1 Europe opens doors to refugees (Johannesburg Times) Britain and France have joined Germany in promising to accept tens of thousands of migrants as Europe’s record influx of people fleeing war and poverty sparked warnings that one Greek migrant choke point was “on the verge of explosion”.
European leaders are scrambling for solutions as bloody conflicts in Syria, Iraq and elsewhere have sent hundreds of thousands of desperate people on dangerous voyages through the Balkans and across the Mediterranean to the haven of the 28-nation EU.
German Chancellor Angela Merkel, whose country is Europe’s top refugee destination, hailed the warm welcome her citizens gave to 20,000 asylum-seekers, and pledged billions more euros to house them. As EU leaders stepped up efforts to tackle the historic crisis, France said it would take 24,000 more asylum-seekers under a European plan to relocate 120,000 refugees from hard-hit frontline countries.
And British Prime Minister David Cameron said his country would take in 20,000 Syrian refugees from camps near the war-torn country’s borders over the next five years. In Greece, the situation on Lesbos, an island near Turkey, was “on the verge of explosion” with the recent arrival of more than 15,000 mainly Syrian refugees.
French President Francois Hollande warned that, unless the EU made a greater collective effort, the core European ideal of open borders would be in peril. But Europe looked far from united as Hungarian Prime Minister Viktor Orban said quotas would be futile for as long as refugees kept streaming in. “As long as we can’t defend Europe’s outer borders, it is not worth talking about how many people we can take in,” Orban said.
2 EU farmers protest price slump (San Francisco Chronicle) Thousands of farmers protested outside European Union headquarters on Monday to demand more aid and higher prices for their milk and pig meat. The European Commission responded with a support plan worth 500 million euros ($560 million).
In a tense standoff, farmers from across the 28-nation EU pelted police with eggs and sprayed them with hay before they were drenched in return by a water cannon. In a building close by, European Commission Vice President Jyrki Katainen announced the support plan, which seeks to immediately ease the debt load of farmers, many of whom are selling milk below production prices. The market has become oversupplied since a system of quotas was reformed this year and some markets were closed off.
Some farmers have called for a reintroduction of quotas on production or more direct aid from their governments to pay the bills. The head of the EU farming federation Copa-Cogeca, Pekka Pesonen, said that “an aid package of 500 million euros is nowhere enough to compensate farmers for the loss” of the Russian export market, which is closed off because of a ban.
Farmers have historically been protected against volatility in market prices by EU policies that sought to guarantee them a fair living in return for steadfast and plentiful production. But a system of generous subsidies and market-shielding measures led to overproduction and the industry found it tough to adapt to changing conditions. Quotas to limit dairy production were abolished in April and extra production has caused prices to tumble.
3 India economic boom yet to take off (Jodri Rof in Khaleej Times) During India’s 2014 elections, Prime Minister Narendra Modi promised to boost the economy if he was elected. Over a year has passed since his landslide win, and recent figures show high GDP (gross domestic product) growth of seven per cent year on year in Q2.
But there are serious concerns that the growth is overstated due to the new official methodology for calculating the country’s gross domestic product. Several changes in the calculation were introduced during this period. As a result, India became the fastest-growing economy “on paper” overnight, which generated a great deal of controversy. The new GDP growth is structurally higher than the old version by 1.5 percentage points on average for the two years in which the two datasets are available.
However, the new series has not registered any significant improvement last year. There seems to be no economic miracle for the time being. A good measure to assess the evolution of the Indian economy is tax revenue, which should be correlated with the targeted sectors. Corporate tax revenue growth fell sharply in the first six months of 2015 (-6 per cent YoY on average) while income tax return growth remained broadly steady, at 3.5 per cent YoY.
Important economic reforms wait to be approved more than a year after Modi’s election. Two important legislative changes are the land acquisition bill and the implementation of the goods and services tax (GST). These two reforms have the potential of boosting investment in India, but so far it is highly uncertain whether the government will succeed in implementing them.
While some factors may pose a threat to the economic outlook, current conditions offer great opportunities. The moderation in food inflation allowed for policy rate cuts, which set an appropriate environment to boost investment and consumption. However, a potential pick-up in energy and commodity prices could fuel inflation in India.
The weakness in global growth, led by the deceleration in China, could also represent a disincentive to invest, but the two main export destinations are the US and the European Union, which are experiencing a resilient recovery. Overall, conditions are right for India, and the government needs to deliver the necessary reforms for economic growth to thrive in the medium term.