Covid-19 Vaccines and the Economy

An Excerpt from the link to the article below. The key is to achieve herd immunity and consumers must return to the pre-pandemic economic activities purchasing behavior. 

"McKinsey & Company identified five challenges to achieving herd immunity in its December report:

1. Americans resist adopting public health measures—only 50% receive the flu vaccine each year. 
2. Only 37% of adults said they will definitely get the vaccine, while an additional 45% are cautious and 18% said it’s unlikely they would get it.
3. It may be hard to change the minds of Americans who said they are cautious about getting the vaccine.
4. Some credible influencers, like doctors and nurses, also said they are uncertain about getting the vaccine.
5. Incorrect or misleading information about the vaccine is widespread."

https://www.thebalance.com/how-do-vaccines-affect-the-economy-5101340

Image - thebalance.com

UNDP Arab States - How Covid-19 Affect Arab Countries

Excerpt:

"A systemic crisis

As the first systemic crisis of the 21st century, the financial crisis of 2008 shed important light on the fragility of an interconnected world, yet despite the global nature of the outfall, many Arab countries were shielded from its worse consequences by virtue of their relative isolation from the global financial system. The COVID-19 pandemic is another story. With close to 700,000 number of cases and more than 30,000 number of deaths in 202 countries worldwide, as of March 30, it has officially spread to nearly every country in the Arab region."

https://medium.com/@UNDPArabStates/grappling-with-a-crisis-like-no-other-the-fragility-of-arab-countries-in-the-face-of-covid-19-a174b1017824

Image - UNDP Arab States

TINA (Trade Intelligence and Negotiation Adviser) to be the Equaliser

Excerpt:

"The UN’s Economic and Social Commission for Asia and the Pacific (ESCAP) has developed a software that gives countries advice for negotiating trade deals."

https://www.trtworld.com/magazine/un-developed-online-tool-could-be-a-game-changer-for-trade-negotiations-45432

Image - TINA Homepage

China, Alipay & Tencent

China goes ahead with the sovereign digital currency, provide backup for 'Alibaba and Tencent' in case they are having technical financial problem. More in the article below.

https://www.scmp.com/economy/china-economy/article/3127136/china-digital-currency-provide-backup-alipay-tencents-wechat

Image - Bloomberg.com

Covid-19 Impact on the Islamic Finance Industry

There is an eBook (13 chapters) on the selected OIC (Organisation of Islamic Coopeartion) discussing this topic pdf download from HERE. Happy weekend reading.

The opening chapter of the eBook is available:

https://salaamgateway.com/story/covid-19-and-its-impacts-on-the-islamic-financial-industry-in-the-oic-countries

Image - South-South Galaxy - SESRIC

Britain Issues £500m Sovereign Sukuk

Back in 2017, I wrote a case study on Brexit. The prediction was Britain would issue Sukuk to maintain its position as the western hub for Islamic finance. Will Sukuk be both the game maker and game changer post-Brexit? An interesting development to watch.

Excerpt:

"LONDON: The British government has issued £500 million ($686.85 million) worth of Shariah-compliant sovereign bonds — seven years since it made history as the first country outside the Muslim world to issue a sovereign sukuk.

The Treasury said on Thursday that “£500 million of sukuk, the Islamic equivalent of a bond, has been sold to investors based in the UK and in the major hubs for Islamic finance in the Middle East and Asia.”

...He said: “They’re not doing it as a funding tool. They have other objectives in mind: They want to maintain their status as a Western hub for Islamic finance, including sukuk. London is one of the largest hubs for issuing sukuk, and this is more important in these times because of Brexit.”

He added: “Other countries, such as Ireland and Luxembourg, are eyeing the status of Islamic finance hub in the Western world — the UK is looking at it from this angle.”

Competition between these locations is already underway, said Al-Natoor. “Ireland is already working on their Islamic finance offering, and Luxembourg has very advanced infrastructure, mainly toward Islamic fund management. You have these two that are visible when it comes to Islamic finance,” he added. “The UK has a head start in the field, but is there competition? I think yes, there is.”

https://www.arabnews.com/node/1831956/business-economy

Image - Trade Finance Global

Biden's Fiscal Stimulus and the Emerging Economies

According to the article below, Biden's fiscal policy is probably good for the US, but not so for the emerging economies. Takin India as an example, the articles says that the non-tradable sector (services) that is going to drive growth in the US is not going to help the emerging economies. Comparing the present situation to the GFC (Global Financial Crisis 2007) recovery trajectory, the article highlights that: 

"So what is the likely policy response from emerging economies? Depending on the country-specific macro-economic fundamentals, emerging economies may either respond by letting their currency depreciate or by increasing domestic rates to contain outflows."

https://indianexpress.com/article/opinion/columns/us-coronavirus-cases-relief-package-joe-biden-7243679/

Image - IMF

Border Wall Cash Freeze

Biden and his border wall promise that he might not be able to keep. More in the article below.

https://www.politico.com/news/2021/03/23/biden-border-wall-477714

Image - Al-Jazeera

Bidenomics $1.9 Trillion Challenge

Will the massive stimulus package lead to inflation? No, according to the article below. 

https://www.ft.com/content/83bdd71b-e0e9-4d9f-a7cd-dfaa183c1fce

Image - The Economist

Source: https://www.lexology.com/library/detail.aspx?g=dae65e86-de77-4a1b-9ca7-2595c6f45207

Price of Technology

I forgot where I took the information. My apology to the researcher. Once I come across the information, I will update. 

Monetary-Fiscal Policy Mix in Malaysia

Malaysia, February 2020. 

Excerpt:

"The relationship between China’s economic growth and that of the Malaysian economy is also too close for comfort, judging by statistics between 2010 and 2018. An estimate suggests that a 0.5% contraction of China’s economy is associated with a 0.2% decline in the growth of the Malaysian economy.

Given the material impact of the COVID-19 outbreak on the Chinese and global economies, Malaysia will likely arm itself with both fiscal and monetary arsenals in 2020. On the fiscal side, the government is already planning to introduce a stimulus package in the near term."

https://www.salaamgateway.com/story/malaysia-economy-a-monetary-fiscal-policy-mix-likely-in-2020-marc

Image - Pinterest

Malaysia Digital Economy Blueprint 2021

The Blueprint was launched on February 19, 2021 by the Prime Minister of Malaysia. Below is the link to the Blueprint.

Key Highlights:

i) By 2025, the digital economy is expected to contribute 22.6 percent to the country’s Gross Domestic Product (GDP).

ii) At the same time, the plan also aims to provide 500,000 job opportunities in the digital economy.

iii) The government also encourages 875,000 micro, small and medium enterprises to accept the use of e-commerce.

iv) In addition, these initiatives under the auspices of MyDIGITAL also serve as catalysts for 5,000 start-up companies to begin their operations in the next five years.

v) These initiatives will be the starting point to attract new investments worth RM70 billion in the digital sector, from within and outside the country.

vi) The government is also targeting for the level of productivity of the economic sector to increase by 30 percent higher than what that has been achieved today, by 2030.

Three phases of implementation until 2030:

Phase 1: 2021 to 2022 - will strengthen the foundation of digital adoption.

Phase 2: 2023 to 2025 - will drive inclusive digital transformation.

Phase 3: 2026 to 2030 - will make Malaysia a digital content and cyber security lead in the regional market.

https://www.epu.gov.my/sites/default/files/2021-02/Malaysia-digital-economy-blueprint.pdf

Image - PwC and the Blueprint

AI and The Rich-Poor Gap

Excerpt:

"Our recent staff research finds that new technology risks widening the gap between rich and poor countries by shifting more investment to advanced economies where automation is already established. This could in turn have negative consequences for jobs in developing countries by threatening to replace rather than complement their growing labor force, which has traditionally provided an advantage to less developed economies. To prevent this growing divergence, policymakers in developing economies will need to take actions to raise productivity and improve skills among workers."

https://blogs.imf.org/2020/12/02/how-artificial-intelligence-could-widen-the-gap-between-rich-and-poor-nations/

Image: Wenjin Chen/Stock by Getty Images - IMF Blog

Prof Mankiw on the Biden Economy

Prof. Mankiw wrote in the New York Times, excerpted below:

"Stimulus proponents argue that the Federal Reserve can deal with inflation by raising interest rates, which would slow spending. True, but it would be a mistake to put too much faith in the prescience and skill of central bankers.

When inflation got out of hand starting in the 1960s, it took until President Jimmy Carter’s appointment of Paul Volcker as Fed chairman in 1979 to get things back under control. The cost of the disinflation was a recession in 1982, at the time the deepest economic downturn since the Great Depression of the 1930s.

Put differently, speeding is dangerous. The result can be not just a ticket but a crash."

https://www.nytimes.com/2021/02/26/business/biden-stimulus-overheat-economy.html

Image credit - Richard Borge, New York Times

Growth in Asia, Interrupted

The recent article from the IMF Blog.

https://blogs.imf.org/2021/03/17/the-future-of-asia-what-a-difference-a-year-can-make/

Digital Goods and the Economic Interpretation

An interesting article by Danny Quah in 2002. Open source software is one example of innovation in this new economy.

https://www.researchgate.net/publication/4808107_Digital_Goods_and_the_New_Economy

Image credit - theDotstore

Island Building Game - Shansha City

Yes, it is China again. Building an island in the South China Sea. Shansha City, a 800,000-square-mile city island in a watery region, founded in 2012. Paracel Island. Spratly Island. The link below if you are interested.

https://www.bloomberg.com/news/articles/2021-02-19/china-has-an-800-000-square-mile-city-in-the-south-china-sea

Shansha City. Image credit - Stimson.org

Steel Prices: Echoes of 2008

Here is an interesting article that describes the present steel prices hike and the link to the previous 2008 situation. Deja vu?

Excerpt:

"Last year was a turbulent one for most global commodity markets. Steel markets stunted by the impact of the Covid-19 pandemic experienced significant highs and lows. But this was not the first time a crisis muted global markets. The global financial crisis (GFC) of 2007-08 caused extreme volatility across all major steel-producing regions – including North America, Europe and Asia.

In 2020, the price of many steel products increased to record highs, spiking in line with short supply. The prices of steelmaking raw materials also moved violently during the year."

https://www.fastmarkets.com/article/3979114/steel-prices-in-times-of-crisis

Image credit - The Fabricator

When Gold Price Will Bottom?

Watch the 12 minutes video below. Gold used to be the primary inflation hedge. 

https://www.kitco.com/news/2021-03-12/Here-s-when-gold-price-will-bottom-says-Phil-Streible.html

China and Australian Iron Ore

It is all business. Trade. Natural resources. Subsidy. Global market price maker. You can choose which perspective you want to examine. But read article below for a start.

https://www.hellenicshippingnews.com/what-would-happen-if-china-stopped-buying-australian-iron-ore/

China's 14th 5-Year Plan (2021-2025)

Excerpt below:

“Dual Circulation” set to be the defining economic strategy for the new era…

The 14th Five-Year Plan adopts the idea of “dual circulation” as its core concept for future economic growth. The term has been around for several years but now features prominently in policy statements.

There is no official interpretation of the policy and we will need to see how it is put forward in the Plan. What is certain, however, are its desired outcomes.

The overarching economic goal is to transform the old growth model to a more sustainable path, in the context of a much more complex domestic and international environment.

In simple terms, the idea is for China to rely predominately on its domestic system (internal circulation) to drive growth but this will be supported by an international cycle of trade and foreign investment (external circulation).

Domestic circulation is expected to focus on:

• expanding, deepening, and strengthening the domestic demand (consumption) by improving the social safety net, undertaking rural reforms, and generally improving people’s sense of security such that they are willing to spend money; and
• increasing industrial capacity and productivity by focussing on technological innovation to support domestic growth and self-reliance. Self-reliance in this context is not a push for economic independence, but rather a shift towards a managed integration into global markets and economies that enhances China’s development process while allowing it to build its own capabilities and mitigate the risks it sees in a more uncertain global outlook.

External circulation, in the new era, introduces some new concepts. China’s engagement with the global economy has to date been seen through the familiar prism of trade (historically exports but with a more recent focus on imports). It is expected that new policies will emphasise Beijing’s desire to remain deeply engaged in the global economy, but the way in which this takes placed is likely to be reframed.

We can expect that there will be efforts to maintain and enhance China’s support for multilateral trade institutions and a rules-based global trading framework, but with a push for greater recognition of China’s role in the global trading system and renewed emphasis on the adoption of Chinese standards and protocols.

It’s likely that the blockchain, new technologies and digital currencies will be promoted to create more resilient supply chains, Belt & Road 2.0 is likely to appear (perhaps with a new focus on projects that address some of the global health challenges the world faces).

Mega economic regions, such as the Greater Bay Area in southern China, will take a more visible role as regions for piloting new domestic policies and new technologies, as well as connecting China to the world and the world to China.

https://www.lexology.com/library/detail.aspx?g=50083c2e-9e68-4b80-b075-07f20334429f

Image credit - Global Times

The Jack Ma Saga

Excerpt:

"China has sought to reassure entrepreneurs in recent weeks, with mixed success. One state-owned newspaper praised Tencent's Pony Ma, Huawei Technologies' Ren Zhengfei, Xiaomi's Lei Jun, and other billionaire founders for breathing "new life into China's economic reforms." Jack Ma -- by far the nation's most famous businessman -- wasn't mentioned."

https://www.ndtv.com/world-news/jack-mas-fall-from-grace-in-china-threatens-xi-jinpings-tech-masterplan-2386614

Image credit - Cointelegraph.

OECD Innovation Blog

Discovered OECD Blog while searching for new reading material. 

4 Key Points in the OECD Digital Economy Outlook 2020:

i.   Connectivity help people to adapt to crisis.

ii.  More significant digital divide.

ii.  Government adopts digital transformation.

iii.  More need to be done to ensure digital inclusion.

https://oecd-innovation-blog.com/2020/11/27/digital-economy-outlook-2020-key-findings/

Image credit - OECD Blog

Digital Rich and Digital Poor - IMF

An Excerpt from the IMF Blog:

For millions, technology has been a lifeline, changing the way we work, learn, shop, and entertain ourselves. In a year like no other, it has spurred game-changing digital shifts. Governments moved quickly, using mobile solutions to provide cash assistance; financial technology has helped the survival, and in some cases, growth of small- and medium-sized businesses; and the first national digital currency, in The Bahamas, provides a glimpse of the future of money.

https://blogs.imf.org/2021/03/01/the-haves-and-have-nots-of-the-digital-age/

The full issue is available. Image credit - IMF

What Drives Local Food Prices?

With the rising global food prices due to Covid-19 pandemic, it is is good to take a re-look at the article below written in 2015 by FAO. The article examines the post-2005 commodity price boom in the maize market by examining factors driving movements of prices in 18 major regional maize markets in Tanzania.

Maybe we could learn something. 

https://www.weforum.org/agenda/2015/08/what-drives-local-food-prices

Image credit - World Grain

The Workings of Negative Interest Rates

An article by Haksar and Koop (2020), the IMF explaining negative interest rate. 

Excerpt:

"For most of history, nominal interest rates—stated rates that borrowers pay on a loan—have been positive, that is, greater than zero. However, consider what happens when the rate of inflation exceeds the return on savings or loans. When inflation is 3 percent, and the interest rate on a loan is 2 percent, the lender’s return after inflation is less than zero. In such a situation, we say the real interest rate—the nominal rate minus the rate of inflation—is negative."

https://www.imf.org/external/pubs/ft/fandd/2020/03/what-are-negative-interest-rates-basics.htm

Image credit - hiqr - WordPress.com

Image credit - Medium

The Evidence is in NIRP (Negative Interest Rate Policy)

 Excerpt from the IMF Blog:

"In sum, the evidence so far indicates negative interest rate policies have succeeded in easing financial conditions without raising significant financial stability concerns. Thus, central banks that adopted negative rates may be able to cut them further. And those non-adopting central banks should not rule out adding a similar policy to their toolkit—even if they may be unlikely to use it.

Ultimately, given the low level of the neutral real interest rate, many central banks may be forced to consider negative interest rate policies sooner or later."

https://blogs.imf.org/2021/03/03/the-evidence-is-in-on-negative-interest-rate-policies/

Image credit - IMF

23 Killer Sites for Free Online Education

Free online education for everyone. 

"From history to coding, excellent, free online education awaits on the following 23 sites."

Search for the article below in the Internet:

23 Killer Sites for Free Online Education Anyone Can Use by Alicia Print

Image credit - ROBOTlab

Resilience in Time of Crisis

Excerpt:

"How Malaysia’s digital economy has proven to be a source of resilience for the economy"

Contributor 16 February 2021

As nations around the world continue to combat the effects of the COVID-19 pandemic, one thing remains certain – the acceleration of digital adoption is here to stay. In Malaysia, the digital economy is expected to balloon by three times, reaching a total gross merchandise value (GMV) of RM125 billion in 2025.

Flight to digital: There is a massive increase in Malaysian consumers turning to digital services for the first time According to the recent e-Conomy SEA 2020 Report published by Google, Temasek, and Bain & Company, more than one in three Malaysians used digital services for the first time ever in 2020. Among these new users, up to 92% said they would continue using digital services post-pandemic."

Image credit - Bomstart Media

Global Food Prices are Going Up

An article in Blooberg below reminding us about potential food prices hike due to pandemic. The economy has to recover soon. Otherwise the vulnerable groups will be severely impacted.

Food Prices Are Soaring Faster Than Inflation and Incomes

As the Covid-19 pandemic wreaks havoc on economic growth, concerns about hunger and malnutrition are rising around the world.

By 

Emily Cadman

, 

Deena Shanker

, 

Leslie Patton

, and 

Charlie Wells

1 March 2021, 08:00 GMT+

An Excerpt:

"With these pressures building, Russia and Argentina have put price curbs on certain staples and slapped tariffs on exports in an attempt to contain domestic food prices.

In some richer countries, governments are focusing more on self-sufficiency than price controls. France is planning to boost its output of high-protein crops to cut reliance on soybean imports, while Singapore recently became the first country to approve sales of lab-created meat as it pushes to boost its domestic food capacity."

Responding to Reviewers' Comments

Good article. Links to sample reviews and responses are also provided. The author points-out that the Nature journal has made it optional for authors to publish the reviews and responses. A good move. 

Excerpt:

"How to respond to reviewers’ comments: A practical guide for authors

Cristina N.24 February 2020

In February 2020, Nature announced that it would give authors the option to publish their referee reports and responses to reviewers. Though this change is only a trial for this journal, other Nature Research journals have opened the peer-review process. I applaud the effort of these and other journals to make peer review more transparent, and hope it will become a standard."

The rest of the article in available in the Internet.

Jurang Kemiskinan Digital

 Excerpt (in Malay):

"Semua pelajar dan kanak-kanak di Malaysia berhak mendapatkan akses yang sama rata kepada pendidikan berkualiti dalam negara. Walaupun benar kata peribahasa “di mana ada kemahuan, di situ ada jalan”, tetapi kita juga perlu memastikan agar kesemua pelajar mampu berjalan di atas jalan yang sama, lurus dan saksama."

https://www.bernama.com/bm/tintaminda/news.php?id=1931493#abc