Copyright 2014

Can the Economic Growth Council deliver growth for Jamaica?

In the context of Brexit and the slowdown in the global economy, the formation of the Economic Growth Council by the Andrew Holness-led Administration may have come at a good time. At any given time, such councils, if properly conceptualised and allowed to function, can be good elixirs in stimulating economic growth.

One must admit that when one heard of the Governments plan, ones first thought and hope was that this would not be another top-down group of economic czars who believe they are best placed to solve the economic problems of Jamaica. Ones second concern was that such growth councils tend to be bedevilled by a notion that grand projects can be the panacea that a young, struggling economy like Jamaicas needs to thrive. Nothing could be further from the truth.

One well remembers the Rockefeller Commission that was appointed by President Reagan which was supposed to help the newly elected and fledgling Jamaica Labour Party Government under former Prime Minister Edward Seaga to move Jamaica from Third World to First. This initiative, including the Caribbean Basin Initiative, sputtered and died like the Peoples National Partys JEEP of a later era. They did not help to move Jamaicas economic dial in any significant direction. Any success at growing the economy in that period (1980-1989) was more due to the common sense application of economic principles by the Seaga Administration, which saw an average of five per cent growth over the period. Some foreign direct investments came, but not in the waves anticipated by the much-ballyhooed Rockefeller Commission and Reagan gentility.



Global economic growth prospects gloomy, commerce minister tells G20 trade leaders meeting

The commerce minister yesterday issued a stern warning over the global economic outlook and urged governments to boost trade and investment as a way to shrug off gloomy sentiment.

As Gao Hucheng made his opening remarks at the Group of 20 trade ministers meeting in Shanghai, he carried a strong message that China was adamant in building a consensus among the economic powerhouses to improve trade and investment to avoid a global recession.

China will host the G20 summit in Hangzhou in ­September.



China's economic growth stable, meets expectations, Xi Jinping says

Chinas economic growth is basically stable and in line with expectations, President Xi Jinping said at a meeting with Chinese economists in Beijing on Friday.

The country will firmly push ahead with the supply-side structural reform and continue to implement prudent monetary and proactive fiscal policies, he said.

But the transition from old to new economic growth engines will take some time, although new growth engines are playing an increasingly larger role in boosting growth, he said.

The sound long-term economic fundamentals remain unchanged, and the economy still has good resilience and big potentials, Xi said, providing room for coping with the current challenge of economic slowdown. The economic restructuring process remains on track, he added.

Policymakers will use stable macroeconomic policies to anchor social expectations and use major reform measures to raise social confidence in the countrys development, he said.

The UKs recent Leave vote has convulsed the global financial markets and major economies have had diversified growth performances. In this global economic environment of weaker growth and higher uncertainty, Chinas external demand will be adversely affected, said a report by investment bank UBS.

But as the Chinese government remains committed to delivering its growth target, we expect policy support to be stepped up again, should downward economic pressures from either domestic demand or exports intensify, it said.

The UBS forecast that Chinas fixed-asset investment could have edged up in June, although exports may have fallen. The National Bureau of Statistics will release growth-related data for June and the overall first half of this year next week.

China faces quite heavy downward growth pressure, said Zhang Yiping, an economist at China Merchants Securities. But seen from recent data, the effect of supply-side structural reform on manufacturing has become apparent and the reduction of excessive production capacity has made headway, he said.

The large number of newly begun projects in the first half of this year will help prevent economic growth from falling drastically, he added.

A financial operation report released by the Peoples Bank of China, the central bank, on Friday said that at the next stage, Chinas monetary policy tool should be used flexibly, economic restructuring and reform will be pushed, and the role of fiscal policy will be further brought out.

In the second half of this year, China should continue to carry out the supply-side structural reform and take more growth-stabilizing measures, said Niu Li, director of macroeconomics at the State Information Center. Stabilization of growth is the most important task, he said, adding that China will adopt the most appropriate policies in line with the changing situation to ensure growth remains within the targeted range.



Is Economic Freedom Related to Economic Growth?

Thomas Jefferson observed that "a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement."

Many economists and sociologists contend that the link between economic freedom and economic growth has been massively over played in the past 35 years. Understanding this issue has important socioeconomic policy implications as economic freedom, as a means of fostering higher economic growth, has been high on the priority list of leading countries like the UK and US. Indeed, virtually every country in the world has embarked on this agenda either voluntarily or at the behest of the World Bank and IMF through Washington Consensus of increasing economic freedom at all costs.

Economic Freedom and Economic Growth

From 1980 to 2008 and during the 'Great Moderation,' the world underwent a massive period of economic and financial liberalization that led to greater globalization. That process commenced in the early 1980s in developed countries like the UK and US with Thatcherism and Reaganomics, respectively. Washington Consensus, at the behest of the World Bank and IMF mapped the economic liberalism developed in the West to emerging economies during 1988 to 1991 with disastrous consequences in terms of global economic and financial stability.



Economic growth worries, oil slump drag Wall St. lower

n>Stocks fell on Wall Street Tuesday following their best weekly performance of the year as investors faced continued uncertainty in the wake of Britains decision to leave the European Union and as tumbling oil prices weighed on energy shares.

U.S government bond yields reached record lows as investors found refuge in the perceived safety of Treasuries and uncertainty from Britains vote to exit the EU, known as Brexit, fueled worries about a global economic slowdown.

Four of the top five decliners on the SP 500 were bank stocks, with JPMorgan (JPM.N), down 2.8 percent t0 $59.55, weighing the most. The financial sector of the SP .SPSY was down 1.5 percent

Brexit is a friction on economic activity and thats bad for banks, said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago.

Low interest rates are horrible for financials, specifically for banks. The spread between where they borrow and where they lend is getting closer together.

The Dow Jones industrial average .DJI fell 108.75 points, or 0.61 percent, to 17,840.62, the SP 500 .SPX lost 14.4 points, or 0.68 percent, to 2,088.55 and the Nasdaq Composite .IXIC dropped 39.67 points, or 0.82 percent, to 4,822.90.

Brent crude LCOc1 fell 3.9 percent and US crude CLc1 lost 4.5 percent as investors worried that Brexit would slow the global economy, making it unlikely energy demand will grow enough to absorb a persistent supply glut.

The energy sector of the SP 500 .SPNY fell 1.9 percent. The materials index .SPLRCM was also down 1.9 percent.

Tepid US data added to overall growth worries. Data showed new orders for US factory goods fell in May on weak demand for transportation and defense capital goods.

Investors have been seeking safe-haven assets in an uncertain economic environment. Weak data from China added to the nervousness stemming from Brexit.

After a surprisingly big bounce last week, I think were in a little bit of a risk-off trading today - the uncomfortable feeling that maybe all is not fully well given Brexit, said Jeffrey Carbone, senior partner at Cornerstone Financial Partners in Cornelius, North Carolina.

Foreign exchange volatility as well as the economic uncertainty after Britains vote to leave the EU also have fueled worries about a projected profit rebound in the United States. US companies have been stuck in an earnings recession since last year.

Teslas (TSLA.O) shares fell 1.2 percent to $213.98 after the electric car maker missed vehicle delivery targets for the second consecutive quarter.

Netflix (NFLX.O) rose 1.3 percent to $97.91 after it reached an agreement with Comcast (CMCSA.O) for its services to be available on the cable companys set-top box. Comcast closed down 0.4 percent at $65.01.

Declining issues outnumbered advancing ones on the NYSE by a ratio of 2.75-to-1 and on the Nasdaq a 2.67-to-1 ratio favored decliners.

The SP 500 posted 69 new 52-week highs and one new low; the Nasdaq recorded 73 new highs and 30 new lows.

About 6.9 billion shares changed hands in US exchanges, compared with the 7.7 billion daily average over the past 20 sessions.

(Additional reporting by Yashaswini Swamynathan and Tanya Agrawal in Bengaluru; Editing by Rodrigo Campos and James Dalgleish)