Brazil showed a pulse, economically and politically, after a devastating collision with Covid-19. But the beat looks too weak to trigger a recovery in a depressed stock market. Funds traded on the Brazilian MSCI iShares exchange are inactive 30% this year, meanwhile global developing market almost returned to even.
The Latin American giant has recovered better than expected over the past two months, driven by consumer spending. David Beker, chief Latin American economist at Bank of America, has increased its 2020 gross domestic product forecast to a contraction of 5.7%, from 7.7%. “The destruction of work is not as bad as we thought,” he said.
Politicians are moving beyond spraying the population with cash to focus on the next big reform challenge: rationalizing Brazil’s very complicated tax system.
Finance Minister Paulo Guedes, economic majordomo President Jair Bolsonaro, launched a tax reform blueprint on July 21, and each assembly of Congress has its own pending. “There seems to be some consensus to move forward with tax changes,” Beker said.
But this Band-Aids will hardly cure an economy that hasn’t grown more than 1.5% every year since 2013. Most consumer revival is driven by government emergency donations, called coronavouchers that distribute 600 reals ($ 116) per month to about half population.
However, the state cannot maintain this for long. The Brazilian budget deficit will approach 20% of GDP this year, inflating public debt to nearly 100% of annual output, figures Alberto Ramos, head of Latin American economic research at Goldman Sachs.
“It stands out as one of the weakest fiscal positions in emerging markets,” he said.
Expenditures driven by a pandemic, although deemed necessary, cut one reason for tax reform: to reduce the net burden of Brazilian companies. Now the government must increase revenues, cut expenses, or maybe do both.
“Taking tax in Brazil is already in the low 30s [as percentage of GDP], which is high for EM, “said Aaron Hurd, senior currency portfolio manager at State Street Global Advisors. “Tax reform will have little impact over the next five years compared to the fiscal consolidation that will be needed.”
Last year, Guedes began a way to replenish state coffers and cut corporate taxes: through financial transaction taxes, which basically will take time anytime Brazilians exchange money. However, that was not a popular idea, and the finance minister’s final proposal firmly abandoned it.
The current system is very difficult to use is a deterrent to fix it. Champions need to find a new formula with more winners than losers, then shepherd it through the legislature with nearly 600 members from around 30 different parties.
No wonder this topic has been on the air for decades without much success, noted Ramos. Hopes are also limited for this round. “It might come out better than we have, but I am not betting on major reforms,” he said.
Brazil is disjointed Response to Covid also undermined the belief that it could lead to technocratic heroism in taxation or other structural reforms, said Monica de Bolle, who monitors the country’s 210 million for the Peterson Institute for International Economics. Brazil is number 2 in the global pandemic mortality count, with around 90,000, although only 10 per capita.
“These are all deck chairs dragging Titanic,” he said. “Forget the whole reform effort.”
FRANKFURT – Germany suffered a record economic contraction in the second quarter as a move to slow the spread of a closed business pandemic and keep consumers home, but European power plants are expected to shrink less and recover faster than other major economies.
German gross domestic product fell 10.1% compared to the previous quarter, the biggest decline since comparable records began in 1970, and roughly doubled the contraction at the nadir of the global financial crisis in 2009, federal statistics …
Germany recorded the worst setback in the economy in the second quarter since 1970, according to statistics released on Thursday.
German gross domestic product fell seasonally adjusted 10.1% quarter-on-quarter, which was worse than economists forecast a 9% decline.
The Federal Statistics Office said there was a “major downturn” in exports and imports of goods and services, as well as for household final consumption expenditure and capital formation in machinery and equipment.
Release comes much sooner than usual, only 30 days after the quarter ends versus 45 more typical days. The statistics agency warns that revisions may therefore be larger than usual.
“In the midst of significant uncertainty about current activities, this challenge is even more frightening than usual. While high frequency data such as retail footprint data, flight statistics and truck mileage provide guidance for current trends, it is still unclear how closely some of the steps recently watched track official statistics, “said Florian Hense, an economist at Berenberg The bank, which added the economy could recover about 40% of its losses in the third quarter.
hovering lower after the release, which also came as Germany reported the unemployment rate remained at 6.4% in July. The most prominent reaction on the stock market, such as the German DAX DAX, -2,13%
Only three major countries – Belgium, Britain, and Spain – have officially experienced more Covid-19 deaths per capita than Italy. But more than two months after the government began to reduce its locking, life began to feel almost normal. Most Romans wore masks in the shops, and fortunately double cheek kisses had disappeared everywhere. But the Eternal City’s public space has grown bustling, even when tourists stay away. Via del Corso looks like a full Wednesday like a pre-pandemic. Families flock to the park every weekend, …
On June 23, the pro-China president of the Republic of Kiribati, Taneti Maamau, reelected. Normal abruptly shifted diplomatic relations from Taiwan to China in September 2019 – news that sent shock waves to the rest of the world.
Some articles mention that the Chinese approach is similar to the development of the region ー including Kiribati ー by post World War I Japan. That is not true.
Kiribati is a small island nation, but it is spread almost as broadly as the mainland of the United States. And has a very large exclusive economic zone – around 3.5 million square kilometers.
Also important is the strategic location of this island nation which spreads from east to west around the equator. It covers 30 degrees of latitude, stretches north and south of the equator, and is a place where tuna migrate.
The Importance of Kiribati From Time to Time
After World War I, Japan occupied the former German colony in the North Pacific and connected shipping lines to Kiribati, which later became part of what Europeans called the Gilbert and Ellice Islands. There, Nanyo-Boeki and Nanyo-Kohatsu, a Japanese trading company that began to develop the regional economy, opened branches. They have established and developed trading businesses in the region.
So, in Kiribati, the main driving factor of the Japanese occupation was the economy, not the military. Only after Manchurian incident and Japan’s withdrawal from the League of Nations in 1933, that every Japanese military activity arose in the mandate.
Japan sends around 100,000 immigrants to its mandate in Micronesia, 60% of which come from Okinawa, where the economy is poor and cannot support an increase in population. Japanese colonization was not a process of Imperialism, but only economic development, following international law, the Treaty of Versailles.
Even after World War II, Japan developed local fisheries in Kiribati, along with the development of the human resources of the local community. Japan’s relations with Kiribati are completely different from the relations of the People’s Republic of China (PRC) at this time.
At present, there are two maritime human resource development centers: the Fisheries Training Center (FTC) and the Maritime Training Center (MTC), each supported by Japan and Germany. Both have produced many excellent world-class marine experts from Kiribati who, in turn, contribute to the country’s GDP.
The development of the Japanese economy in the region was studied by Professor Tadao Yanaihara in 1933.
The Role of Kiribati in the Mysteries of Earhart
In 2017, the famous one Historical Channels broadcast a program that spreads false information about America’s most famous air hero, Amelia Earhart. The report included what was touted as a possible photo of him and his colleague Fred Noonan, taken at the port of Japor Marshall Islands, which was the mandate of Japan at that time.
Amelia and Fred disappeared somewhere in the middle of the Pacific in July 1937. The Historical Channels The documentary argues that both were captured by the Japanese, and then executed. This program received a lot of press and world attention.
This “news”, however, proved to be junk as soon as it came out, when a Japanese blogger discovered that the photo came from a coffee table picture book published two years before the two pilots disappeared. The public at large learned about the photo through SNS, thanks to Japanese bloggers who wrote it.
However, there is new evidence that this photo was taken earlier than the publication of the coffee table book – between 27 and 30 August 1933 – when Professor Tadao Yanaihara visited the former Japanese mandate as part of a research mission for the Institute for Pacific Relations (IPR).
Photographs of Professor Yanaihara
Professor Yanaihara had departed from Yokohama on July 3, 1933, and returned on September 16, 1933. He visited Saipan, Yap, Palau, Chuuk, Pohnpei, Kosrae, and the Marshall Islands. He made another trip in 1934 as part of this same research mission. However, at that time, he only visited Yap.
Yanaihara wrote a very detailed report about this trip in Japanese and English. The English version was published in 1940 by Oxford University Press. Which photo Historical Channels have been used for their fake documentaries printed only in Japanese publications as part of an appendix describing his diary.
The title of the photo says: “The steamboat on the right is for the inland route. On the left is a liner for the remote island route, and the sailing ship is an island ship.”
Yanaihara’s diary contains many photos of the place she visited. Some photos including him. It is not known whether Professor Yanaihara, his colleagues, or anyone else took actual photographs of the Japor port on the Marshall Islands. But at least this photo was taken in August 1933, and his book in Japanese was published in 1935. So it is not possible this photo was taken in 1937 when Amelia Earhart disappeared.
Yanaihara’s book is very important for Pacific scholars. For example, after a war senior US government officials in Guam called this work as providing the most important information about Micronesia. He asked Yanaihara to bring a copy when he visited Tokyo, according to a paper written by Yanaihara’s son, Professor Katsu Yanaihara. His own son is a prominent Japanese academic in the economic field.
Yanaihara’s Research and Relevance Today
For the past few weeks I reread Yanaihara’s book as part of my research for a new book in the Pacific Islands and suddenly remembered the photo.
From 1922 to 1937, Yanaihara was responsible for the Colonial Policy class developed by her teacher, Dr. Inazo Nitobe, at the Imperial University of Tokyo. In 1937, Yanaihara left the university. In fact, he was fired by the government because he criticized Japanese military activity in China. After the war, he returned to Tokyo University and later became its president from 1951 to 1957.
His research trip to Micronesia from July to August 1933 also had a role in assessing whether Japan had developed military facilities on these islands or not. This topic has been debated in the League of Nations, because the Treaty of Versailles prohibits any country that has a mandate to establish territory fortifications or military and naval bases.
In 1933, Professor Yanaihara then reported that there was no military activity in the Japanese mandate territory of Micronesia. However, it is ironic that his picture is used by some US citizens – and the media – to spread false news about Japan.
Former President of Kiribati, Anote Tong, who in 2013 transferred diplomatic relations from the PRC to Taiwan, revealed that during the last election the PRC made many promises of economic development with the people of Kiribati. The world must pay close attention to see how the PRC keeps its promises.
Author: Rieko Hayakawa, Ph.D
Rieko Hayakawa has been handling Pacific and ASEAN issues since 1988 as Secretary General of the Japan-ASEAN youth organization. He launched an upgrade for USPNet as a Japan / Australia / NZ ODA project, as well as a maritime security project for the western Pacific and many other projects. In 2017, he proposed the Indo-Pacific strategy with maritime security to PM Abe’s administration. He has an MA in education, international relations, and a PhD in ICT4D (Otago University, NZ). He is currently working on his second PhD in international sea law at Doshisha University (Kyoto).
The UK economy rose 1.8% in May, only a slight rebound after the historic fall caused by the closure of the coronavirus pandemic.
The Office for National Statistics said the May increase came after a 20.3% decline in April and a 6.9% contraction in March. GDP fell by 19.1% in the three months to May, due to government restrictions on movement to dramatically reduce economic activity, said the ONS.
The UK economy slipped 24.5% between February and May. Construction fell 38.8% during that time span, manufacturing fell 22.3%, service output fell 24.4%.
“Home manufacturing and construction are showing signs of recovery when some businesses see staff returning to work. Even so, the economy is still a quarter smaller in May than in February, before the full impact of the pandemic struck, “said Jonathan Athow, national statistics representative for economic statistics.
Andrew Sentance, a former Bank of England official, tweeted that warm growth was not surprising.
Prime Minister Imran Khan Saturday emphasized that an out-of-the-box solution was needed for that economic growth in these crucial times when COVID-19 had a negative impact on the world economy including Pakistan.
At the meeting of the Financial and Economic think-tank meeting, he said that from day one, the government adopted a strategy to maintain a balance between maintaining economic activity and protecting the masses from the contagious disease Covid-19.
Financial Adviser Dr. Abdul Hafeez Sheikh, Advisor for Institutional Reform Dr. Ishrat Hussain, Governor of the State Bank of Pakistan Raza Baqir and former finance secretary Dr. Waqar Masood Khan was present, the media wing of the PM office in a press release said.
Trade Advisor Abdul Razaq Dawood, Shaukat Tareen, Sultan Alana, Dr. Ijaz Nabi and Arif Habib participated through the video link.
The Financial Advisor provides guidance on the goals and focus areas of this think tank on finance and economics.
The prime minister directed that regular feedback from think-tanks be given to him about various ongoing government initiatives, policies and programs.
The prime minister stressed that their main focus was to provide assistance to segments of the poor through targeted subsidies.
He said Ehsaas was the government’s main program to reduce poverty and needed expansion along with strategies to achieve the most needy.
The prime minister highlighted that a substantive package has been announced for the construction and housing sector which aims to increase employment opportunities and much-needed economic stimulus and increase the inventory of affordable housing for the poor.
He also appreciated the proposals submitted by think tanks on banking & finance, further enhancing the Ehsaas program and facilitating SMEs.
OTTAWA – The Bank of Canada anticipates providing a large enough stimulus to the economy in the future to help the country rebuild from the damage caused by the pandemic, Governor Stephen Poloz said Monday.
He said he believed the Canadian economy was in a position to “get rid” of the worst of the virus, because it was in a healthy position before the pandemic. To contain the spread of the new corona virus, authorities here and elsewhere impose restrictions on economic activity. The ranks of the unemployed have swollen, and the data …
FRANKFURT – Germany fell into recession in the first quarter, shrinking at the second fastest pace since reunification when the coronavirus pandemic biting everything from retailers to auto exporters, but the economy of European power plants is expected to be better than its neighbors at balance 2020
German gross domestic product shrank 8.6% in the first quarter on an annual basis. Because the fourth quarter numbers were revised to show a small contraction, Friday’s data showed that Germany is now in a recession.
Italian industrial production dropped nearly 30 percent in March when the country closed down many businesses to curb the spread of the new corona virus, the country’s statistics agency said Monday.
Production fell by 28.4 percent compared to February using seasonally adjusted figures and 29.3 percent compared to March 2019 adjusted for the number of different workdays, Istat said.
Italy, home to the eurozone’s third-largest economy, has been hit with nearly 30,000 viral deaths, with the economy shrinking 4.7 percent in the first quarter compared to the euro zone average of 3.8 percent.
Italy is the first country in Europe to be hit by a pandemic, with March industrial production figures affected by national lockdown imposed since March 10 and all non-essential production closed since March 22, which basically paralyzed the economy.