1 World Bank’s ‘perfect storm’ warning for 2016 (Larry Elliott in The Guardian) The risk of the global economy being battered by a “perfect storm” in 2016 has been highlighted by the World Bank in a flagship report that warns that a synchronised slowdown in the biggest emerging markets could be intensified by a fresh bout of financial turmoil.
The Bank said the possibility that Brazil, Russia, India, China and South Africa – the so-called Brics economies – could all face problems simultaneously would put in jeopardy the chances of a pick-up in growth in the coming year.
It added that the impact would be heightened by severe financial market stress of the sort triggered in 2013 by the announcement by the Federal Reserve that it was considering reducing the stimulus it was then providing to the US economy.
The Bank said activity in 2015 had failed to live up to its expectations – the fifth year in a row that growth has undershot the forecasts made by the Washington-based institution, which lends to the world’s poorest countries. It said growth had slowed to 2.4% in 2015, from 2.6% in 2014, but added that a stronger performance in developed countries should lead to 2.9% growth this year.
The Bank is predicting that recessions in Brazil and Russia will bottom out in 2016, that China will experience only a modest growth slowdown from 6.9% to 6.7% and that India will continue to expand at a robust pace. The Bank has estimated that growth in developing countries reached a post-crisis low of 4.2% in 2015, down from 4.9% in 2014, and warned that 2016 could be another difficult year.
The Bank also highlighted the risks of what it called a perfect storm. “Spillovers could be considerably larger if the Brics growth slowdown were combined with financial market stress. If, in 2016, Brics growth slows further, by as much as the average growth disappointment over 2010-14, growth in other emerging markets could fall short of expectations by about one percentage point and global growth by 0.7 percentage points.
“If such a Brics growth decline scenario were to be combined with financial sector turbulence, emerging market growth could slow by an additional 0.5 percentage points and global growth by an additional 0.4 percentage points.”
2 Macy’s to cut jobs, shut stores (BBC) US department store giant Macy’s said it will cut thousands of jobs and close stores after disappointing sales over the holiday season. The cuts will impact 3,000 jobs, half of which are expected to be placed in other positions.
An additional 600 jobs will be lost in back-office operations, while 750 workers will go through the closing of a call centre. About 36 stores will also be closed by early spring of this year. The company expects a 2.7% drop in same-store sales for the year to January, more than the up to a 2.2% decline it had initially forecast.
Macy’s is the US’s biggest department store chain and operates upscale retail chain Bloomingdale’s. A strong US dollar, low spending by tourists, warm weather and a glut of unsold inventory are being blamed for its disappointing performance over the key winter holiday season.
Consumer spending habits have also changed as people spend more money on travel and electronics and less on discretionary items such as clothing and cosmetics. The retail giant has also been hit hard by deep discounts from e-commerce giants such as Amzon and low-cost rivals such as TJ Maxx. Macy’s said the job losses and store closures would mean a saving of $400m.
3 Pope Francis says ‘restless hearts’ of our times seek certainty (San Francisco Chronicle) Pope Francis says restless hearts are seeking sure answers to life’s questions without finding them. Francis has voiced this reflection during Mass in St. Peter’s Basilica to mark Epiphany, recalling the Gospel account of the Three Kings, or Magi, who follow a star to find the infant Jesus in Bethlehem.
The pontiff says the church is tasked with “showing ever more clearly the desire for God which is present in the heart of every man and woman” but “to be a missionary does not mean to proselytize.”
Francis says: “Like the Magi, countless people in our own day have a ‘restless heart’ which continues to seek without finding sure answers.” Recalling the long journey of the Magi, Francis says “before Jesus, all divisions of race, language and culture disappear.”