Archive for category: Economy

Information and stories about economy.

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Services Sector Slows China’s Economy

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China’s economy, the services sector in particular, appears to be slowing down, according to statistics.

According to the Hong Kong and Shanghai Banking Corporation (HSBC)/Markit Services, the Purchasing Managers’ Index (PMI) of China dropped to 50.7 in January. “The slower expansion of services activities in January reflected soft manufacturing growth and the impact of Beijing’s latest measures to curb official extravagance,” said Hongbin Qu, Co-Head of Asian Economic Research at HSBC.

Although Qu said services would rise again in the next few months, he also said “a meaningful improvement relies on stronger growth of manufacturing sectors and the implementation of reforms to boost service sectors.”

To provide an updated understanding of what is affecting the private sector economy, the PMI tracks variables such as sales, employment and prices. Moreover, Markit states in its website that businesses as well as governments rely on its data to make better monetary decisions and shape policy.

“The HSBC China Services PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 private service sector companies,” noted Markit on a press release. “The panel has been carefully selected to accurately replicate the true structure of the services economy.”

For China, the PMI score of 50.7 indicates the output growths at manufacture companies and service providers are weakening. It also indicates that these entities are beginning to cut the prices of what they are trying to sell.

A Reuters article states that China’s economy is still above the 50-point level in which anything below it signifies contraction. In a nutshell, the current score means that the Chinese economy is slowly growing, but it is also on the verge of contraction.

In terms of GDP, the economy of China is the second-largest in the world, according to the World Bank. Based on the Chinese government’s official poverty line, poverty in the nation declined dramatically. However, despite past achievements, many people in the rural areas of China remain impoverished.

“Since the international standard is somewhat less severe than China’s official poverty line, it indicates greater numbers of poor in all years, and that by end-1998, a much larger share of the rural population – about 11.5 percent or some 106 million people – remained in poverty,” said the World Bank.

Once again, it is anticipated that China’s services sector will eventually pick up in the coming months. Only time will tell what direction it will take as the economy that once proved to be a miracle.

– Juan Campos

Sources: Market Economics, Reuters, World Bank
Photo: Business Week

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The Myth of Countries Being Doomed to Poverty

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The Bill and Melinda Gates Foundation released its 2014 annual letter, which, rather than focusing on the foundation’s accomplishments over the past year or discussing its plans for the future, addressed three widely held beliefs regarding poverty.

The Foundation focused on eliminating these three myths: “Poor Countries are Doomed to Stay Poor,” “Foreign Aid is a Big Waste,” and “Saving Lives Leads to Overpopulation.” The letter deconstructs these myths, showing they are not only incorrect, but also highly detrimental to the progression of the fight against global poverty.

The idea that poor countries are trapped in a cycle of poverty is one held by people worldwide, especially those in the United States and other Western countries. While this belief that poor countries can never improve is deeply ingrained, it can be disproved through simple statistics.

In 1960, the majority of the global economy was focused in the West, with many of the countries across Asia, Africa, and Latin America counting as among the most impoverished in the world.

Today, many of the countries formerly considered irrevocably poor, such as Mexico, Turkey and Chile have rapidly growing and thriving economies and according to the Bill and Melinda Gates Foundation, “the percentage of very poor people has dropped by more than half since 1990.”

Many countries that were once viewed as “developing” such as China and India have come so far that it is difficult to continue viewing them as such, even for those who subscribe to the belief that poor countries are doomed to remain impoverished.

While people may find it easy to accept growth in countries in Asia as well as North and South America, they have a harder time believing that life in Africa will improve in the future.

The fallacy that the quality of life in African countries remains stagnant or decreases persists despite the fact that “7 of the 10 fastest-growing economies of the past half-decade are in Africa.”

In addition to growing economies, health care quality and availability both increasing throughout Africa. Since 1960, in spite of the AIDS epidemic, the life span of women in sub-Saharan Africa has increased by 39 percent from 41 years old to 57 years old. Education is improving as well, with over 75 percent of sub-Saharan children in school since 1970.

While not every impoverished country is experiencing drastic improvement, it is irrational to view all poor countries as the same. So long as there are not inherent geographical difficulties, such as those the landlocked countries in Africa face, or a government that impedes their growth, as is seen in North Korea, impoverished countries have the ability to improve exponentially.

Poverty will inevitably continue across the globe, but it will decrease significantly in scope and severity as it has done over the past several decades.

In addition to dissolving the misguided belief that poor countries will never improve, The Bill and Melinda Gates Foundation examines why this myth must be reevaluated. This misinformation harms the fight against global poverty because no one will support a cause they believe to be pointless.

– Cameron Barney

Sources: Gates Foundation, Forbes

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Hunger in Zimbabwe

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Drought in Zimbabwe is reaching epic proportions as nearly one million people are at risk of food insecurity. According to the 2013 Zimbabwe Vulnerability Assessment Committee (ZimVAC,) food insecurity levels will affect roughly 2.2 million Zimbabweans at the peak of hunger season between January and March in the upcoming year. Zimbabwe already suffers from high poverty rates as approximately 72 percent of citizens currently below the poverty line and nearly 14.7 percent of the population is HIV prevalent.

Zimbabwe relies heavily on rain-fed agriculture, which has since plummeted since last season’s drought.  As the need for food increases, maize, a primary source of food in Zimbabwe, continues to rise in price making it more difficult on a population who already lives on less than a $1 a day. Making matters worse, the World Food Programme (WFP) recently announced that their initial plan of providing support for 1.8 million people will be drastically reduced.

“We’d been hoping to have scaled up our seasonal relief operations to reach 1.8 million people in the coming months with distributions of food aid, in some areas, cash transfers. Despite generous contributions from donors such as (United States,) (United Kingdom,) Japan, Australia, ECHO and the central Emergency Relief Fund (UN CERF), it’s now looking like all this will not be possible because of a shortage of funds. In fact, we’ve had to cut rations for one million of our beneficiaries in recent months and there are likely to be deeper cuts as from next month,” said WFP in a statement to the media.

Of the $86 million funding dispersed by the previous listed countries, only half of it has been implemented into relief intervention. “Rising food prices are making matters worse — in some areas, they are as much as double what they were last year,” says WFP communications manager Tomson Phiri.

These rising prices in the market are heavily affecting food security and although WFP is short on funding, they are hoping to raise another $60 million over the next 6 months in an effort to implement relief and recovery operations.

– Jeffrey Scott Haley
Feature Writer

Sources: World Food Programme, World Food Programme, Zimeye
Photo: The Telegraph

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Poverty in Russia

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As the adage goes, the poor stay poor while the rich get richer. For years, Russia has been regarded as a nation fraught with economic inequality- a land where the rich accrue more and more wealth each year while the poor descend further and further into squalor. Even in the advent of the burgeoning middle class, the growing disparity of wealth has contributed to a widening economic gap between Russia’s rich and poor residents.

Although an astounding 18 million Russians, or roughly 13 percent of the population, live below the official poverty line, having a collective income of $12.4 billion, the 97 wealthiest Russians jointly own $380 billion- nearly 31 times the collective income of the nation’s poorest individuals.

While $18 million residents grapple with the challenges of poverty, Vladimir Putin consistently vaunts the exclusive wealth of Russia. In a sense, Russia has exhibited economic growth. For instance, Moscow now houses more billionaires than New York City, the iconic American city that has long been esteemed as the metropolis of wealth and power of the Western World.

Although Putin boasts about the economic prosperity of the few wealthy elites, little effective action has been taken to curb the growing rates of poverty in Russia. For example, the estimated cost of living in Russia is approximately $210. However, the nation’s minimum wage is wholly insufficient at $155 per month.

Despite this harrowing fact, it appears that the 2014 Winter Olympic Games, set to be hosted in Sochi, has taken prominence over the rampant poverty in Russia. In 5a Akatsy Street, located in a neighborhood with deteriorating infrastructure, a brand-new multi-million dollar highway brazenly cuts through the surrounding poverty.

The glossy highway stands in salient contrast to the squalor of 5a Akatsy Street, a locale in which residents have barely sustained themselves without running water or a sewage system. While the Russian government sanctions the construction of stadiums and highways, the majority of Sochi residents live in dwindling, contaminated and neglected villages.

However, the juxtaposition of the ostentatious Olympic preparations in Sochi and the prevalence of squalor surrounding the slinky stadiums and magnificent mega-malls highlights a general trend that has been observed in Russian society, a dangerous trend in which in which the poor are vastly overlooked while the most wealthy are needlessly glamorized.

– Phoebe Pradhan

Sources: Telegraph, Forbes, TribLive
Photo: AsiaOne

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What $10 Buys in World’s 10 Poorest Countries

Often, the assumption is that the world’s poorest countries must have a low cost of living; unfortunately, the average annual income (GNI) in poor countries is often too low to purchase many of the things Western Civilization considers basic necessities of life. With this discrepancy, it is possible to see how so many people are going without food and an education. Below is a list of what you can buy with $10 in the World’s 10 poorest countries.

Afghanistan (GNI = $426): $10 buys 35 pounds of Pakistani sugar, or 17 pounds of rice

Madagascar (GNI = $450): $10 buys five dozen eggs, five liters of domestic draft beer or two seats for an international film release at the cinema

Malawi (GNI = $900): $10 buys 22 pounds of rice

Niger (GNI = $3,716): $10 buys 20 cigarettes

Central African Republic (GNI = $800): $10 buys four and a half pounds of apples, or 11 pounds of potatoes

Eritrea (GNI – $403): $10 buys ten liters of gasoline

Liberia (GNI = $436): $10 buys 15 liters of mineral water

Burundi (GNI = $160): $10 buys five and a half pounds of rice, or one combo meal at a local fast food joint

Zimbabwe (GNI = $150): $10 buys a meal in an inexpensive restaurant, or five cappuccinos

Democratic Republic of the Congo (GNI = $120): $10 buys financial literacy training material for one woman

This list demonstrates how important it is to provide the means rather than the product; shipping water across the ocean rings up an endless bill, but digging a well could save hundreds and is a one-time labor. A small loan is all it takes to provide a woman with the knowledge to later provide for herself and her children.

The cost of food skyrockets when there is a shortage and evaporates when there is abundance, so rather than a single meal, they often need support for their agricultural systems to provide a cushion for farmers. Our money would be well served providing farmers with the knowledge and equipment to maintain a reliable price on their product. This would not only allow farmers to feed and care for their families, but keep food available and affordable for the masses.

– Lydia Caswell

Sources: Asia Times, FINCA, Global Giving, International Women’s Rights Action Watch, Maps of World, The Richest, The Washington Post, The World Bank, World Vision
Photo: Vando Nascimento

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Greece: A Nation in Decline

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In 2013, Greece faced its sixth consecutive year of a devastating recession. In order to secure $325 billion in rescue funds from the European Union and the International Monetary Fund, the Greek government resorted to cutting jobs and wages, actions that consequentially incited mass protests and unrest.

As a result, according to statistics released by the Hellenic Statistical Authority (HSA,) nearly a quarter of Greece’s population is susceptible to poverty. In a nation composed of 11 million residents, 2.75 million of whom are at risk of poverty, Greece has the highest poverty risk in the E.U. Among those at risk, the most susceptible individuals are single parents and unemployed men. Approximately half of jobless men in Greece are at risk of poverty, while single-parent households are also in a vulnerable position.

A factor contributing to the anticipated poverty of Greece’s population are the projected social welfare budget cuts for 2014. Between 2012 to 2013, the welfare budget had been cut by almost seven percent. However, the projected budget reduction for social welfare in 2014 is a staggering 18%, or $406 billion.

Furthermore, according to the Public Policy Analysis Group at the Athens University of Economics and Business (AUEB) discovered that within the last year, approximately 14% of Greeks had earned an income that was less than the living standard. In contrast, in 2004, only two percent of the population had earned an income below the standard of living.

Since 2008, the crisis in Greece had steadily increased in volatility. According to ESYE statistics agency, an increase in material deprivation in at least four of the nine basic categories of goods and services for human survival occurred during the past five years. To clarify, basic needs include the ability to endure unforeseen financial expenses, eat meat every two days, and heat one’s home. However, due to the economic crisis, approximately 76.3% of poor Greeks were directly affected, while 30.8 percent of the non-poor population suffered as well.

Without adequate government intervention, a substantial portion of the Greek population will remain at risk of poverty throughout 2014. With poverty and struggle in sight, internal social conflict in Greece will continue to rise as well. However, with aid from the E.U. and gradual stabilization, the nation can begin to recover.

– Phoebe Pradhan

Sources: International Business Times, The Telegraph, Zero Hedge, AFR
Photo: Read My Mind

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Are Needy Children in Nigeria Invisible?

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As the most populous country in all of Africa, the Federal Republic of Nigeria is made up of over 250 ethnic groups. The following are the most populous: Fulani and Hausa, 29 percent; Yoruba, 21 percent; Igbo, 18 percent and Ijaw 10 percent.  They also have a significant split in religion, with 50 percent of the population being Muslim and 40 percent of the population being Christian.

With the largest population in Africa, Nigeria has 174,507,539 people and is ranked as having the 8th highest amount of people in the world.  Of all those people, 76,461,896 are fourteen years of age or younger, meaning 43.8 percent of Nigerians are children.  Of that 43.8 percent, about 60 percent lack birth certificates, meaning they are not permitted to use many government facilities that would normally be free with proper proof of citizenship.

Nigeria’s government is trying to reform its petroleum-based economy, but through all the corruption in that sector, it is not focusing as much on the youth in need.  On top of that, presidential elections are tarnished by substantial violence and irregularities and the country has been undergoing long-lasting religious and ethnic conflicts, which also takes focus away from the children in need.  These children need help; about 1,000,000 children die each year in Nigeria before their fifth birthday (10 percent of the global total.) What they need to save more lives is continuous investment and organized scaling up of essential newborn, maternal, and juvenile health interventions.

In Nigeria, there are numerous state hospitals that are free for children under the age of five, but the only dilemma is that the majority of these children do not have birth certificates.  This is a catch-22 because the hospitals admit patients under five for free with proof of age, but these children have never had any way to prove how old they truly are.  From there, they have no choice but to go to a private hospital for treatment where they are forced to pay $45 (a trivial amount for a life-saving medication in the United States,) but an unfathomable expense for the people living in this region, especially since most of them live on less than a dollar per day.

The number of children lacking birth certificates in Nigeria is up to about 17,000,000, a number second only to India, which has 71,000,000 unregistered children.  According to UNICEF, one out of every three children in Sub-Saharan Africa does not “officially exist,” but does that mean that they do not still need help?  The undocumented children in Nigeria are denied education and healthcare and often times have their rights abused.  Their parents often times cannot even help them because in these rural areas many are uneducated and are not aware of how important it is to register their children.

The deficiency of birth records in Nigeria also causes an error in the government’s efforts to track demographic information.  Without the proper information on how many children need hospitalization or immunization, the government cannot tell how many vaccines it needs from organizations like UNICEF, it cannot tell how many children have already died nor the cause of death.

The good news is UNICEF is trying to convince people to register their children and trying to increase the number of registration centers in Nigeria so the families can have easier access.  They plan on having 65 percent to 70 percent of children be registered with official birth certificates within the next few years.

– Kenneth W. Kliesner

Sources: CIA World Factbook, Voice of America ,UNICEF
Photo: The Guardian

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Davos’s Gender Problem

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Helen Clark, the former prime minister of New Zealand, was interviewed during her preparations to attend the World Economic Forum in Davos, Switzerland. More than 2,600 people are currently attending the forum, which runs from January 22 to January 25.

Asked about women’s attendance at the conference, Clark said “It’s the same story every year, under 20% of the people going are women.” When informed that the actual figure is closer to 15%, the former prime minister just rolled her eyes.

And, understandably so. Despite comprising 50% of the global population, a mere 15% of attendees are women. Worse yet, this number is down from last year, where 17% of attendees were female. Statistically, this means a person is 66% less likely to encounter a woman at Davos than anywhere else in the world.

The World Economic Forum’s (WEF) organizers contend that the gender disparity at the conference merely mirrors the reality of today’s world. WEF’s managing director and head of communications Adrian Monck says: “We’re on the front line of reflecting the world as it is, not how we want it to be.”

Monck claims that the organization wishes its meetings were better attended by women but that the organization’s greater goal prevents it. WEF’s imperative? To bring together the world’s most powerful and influential people. Given that only 16.9% of Fortune 500 boards of directors are comprised of women and less than 5% of the Fortune 500 are actually led by women, it is a point that, unfortunately, makes sense.

However, according to Clark, who is currently ranked as the 21st most powerful woman in the world by Forbes, getting women to these events should not be an issue. “Often the response from people who organize these events is that they cannot find enough women. If you look you can find them, they exist,” she says.

At least one measure is in place to encourage more women to attend. Business members of WEF receive varying numbers of invitations to be distributed to their employees as they see fit. At the highest level of membership, members are offered four tickets, but if one of their designated tickets is given to a female employee, the company gets a fifth ticket to dole out.

But, as evidenced by the 15% female attendance rate at Davos this year, such a measure enjoys only limited success in drawing women to the conference. Thus, Davos’s reflection of the world’s gaping gender bias calls into question the efficacy of the conference.

The WEF defines itself as “an independent international organization committed to improving the state of the world by engaging in business, political, academic and other leaders of society to shape global, regional and industry agendas.” Yet, with only one out of every seven delegates a woman, how can you really tackle the issues that face today’s world?

Making such a question even more stark is WEF’s theme this year: “Reshaping the World.”

As put by Forbes’s Dina Medland, “what’s the point of meetings between elite male leaders to discuss a world that goes far beyond their boundaries?”

– Kelley Calkins

Sources: The Telegraph, Quartz, Huffington Post, Forbes
Photo: The Daily Beast

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Poverty is Reality for Struggling Spain

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The Great Recession brought economic progress to a virtual standstill in the Western World: property values plummeted, the stock market took a hit to the gut and unemployment rates spiked. In the United States, investors and employees are slowly getting back on their feet, but are still anxious due to the ping-pongish activity of the Dow Jones and mediocre new job numbers from the Department of Labor.

While Americans struggle to digest their nation’s 6.7 percent unemployment rate, some Europeans are choking on jobless numbers affecting upwards of 20 percent of the workforce, even over five years after the economy first took a nosedive.

The European Union’s austerity measures have yet to restore stability to pre-bailout levels and a recent Oxfam report revealed “only the richest 10 percent of Europeans…have seen their wealth rise” as a result of the well-intentioned policies. Macroeconomists measure the ongoing crisis in terms of government debt, budget deficits and income inequality, but the individuals and families affected in floundering nations like Spain feel the sting of poverty in an acute and personal way.

Spain, a pillar of culture and history on the European continent, hosts millions of tourists each year who yearn for a taste of Hispanic culture and a hint of the nation’s unique flavor. Few westerners would suppose that a historic power player overflowing with natural beauty is home to a poverty rate on par with former socialist nations Romania and Bulgaria.

Spain’s saga followed the same basic trajectory as that of the United States. In 2008, following a property boom, regional governments that had raked up pricey expenses found themselves with empty pockets and out-of-control debts. A shaky central government with debt of its own was unable to provide enough federal assistance to localities and the nation found itself in an economic tailspin.

E.U. interventions such as the aforementioned austerity measures have thus far been ineffective in creating jobs and a critical portion of the Spanish workforce has emigrated in search of opportunities suited for their skill set. Those remaining must clamor for dwindling, low-paying positions.

Many former middle class Spanish families have found themselves unexpectedly living under the poverty line.

A whopping 15 percent of Spaniards subsist on less than half of the national median income and nearly 10 percent have unfortunately arrived at “great poverty” status, indicating a household income below 40 percent of the national average. For Spaniards, these rates translate into monthly earnings of below 555 euros and 444 euros, respectively, for the two groups.

Women and young people are disproportionately affected by poverty in Spain. According to Eurostat, a full 1.2 percentage points (to the detriment of females) separate the number of impoverished men and women. Similarly, six percent more young people fewer than 25 years of age suffer in poverty than Spanish citizens in their late twenties and beyond.

Rising power bills, a frozen minimum wage and more expensive public transportation will add to the burden for a generation of Spaniards who, on an aggregate level, greet 2014 “a little poorer.”

Frustrated citizens, the backbone of 2011’s “los indignados” movement (a precursor to Occupy Wall Street,) will continue to push back against policy decisions negatively impacting an increasingly impoverished working class. Poverty will be synonymous with reality for over 20 percent of Spaniards until Spain’s anemic economy is jump-started back to life.

– Casey Ernstes

Sources: Eurostat, Forbes, Global Research Centre for Research on Globalization, Inequality Watch, Oxfam International, The Huffington Post, The Huffington Post WorldPost
Photo: Food Not Bombs

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Prison and Poverty

Prison and Poverty
The incarcerated population of the United States has reached over 2.3 million, making the U.S. incarceration rate the highest in the world, housing more inmates than the top 30 European nations combined.  Mass incarceration strategies were put in place, in part, to reduce crime in poor neighborhoods, but decades after their initial implementation, individuals and communities continue to suffer.

Researchers attribute some of the large increases in prison populations to longer mandatory sentencing.  Going hand in hand with longer sentencing is the fact that the incarcerated population is disproportionately concentrated among young minority men with very low levels of education.   For instance, black men experience 20% longer prison sentences than white men for similar crimes.

When people are in their twenties and are locked up for 10 to 15 years, they not only adapt to the extreme culture of prison, but when they exit, they will find it hard to assimilate into normal society.  Moreover, the slim job prospects many people faced before going into jail are worsened upon release.

Sociologists have found that once one takes into account the various socioeconomic factors, incarceration typically reduces annual earnings by 40% for the former average male prisoner.  This does not include wages lost while behind bars or the burdens endured by the prisoner’s family and community during the stint.

Prison has such a debilitating impact on the U.S. that taxpayers end up spending over $50 billion annually on maintaining the system of incarceration.  Without the significant incarceration efforts made by the U.S. government, researchers calculate that the nation’s poverty rate would be 20% below the current level, equaling to roughly 9 million people who would be less reliant on subsidies and assistance programs.  These same people would add to the tax base and make up potential consumers of American products.

Furthermore, slightly under half of federal prisoners are in jail for drug crimes and nearly half of all prisoners in state prisons are there for non-violent offenses.  As a result, the Obama administration has recognized the moral and economic need to curb prison populations.  In 2013, Attorney General Eric Holder Jr. announced policies that would increase the use of drug-treatment programs as alternatives to incarceration while expanding another program which releases inmates who committed non-violent crimes and have served significant portions of their sentences.

The experiment of mass incarceration in the name of public safety has been a clear detriment to American society.  Rather than throw away money and effort to a system that perpetuates unemployment, poor health, family instability and other conditions of poverty, the U.S. must focus on social policies that improve opportunities for those on the lower pegs of the socioeconomic ladder.

– Sunny Bhatt

Sources: New York Times, National Public Radio, Bureau of Justice Statistics

Photo: Barnard.edu