has said he will renegotiate the Nafta free trade agreement between the US, Canada and Mexico and slap duties on imports from countries that don’t play by global trade rules. He also floated the idea of a 35% tariff on goods from Mexico, a 45% tariff on goods from China, and a border tax – which would impose a levy on imports but not exports.

Those attending Davos reassured themselves that Trump would ditch all these proposals once he was in office. But if he doesn’t, the consequences are obvious: the world will be plunged into a trade war that will bring the globalisation of the past quarter of a century to a juddering halt.

And it is not just Trump. Alarm bells were set ringing by Britain’s vote for Brexit, seen as a shout of rage from those who feel that globalisation has brought them precious little. They will clang even louder if Marine Le Pen wins the French presidency in May. One senior diplomat said that if Le Pen pulled off yet another shock result, it would spell the end of the European Union.

The received wisdom for Davos is that this isn’t a tipping point. Globalisation, it was asserted, is really being driven by technological change over which politicians have little control. Supply chains cross borders, often many times over. Consumers care more about whether the goods they can order online will be delivered the next day than where they are sourced from.

Douglas Flint, chairman of HSBC, cited the example of the taxi app Uber as a disruptive technological change that was here to stay. The globalisation optimists may well be proved right. Unravelling the complex web of international links that have been established since the Berlin wall came down at the end of 1980s would be a long and painful process.

2 Trumponomics and markets (Lim Say Boon in Straits Times) Look past the US President Donald Trump’s Twitter storms and focus on the big trends to navigate what will likely be extraordinarily volatile market conditions this year. In analysing markets, the three things I focus on are government spending, inflation and US Treasury yields. All of these had already started reversing before the arrival of Mr Trump.

America had already exhausted fiscal austerity before the Trump election. The budget deficit fell from 10 per cent of gross domestic product at the time of the global financial crisis and appeared to have bottomed at around 2 per cent in 2015.

Globally, politicians, economists and central bankers have been arguing for an end to austerity, calling on governments to spend more. Government austerity was offsetting the stimulus from quantitative easing, so the argument went. But, the Obama administration couldn’t meaningfully lift government spending as a result of the obstruction by a Republican Congress. Now, the Republicans control both the White House and the Congress. Expect much more government spending, much bigger budget deficits.

Inflation was starting to pick up anyway. It started reversing mid-2015. And, as a result, the 10-year US Treasury rose in mid-2016. Mr Trump did not create these trends, but his mere arrival has already accelerated them. And, his spending will further accelerate them upwards. Near term, the expectation of Trumponomics is bullish US equities.

The bottom line is this: Rates are still very low. The economy is still flush with cash. And, most importantly, the market believes that it is not just about government spending and taxes. It is about a profound, pro-capitalist shift in government that could “ignite animal spirits and attract productive capital”.

Sentiment could take US equities higher in the near term, notwithstanding the recent hesitation. Along with that, I am also bullish on US banking stocks. Emerging market and Asia ex-Japan stocks look bearish near term.

3 India’s diverse protests (Soutik Biswas on BBC) India, wrote author VS Naipaul, is a country of a million little mutinies, reeling with rage and revolt. One such mutiny has brewed almost all of this week in southern Tamil Nadu state, where people have been protesting against a ban on a traditional bull-taming contest, known as jallikattu. They say the ban is an attack on their culture and identity.

On Saturday evening, a harried government scrambled to bring in a temporary law that would allow the sport to resume.The embers of this unique protest will continue to flicker because they were not merely about bulls alone. Animal rights activists, who support the ban, say the sport is cruel to animals. Nonsense, say the bull owners and supporters.

The January protests have been spontaneous and not led by any political party. And the protests are no longer just about bulls. There are people angry with the recent currency ban and the shortage of cash that it caused. There is also angst about a controversial judicial order making it compulsory to play the national anthem in theatres and for audiences to stand when it is being played.

There are people who have protested against a nuclear plant in the state and against GM crops. There are irate drought-hit farmers who feel they are being deprived of their share of water from a river that their state shares with neighbouring Karnataka.

“Jallikattu is just a trigger. This huge protest is a manifestation of the trust deficit between Tamil people and the federal government and the judiciary,” says historian AR Venkatachalapathy. “Many don’t trust Prime Minister Narendra Modi’s BJP government’s muscular nationalism and recent moves like the currency ban.”

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Trump vows to end ‘American carnage’; China growth slowest in 26 years; Gulf nations brace for budget cuts

1 Trump vows to end ‘American carnage’ (BBC) President Donald Trump has painted a bleak picture of a broken country after being sworn in as US president. He spoke of abandoned factories, rampant crime and a failed education system, pledging that his presidency would bring about change.

“This American carnage stops right here and stops right now,” President Trump said on the steps of the Capitol. The moment marks the end of an improbable journey for the property tycoon after a campaign marked by controversy.

Shortly after the ceremony Mr Trump was seen signing his first official actions as the 45th president. He sent his Cabinet nominations to the Senate as well as a signed a proclamation for a national day of patriotism, according to Press Secretary Sean Spicer.

He also signed his first executive order as president, ordering federal agencies to ease the regulatory burdens associated with Barack Obama’s health care laws, known as Obamacare, as the US Congress determines how to repeal and replace them.

He also signed into law a waiver allowing retired Marine General James Mattis, his pick for defence secretary, to serve in the post. The Senate has voted overwhelmingly to approve retired Marine general John Kelly as Mr Trump’s secretary of Homeland Security.

The change of hands was reflected on the White House website, which was scrubbed of Mr Obama’s policies and replaced with Mr Trump’s new agenda. The Trump administration has only listed six issues on the website: energy, foreign policy, jobs and growth, military, law enforcement and trade deals. Critics pointed out the revamped site made no mention of civil rights, LGBT rights, healthcare or climate change.

2 China growth slowest in 26 years (Katie Allen in The Guardian) China’s economy slowed further last year to expand at its weakest pace for quarter of a century, with warnings that it risks losing further momentum in 2017 as Donald Trump’s presidency creates new challenges for the trading superpower.

The world’s second-largest economy grew 6.7% last year, according to China’s statistics office, meeting Beijing’s target range of 6.5-7% but the slowest growth since 1990. Figures for the final quarter of 2016 alone pointed to a small pick-up in pace at the close of the year.

But news that the fourth-quarter performance was bolstered by higher government spending and record bank lending fanned fears about China’s rising debt levels. Economists fear that debt could rise further this year if the government continues to inject stimulus into the economy to meet its growth targets regardless of a changing global economy.

Forecasters see the outlook for global growth as particularly uncertain, with a change of administration in the US, key elections in the eurozone, the UK embarking on Brexit negotiations and US interest rate rises all having repercussions for indebted emerging market economies. With China still struggling to rebalance its economy away from a reliance on manufacturing and exports, any slowdown in global trade will be keenly felt in the country.

3 Gulf nations brace for budget cuts (Issac John in Khaleej Times) Despite significant deficit-reduction efforts under way since 2015 in the backdrop of plunging oil revenues, all GCC countries are projected to record fiscal deficits in 2017 while making substantial budgetary cuts.

Analysts expect most GCC states to press ahead with substantial budgetary cuts from 30 per cent upwards in order to maintain balanced budgets regardless of signs of a gradual recovery in oil prices following the recent agreement among oil exporters to cut output.

Across the GCC, government financial assets have been drawn down as part of the deficit financing programmed over the past two years. After a significant withdrawal of financial assets in 2015, a larger portion of the 2016 fiscal deficits that amounted to about $193 billion was covered by issuing debt, analysts pointed out.

Bahrain, Oman, Qatar, Saudi Arabia, and the UAE have issued bonds and obtained syndicated loans in international markets this year. In a market overview, Value Partners analysts point out that while oil price drop has largely impacted GCC public finances and has hampered foreign direct investment, only the UAE has been capable to retrieve FDI to pre-crisis level with an increase of 117 per cent in 2015 compared to 2008.

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Saudi Arabia hints at another Opec cut in 2017; Theresa May sees inequality fueling divisive politics; Middle East debt issuance jumps to $78bn

1 Saudi Arabia hints at another Opec cut in 2017 (San Francisco Chronicle) OPEC countries could cut oil production again this year, Saudi Arabia’s energy minister has said. Khalid Al-Falih said he “would not exclude” another cut to follow last year’s agreement if higher prices don’t stick because of variables outside producers’ control, such as a potential collapse in demand.

“I think Plan B is to be resilient and to be flexible and to deal with the circumstances,” he said. Asked if there could be further cuts, the minister said “if needed, absolutely.” However, he said his baseline expectation is that it “will not be necessary.”

OPEC agreed in late November to cut its production by 1.2 million barrels a day to 32.5 million barrels, the first reduction agreed to by the cartel since 2008. Nearly a dozen other countries, including Russia, pledged in December to cut an additional 558,000 barrels a day.

Those cuts are due to expire in June and Al-Falih said an extension is also possible. He warned that extending the cuts “could create a shortage too early which we don’t want to.” Oil prices are trading over $50 a barrel, nearly double the level they were a year ago, largely because of the production cuts.

The Paris-based International Energy Agency’s executive director, Fatih Birol, cautioned that the higher oil prices prompted by the production cuts could see a rise in output from US shale gas producers. And that newly increased supply could weigh on oil prices. “Don’t underestimate the shale gas reaction,” he said.

2 Theresa May sees inequality fueling divisive politics (BBC) Theresa May has told leaders at the World Economic Forum in Davos that the UK will be a “world leader” on trade. But the prime minister also warned that inequality blamed on globalisation was aiding the “politics of division”.

Her speech comes after EU leaders said a post-Brexit trade deal with the UK would be “difficult”. The European Commissioner for Economic Affairs, Pierre Moscovici, said Brexit would be bad for the UK and the EU. Mrs May said the world was enjoying an “unprecedented level of wealth”, but many people felt this was “not working for them”.

Global elites needed to tackle the backlash against globalisation, liberalism, and free trade because leaders who “embrace the politics of division and despair” were working to exploit the situation.

Mrs May said: “Talk of greater globalisation can make people fearful. For many it means their jobs outsourced and their wages undercut. It means having to sit back as they watch their communities change around them. And in their minds, it means watching as those who prosper seem to play by a different set of rules, while for many life remains a struggle as they get by, but don’t necessarily get on.”

3 Middle East debt issuance jumps to $78 billion (Issac John in Khaleej Times) Debt issuance in Middle East jumped to a record $77.8 billion in 2016 compared to 2015 as major economies in the region resorted to bond and sukuk market to tide over the challenges posed by the drop in oil revenue.

“Bolstered by Saudi Arabia’s $17.2 billion bond sale in October, Middle Eastern debt issuance reached $77.8 billion during 2016, a 145 per cent increase compared to the value raised during 2015 and by far the highest annual total in the region since records began in 1980,” said Nadim Najjar, managing director, Mena, Thomson Reuters.
Saudi Arabia was the most active nation in the Middle East accounting for 29 per cent of overall activity, followed by the UAE and Qatar.

International Islamic debt issuance increased 24 per cent year-on-year to reach $37.9 billion during 2016. HSBC took the top spot in the Middle Eastern bond ranking during 2016 with 13.3 per cent share of the market, while CIMB Group took the top spot for Islamic DCM issuance with a 13.5 per cent share.

The GCC countries, which together pump more than 18 million barrels per day of crude oil, suffered significant revenue shortfall in 2016. In 2015, total GCC total revenue, mainly from hydrocarbons, dropped to $443 billion, the lowest in five years, from a peak of $735 billion in 2013. In 2016, combined GCC revenue is estimated to have dropped further to $365 billion.

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South-East Asia giants losing their edge; Year 2016 is hottest ever recorded; Pearson shares fall 30%

1 South-East Asia giants losing their edge (Marissa Lee in Straits Times) South-east Asia’s conglomerates continue to outperform their pure-play peers, but their lead has narrowed with the end of the commodities boom and mounting competition in a slower growth era, a new report has shown.

The study assessed the performance of 67 large family- and government-linked conglomerates in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam over a 10-year period from 2006 to 2015.

During that decade, their median annual total shareholder returns or TSR, which assumes that dividends are reinvested, was 13 per cent – respectable, but a hard fall from the impressive 29 per cent TSR achieved from 2003 to 2012.

In comparison, firms in South- east Asia that focused on a single business saw median annual TSR decline markedly in the same periods, from 19 per cent to 11 per cent, management consulting firm Bain & Company found in the study.

One factor that has eroded the conglomerate advantage is the commodities rout. As many as 30 per cent of the region’s conglomerates have a commodity focus, and these firms suffered from 2012 to 2015.

The other reason plays directly to the cliche of conglomerates as unwieldy dinosaurs. “A conglomerate’s size and complexity create ways to hide costs, cross-subsidise businesses and avoid tough decisions,” said the report, and the region’s dinosaurs have lagged their focused counterparts in tackling the mounting cost and productivity challenges.

In spite of this, conglomerates continue to play a major role in South-east Asia, accounting for around 40 per cent of the top listed stocks. And what has not changed is that South-east Asia conglomerates are consistently delivering higher shareholder value than their counterparts in developed markets.

2 Year 2016 is hottest ever recorded (Damian Carrington in The Guardian) 2016 was the hottest year on record, setting a new high for the third year in a row, with scientists firmly putting the blame on human activities that drive climate change.

The final data for 2016 was released on Wednesday by the three key agencies – the UK Met Office and Nasa and Noaa in the US – and showed 16 of the 17 hottest years on record have been this century.

Direct temperature measurements stretch back to 1880, but scientific research indicates the world was last this warm about 115,000 years ago and that the planet has not experienced such high levels of carbon dioxide in the atmosphere for 4m years.

In 2016, global warming delivered scorching temperatures around the world. The resulting extreme weather means the impacts of climate change on people are coming sooner and with more ferocity than expected, according to scientists.

The natural El Niño climate phenomenon, which helped ramp up temperatures to “shocking” levels in early 2016, has now waned, but carbon emissions were the major factor and will continue to drive rising heat.

The new data shows the Earth has now risen about 1.1C above the levels seen before the industrial revolution, when large-scale fossil fuel burning began. This brings it perilously close to the 1.5C target included as an aim of the global climate agreement signed in Paris in December 2015.

The declaration of 2016 as a year of record-breaking heat comes just ahead of the inauguration of Donald Trump as US president. Trump has called global warming a hoax and is filling his administration with climate change deniers and former ExxonMobil boss Rex Tillerson. Tillerson said recently that climate change does exist but that the ability to predict the effects of greenhouse gas emissions is “very limited”, a statement most climate scientists would reject.

3 Pearson shares fall 30% (BBC) Shares in the international publishing group Pearson fell nearly 30% after the company warned of a big fall in sales in its US education business. The company said profits for 2017 could drop by £60m and it would cut its dividend for shareholders.

“The education sector is going through an unprecedented period of change and volatility,” Pearson said. The group will now sell its 47% stake in the book publisher Penguin Random House to bolster its finances.

In a trading update, Pearson revealed a sharp and sudden drop in its main business – the sale of printed and online books to higher education students in the US. Pearson said it had suffered a 30% fall in sales in the last three months of 2016, producing an “unprecedented” 18% fall for the whole of 2016. “Our higher education business declined further and faster than expected in 2016,” it revealed.

Pearson now expects the downward trend in its educational publishing business to continue during this year with profits for 2017 likely to be £60m lower than last year. One step to stem this trend will be to cut its eBook rental prices by as much as 50% for 2,000 titles.

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China will champion free trade if Trump builds barriers; World economy to grow faster in 2017; EU may call robots ‘electronic persons’

1 China will champion free trade if Trump builds barriers (Larry Elliott & Graeme Wearden in The Guardian) China’s premier, Xi Jinping, has delivered a strong defence of globalisation, serving notice to Donald Trump that Beijing will seek to usurp America’s traditional role as the champion of free trade and open markets.

Xi used an hour-long address to the World Economic Forum (WEF) to take a number of sideswipes at the US president-elect, attacking Trump’s protectionist views without mentioning him by name.

In the first speech by a Chinese president at the annual Davos meeting of global political and business leaders, Xi said China would keep its borders open, stressed that there would be no winners from a trade war, and urged that all countries continued to support the 2015 Paris climate change accord.

With Trump preparing for Friday’s inauguration in Washington, Xi used the opportunity to make clear that China was keen to take a bigger role on the global stage if the US lapsed into isolationism. “Pursuing protectionism is like locking oneself in a dark room,” he said. “Wind and rain may be kept outside, but so is light and air.”

Trump campaigned on a strongly protectionist platform, pledging to protect US firms from unfair overseas competition and threatening tariffs on goods from China and Mexico. Xi said originally globalisation had been seen as Ali Baba’s treasure trove but for many had become a “Pandora’s box”.

He added, however, that the economic liberalisation of the past quarter or a century was not the root cause of the world’s many problems and that the financial crash of 2008 was the result of excessive pursuit of profit. Xi likened the global economy to a big ocean from which it was impossible to escape. “Any attempt to cut off the flow of capital, goods, and people between economies, and channel the waters into the ocean back into isolated lakes and creeks is simply not possible.

2 World economy will grow faster in 2017 (Issac John in Khaleej Times) Global economic activity is projected to pick up pace in 2017 and 2018 after a lackluster performance in 2016, the International Monetary Fund (IMF) said. Global growth for 2016 is now estimated at 3.1 per cent, in line with the October 2016 forecast by the Washington-based fund.

As per its latest global economic outlook, economic activity in both advanced economies and emerging economies is forecast to accelerate in 2017-18, with global growth projected to be 3.4 per cent and 3.6 per cent respectively, again unchanged from the October forecasts.

In the Middle East, growth in Saudi Arabia is expected to be at 0.4 per cent in 2017, weaker than previously forecast, as oil production is cut back in line with the recent Opec agreement, while civil strife continues to take a heavy toll on a number of other countries.

In India, the growth forecast for the current (2016-17) and next fiscal year were trimmed by one percentage point and 0.4 percentage point respectively, primarily due to the temporary negative consumption shock induced by cash shortages and payment disruptions associated with the recent currency note withdrawal and exchange initiative.

Near-term growth prospects were revised up for China, due to an expected policy stimulus, but were revised down for a number of other large economies – most notably India, Brazil and Mexico. The IMF said that among emerging economies, China remains a major driver of world economic developments.

At the global level, other vulnerabilities include higher popular antipathy towards trade, immigration and multilateral engagement in the US and Europe; widespread high levels of public and private debt; ongoing climate change – which especially affects low-income countries; and, in a number of advanced countries, continuing slow growth and deflationary pressures.

3 EU may call robots ‘electronic persons’ (Emily Price in San Francisco Chronicle) The European Parliament committee released an interesting report pertaining to robots this week: it wants to call them “electronic persons.”

They’re not quite considering your average robot a human, but they want to give them a distinction that makes them sound more human-like: “The most sophisticated autonomous robots could be established as having the status of electronic persons with specific rights and obligations, including that of making good any damage they may cause,” reads the report.

The idea is that, as artificially intelligent robots become more and more commonplace, that robots will legally need to be made in such a way that they will not harm humans, or allow humans to be harmed through their actions. If they do, then the robots (and more likely their creators) will need to be held responsible for their actions.

The report also suggests that all robots should be made with a “kill switch” that would allow them to be powered off should they go rogue and become too powerful with their AI.

The report also suggests that robots should be broken down into subcategories in such a way that identifies them as devices that are self-learning, or as a robot that adapt its behaviors and actions to its environment. Those categories would then help individuals understand what risk and opportunities are available with such robots.

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Eight men as rich as half the world; Pound sinks on Brexit anxiety; Crude oil faces slippery road

1 Eight men as rich as half the world (Larry Elliott in The Guardian) The world’s eight richest billionaires control the same wealth between them as the poorest half of the globe’s population, according to a charity warning of an ever-increasing and dangerous concentration of wealth.

In a report published to coincide with the start of the week-long World Economic Forum in Davos, Switzerland, Oxfam said it was “beyond grotesque” that a handful of rich men headed by the Microsoft founder Bill Gates are worth $426bn, equivalent to the wealth of 3.6 billion people.

The development charity called for a new economic model to reverse an inequality trend that it said helped to explain Brexit and Donald Trump’s victory in the US presidential election. Oxfam blamed rising inequality on aggressive wage restraint, tax dodging and the squeezing of producers by companies, adding that businesses were too focused on delivering ever-higher returns to wealthy owners and top executives.

The World Economic Forum (WEF) said last week that rising inequality and social polarisation posed two of the biggest risks to the global economy in 2017 and could result in the rolling back of globalisation.

Oxfam said the world’s poorest 50% owned the same in assets as the $426bn owned by a group headed by Gates, Amancio Ortega, the founder of the Spanish fashion chain Zara, and Warren Buffett, the renowned investor and chief executive of Berkshire Hathaway.

The others are Carlos Slim Helú: the Mexican telecoms tycoon and owner of conglomerate Grupo Carso; Jeff Bezos: the founder of Amazon; Mark Zuckerberg: the founder of Facebook; Larry Ellison, chief executive of US tech firm Oracle; and Michael Bloomberg; a former mayor of New York and founder and owner of the Bloomberg news and financial information service.

Last year, Oxfam said the world’s 62 richest billionaires were as wealthy as half the world’s population. However, the number has dropped to eight in 2017 because new information shows that poverty in China and India is worse than previously thought, making the bottom 50% even worse off and widening the gap between rich and poor.

2 Pound sinks on Brexit anxiety (Straits Times) Sterling slid to three-month lows in Asia on Monday with investors again spooked by concerns over Britain’s exit from the European Union, while US policy uncertainty lingered ahead of President-elect Donald Trump’s inauguration.

All the early action was in currencies where the pound sank as low as $1.1983, depths not seen since the flash crash of October, having finished around $1.2175 in New York on Friday. It was last down 1.1 per cent at $1.2044.

Dealers said the market was reacting in part to a report in the Sunday Times that UK Prime Minister Theresa May will use a speech on Tuesday to signal plans for a “hard Brexit”, quitting the EU’s single market to regain control of Britain’s borders. Investors have been worried such a decisive break from the single market would hurt British exports and drive foreign investment out of the country.

3 Crude oil faces slippery road (Dharmesh Bhatia in Khaleej Times) Crude oil recorded lucrative gains in 2016 as prices rebounded from decade-low levels of $26 per barrel in February of last year. Soaring over 50 per cent, this marked the first annual gain for Brent crude oil in four years.

The over 45 per cent rally in WTI crude oil also marked the first yearly increase, following the sell-off, totalling -76 per cent, over the previous two years (crude oil peak prices were in 2014 – $107; 2015 – $62 and 2016 – $54).

Apart from the low base, the rally was driven by ongoing speculations that Opec and non-Opec producers would freeze or cut output. Such hopes culminated in the deal, announced in December 2016, that Opec decided to cut its crude production by 1.2 million barrels, effective January 1, 2017, while non-Opec producers, including Russia but not the US, would reduce output by around 0.6 million barrels per day (bpd).

Opec produces a third of global oil, or around 33.6 million bpd, and under the new deal has said it would reduce output by around 1.2 million bpd from January 2017. That would take its output to January 2016 levels, when prices fell to over 10-year lows amid ballooning supply.

The path ahead for the oil market, however, is expected to be volatile, as those who positioned for a rally unwind their trades to book profits. The possibility that Opec will be unable to meet its commitment to cut production could also undermine prices. That makes the long-term path for oil more uncertain, but few expect the commodity to reach $60 a barrel soon.

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World Bank predicts moderate global growth; China to cut steel, coal output; All Dutch trains now run on wind

1 World Bank predicts moderate global growth (BBC) There will be only a moderate pick up in global economic growth during 2017, the World Bank has predicted. Its Global Economic Prospects report is forecasting 2.7% growth compared with the 2.3% seen last year. That slight strengthening will be driven mainly by improvements in emerging markets and developing economies, the Bank says.

But there is heightened uncertainty after the US Presidential election, according to the report. The World Bank’s new forecasts suggest we can expect the unconvincing global economic revival following the financial crisis to continue. Last year’s growth figure was described as a “post-crisis low”, with “anaemic” levels of investment and a further weakening of global trade.

For emerging market and developing economies, the rise in interest rates in the US and the strengthening dollar also led to a “notable tightening of financing conditions” – which means credit that is either more expensive or harder to get. But the Bank still expects growth to accelerate in these countries, partly due to higher commodity prices, such as oil and metals, which many of them export.

The Bank’s economists also expect the slowdown in two large emerging economies, Brazil and Russia, to come to an end. For the developed economies the Bank forecasts continued weak growth of around 1.8%. That would be slightly better than 2016, but still slow compared to the period before the crisis.

2 China to cut steel, coal output (San Francisco Chronicle) China’s top economic planner has pledged to continue cutting steel and coal production, which have been a source of trade friction with many countries.

China reached targets for cuts in production capacity last year, said Xu Shaoshi, chairman of the National Development and Reform Commission, adding that hundreds of thousands of steel and coal workers have been transferred to other jobs. Other industries such as cement and glass are also “actively” cutting capacity, Xu said.

China’s trade partners accuse the country of dumping excess steel, coal, cement and glass on world markets. US President-elect Donald Trump has engaged in a war of words with Beijing, accusing China of unfair trade practices and threatening punishing tariffs.

When asked about Trump’s tariff threats and the possibility that Beijing could launch retaliatory antitrust investigations against U.S. companies in China, Xu told reporters it was “normal” to have differences on trade issues and urged the US and China to “control these issues through dialogue on the basis of mutual respect and equality.”

Xu said cutting production capacity of steel by 45 million tons and coal by 250 million tons in 2016 affected the jobs of 800,000 steelworkers and miners, with the government resettling 700,000 of them in new jobs by the end of last year.
He said China’s economy is estimated to have grown by roughly 6.7 percent last year, within its official target range of 6.5 to 7 percent.

3 All Dutch trains now powered by wind (The Guardian) All Dutch trains have become 100% powered by electricity generated by wind energy, the national railway company NS has said. “Since 1 January, 100% of our trains are running on wind energy,” said NS spokesman, Ton Boon.

Dutch electricity company Eneco won a tender offered by NS two years ago and the two companies signed a 10-year deal setting January 2018 as the date by which all NS trains should run on wind energy.

Eneco and NS said that around 600,000 passengers daily are “the first in the world” to travel thanks to wind energy. NS operates about 5,500 train trips a day. One windmill running for an hour can power a train for 120 miles, the companies said. They hope to reduce the energy used per passenger by a further 35% by 2020 compared with 2005.

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