1 Is IMF Mr Nice or Nasty in Ukraine issue? (Robert Peston on BBC) Is tough love from the West the right economic prescription for Ukraine, as the Russian bear consumes the Crimea and appears to be salivating over the prospect of consuming rather more of that turbulent country? Or should the International Monetary Fund and other sovereign creditors be a little less insistent that Ukrainians should put on hairshirts as a condition of receiving vital official loans?
The IMF has announced it will provide between $14bn and $18bn over two years, and believes another $10bn or so will be “unlocked” from other international financial organisations and rich countries (such as the EU and Japan). The provision of new credit is vital. Without it, Ukraine risks not being able to service its external debts in the coming year, of defaulting, and of running out of reserves to pay for imports.
That way lies penury, for a country whose economy has been limp for years. Against that background, the IMF’s imposed reforms are the conventional remedy. The status quo is the road to ruin. But as ever the debate is all about the sensible pace for the acquisition of economic prudence and fiscal rectitude. Now on this, the IMF’s actions and statement are somewhat ambiguous (ahem).
On the one hand, the Ukrainian government yesterday said it would be whacking up the gas price paid by consumers by an eye-watering 50%, citing the looming agreement with the IMF as cause. On the other, the IMF insists that government spending cuts and tax increases will be “proceeding at a pace commensurate with the speed of economic recovery and protecting the vulnerable”.
What does that mean in terms of numbers? Well the IMF wants the fiscal deficit – the gap between government revenues and expenditure – to be halved (more or less) to 2.5% by 2016. Which is slower retrenchment than planned in the UK. So is this an occasion, where the West and its official financial institutions, could and should be a little more conspicuously generous – such that they should offer the Ukrainians more carrot, especially since there is little appetite to brandish an intimidating stick against the Russians?
2 China at the cross roads (Max Mason in Sydney Morning Herald) The rebalancing of China’s economy will not be without its hiccups, but debate is rampant about whether the easing of growth will result in a soft-landing or a fall off the cliff face. Should China manage the transition successfully, the benefits for its citizens and the rest of the world will be ample. The repercussions, should it fail, are dire.
”On the monetary side, we believe the PBoC needs to send a stronger signal of policy easing. We believe a reserve requirement ratio cut of 50 basis points in the second quarter and another 50 basis point cut in the third quarter are likely. The probability of an interest rate cut is rising as well, although it is not yet part of our base case,” Nomura research analyst Zhiwei Zhang said. The country has transformed itself from a nation of farmers into the world’s second largest economy, largely through the manufacturing of goods for the developed world.
But following years of economic expansion, the Chinese government faces a difficult crossroads. Having developed to the point where GDP per capita places it in the middle of the World Bank’s measurement for a middle-income nation, China is facing the task of shifting its economy from being the world’s factory to one of domestic consumption.
”On the fiscal front, we believe fiscal spending will increase, so on a monthly basis the actual central government fiscal deficit may widen,” Mr Zhang said. ”In the housing market, policies may loosen in de facto terms. The central government has decided to give local governments more freedom to choose housing policies that are appropriate for local circumstances. This will likely lead to policy easing, as local governments are under pressure to boost local housing markets.”
3 PCs to lose more ground to tablets (Sydney Morning Herald) Sales of traditional computers will lose more ground in 2014 to tablets and other mobile devices, a market tracker says. The overall market for connected devices – PCs, smartphones and tablets – is likely to grow 6.9 per cent to nearly 2.5 billion devices in 2014, according to a report by research firm Gartner. More people will dump their PCs for other devices, but the drop in PC sales will moderate to about 6.6 per cent this year, with unit sales of 276 million.
Some surveys showed a drop of about 10 per cent in PC sales last year. The global tablet market is expected to grow 38.6 per cent, Gartner said. Total tablet sales will nearly equal that of PCs at 270 million, the firm said. Mobile phones, the largest segment, is seen as growing 4.9 per cent to 1.9 billion units – led by “the lower end of the premium phone market and the higher end of the basic phone market,” Gartner said.
The Google Android platform is expected to extend its lead in overall devices, with more than 1.1 billion units in 2014, mostly in mobile phones. Microsoft Windows will remain the number two platform with 339 million devices and Apple’s iOS and Mac OS will remain third with 286 million devices, Gartner said.
4 The rise and rise of selfies (Khaleej Times) One of the first teen selfies was taken by the Grand Duchess Anastasia Nikolaevna of Russia using a mirror and a Kodak Brownie box camera in 1914. A hundred years later, selfies — the pictures of self or a group — are all the rage thanks to smartphones. What raises serious concerns now is when selfies become an obsession, especially with teenagers who just can’t seem to get that “right selfie”! It just might be that selfies are becoming as damaging as doctors have been warning.
It is time we say it is not okay to have kids spend large parts of their day with their cellphones, posting group pictures with friends. When a teenager tries to kill himself because he could not manage a “perfect” selfie, it is time for the alarm bells to ring and tell them it’s time to come back to real life. Danny Bowman could be anyone’s college-going teenager, having fun with friends and hanging out with them. Instead, he is in hospital in the United Kingdom, all because he did not find a single acceptable selfie from the almost 200 that he took every day.
It is a case of technology addiction and body dysmorphic disorder. “I was constantly in search of taking the perfect selfie and when I realised I couldn’t I wanted to die,” he said recently, recalling instances of people making rude comments about the size of his nose or the state of his skin, when he first started posting selfies at the age of 15. The medical fraternit is cautioning people about what could be a wave of people harming themselves over their selfies. David Veal, a doctor whose clinic weaned Danny off his iPhone, said “This is a serious problem. It’s not a vanity issue. It’s a mental health one, which has an extremely high suicide rate.”