Australia budget keeps defence spending commitments

2021 ◽  
Keyword(s):  
South China Sea ◽  
Interest Rates ◽  
Fiscal Year ◽  
National Politics ◽  
Content Type ◽  
Defence Spending ◽  
Low Interest Rates ◽  
Defence Expenditure ◽  
Conducive Environment ◽  
Made In

Significance With an election due soon, the governing Liberal-National Coalition’s pledge to ring-fence the defence spending commitments made in 2016 was under some pressure. However, defence spending in fiscal year 2021/22 will grow by over 4% in real terms and stay above the symbolic level of 2% of GDP. Impacts Growing popular and bipartisan concern with Chinese aggression is a conducive environment for increased defence spending. Low interest rates and a stronger Australian dollar are also supporting sustained levels of defence expenditure. Washington may increase pressure on Australia to conduct freedom of navigation exercises in the South China Sea. Major business groups are concerned that increased criticism of China in national politics will produce yet more punitive backlash.

Low interest rate environment: inventory management in Finland and Baltic states

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Olli-Pekka Hilmola ◽  
Weidong Li ◽  
Andres Tolli
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Customer Service ◽  
Inventory Management ◽  
Global Financial Crisis ◽  
Recent Decade ◽  
Baltic States ◽  
Content Type ◽  
Low Interest Rates ◽  
Rate Environment

PurposeFor decades, it was emphasized that manufacturing and trading companies should aim to be lean with very small inventories. However, in the recent decade, time-significant change has taken place as nearly all of the “old west” countries have now low interest rates. Holding inventories have been beneficial for the sake of customer service and for achieving savings in transportation and fixed ordering costs.Design/methodology/approachIn this study, inventory management change is examined in publicly traded manufacturing and trade companies of Finland and three Baltic states (Estonia, Latvia and Lithuania) during the years 2010–2018.FindingsInventory efficiency has been leveled off or falling in these countries and mostly declining development has concerned small- and medium-sized enterprises (SMEs). It is also found that inventory efficiency is in general lower in SMEs than in larger companies. Two companies sustaining in inventory efficiency are used as an example that lean has still significance, and higher inventories as well as lower inventory efficiency should not be the objective. Two companies show exemplary financial performance as well as shareholder value creation.Research limitations/implicationsWork concerns only four smaller countries, and this limits its generalization power. Research is one illustration what happens to private sector companies under low interest rate policies.Practical implicationsContinuous improvement of inventory efficiency becomes questionable in the light of current research and the low interest rate environment.Originality/valueThis is one of the seminal studies from inventory efficiency as the global financial crisis taken place in 2008–2009 and there is the implementation of low interest rates.

The current farm downturn vs the 1920s and 1980s farm crises

2018 ◽  
Vol 78 (4) ◽  
pp. 396-411 ◽  
Author(s):  
Wendong Zhang ◽  
Kristine Tidgren
Keyword(s):  
Interest Rates ◽  
Agricultural Sector ◽  
Balance Sheet ◽  
Real Income ◽  
Economic Downturn ◽  
Agricultural Credit ◽  
Content Type ◽  
Farm Crisis ◽  
Low Interest Rates ◽  
Sudden Collapse

Purpose The purpose of this paper is to examine the current farm economic downturn and credit restructuring by comparing it with the 1920s and 1980s farm crises from both economic and regulatory perspectives. Design/methodology/approach This paper closely compares critical economic and regulatory aspects of the current farm downturn with two previous farm crises in the 1920s and 1980s, and equally importantly, the golden eras that occurred before them. This study compares key aggregate statistics in land value, agricultural credit, lending regulations, and also evaluates the situations and impacts on individual farmer households by using three representative case studies. Findings The authors argue that there are at least three economic and regulatory reasons why the current farm downturn is unlikely to slide into a sudden collapse of the agricultural markets: strong, real income; growth in the 2000s, historically low interest rates; and more prudent agricultural lending practices. The current farm downturn is more likely a liquidity and working capital problem, as opposed to a solvency and balance sheet problem for the overall agricultural sector. The authors argue that the trajectory of the current farm downturn will likely be a gradual, drawn-out one like that of the 1920s farm crisis, as opposed to a sudden collapse as in the 1980s farm crisis. Originality/value The review provides empirical evidence for cautious optimism of the future trajectory of the current downturn, and argues that the current downturn is much more similar to the 1920s pattern than the 1980s crisis.

US energy high-yield bonds spur default risk

2015 ◽  
Keyword(s):  
Interest Rates ◽  
Default Risk ◽  
Oil Price ◽  
High Yield ◽  
Content Type ◽  
The Past ◽  
The Us ◽  
Low Interest Rates ◽  
Investment Grade ◽  
Energy Companies

Subject Impact of the oil price drop on energy high-yield bonds. Significance The over 50% oil price drop since June 2014 is hitting bonds issued by energy companies, particularly those issued by sub-investment grade corporates. The US high-yield bond market has been growing rapidly over the past five years. The shale boom has generated considerable investment, mainly funded through the issuance of these bonds which benefit from historically low interest rates. As the oil price has plunged, the spread over Treasury yields paid by the average issuer in the energy subsector has more than doubled between July and the December 2014 peak. Impacts Yields currently offered by the energy subsector are not far from pricing in a default scenario. Persistently low oil prices will further darken the outlook for the energy subsector and the high-yield market generally. A possible default cycle in the energy sector could accelerate outflows, overstretching the sector further.

Global investment in aircraft, housing securities up

2017 ◽  
Keyword(s):  
Financial Crisis ◽  
Interest Rates ◽  
Institutional Investors ◽  
Sparse Data ◽  
Pension Funds ◽  
Business Climate ◽  
Content Type ◽  
Mortgage Backed Securities ◽  
Rental Property ◽  
Low Interest Rates

Subject Trends in the securitisation market. Significance Investment in securitised assets fell after the financial crisis due to the role played by mortgage-backed securities as well as investor concerns about sparse data and complexity. The search for yield in a world of low interest rates has drawn investors back to securitised investment, particularly in aircraft-backed securities and rental property portfolios. Specific investor concerns have been dealt with, raising confidence, and the sector is meeting the financing shortfall arising from the pressure that traditional lenders have been under since the crisis. Impacts US-based securitisations are likely to become more available to European institutional investors if, as expected, regulation increases. The new US administration is expected to bring in measures to improve the business climate and may reduce regulation. The uptake of aircraft-backed securities will increase, but regulatory bias means that demand will still be dominated by pension funds.

Iran will struggle to create a ‘resistance economy’

2017 ◽  
Keyword(s):  
Central Asia ◽  
Fiscal Year ◽  
Gdp Growth ◽  
Crowding Out ◽  
Medium Term ◽  
Content Type ◽  
Investor Confidence ◽  
Real Gdp ◽  
Defence Spending ◽  
Supreme Leader

Subject The Iranian budget. Significance Speeches marking the Iranian New Year (Nowruz) on March 21 highlighted disagreements between Supreme Leader Ali Khamenei and President Hassan Rouhani. While both promoted a ‘resistance economy’, each meant something different. The recently published budget for the 2017-18 fiscal year highlights divisions and linkages between the two philosophies. Impacts Real GDP growth in 2017 will not be much above 3.0% and will rise to 4.5% in the medium term. Rising tensions with Washington will further boost defence spending, crowding out development. Additional US congressional sanctions, or even threat of sanctions, are likely to depress investor confidence. New transport links to Central Asia may significantly increase trade.

COVID-19 will hit Australia’s defence strategy

2020 ◽  
Keyword(s):  
United States ◽  
Cost Saving ◽  
Interest Rates ◽  
Content Type ◽  
Defence Budget ◽  
Defence Spending ◽  
Defence Strategy ◽  
The Government

Significance The government has incurred debt to cover its COVID-19 business and social lockdowns. The defence budget is now a likely to target for cost-saving. Impacts COVID-19 is hitting Australia’s close defence and strategic partners (United States, Japan, India) much harder than Australia. China, which has also been hard hit by COVID-19, will be Australia’s primary strategic concern. Interest rates and the Australian dollar’s strength will affect COVID-19’s effect on defence spending. Rising unemployment may help the ADF address its long-standing recruitment problems. Constrained Australian defence outlays will make Canberra a weaker ally during that time.

Year of elections will not shift Spain's economic woes

2015 ◽  
Keyword(s):  
Interest Rates ◽  
House Prices ◽  
Bank Lending ◽  
Federal State ◽  
The Political ◽  
Energy Prices ◽  
Tax Reforms ◽  
National Elections ◽  
Content Type ◽  
Low Interest Rates

Subject Economic backdrop to the election cycle. Significance Incumbent administrations will be helped in this year's local, regional and national elections by a number of factors that will contribute to economic growth: lower energy prices, low interest rates, easier bank lending, income tax reforms, a stabilisation in house prices and the stimulus to exports of a weak euro. Nevertheless, widespread disillusion with the political system is likely to result in significant changes in the political landscape, with repercussions for the direction of policy both within Spain and at the European level. Impacts A coalition of the left would push for an easing of austerity measures and more public spending paid for by more progressive taxation. It is also likely to be supportive of a move towards a federal state. Domestic demand should rise, unemployment continue to fall and property prices to stabilise and start to move upwards in some locations. Challenging political and economic conditions will make it difficult to sustain fragile coalitions.

Policy will strain the German pension system

2018 ◽  
Keyword(s):  
Interest Rates ◽  
Pension System ◽  
Pension Reform ◽  
Government Policies ◽  
Occupational Pension ◽  
Content Type ◽  
Low Interest Rates ◽  
Old Age Poverty ◽  
The Government ◽  
Pension Liabilities

Subject Germany’s pension system. Significance The pension system is under increasing pressure from demographic change, low interest rates and generous government policies. Impacts Increasing tax liabilities on pension incomes could increase the prevalence of old-age poverty. Rising pension liabilities in the occupational pension pillar could dampen business investment in years ahead. The question of pension reform could be the undoing of the government when the coalition parties meet to evaluate their work in late 2019.

Germany will gradually build up its defences

2018 ◽  
Keyword(s):  
National Security ◽  
Armed Forces ◽  
Content Type ◽  
Defence Industry ◽  
Defence Spending ◽  
Overseas Operations ◽  
Peacekeeping Missions ◽  
Defence Expenditure

Significance Traditionally, Germany has been cautious about defence spending and build-up. However, the defence ministry now wants to reorganise the Bundeswehr (armed forces) so that it contributes not only to overseas operations as is currently the case but also to national security. Impacts If defence expenditure reaches Merkel’s goal of 1.5% of GDP by 2021, this would allow spending of approximately 49 billion euros. Germany is likely to purchase more from its domestic defence industry as it increases spending. Overseas peacekeeping missions, especially in Iraq, Afghanistan and Mali, are likely to be expanded.

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