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Globescan: Sharp Brake
Economists say a confluence of temporary factors, including an ongoing problem with the model the government uses to smooth the data for seasonal fluctuations, has contributed to lowering growth in the first quarter
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US industrial production fell more than expected in March as manufacturing output dropped by the most in a year and mining maintained its downward trend, the latest indication that economic growth braked sharply in the first quarter. A rebound in growth is, however, anticipated despite other data showing a further erosion in consumer sentiment in early April. Economists say a confluence of temporary factors, including an ongoing problem with the model the government uses to smooth the data for seasonal fluctuations, has contributed to lowering growth in the first quarter.
Sigh Of Relief
Financial leaders from the Group of 20 nations said they were heartened by a recent recovery in financial markets, but warned that global growth was “modest and uneven” and threatened by weakness in commodities-based economies. In a communique issued after their meeting in Washington, G20 finance ministers and central bank governors repeated their pledge to refrain from competitive currency devaluations, but offered no new initiatives to keep growth from stalling. The G20 officials took a slightly more positive view on financial markets, which they said had mostly recovered from sharp selloffs earlier this year and were in better shape since they last met in Shanghai in February.
Fight For Privacy
Microsoft has sued the US government for the right to tell its customers when a federal agency is looking at their emails, the latest in a series of clashes over privacy between the technology industry and Washington. The lawsuit, filed in federal court in Seattle, argues that the government is violating the US Constitution by preventing Microsoft from notifying thousands of customers about government requests for their emails and other documents. The government’s actions contravene the Fourth Amendment, which establishes the right for people and businesses to know if the government searches or seizes their property, the suit argues, and Microsoft’s First Amendment right to free speech. The Department of Justice is reviewing the filing, spokeswoman Emily Pierce said. Microsoft’s suit focuses on the storage of data on remote servers, rather than locally on people’s computers, which Microsoft says has provided a new opening for the government to access electronic data.
General Motors said it is recalling nearly 1.04 million newer pickup trucks for a seat belt flaw. The largest US automaker said the recall of the 2014-15 Chevrolet Silverado and GMC Sierra 1,500 pickups is not linked to any crashes or injuries. GM said the cost of the large recall “is not expected to be significant and is covered within normal and customary warranty reserves.” GM said the recall in the US includes 895,232 vehicles and a stop-sale of approximately 3,000 new 2014 and 2015 model year pickups still on dealer lots. GM said the recall was prompted by warranty data that showed the flexible steel cable that connects the seat belt to the vehicle can separate over time as a result of the driver repeatedly bending the cable when entering the seat.
Greece is considering adopting measures proposed by EU institutions now and agreeing to implement additional reforms if it misses its 2018 bailout targets, in an effort to unlock new bailout loans, a government official said. Talks on the review of Greek reforms have dragged on for months partly because the IMF and EU institutions cannot agree between themselves on some economic assumptions and scenarios of how the Greek economy might develop. The EC, the ECB and the European Stability Mechanism believe Athens can achieve a 3.5 per cent of GDP target for its primary surplus in 2018, if it takes measures to plug a 3 per cent fiscal gap.
Search Vs Search
The European Union antitrust chief, who has already charged Google with favouring its own shopping service in Internet searches, said that she was now examining its deals with phone makers and operators. The comments by European Competition Commissioner Margrethe Vestager follow a year-long investigation into Android, the world’s most popular operating system for smartphones, triggered by two complaints. A decision on the shopping service could come this year. Like the Android case, it could lead to a fine of up to $7.4 billion or 10 per cent of Google’s 2015 revenue, and force it to change its business practices. Vestager said big companies should not try to protect themselves by holding back innovation.
On The Crawl
China’s economy expanded a seasonally-adjusted 1.1 per cent in the first quarter of 2016 from the fourth quarter of last year, National Bureau of Statistics data showed, the lowest quarterly expansion on record since 2010. The slower-than-expected quarterly growth rate comes amid other signs the Chinese economy is stabilising in the first quarter, including positive surprises from trade, inflation, output and credit. Analysts had expected quarterly growth of 1.5 per cent for the first quarter, but the statistics bureau did not release quarterly figures when it issued annual figures.
The World Bank will likely take the lead on initial projects jointly financed with China’s new Asian Infrastructure and Investment Bank, the head of the Washington-based multilateral lender said. The two institutions signed a framework agreement to co-finance projects, and the World Bank said they were currently discussing nearly a dozen projects in sectors that include transport, water and energy in Central Asia, South Asia and East Asia. AIIB expects to approve $1.2 billion in financing this year. The World Bank said joint projects will account for a sizeable share of that amount. World Bank President Jim Yong Kim said that such financing projects require a massive amount of up-front preparation work, and the AIIB is still building up its capabilities. “The AIIB is only now increasing their staff. So likely, the first projects will be that we do all of that project preparation, we do all the work that requires huge amounts of staff in a large and institutional infrastructure, and then they will simply co-finance,” Kim said.