Economic & Political Weekly 18th Nov, 2018

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World

Politics-

·German chancellor Merkel backs French President Macron’s call for creation of European army. ‘We must take our fate more decisively into our own hands,’ chancellor tells European Parliament.

Angela Merkel has called for the creation of a European army, using a speech to the European Parliament in Strasbourg to make a passionate appeal for closer defense co-operation between EU member states.

·Trump administration has been ordered on 16th Nov to return CNN reporter’s credentials.

The judge, Timothy J Kelly of US district court in Washington, ruled that the Trump administration had most likely violated Acosta’s due process rights when it revoked his press badge after a testy exchange with the president at a news conference last week.

·Japan struggles to halt its shrinkage. World’s third-largest economy seeks to revive ageing, declining population.

For years Japan has been anxiously mulling whether to import more foreigners to stem a shortage of workers. That debate seems to have been partially resolved this month with a controversial decision by the cabinet of Prime Minister Shinzo Abe to change the nation’s visa rules.

To the horror of the right-wing media, this may mean another 500,000 foreign nationals living in the country by 2025. Abe, a staunch nationalist, sees this a compromise between meeting the demands of the business class for more labor and assuring his base that he will protect Japan’s ethnic homogeneity.

 

  • Two top leaders of Cambodia’s Khmer Rouge regime were found guilty of genocide on 16th Nov, in a landmark ruling almost 40 years after the fall of a brutal regime that presided over the deaths of a quarter of the population.

The Khmer Rouge’s former head of state Khieu Samphan, 87, and “Brother Number 2” Nuon Chea, 92, are the two most senior living members of the ultra-Maoist group that seized control of Cambodia from 1975-1979.

  • British and EU negotiators have reached a framework for Brexit agreement that will be examined by the UK cabinet, Prime Minister Theresa May’s office says.

A European source said a technical agreement had been struck but still needed political approval both on the British and European sides.

  • Sri Lanka’s Supreme Court on 13th Nov overruled President Maithripala Sirisena’s dissolution of parliament and ordered a halt to preparations for snap elections next year.

The Indian Ocean Island has been gripped by a constitutional crisis since Sirisena sacked Prime Minister Ranil Wickremesinghe on October 26 and replaced him with former strongman president Mahinda Rajapakse.

  • Myanmar authorities and citizens leapt to the defense of Aung San Suu Kyi after Amnesty International stripped her of its top award over indifference to atrocities committed against Rohingya Muslims, doubling down on support for the civilian leader in the face of global ire.

Suu Kyi’s international reputation as a rights icon is in pieces and Amnesty’s move is the latest in a string of rescinded accolades. Canada revoked her honorary citizenship last month and the United States Holocaust Museum in March took back an award named after concentration camp survivor Elie Wiesel.

Institutions that once showered Suu Kyi with titles are rapidly distancing themselves from a leader they argue is doing little in the face of alleged genocide and ethnic cleansing against Myanmar’s Rohingya minority.

  • China rising: The country is set to take its place as a superpower.

Nearly 70 years after the revolution, China is poised to take its place as a superpower with global influence to match its status as an economic colossus. Nationalist sentiment is riding high, hundreds of millions have been lifted out of poverty, and the Beijing government confidently preaches Xi’s core pledge of stability, the China Dream. But at the same time, a ground change is taking place. China is reverting to centralized systems of control and Marxist-Leninist fundamentalism, against a backdrop of a tit-for-tat trade war between Xi’s resurgent China and Donald Trump’s unpredictable US administration, which has seen tariffs imposed on hundreds of billions of dollars’ worth of each other’s imports. While China reaches out to Europe, Central Asia and Africa with a New Silk Road of trade, the Belt and Road Initiative (BRI), some of its new friends or client states are finding themselves forced to choose between China and the United States. There is talk of a new cold war and questions if China is overreaching.

  • French protesters rail against Macron’s fuel taxes with road blocks.

Thousands of French protesters hit out at higher fuel taxes and President Emmanuel Macron’s economic policies in demonstrations across motorways on Saturday, sparking major logjams and several accidents, including a fatality at one road blockade.

Economy-

  • Economic growth in the energy-rich Gulf will recover in 2018 from a contraction last year but remains vulnerable to volatility in crude oil prices, IMF forecasts.

The global lender predicts that an overall energy price recovery from 2015-2016 lows would spur the economies of the six-nation Gulf Cooperation Council to grow by 2.4 per cent in 2018 and 3.0pc in 2019, after a contraction of 0.4 percent last year.

Grouping Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, the GCC states together pump over 17 million barrels per day and depend heavily on crude revenues.

· UK unemployment ticks up with men worst hit.

UK Unemployment has increased by 21,000 even though record numbers of people are in work, new figures reveal. The jobless total rose to 1.38 million in the three months to September after a big increase in the number of men out of work.

·Energy prices dragged lower by softening oil prices

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 Oil prices dropped 6 per cent during the month, finally settling at $75.47 a barrel on concerns that weaker global growth would hit oil demand. Oil prices had trading close to a four-year high of $85 a barrel at the start of October, driven by concerns that imminent US sanctions on Iran would tighten oil markets globally.

The market is now waiting when Iranian sanctions come into full effect with oil exports from Iran already fallen by 700,000 barrels per day since May. Gas prices also dropped 7 per cent month on month but remain over 49 per cent above the comparable period last year, while electricity prices rose by 3 per cent.

  • Most of Global Stock Markets went in to a downward trend as of 16-11-18 as compared to 9-11-18.

Global Indices 16-11-18

Name Current Value Change
US Markets
Nasdaq (Nov 16) 7,247.87 -11.16
European Markets
FTSE 100 (Nov 16) 7,013.88 -24.13
CAC 40 (Nov 16) 5,025.20 -8.42
DAX (Nov 16) 11,341.00 -12.67
Asian Markets
Nikkei 225 (Nov 16) 21,680.34 -123.28
Straits Times (Nov 16) 3,083.60 29.07
Hang Seng (Nov 16) 26,183.53 80.19
Taiwan Weighted (Nov 16) 9,797.09 -29.37
KOSPI (Nov 16) 2,092.40 4.34
 SET Composite (Nov 16) 1,635.00 -3.83
 Jakarta Composite (Nov 16) 6,012.35 56.61
Shanghai Composite (Nov 16) 2,679.11 10.94

 

Global Indices 09-11-18
Name Current Value Change % Chg
US Markets
Nasdaq (Nov 09) 7,406.90 -123.99 -1.67
European Markets
FTSE 100 (Nov 9) 7,105.34 -35.34 -0.50
CAC 40 (Nov 9) 5,106.75 -24.70 -0.48
DAX (Nov 9) 11,529.16 1.84 0.02
Asian Markets
Nikkei 225 (Nov 9) 22,250.25 -236.67 -1.06
Straits Times (Nov 9) 3,077.97 -15.27 -0.50
Hang Seng (Nov 9) 25,601.92 -625.80 -2.44
Taiwan Weighted (Nov 9) 9,830.01 -115.30 -1.17
KOSPI (Nov 9) 2,086.09 -6.54 -0.31
 SET Composite (Nov 9) 1,668.52 -13.21 -0.79
 Jakarta Composite (Nov 9) 5,874.15 -102.66 -1.75
Shanghai Composite (Nov 9) 2,598.87 -36.76 -1.41
SGX Nifty (Nov 10) 10,572.00 -50.50 -0.48

 

Pakistan

 

Politics

  • Prime Minister Imran Khan has reaffirmed his government’s resolve to respect the Supreme Court’s judgment in the case of Aasia Bibi, a Christian woman recently freed from prison after her blasphemy conviction was overturned.

“As citizens of Pakistan, Aasia Bibi and her family are entitled to all rights as guaranteed by the Constitution of Pakistan,” the premier told European Parliament President Antonio Tajani, who had telephoned Khan.

  • Prime Min­is­ter Imran Khan has said the real leader of a nation always makes U-turns and changes his or her strategy according to the situation and the need of the hour.

Mr Khan gave the example of the ‘failure of German leader Adolf Hitler and French military leader Napoleon Bonaparte in the wars in Russia’ and said: “Both Hitler and Napoleon faced defeat as they did not change their strategies according to the situation and (as a result) their armies were marooned in Russia.”

  • To commemorate 4th Faiz International Festival in Lahore, noted Indian poet Javed Akhtar along with his wife, film star Shabana Azmi, have come to Pakistan.

 

This visit is also conceived to enhance the areas of art and to promote harmony and peace in the region.

  • In Islamic history, the Treaty of Hudaibiya is held up as a shining example of a tactical retreat that led to an eventual and grand victory. Prophet Mohammad (PBUH) convinced his people to return home without performing Hajj that year; he argued that the next time round the Muslims would return to Makkah in larger numbers and without the clouds of insecurity and fear hanging over the travelling pilgrims. And they did so the next year, exactly as the Prophet (PBU) had said they would.

However the treaty inked between the Pakistan Tehreek-i-Insaf (PTI) government and the Tehreek-i-Labbaik Pakistan (TLP) isn’t quite the Treaty of Hudaibiya, at least not for Khadim Hussain Rizvi’s party. Neither of their two demands was met; the chief justice didn’t resign nor was Aasia Masih sent to the gallows.

  • The Supreme Court has ordered Gilgit-Baltistan Tourism Minister Fida Hussain of PTI and the arrival in charge at Islamabad Airport to appear before the court on November 17 and explain their position about an incident where Husain allegedly misbehaved with the airport official following a flight delay on15th Nov.

Chief Justice Saqib Nisar issued court summons on 16th Nov asking both Hussain and the airport official to appear before the Supreme Court’s Lahore Registry on Saturday.

On the same occasion another passenger set his luggage on fire in protest against his flight ((PIA) flight PK-607) being cancelled at the Islamabad International Airport (IIA).

  • SC orders prompt revival of Karachi Circular Railways.

The Supreme Court (SC) of Pakistan on 17th Nov ordered the concerned authorities to oversee and make sure of clearing all encroachments on Railways land in the port city so that the Karachi Circular Railway (KCR) project could be relaunched.

Economy

  • With primary focus on containing fiscal deficit, Pakistan and the International Monetary Fund (IMF) began policy discussions on economic and fiscal adjustments required to ensure a fresh fund program worth around $6 billion.

A senior government official says a draft Memorandum of Economic and Financial Policies (MEFP) had been prepared by the Ministry of Finance in consultation with other economic ministries that was now the centre of discussion with the IMF.

“The focus is on deficit reduction to a level acceptable to the IMF because economic stabilization is going to be the ultimate objective” for which the two sides are reviewing revenue measures and expenditure controls, he said, adding the IMF also asked questions about the external payment plans.

The fund is reported to have raised questions over more than Rs 90bn revenue shortfall in the first four months of the current fiscal year and wondered how the projected fiscal deficit target of 5.1pc could be achieved when development program had already been curtailed to a bare minimum.

They also asked questions about the revenue measures under consideration as to make up for the loss suffered so far and what was the policy plan going forward. The mission was told that FBR was issuing notices to high net worth individuals on the basis of available data of those living in posh areas, living luxury lives and air travels etc.

The IMF is also dissatisfied over the performance of the power sector whose losses and recoveries are reported to have gone down rather than improving since the last IMF program was completed in Sept 2016, leading to build up of circular debt beyond Rs 1.2 trillion and creating supply side constraints.

The authorities have reported increased gas and power tariff to reduce energy sector losses and planned campaign for recovery of outstanding bills and reduction in theft but the fund mission believed the challenge could not be overcome without deep rooted structural reforms.

The government has also promised with the International Monetary Fund (IMF) to separate policy and administrative functions of the Federal Board of Revenue (FBR) within first 100 days of its tenure and undertake a full-fledged effort for maximum recovery of more than Rs2 trillion tax and power dues.

  • As the total circular debt of the power sector is estimated to have crossed Rs1.2 trillion, the power division has set specific targets for distribution companies to recover arrears from previous bills and ensure 100pc recovery of current billing.

A meeting, presided over by Federal Power Minister Omer Ayub Khan on 16th Nov, set targets for six distribution companies (Disco) for collection of Rs 83bn of past bills and asked them to ensure 100pc recovery targets for current electricity billing.

  • The country’s oil import bill has increased by 16.8 per cent year-on-year to $5.2 billion during the first four months of the current fiscal year largely due to the rise in global oil prices and depreciation of the rupee.

In terms of quantity, petroleum products fell by 40.33pc to 3.65 million tons while that of petroleum crude was down 11.33pc to 3.17m tons. According to latest data released from the Pakistan Bureau of Statistics (PBS), the overall import of commodities edged lower by a slight 0.1pc to $19.04bn during July-October, from $19.06 bn in same period last year.

 

Exchange Rates for Currency – 16th Nov 2018

Countries Selling (Rs.) Buying (Rs.)
U.S.A. 133.50 134.00
U.K. 172.00 174.00
Euro 151.00 152.50
Japan 1.1500 1.1800
Saudi Arabia 35.50 35.70
U.A.E. 36.50 36.70

 

  • The week continued ended with slight upward trend in the stock markets as of 16th November 2018 as compared to 9th November 2018.
Position as of 16th Nov 2018

 

Symbols                                                 KSE100                              PSX-KMI
Advanced (Curr.) 169
41660.75
20348.27
Declined (High) 156
41804.81
20426.41
Unchanged (Low) 22
41428.63
20234.40
Total (Change) 347
232.12
113.87
Position as of 9th Nov 2018
Symbols                                                   KSE100                               PSX-KMI
Advanced (Curr.) 201
41388.88
20307.72
Declined (High) 122
         41567.19
20411.39
Unchanged (Low) 26
41208.26
20195.99
Total (Change) 349
21.50
34.09

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