Tag Archives: Economic

Air Pollution Costs Iran Billions In Economic And Social Damage

Iran’s capital Tehran has been blanketed by heavy smug this week, forcing schools to shut down and hospitals have admitted many more cases of heart and respiratory emergencies.

The head of Environment and Sustainable Development at Municipality of Tehran says air pollution costs the capital of Iran up to $2.6 billion per year. But other major cities, specially in the south also suffer from periodic heavy air pollution.

The main culprits are vehicles that produce 70%-80% of the pollutants, Shina Ansari disclosed on Wednesday, November 13.

The level of pollution in Tehran was so alarming on Wednesday that schools were forced to shut down.

Earlier on Monday, Majles (parliament) Research Center (MRC) had also cited the World Bank as saying that “the cost of air pollution in Tehran is $2.6 billion per year.” However, the MRC report published on its official website has insisted, “The estimate only considers human health effects, and therefore underestimates the total economic cost from air pollution.”

The total economic damage from air pollution, the report maintains, would be much higher if other impacts, including reduced agricultural productivity, reduced visibility; long-term damage to cultural sites and infrastructure; reduced quality of life; and education-days lost because of closed schools, are accounted for.”

Meanwhile, the report has suggested that all non-standard and old vehicles should be taken off the streets of Tehran to rein in the pollutants.

“Nonetheless, more than 2.6 million below Euro 4 standards sedans are currently moving around the capital city,” the report says.

After years of economic sanctions and an economy largely closed to international markets, Iran suffers from an outdated vehicle fleet. Locally produced cars are replicas of older foreign models and imports of new vehicles are heavily taxed.

Nearly 72% of vehicles in Tehran are sedans, 2% taxis, 18% motorbikes, 5.5% pickups, 2% trucks, and almost half a percent buses and mini-busses.

According to the last research about the relationship between vehicles and air pollution in Iran, “726,000 tons of pollutants are produced in Tehran every year, out of which 85% by vehicles,” the 2013 research noted.

However, the data presented by the report are gravely dubious, since the real volume of pollutant gases in the Iranian capital city is much higher. International entities have estimated that Iran produces more than 670 million tons of Carbon Dioxide each year. Therefore, it is highly unacceptable to say that Tehran has only a 1% share in producing pollutants in the country.

A report by World Bank published in April 2018, says, “There are more than 17 million vehicular trips per day in Tehran, and many of the vehicles have outdated technology. Thus, the air in Tehran is amongst the most polluted in the world.”

As a rule, the Islamic Republic authorities are not serious in tackling the problem of deadly air pollution, critics say.

Tehran’s Mayor, Pirouz Hanachi, echoed the critics’ voice last Tuesday by saying, “Tehran’s only way out of the current crisis is to hope for Mother nature’s assistance,” adding, “If the wind were to blow our way, the situation would improve.”

Furthermore, government orders concerning air pollution are frequently disregarded.

As recently as last Monday, President Hassan Rouhani’s Administration banned trucks from entering Tehran. Nevertheless, it took two days for the traffic police to execute the order.


Nigerian Economic Growth Slows to 1.94% in the Second Quarter

 Nigeria’s economic growth slowed in the second quarter as oil output declined slightly.

Gross domestic product in Africa’s largest oil producer grew 1.94% in the three months through June from a year earlier, the Abuja-based National Bureau of Statistics said in a report published on its website Tuesday. That compared with a revised expansion of 2.1% in the first quarter and a median estimate of 2.46% in a Bloomberg survey of six economists.

Key Insights

  • After a few years of massive spending to boost the economy following a 2016 contraction, Nigeria’s Senate approved a reduced budget for 2019 as the government struggles to meet revenue targets. The central bank has now stepped in to help support expansion, first with an interest-rate cut in March and thereafter by forcing lenders through regulations and penalties to give out more credit in an attempt to stimulate growth.
  • President Muhammadu Buhari, who was re-elected in February, has pledged to diversify his country’s economy, which depends on oil for 90% of its foreign exchange, making it vulnerable to global price movements. Crude output fell to 1.98 millions barrels per day from 1.99 million barrels in the first quarter.
  • After averaging more than 7% in the first 14 years of this century, annual growth in Nigeria’s economy, which vies with South Africa as the continent’s largest, hasn’t managed to top 3% for the past four years.


China’s Economy Will Grow at 5.7% in 2020, Oxford Economics Says

 China’s economic growth will likely slow to 5.7% in the last quarter of 2019 and remain broadly at that pace in 2020, even with increased stimulus from policy makers, according to Oxford Economics.

While the policy easing since late last year has helped moderate the slowdown, the impact has been small, according to a report by Louis Kuijs, chief Asia economist at Oxford Economics in Hong Kong. With the domestic economy slowing, conflict with the U.S. and weak global trade momentum, “more policy easing is needed to convincingly stabilize economic growth,” he said.

China’s fiscal stimulus package including about two trillion yuan ($279 billion) of tax cuts has had less of a multiplier effect on lifting growth at home and abroad, compared with previous easing which was mainly focused on infrastructure and housing spending, the report said. Demand for credit has stayed weak as the economy slows and the trade war escalates, but policy makers have remained reluctant to boost credit growth in a major way.

China’s economic growth softened to 6.2% in the second quarter, the lowest pace in almost three decades and close to the lower bound of the government’s full-year target of between 6% and 6.5%. Earliest indicators compiled by Bloomberg showed the economy is slowing further in August.

“We still expect growth to stabilize, but later than envisaged before and at a lower rate,” Kuijs said. “The key downside risk to this forecast is policy makers not stepping up the policy easing sufficiently.”


Lebanese officials declare state of economic emergency

BEIRUT: Lebanon’s political leaders declared what they called an economic state of emergency Monday following a meeting aimed at finding a solution to the country’s economic crisis, raising concerns that more taxes will be imposed.

Lebanon has one of the world’s highest public debts in the world, standing at 150 percent of gross domestic product. Growth has plummeted and budget deficit reached 11 percent of GDP as economic activities slowed and remittances from Lebanese living abroad shrank.

The government hopes to bring down the budget deficit to 7.6 percent of the GDP this year and to 6.5 percent in 2020.

The meeting at the presidential palace discussed measures to be taken in the near future and as part of the 2020 draft budget.

Prime Minister Saad Hariri told reporters after the meeting that the leaders have agreed on “declaring an economic state of emergency” and the formation of a committee that will follow on the situation.

Hariri added that employment in the public sector will be frozen and work will begin for a new retirement system. He said officials will work on reducing the percentage of the debt through partnership between the public and private sectors.

President Michel Aoun said in a speech at the opening of the one-day session that everyone should make “sacrifices” in order to get one of the world’s most indebted countries out of its problems.

“We have to unite our efforts to come out with solutions to the economic crisis that is strangling the dreams and hopes of our people,” Aoun said.

No official details about the expected measures have been made public but economists who took part in preparatory talks for Monday’s meeting said they included raising tax on gasoline, boosting the value added tax from 11 percent to 15 percent on luxury items, as well as fighting tax evasion.

The meeting came 10 days after international ratings agency Fitch downgraded Lebanon’s ratings and as tensions on the border with Israel increased in recent days. Hezbollah on Sunday fired a barrage of anti-tank missiles in retaliation for an airstrike that targeted the group in Syria and an alleged Israeli drone attack south of Beirut late last month.

The recent developments have led for the first time in years for the US dollar to reach 1,560 Lebanese pounds on the black market, compared with the 1,500 that has been fixed since 1997.

Hariri vowed that the peg of the Lebanese pound to the American currency will remain in place.

Corruption-plagued Lebanon suffers from one of the world’s highest debt ratios, high unemployment and little growth.

In July, Lebanon’s parliament ratified a controversial austerity budget that aims to save the indebted economy.

Last month, Standard & Poor’s Global Ratings maintained its long- and short-term foreign and local currency sovereign credit ratings, saying the country’s outlook remains negative. The agency is scheduled to issue new ratings within six months.

Hariri said Lebanon has a period of six months to act and it is better “that we not become like states that collapsed.”

I’n January, Moody’s downgraded Lebanon’s issuer ratings to Caa1 from B3 while changing the outlook to stable from negative.


Manmohan blames ‘politics of vendetta’ for economic slowdown

NEW DELHI: Former Indian prime minister Manmohan Singh on Sunday urged the Modi government to shun its politics of vendetta which he blamed as a factor in India’s worrying economic outlook.

In a recorded message to Prime Minister Narenda Modi he said the 5 percent growth in India’s Gross Domestic Product (GDP) signalled a prolonged slowdown.

“Our youth, farmers and farm workers, entrepreneurs and the marginalised sections deserve better. India cannot afford to continue down this path. Therefore, I urge the government to put aside vendetta politics, and reach out to all sane voices and thinking minds, to steer our economy out of this man-made crisis.”

Dr Singh said the state of the economy was “deeply worrying” and the near zero percent growth of the manufacturing sector proved that it had not fully recovered from the “blunders of demonetisation and a hastily implemented GST.”

“The last quarter’s GDP growth rate of 5 percent signals that we are in the midst of a prolonged slowdown. India has the potential to grow at a much faster rate but all-round mismanagement by the Modi government has resulted in this slowdown,” he said.

“It is particularly distressing that the manufacturing sector’s growth is tottering at 0.6%.”

Projecting a grim picture of the economy – depressed demand and consumption, lower tax revenues, job losses in formal and informal sector, negative investor sentiment and tax terrorism – Dr. Singh also attacked the Modi-led government for eroding the autonomy of the independent institutions and credibility of government data.

On the Modi government taking 1.76 lakh crore from the Reserve Bank of India (RBI) reserves, Dr. Singh, who has been a former RBI Governor himself, said the resilience of the RBI will be tested after this record transfer to the government.

“In addition, the credibility of India’s data has come under question under this government. Budget announcements and rollbacks have shaken the confidence of international investors. India has not been able to increase its exports to take advantage of opportunities that have arisen in global trade due to geopolitical realignments. Such is the state of economic management under the Modi government,” he said.

Dr Singh also claimed that the low inflation figures ‘showcased’ by the Modi government has come at the cost of farmers.

“Rural India is in terrible shape. Farmers are not receiving adequate prices and rural incomes have declined. The low inflation rate that the Modi government likes to showcase comes at the cost of our farmers and their incomes, by inflicting misery on over 50% of India’s population,” he said.

“The Modi government’s policies are resulting in massive jobless growth. More than 3.5 lakh jobs have been lost in the automobile sector alone. There will similarly be large scale job losses in the informal sector, hurting our most vulnerable workers,” he added.

Dr Singh’s scathing attack comes after the country reported a slow GDP growth rate of 5 percent for the first quarter of this fiscal, with sharp deceleration in manufacturing output and subdued farm sector activity.


Consumer worries cloud best Canadian output gain in two years

Canada’s economy recorded a stronger-than-expected rebound in the second quarter as exports recovered, but surprisingly weak consumption and business investment will cast doubts on the expansion’s sustainability.

Output grew at an annualized pace of 3.7 per cent in the three months through June, Statistics Canada said Friday in Ottawa, up from a paltry 0.5 per cent increase in the first quarter. The rebound follows two straight quarters of hardly any growth. The period also ended better than expected, with a monthly expansion of 0.2 per cent in June.

The underlying details, however, were less impressive. The rebound was driven by the fastest quarterly increase in exports since 2014, but growth in household consumption came to a near halt despite strong gains in incomes, and business investment shrank by the most in more than two years. As a result, domestic demand contracted in the second quarter.

That could be a signal of growing unease among households and businesses about global economic conditions, fueled by concerns over the U.S.-China trade war and potentially foreshadowing a sharper slowdown in the second half of the year. Policy makers at the Bank of Canada may look through some of the strength in the report.

“This was a ‘less than meets the eye’ report,” Brian DePratto, senior economist at Toronto-Dominion Bank, said in a note to investors. “Not only were today’s details weak, but since the second quarter ended we’ve seen yet another escalation in the trade wars and associated uncertainty.”

Possibly reflecting concerns about the outlook, businesses met some of the pickup in foreign demand by drawing down inventories, rather than boosting production. The strong gain in exports, meanwhile, is seen as only temporary, reflecting a ramping up of shipments after a sluggish winter. Exports had slumped sharply earlier this year because of curtailments on oil production and other temporary issues, prompting many businesses to stockpile.

DePratto said he expects the Bank of Canada to join the global trend toward easing monetary policy in October, an increasingly likely scenario according to swaps trading. A second cut is being priced in by investors sometime next year. The next rate decision is Sept. 4, when policy makers aren’t expected to move but will likely strike a more dovish tone. Friday’s GDP numbers beat the bank’s 2.3 per cent forecast, and economists had predicted a 3 per cent increase.

The stronger-than-expected headline figure boosted the Canadian dollar. The loonie was up 0.2 per cent to $1.3255 per U.S. dollar at 10:04 a.m. in Toronto.

Solid Increase’

Despite the worrying details, the Canadian economic expansion in the second quarter was still impressive — growing the most in two years at easily the fastest pace in the Group of Seven. The U.S. economy expanded by an annualized 2 per cent over the same period.

Shipments by Canadian exporters rose at a 13 per cent pace, contributing more than 4 percentage points to growth. A drop in imports also added to the expansion, as more of the nation’s demand was used to buy domestically produced goods and services.

Housing investment, meanwhile, recorded its first gain in six quarters.

It’s the sort of data that make the case for cheaper money less compelling in Canada than it is elsewhere. Even two cuts over the next 12 months will still leave the country with the highest policy rate among advanced economies.

“The solid increase in the headline numbers leaves our call intact for the Bank of Canada to remain patient on cutting rates for the next few month,” said Royce Mendes, an economist at Canadian Imperial Bank of Commerce, which expects a cut in January


Trump Touts N. Korea, Iran to Realize Economic Potentials

U.S. President Donald Trump says Iran and North Korea have tremendous potential, touting the two should reach deals with the U.S.

During a meeting with Egyptian President Abdel-Fattah el-Sissi on Monday at the G7 summit in France, Trump brought up Pyongyang and Tehran, whose nuclear ambitions the U.S. has tried to thwart.

[Sound bite: US President Donald Trump]
“They have a great potential. Iran has great potential. You know who else has great potential? North Korea. Kim Jong-un. And under his leadership, North Korea has great potential. And I don’t think North Korea wants to blow it. Because if they blow it, it won’t be good.”

While trying to persuade Pyongyang to quickly resume working-level talks, he hinted that the U.S. could take the approach it has taken with North Korea in dealing with Iran. 

At a news conference wrapping up his engagements at the G7 summit, the American president said he could meet Iranian president Hassan Rouhani.

In an interview with Iranian state TV on Tuesday, however, Rouhani seemed to reject the suggestion, saying he would meet with Trump only if Washington removes sanctions on Tehran.

Trump says China requested to ‘get back to the table’ for trade talks

U.S. President Donald Trump said China has asked to re-start trade talks, hours after Beijing’s top negotiator publicly called for calm in response to a weekend of tit-for-tat tariff increases that sent global stocks plunging.

“China called last night our trade people and said let’s get back to the table,” Trump said on the sidelines of the Group of 7 meeting in Biarritz, France. “They understand how life works.”

Trump said U.S. officials received two “very productive” calls from the Chinese but declined to say whether he’d spoken directly to Xi. “They want to make a deal,” he said, adding: “We’re going to start very shortly and negotiate and see what happens but I think we’re going to make a deal.”

Asked by reporters about Trump’s remarks shortly after the American president spoke, Geng Shuang, a spokesman for the Foreign Ministry in Beijing, said that he wasn’t aware of any weekend U.S.-China phone calls. He repeated China’s position that the trade war should be settled through negotiation.

S&P 500 futures reversed losses after Trump’s comments. Shares in Asia dropped on Monday in all major markets, led by Hong Kong’s 2.3% decline.

“China called last night our top trade people and said let’s get back to the table.”

Earlier, China’s top trade negotiator, Vice Premier Liu He, had used an appearance in China to call for a de-escalation in tensions.

“We are willing to solve the problem through consultation and cooperation with a calm attitude,” Liu said at the opening ceremony of 2019 Smart China Expo in Chongqing, Caixin reported on Monday. “We firmly oppose the escalation of the trade war,” he said, adding that it “is not conducive to China, the U.S. and the interests of people all over the world.”

The world’s two largest economies traded further blows over the weekend, with Beijing’s retaliation on an earlier tariff increase by the U.S. meeting yet another increase from Trump, who said that existing 25 per cent tariffs on some US$250 billion in imports from China would rise to 30 per cent come Oct. 1, the 70th anniversary of the founding of the People’s Republic. Economists are warning that a global recession could result from the spiral of trade measures.

China welcomes all foreign investors, including those from the U.S., Liu said, adding that policy makers will keep building a favorable environment and protecting property rights. He stressed that China has ample macro-policy tools to ensure the country’s economic fundamentals have “good momentum.”

Liu’s comments and a stronger-than-anticipated yuan fixing suggested that traders don’t need to worry about an immediate counterpunch from China after a tumultuous weekend. China on Friday threatened to impose more tariffs on $75 billion of American goods, prompting President Donald Trump to announce even higher tariffs on Chinese goods and call for American companies to pull out of Asia’s largest economy.

Liu spoke an event focused on high-tech industries such as big data, artificial intelligence, semi-conductors and 5G. He said China opposes technology blockades and protectionism, and is trying hard to maintain the completeness of supply chains.

On Friday, Trump said existing 25 per cent tariffs on some US$250 billion in imports from China would rise to 30 per cent come Oct. 1, the 70th anniversary of the founding of the People’s Republic of China. Planned 10 per cent tariffs on a further US$300 billion in Chinese goods will be taxed at 15 per cent instead of 10 per cent starting with the first tranche on Sept. 1.

China will follow through with retaliatory measures announced Friday and fight the trade war to the end, after the U.S. failed to keep its promises, the Communist Party flagship newspaper People’s Daily wrote in a Saturday editorial. Later, the Editor-in-Chief of the nationalist Global Times, Hu Xijin, said on Twitter that the U.S. is “starting to lose China.”

China has ‘lost’ the US already: all-round high tariffs, Huawei ban, political hostility, Hong Kong, Taiwan… We’re facing a completely different United States. We have nothing more to lose, while the US is just starting to lose China.


US sanctions take economic toll on lives of Iranians

The US is applying a policy of ‘maximum pressure’ on Iran, where economic sanctions are having a noticeable effect on the everyday lives of ordinary Iranians. DW’s Theresa Tropper talked to people in Teheran and found that opinions cover a wide spectrum.


India’s New Steps to Spur Economic Growth Seen Falling Short

 India’s steps to boost financial market sentiment and support businesses could fall short of shoring up growth in Asia’s third-largest economy.

Finance Minister Nirmala Sitharaman announced a number of measures on Friday to help re-ignite an economy that’s slowed sharply on the back of weak consumption and a deteriorating global environment. However, she didn’t outline any major fiscal support — as businesses had been calling for — focusing instead on steps to spur foreign funds and lending.

Economists, finance leaders, industry executives and local media raised questions about the effectiveness of the measures, which included scrapping a tax on foreign funds, allowing concessions on vehicle purchases and hastening infusion of an already announced 700 billion rupees ($9.8 billion) of capital in state-run banks.

“These are short-term palliatives,” said Priyanka Kishore, head of India and Southeast Asia economics at Oxford Economics in Singapore. “What India needs is structural reforms to take growth to above 7%.”

Consumers have cut spending in India as they turn more pessimistic about jobs amid a slowdown in growth to a five-year low. Data due this week is likely to show the economy expanded 5.7% in the quarter ended June, below the 5.8% pace seen in the previous three months.

The withdrawal of the additional tax on foreign portfolio investors may help to spur sentiment in the equity markets. Overseas investors pulled out more than $3 billion from the nation’s stock and bond markets since July.

But businesses had been hoping for more.

The “crisis is not because of decline in ease of doing business or sops for automakers,” Thomas Isaac, the finance minister of the southern Indian state of Kerala, said via Twitter. “Bank recapitalization had already been announced. What is required is a large fiscal spending package.”

Sitharaman, who last month narrowed the budget deficit target for the current fiscal year to 3.3% of GDP from 3.4%, ignored the auto industry’s demand for a reduction of a goods-and-services tax on vehicles to halt the worst slump in car sales in almost two decades.

“Moderation of GST base rate from 28% to 18% for all categories as being requested by the auto industry for sometime now would have been the real demand stimulant,” said Rohit Suri, president and managing director of Jaguar Land Rover India Ltd.

The lack of a fiscal response puts the burden on the Reserve Bank of India to continue with its stimulus. Governor Shaktikanta Das has already cut interest rates to the lowest in nine years.

Top Finance Ministry officials have shown reluctance for stronger measures. Krishnamurthy Subramanian, the ministry’s chief economic adviser, said government intervention for the private sector presents a “moral hazard.”

The Times of India newspaper said in an editorial that while Sitharaman’s plan was a start, the government needs to do more work to address larger problems of structural deficiencies, which have lowered the nation’s growth potential. The finance minister said Friday that more measures are in the offing to support the economy and an announcement may be made again this week.

“Announcements from the finance minister have potential to boost short-term sentiment,” said Prayesh Jain, executive vice president at YES Securities India Ltd. in Mumbai. “But ground realities of weak economic environment needs to change for a tectonic shift in demand.”