Topic Category: Economy

Last month’s vote by the United Kingdom to leave the European Union gives control over trade policy back to British officials, who are now faced with the difficult task of creating new domestic institutions and formulating trade and other international economic policies. Some of their immediate work is obvious.

Americans have a love-hate relationship with international trade. Every day we enjoy its fruits, which include better and more affordable products; access to a larger pool of customers, suppliers and capital; and greater employment and business opportunities with foreign companies operating in the United States. Yet many of us cheer when politicians take to the stump and promise to erect trade barriers, restrict foreign investment and tear up trade agreements.

In a rare instance of bi-partisan cooperation, Democrats and Republicans voted to lift the ban on crude oil exports on December 18, 2015 as part of a budget deal for 2016. At present, U.S exporters are allowed to sell oil to Canada, Switzerland, and Spain, with smaller amounts (less than a million barrels annually) to China, Germany, South Korea, and Singapore.

The International Monetary Fund (IMF) estimates real gross domestic product (GDP) growth for the world in 2016 will reach 3.5 percent, slightly better than was projected this year. What are the factors impacting growth? And how will our major trading partners perform?

The sharp defeat of Narendra Modi’s Bharatiya Janata Party in the state of Bihar has put the prime minister’s reform plan and political legacy at risk. Despite his overwhelming victory in last year’s national election, his government has failed to overhaul the legal barriers and regulatory excesses which have left an economy full of entrepreneurial people mired in poverty.

For baffling reasons, Russia is perceived as a world power that rivals America. Look beneath the veneer of Putin’s bluster and you’ll find a country in deep financial distress that is on the verge of economic collapse. The culprit is oil. The price of a barrel of oil has been cut roughly in half since June 2014, reaching levels last seen during the depths of the 2009 recession.

The rupiah is plumbing the depths it last visited in 1998 during the Asian financial crisis. The chart below of the rupiah’s value against the U.S. dollar tells the tale. Although the rupiah’s recent plunge is not as dramatic as the post July 1997 float of the rupiah, it is ugly nevertheless.

Prime Minister Narendra Modi delivered his second Independence Day speech in mid-August, and used the opportunity to lay out his government’s priorities for the remainder of his term, which ends in 2019. Largely missing from the address was the optimistic promise of sweeping reforms that would transform the Indian economy, a topic that was the central feature of his first Independence Day speech in 2014.

In mid-July, Bank of Canada Gov. Stephen Poloz affirmed that the country’s GDP contracted for a second consecutive quarter in the April–June 2015 period, technically meeting the definition of a recession. That is very bad news for Prime Minister Stephen Harper’s CPC government, which will be seeking re-election to a fourth consecutive term at parliamentary elections scheduled for October 19.