ISSUE 2812 NOVEMBER 2012
- The Nobel Peace Prize for 2012- Dilemma of the Indian Central Bank - Obama Reelected: Good or Bad? You decide.
The Fortnight In Brief (30
October to 12
Improved Economic Data Amidst Obama’s Re
With President Barack Obama winning the second term on 6 Nov, the focus nowhas shifted to the imminent fiscal cliff. The Democrats increased their majority inthe senate while the Republicans retained their control of the house of representatives. The election came with a backdrop of improved economic data,with the ISM manufacturing index increasing from 51.5 in September to 51.7 inOctober and the private sector adding 163,000 jobs in October. The report on jobcreation was above expectations, with gains becoming more broad-based,indicating a labour market in healing mode.
Asia Pacific ex-
Japan: Upbeat Economic Data to Welcome China’s New
Currencies throughout Asia rose with Barack Obama’s
reelection, with the Taiwan
dollar advancing 0.5% and the Thailand baht, South Korea’s won and Philippine’s
peso all gaining 0.3%. The rise indicates the view that Obama is likely to continueincreasing dollar supply which can be invested in Asia. Meanwhile in China,exports in October grew its fastest since May, with overseas shipments increasing11.6% compared to a 10% estimate. Retail sales, a measure of consumptionspending saw a 14.5% rise, up 0.3% from September. This points to a potentialrebound of the China economy and the avoidance of a hard landing. The upbeat economic data comes at a time where China transits to a new leadership.
EU: Healthcare Reform Test for New Dutch Government
The recently sworn in dutch coalition government is showing strains ashealthcare reform drives a wedge between the liberal and labour parties. Mark Rutte, the liberal prime minister, negotiated a coalition agreement with the labourparty which will introduce progressive insurance premiums. This has riled manyof his party members and supporters alike, driving some to call him "Marx Rutte".An income tax cut at the top end from 52% to 49% is expected to compensate thehigher income group but the cap on premiums means that top income earnerscome out ahead while the upper middle class gets squeezed. Prime Minister Rutteseeks to clear up this fiasco and renegotiate a deal with labour, but the staunchlabour party is unlikely to budge on the agreement. This untimely setback couldthrow a monkey wrench to the plans to initiate tough reforms amidst theEuropean debt crisis.
AN SMU ECONOMICS INTELLIGENCE CLUB PRODUCTION