BUSINESS SATURDAY, MAY 13, 2017

Report card for global economy: Tries hard, could do better

LONDON: Setting aside a few uncomfortable economic truths such as the increasing US skills gap, eye-wateringly high unemployment in parts of the eurozone, and growing income inequality in China, the world economy has been doing pretty well this year. The issue is: how well and how sustainable? In the United States, the economy has been strong enough for the Federal Reserve to start raising interest rates, slowly. In the euro zone, growth is robust enough for the European Central Bank to think about dropping public warnings of risks. China, meanwhile, has so far staved off last year’s dire warn- ings of a sharp, potentially damaging, slowdown. But much of this comes courtesy of billions of dollars, euros, and other currencies being pumped into the global economy. In some cases, it is still being pumped in. And the results are not exactly bracing. The International Monetary Fund expects the world economy to grow 3.5 percent this year —- not bad until you remember it averaged 4.2 percent over the 10 years before the financial crisis. The IMF sees the US economy growing at 2.3 percent this year, below the 2.6 percent average for 1999-2008. Ditto the eurozone — 2017 growth at 1.7 percent versus 2.1 percent. For China, the numbers are 6.6 percent and 10.1 percent, respec- tively. After their spring meeting last month, the IMF and World Bank sounded a bit passionless about it all. “The global econo- my is gaining momentum, but risks remain tilted to the down- side,” they said. So a near 10-year deluge of global central bank stimulus has not brought things back to where they were and a left a large question about the sustainability of what has been achieved. As European Central Bank President Mario Draghi said in a NEW YORK: An American flag hangs on the front of the New York Stock Exchange on an evening, in New York. Stocks slightly different context in the past week: “It is too early to opened lower on Wall Street, yesterday.— AP declare success.” Most economists appear to believe the global economy is strong enough to keep going, if not exactly at a tear. The coming week will probably confirm this, but could S&P, Dow slip as banks also provide something of a reality check.

Ticking away In what may be an example for the global economy as a drag; Nasdaq stays flat whole, the United States is expected to report slower industri- al output growth for April-that is, it continues to grow (at 0.3 percent), but at a lesser rate than March’s 0.5 percent. European markets continue rally But more attention is likely to be paid to the respective NEW YORK: The S&P 500 and the Dow er-than-expected comparable store back ahead of the weekend with con- reports of the Federal Reserve banks of Philadelphia and New edged lower yesterday as financial sales, sending its shares down 9 percent. fidence rattled by a series of below- York-the Philly Fed and Empire State. —Reuters stocks fell, but losses on the Nasdaq GE was the top percentage loser on the par Chinese data and the lingering were kept in check by a rise in technolo- Dow, down 1.7 percent after Deustche fallout of Donald Trump’s shock firing gy shares. With the first-quarter earnings Bank downgraded its shares to “sell” of the head of the FBI, which some Startup’s challenge season coming to an end, investors are from “hold”. fear could lead to a crisis that will looking to the Federal Reserve, Trump Meanwhile, European stock markets knock the president’s economy- to administration and economic data for seemed happy yesterday to quietly car- boosting agenda off centre. fresh trading catalysts. A risk-off senti- ry the week’s gains into the weekend, Tokyo’s Nikkei index closed down 0.4 hits the buffers ment has dominated trading this week while Wall Street’s worries about retail percent from a 17-month high, while AM MAIN: rail startup Locomore has after President Donald Trump unexpect- weakness were compounded by soft Sydney shed 0.7 percent and Singapore been placed into administration just months after it edly fired his FBI chief, the potential fall- core inflation data. gave up 0.3 percent. Seoul, which launched a challenge to state-owned monolith Deutsche out of which could delay Trump’s pro- The dollar weakened in response, closed Thursday at a record high, eased Bahn, which dominates long-distance train travel in growth policy. and so did the New York stock market at 0.5 percent. Wellington, Taipei and . The Berlin-Charlottenburg court yestserday con- “Today, the focus is on macro news, the opening as earlier optimism about Manila also slipped. firmed the firm had triggered the proceedings the day while the political situation in solid jobs data was mitigated, while T- But Hong Kong rose 0.1 percent before. “We will know in the course of the day what hap- Washington continues to linger. So we bonds rose as investors became less extending a rally to five days. pens with the operation” of the train linking the capital are looking at a cautious market,” said sure about an early rate hike. Bloomberg News reported, without with in southwest Germany, Locomore financial Peter Cardillo, chief market economist at naming sources, that China had director Katrin Seiler told AFP. First Standard Financial in New York. ‘Cooler than expected’ made preparations to support the A service had been set to depart Berlin in the early Data from the Commerce Department “Treasury yields and the US dollar are Hang Seng Index if needed ahead of afternoon Friday, but the company was still in talks with showed retail sales increased by 0.4 per- lower, as the data included a cooler- the expected visit of President Xi the court-appointed administrator over whether it could cent in April, but fell short of an estimat- than-expected read on consumer price Xinping to the city for the July 1 han- leave. Launched in mid-December with modernized 1970s ed 0.6 percent rise. inflation,” said analysts at Charles dover celebrations. carriages and lower prices than Deutsche Bahn, Locomore US consumer prices rebounded in Schwab. European equity markets, Shanghai-which has fallen about sev- offered one return trip per day between Berlin and April, a Labor Department report meanwhile, were modestly optimistic, as en percent in the past month on worries Stuttgart, and had plans to expand to other lines. The firm showed, pointing to a steady rise in they awaited political developments in about a state crackdown on leveraged pointed to successful crowdfunding drives as evidence of inflation that could make the case for an coming days. investing-ended up 0.7 percent with demand for an alternative to the state-owned service. interest rate hike next month. Emmanuel Macron will be sworn in speculation mainland shares were also But low bookings and maintenance problems meant it At 9:38 am EDT the Dow Jones indus- as French president tomorrow and is being given state backing. The dollar had to cut service to four days a week. trial average was down 44.07 points, or expected to line up a government the declined against the yen and euro, hav- By early April, the firm said it had transported some 0.21 percent, at 20,875.35, the S&P 500 following day, giving a first indication of ing enjoyed a surge Thursday on com- 70,000 passengers and was already planning higher was down 4.42 points, or 0.18 percent, the outlook for his economic reform ments from a top Federal Reserve offi- capacity and more frequent services for the future. at 2,390.02 and the Nasdaq Composite plans. Germany’s most populous state cial backing three more interest rate Deutsche Bahn still operates 99 percent of long-dis- was down 1.87 points, or 0.03 percent, North Rhine-Westphalia votes in a hikes this year. tance services in Germany, despite the sector being liber- at 6,114.10. regional election tomorrow, a key test And on oil markets both main con- alized in 1994. Competition in regional markets is more Financials and industrials, which have for Angela Merkel’s re-election chances tracts pressed on with their recovery from intense, with the state-owned firm’s share falling to 72 gained the most in the Trump-inspired as chancellor. last week’s sharp losses, with investors percent against numerous local alternatives according to trade, were the biggest drags on the cheering a bigger-than-expected drop in specialist consultancy BSL. —AFP S&P. Technology was up 0.13 percent, Confidence rattled US inventories and signs an OPEC output lifted by Apple. JC Penney reported low- Earlier in Asia, traders took a step cut was kicking in. —Agencies