1 Global trade to gain speed in 2014 (Andrew Walker on BBC) The growth of global commerce will pick up speed this year and next, says the World Trade Organization. Trade will grow by a “modest” 4.7% this year and by 5.3% in 2015, says the WTO. Next year’s figure, if correct, would be in line with the average growth rate in world trade over the last 20 years. These forecasts are consistent with other figures that show the world economy is gradually recovering from the financial crisis.
In 2009, trade in goods declined by 12% and bounced back by 14% the following year. The year 2011 was in line with the long term average, then came what the WTO calls a two-year slump – annual growth of around 2%. The overall impact is that global trade is above its pre-crisis level, but well below where it would have been, had it grown in line with the earlier pre-crisis trend.
But if world trade and its growth before 2008 was in some sense normal, we are still not back there. But perhaps that isn’t normal any more. The agency’s director general, Roberto Azevedo, said that just waiting for an automatic increase in trade was not enough. He called for new trade liberalisation agreements, in particular the negotiations known as the Doha Round.
The new WTO figures confirm that China is now the biggest goods trader in the world. Adding together exports and imports, China leads the US, which is itself still the biggest trader in commercial services. However, the picture is different if the European Union is treated as a single unit, counting the trade of EU member states with outside nations and excluding commerce within the Union. On that basis, the EU is the world’s biggest trader.
2 Facebook may launch e-money transfer in Europe (Samuel Gibbs in The Guardian) Facebook is preparing a money transfer service in Europe that would allow it to compete with the likes of Western Union, while giving users the option of storing money with the social network or buying items online. The US tech firm is seeking regulatory approval in its European base in Ireland for “e-money” status, which would see it issue digital credits that can be converted into cash by recipients.
The firm already has permission for some forms of money transfer in the US, which allow payments within apps, from which Facebook takes a 30% cut. The company facilitated $2.1bn in transactions across Facebook in 2013, primarily to games publishers. Approval in Ireland would allow Facebook to operate an e-money service throughout Europe using “passporting”, which allows digital payments to be used across EU member states without having to gain regulatory approval from each one.
Facebook declined to comment on the development. “The market for money transfer is very, very large,” said Taavet Hinrikus, co-founder of TransferWise – one of three payment services reportedly in partnership discussions with Facebook. Hinrikus declined to comment on the reported partnership discussions but said: “For remittance alone the market is worth around $500bn, according to the World Bank, but for money moved between developed nations, as well as between developed and developing individuals and business, the market is valued at an estimated $5tn to $10tn, based on our analysis of global money flow data.”
3 Aussies hope to retire at 70 (Lisa Visentin & Gareth Hutchens in Sydney Morning Herald) Australians will become some of the oldest workers in the world if the government lifts the pension age to 70. Data from the Organisation for Economic Co-Operation and Development shows if Australia lifts the pension age to 70 – as indicated by Federal Treasurer Joe Hockey – it will be doing so years before other countries finish lifting theirs to 67.
Mr Hockey gave his clearest signal yet that Australia’s pension age could rise to 70 in the budget, saying his generation would have to work for longer to prevent serious future budgetary stresses from an ageing population. His plan has been heavily criticised by seniors and the Labor Party, with opposition spokeswoman for families Jenny Macklin saying the legislated rise to 67 had not begun yet, and the government would need to account for serious age discrimination in the workplace before lifting it to 70.
But the Productivity Commission and the Grattan Institute both support lifting the age to 70, saying it is reasonable in the face of an ageing population. The data shows if Australia moved to lift its pension age to 70 after 2023, it would be doing so before most other countries had finished lifting their pension age to 67. Canada will finish lifting its pension age to 67 by 2029; Germany will complete the process by 2029, while the US will be done by 2036. China has no plans to lift it above 60.
4 Education and Inda’s jobs crisis (Raymond Zhong & Saptarishi Dutta in The Wall Street Journal) India’s economic slowdown is giving rural Indians fewer incentives to leave their home villages and farms in search of better-paying work. For some who have already left, it means going back to a way of life they thought they’d left behind. Credit-rating firm Crisil predicts that by 2019, 12 million more people will be working in agriculture than in 2012. Compare this to what happened between 2005 and 2012, when the agricultural workforce shrank by 37 million people, and you get some sense of what a turnaround this could represent for India if Crisil’s forecast bears out.
This stalling of urbanization and industrialization touches on many aspects of India’s extraordinary, if rickety, economic rise. Part of the problem is the country’s undersized manufacturing sector. But it’s important not to undervalue another factor that is also preventing more people in India’s countryside from finding more productive—and hence more remunerative—work.
School education in India is “abysmally poor” as one report put it last year. More boys and girls are enrolling than before, but quality hasn’t kept up. The Right to Education Act, 2009 guarantees free and compulsory elementary education but has been criticized for setting such unrealistically high standards for quality that schools are encouraged to pay bribes in exchange for certifications from government inspectors.
Rabindranath Tagore, the Nobel Prize-winning Bengali poet and polymath, issued this diagnosis many decades ago: “In my view the imposing tower of misery which today rests on the heart of India has its sole foundation in the absence of education.” According to a 2010 study, only 40% of 8- to 11-year-old students in government schools in Bihar could read a simple paragraph. Just 43% of them could subtract a two-digit number from another two-digit number. The truly depressing thing about that last statistic? The nationwide average in India was also 43%.