IMF bailout would force Pakistan’s Khan to compromise

2018 ◽  
Keyword(s):  
Saudi Arabia ◽  
Welfare State ◽  
Current Account ◽  
Budget Deficit ◽  
Prime Minister ◽  
Current Account Deficit ◽  
Fiscal Year ◽  
Content Type ◽  
The Us ◽  
Us Government

Subject Pakistan's likely need for an IMF bailout. Significance Prime Minister Imran Khan, sworn in earlier this month, came to power promising to create an ‘Islamic welfare state’. In the fiscal year ending June 2018, the current account deficit was nearly 6% of GDP and the budget deficit nearly 7% of GDP. Pakistan in September 2016 completed a three-year Extended Fund Facility programme with the IMF worth some 6.6 billion dollars, and in the last month has availed of loans worth 2.0 billion dollars from China and 4.0 billion dollars from Saudi Arabia. Impacts The US government will issue further warnings against an IMF bailout being used to pay off Pakistan’s debt to China. The revival of ties between Pakistan and Saudi Arabia may hinder Islamabad’s efforts to improve ties with Tehran. Khan’s governing coalition will be relatively stable, fewer constituent parties reducing the risk of splits, and the opposition divided.

India’s growth will be fragile

2018 ◽  
Keyword(s):  
Stock Market ◽  
Current Account ◽  
Prime Minister ◽  
Current Account Deficit ◽  
General Election ◽  
Gdp Growth ◽  
Economic Downturn ◽  
Hindu Nationalism ◽  
Content Type ◽  
The Current Account

Subject Outlook for India's GDP growth. Significance India’s GDP statistics point to robust growth and its stock market indices suggest a boom. Yet inflation is high, the current account deficit is widening, the rupee has depreciated and investors are increasingly wary. Impacts Prime Minister Narendra Modi will highlight India’s growth figures in campaigning for a second term early next year. Opposition parties will push back on Modi by suggesting India’s growth is largely ‘jobless’. Any sign of an economic downturn prior to the general election could prompt Modi to appeal more to Hindu nationalism to garner support.

Twin deficits hypothesis in Bangladesh: an empirical investigation

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sima Rani Dey ◽  
Mohammad Tareque
Keyword(s):  
Current Account ◽  
Budget Deficit ◽  
Good Governance ◽  
Current Account Deficit ◽  
Trade Deficit ◽  
Fiscal Deficit ◽  
Twin Deficits ◽  
Content Type ◽  
Long Run ◽  
The Current Account

PurposeThis study attempts to examine the twin deficits hypothesis for Bangladesh. Along with the traditional twin deficits hypothesis associated with the current account and fiscal deficit, the paper also explores the causal relationship between the trade deficit and fiscal deficit.Design/methodology/approachWe start with the investigation of the conventional twin deficit hypothesis employing autoregressive distributed lag (ARDL) bounds testing approach in a multivariate framework. Due to the absence of cointegration between the budget deficit and trade deficit, the study adopts a multivariate vector autoregressive (VAR) model to analyze the nexus.FindingsThe study supports the presence of the twin deficits hypothesis in Bangladesh, both in the short run and long run. Unidirectional causation running from the budget deficit to the current account deficit in the long run. The trade model also supports the twin deficit hypothesis, like the aforementioned current account model.Practical implicationsTherefore, the sustainable fiscal deficit is the key to maintain a stable current account deficit and trade deficit in Bangladesh.Originality/valueThe study incorporates the country risk indicators to address the governance issue while analyzing the models' deficit scenarios because good governance is an integral part of explaining the development outcome and failure of a country like Bangladesh.

External factors may trigger more Mexican rate hikes

2016 ◽  
Keyword(s):  
Interest Rate ◽  
Current Account ◽  
Federal Reserve ◽  
Rate Increase ◽  
Current Account Deficit ◽  
External Factors ◽  
Content Type ◽  
The Us ◽  
The Interest Rate ◽  
Direct Trade

Significance The hike was double the 25 bp expected by most economists and took place without any similar move from the US Federal Reserve (Fed), increasing the gap between the respective rates to 375 bp. Impacts The interest rate increase will affect growth negatively, with GDP probably growing by around 2% this year. A weak peso should help to maintain the current account deficit at manageable levels. The direct trade impact of Brexit on Mexico will be marginal but any new bilateral deals will be on hold until after UK-EU exit talks.

Lebanese ‘dissociation’ from Syria will stall

2017 ◽  
Keyword(s):  
Saudi Arabia ◽  
Prime Minister ◽  
Refugee Camps ◽  
Palestinian Authority ◽  
Content Type ◽  
Full Support ◽  
The Us ◽  
Palestinian Refugee ◽  
Foreign Conflicts

Significance Ties have been difficult since Prime Minister Saad al-Hariri reversed his Saudi-inspired resignation on November 4, despite his insistence that it was on the basis that all parties in Lebanon -- including Hezbollah, backed by Riyadh’s enemy, Tehran -- would ‘dissociate’ themselves from foreign conflicts. This position wavered on December 16, when Nabil Qaouq, a senior Hezbollah leader, said that the Shia movement will give full support to the Palestinian ‘resistance’ after the US decision to recognise Jerusalem as the capital of Israel. Impacts Heightened tension on the Lebanese-Israeli border will increase the chances of a miscalculation leading to confrontation. Complete Hezbollah intransigence on the dissociation agreement could force Saudi Arabia to reconsider its support for Hariri. A crisis within the Palestinian Authority could spill over to Lebanon, with factional confrontations in the Palestinian refugee camps.

Pakistan will have to rely more on IMF

2020 ◽  
Keyword(s):  
Economic Impact ◽  
Current Account ◽  
Prime Minister ◽  
Current Account Deficit ◽  
Oil Prices ◽  
Content Type ◽  
Business Operations ◽  
The Current Account ◽  
The Imf

Subject Pakistan's economic woes. Significance Prime Minister Imran Khan says he cannot afford to declare a COVID-19 lockdown in Pakistan because of the damage it would do to the economy, although provincial authorities have imposed restrictions on movements and business operations anyway. Meanwhile, Islamabad has approached the IMF for a 1.4-billion-dollar loan to help deal with the economic impact of the pandemic, on top of the 6.0-billion-dollar bailout it secured from the Fund last year. Impacts Khan will increasingly emphasise the importance of youth volunteers in helping poorer people affected by the COVID-19 crisis. Currently low oil prices may help reduce Pakistan’s import bill even as the current account deficit widens. The Federal Board of Revenue will struggle for direction until its leadership situation is clarified.

Are export earnings from India’s bilateral intra-industry trade with the US and China robust enough?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sagnik Bagchi ◽  
Surajit Bhattacharyya
Keyword(s):  
Current Account ◽  
Manufacturing Industry ◽  
Current Account Deficit ◽  
Export Price ◽  
World Market ◽  
Export Share ◽  
Content Type ◽  
Persistent Problem ◽  
Industry Trade ◽  
The World

Purpose This paper aims to explore whether India’s export basket in the bilateral intra-industry trade (IIT) with two of its top trading partners characterize robust export earnings or not. This is pertinent for two reasons. First, India has a persistent problem of current account deficit for over decades now. Second, whether India’s export diversification strategy by participating in global value chains to improve export share in the world market led to the problem of the fallacy of composition. Design/methodology/approach This study considers bilateral trade data between India-USA and India-China at the HS-6 digit level over the period 1990–2018. The magnitude of total IIT is computed using the Grubel and Lloyd (1971) index. This paper then uses the unit value dispersion criterion to disentangle the magnitude of total IIT into horizontal and vertical IIT. Through a stepwise econometric exercise, this paper explores the attributes of exported goods in the IIT basket in terms of the directions of ToT, export share and export-price elasticity. Findings Across the two country pairs, the major contributors to the upsurge in IIT are five manufacturing industry groups of chemical, plastics and rubber, textiles, base metals and machinery and mechanical appliances. Across the industry groups, the dominant form of IIT has been low vertical IIT. Most of the industry groups do not characterize robust export earnings as the commodity groups have an elastic demand and an increasing trend of Terms of Trade (ToT). The exceptions are the industry groups of chemicals and textiles in India-China and India-USA, respectively. Research limitations/implications The concern of slim export earnings in most industry groups offers scepticism in maintaining the sustainability of the current account. The problem of the fallacy of composition also cannot be ruled out given the dominance of low vertical IIT. This study argues that these industry groups need to engage in labour market reforms and require access to easy credit to achieve competitiveness in the world market. Originality/value The analysis performed in this paper attempts to integrate the Prebisch-Singer hypothesis in the context of IIT. Empirical evidence to such an issue is not profound.

June summits signal progress on EU-US trade ties

2021 ◽  
Keyword(s):  
Corporate Taxation ◽  
Gas Pipeline ◽  
Security Technology ◽  
Content Type ◽  
Transatlantic Cooperation ◽  
The Us ◽  
Us Government ◽  
Nord Stream ◽  
High Level ◽  
Two Sides

Significance The two sides have suspended tariffs arising from their dispute over subsidies to Airbus and Boeing, are working on an international deal on corporate taxation and have established a high-level council to discuss issues at the nexus of security, technology and trade. Impacts A major aim of closer transatlantic cooperation is better coordination of policies with respect to China. Closer transatlantic cooperation over China might soften US opposition to the Nord Stream 2 gas pipeline. It will be difficult for the US government to pass legislation concerning trade given the Democrats' precarious majority in both houses.

Iran’s hopes of swift economic recovery will be dashed

2021 ◽  
Keyword(s):  
Economic Policy ◽  
Vaccination Campaign ◽  
Economic Recovery ◽  
Fiscal Year ◽  
Islamic Revolution ◽  
Content Type ◽  
The Us ◽  
Supreme Leader

Significance His government is in an impasse with the conservative parliament over the draft budget for the new fiscal year beginning on March 21. Rouhani needs the US sanctions to be lifted fast and a COVID-19 vaccination campaign to allow for an exit from the pandemic in order to meet his economic promises. Impacts The supreme leader will become even more closely involved in shaping economic policy, with the autarkic ‘resistance’ narrative dominant. Khamenei may seek a new ‘jihadi manager’ president, linked to the Islamic Revolution Guard Corps (IRGC), who follows his economic vision. Progress with vaccinations, which began on February 8, will likely be slow, as supplies have become highly politicised.

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