BRUSSELS | March 5, 2015 | By Alexandre Mato | When presenting its annual report, ‘Going for growth’ in Brussels, the Paris-based institution raised some doubts about the ongoing recovery in Europe. Structural, long-term unemployment and low productivity in some Member States are becoming the main economic issues of concern, with neither investment nor fiscal adjustments seen as the antidote.
MADRID | The Corner | Markets were sad on Monday until Mario Draghi emerged and spoke his magic words. It seems markets feel more secure every time the president of the ECB takes the lead and assures everything will be alright. Investors felt more confident after his intervention at the European Parliament’s Economic and Financial Committee. However, despite his speech regarding new potential actions in monetary policy, he also highlighted the need of deep structural reforms by the Members States. According to market watchers at Link Securities, sooner or later, “such reforms will have to be faced by Italy or France’s government, because it is necessary to make them competitive and able to grow again.”
Three decades after admired reformist leader Deng Xiaoping launched his experimental plan of economic reforms, the new Chinese president Xi Jinping is nowadays facing the exact same challenges (and pressures) than his revered comrade. Moreover, Mr Xi’s political survival depends on his ability to earn the trust of the masses and offer them real options for progress. He will have to find a way to do so without tamping the privileges of all those wealthy entrepreneurs who benefited from Mr Deng’s capitalist reforms.
MADRID | By Juan Ballesta | Spain’s new King Felipe VI took the throne on Wednesday night, declaring his commitment to carrying out the transformations needed. The once severely crisis-battered country is finally seeing the light at the end of the tunnel, seeing his international financing costs going down and growth rate timidly increasing but still fighting with a huge unemployment rate and deficit.
Iris Mir | Tight control of capital accounts has pushed China to a financial deadlock. Chinese savers are looking to new online investment platforms amid a lack of substantial wealth management options. Last year China’s Internet payment platform launched the online investment platform Yu’e Bao to offer its users the possibility of investing the idle money on their Alipay accounts and getting much higher benefits than any traditional bank. More than 43.03 million people already enjoy its advantageous financial products. The opportunities of this business model are huge and many other Chinese internet giants are following suit.
China (which grew by 7.7% in 4Q13) wants to pursue a very different strategy in 2014, setting “reasonable growth” as its macroeconomic goal, meaning by that a rate that will support the country’s economic restructuring and upgrading. But such a technical description fails to meet society’s real needs and achievements, and so new alternative models are booming.
Iris Mir | China starts a new round of economic experimentation. Shanghai is set to become the new engine of growth with a China’s first Free Trade Zone (FTZ). The goal is to attract foreign investment by testing new deregulation rules that should give foreign companies greater flexibility. But urgent reforms in other areas are a must in order to transform the rise of the income of Chinese households into real purchasing power.
BARCELONA | By CaixaBank research team | In order to be effective, pending reforms in Mexico should make public revenue less dependent on oil, such as by eliminating income tax deductions.
Keep in mind a new concept: Lionomics. An acronym that gives name to the ambitious process of economic reform the new Chinese Prime Minister Li Keqiang must bring forward.
BEIJING | In his last speech the outgoing Prime Minister, Wen Jiabao, acknowledged the social challenges China is dangerously facing. The new leadership will have to deal with local governments and State Owned Enterprises ready to defend their current status quo and likely to be sceptical about any form of reform.