1. China predicted to report 2.3% positive GDP growth
A European economic research report expects China to be the only major economy to report positive growth in 2020, while the global economy is predicted to shrink by 4.4%, signalling a steady recovery for the world’s second-largest economy in the post-pandemic era. The economies of the US and the European Union are expected to shrink by 6.5% and 8.4%, respectively. Experts believed that the global economic recovery could continue until at least 2022 before pre-COVID levels are reached.
2. The US debt is now larger than the US economy
New, eye-popping federal budget figures released Thursday show an enormous $3.1 trillion (INR 226 lakh crores) deficit in the just-completed fiscal year, a record swelled by coronavirus relief spending by the US government. (A budget deficit occurs when a government spends more than it receives in taxes and other revenue in one year. In layman terms, it can be considered as a yearly debt of the government). The deficit equalled 15% of the total U.S. economy, a huge gap that is the largest since the government took massive borrowing to finance the final year of World War II.
The country’s total debt owed to investors — which is essentially the sum of annual deficits that have accrued over the years — has outpaced the size of the economy, coming in at nearly 102% of GDP. The total debt hasn’t been that high since 1946, when the federal debt was 106.1% of GDP.
Debt is the size of the economy today, and soon it will be larger than any time in history. The problem with such high debt levels going forward is that they will be increasing restrictions on what the government can do to meet the country’s needs. Government spending is projected to continue rising and is greater than revenue, and interest payments alone on the debt — even if rates remain low — will eat up an ever-growing share of tax dollars. Given the risks of future disruptions, like a pandemic, a debt load that already is outpacing economic growth puts the country at greater risk of a monetary crisis, which in turn would require sharp cuts to the services and benefits on which American citizens rely.
3. IBM to split the company to focus on cloud computing and artificial intelligence
IBM says it is breaking off a $19 billion chunk of its business to focus on cloud computing. The 109-year-old tech company said Thursday it is separating its infrastructure services unit into a new public company, temporarily named NewCo. The separation is expected to take effect by late 2021. IBM CEO Arvind Krishna said the split will help IBM focus on its cloud platform and artificial intelligence, while the newly formed company will provide its existing services to manage the infrastructure of businesses and other organizations. IBM’s annual revenue was $77.1 billion last year. Krishna said in April at his first quarterly earnings call as CEO that the company will continue to eliminate software and services that don’t align with IBM’s top two focus areas for growth: cloud computing and artificial intelligence.
4. London may lose spot as Europe’s Stock Trading Hub in the Future
The approach of Brexit has London realizing the loss of its role as Europe’s undisputed stock-trading hub and, with it, billions of euros in daily trading. More than half the volume in London is in shares of European Union companies, and that’s at risk of migrating to the EU without a breakthrough in Brexit trade negotiations.
Companies based in the 27 European Union countries contribute more than half the value of all stocks traded in the U.K. In August, that averaged 7.2 billion euros ($8.5 billion), or about 60% of the 12.5 billion euros of equities that are traded daily are currently handled in the U.K. markets.
5. Dubai Company set sights on India’s Deadly Winter Smog Problem
Dubai-based Averda is making an entry into India for managing municipal and farm waste in the northern city of Amritsar to offer a solution to the deadly smog caused by stubble burning. The burning of crop residues is seen as a major contributor to the smog that shrouds most of north India during winter months, raising the risk of heart and lung diseases and harming the country’s economy. Even though the government has made the practice illegal, it still continues.
The toxic air costs the country as much as 8.5% of its GDP besides shortening the lives of citizens. The pollution intensifies during winters as smoke rising from farm fires drifts and then hangs in the air because of low temperatures, covering the country’s land-locked capital and other adjoining areas in a thick blanket of smog.
Averda’s India is also setting its sight on India’s swelling heaps of household waste. It will bring in processes for segregating the waste and recycling it to produce energy. It plans to be present in as many as 20 Indian cities and inject $50 million to $100 million every year in the India business over the next three to five years
6. The UK to ban Huawei 5G earlier than expected
The UK is considering to ban Chinese technology giant Huawei from next-generation mobile phone networks two years earlier than planned. Prime Minister Boris Johnson’s government in July blocked Huawei from having any role in building the country’s new 5G networks, amid security concerns fueled by rising tensions between China and Western powers. British wireless carriers are prohibited from buying Huawei network equipment but had until 2027 to remove Huawei gear they’ve already installed in the new networks.
The British parliament’s defence committee said on Thursday that it had found clear evidence that Chinese telecom giant Huawei had colluded and conspired with the Chinese government and said Britain may need to remove and ban all Huawei equipment earlier than planned. These developments could prompt Britain to remove Huawei from 5G networks as early as 2025. The US and its allies say Huawei technology can be used to spy for China. Huawei has repeatedly denied this.
7. Russia expected to register second COVID-19 vaccine on Oct 15
Russia is expected to register a second potential vaccine against COVID-19 on Oct. 15, the vaccine’s developer said today. The vaccine has been developed by Siberia’s Vector Institute, which completed early-stage human trials of the vaccine last month.
8. China Joins WHO’s Vaccine Program, Filling Void Left by Trump
China will take part in a World Health Organization-backed effort to provide a coronavirus vaccine to developing nations, filling a void in global health leadership after U.S. President Donald Trump withdrew the US from the program. China on Thursday joined the $18 billion Covax initiative that aspires to give lower-income countries the same access to vaccines as wealthier nations. The move came when China is leading the world with several vaccines in advanced stages of R&D and with ample production capacity.
This move allows China to get a better image compared to the U.S. as tensions between the world’s two biggest economies increase on fronts from trade to technology and human rights. The US has withdrawn from the WHO and refused to join Covax, stating that the U.S. wouldn’t be part of multilateral organizations influenced by the corrupt World Health Organization and China.
9. Indonesia adds Microsoft, others to list of tech firms that must pay VAT
Indonesia has added eight more technology companies, including Alibaba Cloud (Singapore) Pte Ltd and Microsoft Corp, to a list of businesses that must pay a 10% value-added tax (VAT) on sales. The country’s tax authority has named 36 companies including the latest additions as liable to pay VAT since July 7 when it listed Netflix Inc and Alphabet Inc’s Google Asia Pacific among other tech firms.
10. Billionaires’ riches reach record highs during coronavirus pandemic
Billionaires across the globe saw their wealth reaching record highs in 2020 despite the pandemic. Innovators from the tech and health top the list. According to a study by Swiss bank UBS, by July-end, the total wealth of billionaires was $10.2 trillion, exceeding the previous high of $8.9 trillion in 2017. The list of the super-rich now also consists of “innovators and disruptors” in the tech, healthcare and industry sectors as they are giving hefty competition to traditional areas like entertainment. This has caused sharp criticism as the pandemic has led to a rise in debt, rise in unemployment, as well as businesses collapsing.
