43-44/2018 Safety last
Once the fourth quarter starts the economics prophets once again do the honours. Apparently the old has been rung out (not true), the new year thoroughly planned (an illusion, or said by an auditor) and ‘tina’ calls the shots – ‘there is no alternative’ to certain very urgent measures (without any foundation). Basically, however, the new worries are actually the old ones. Concern for weakening Chinese growth, the Sino-US trade conflict and Italy, which would like to take up more loans, despite an already heavily-indebted budget. At least two questions were resolved simultaneously recently. According to information provided by the Chinese customs authority in September the country’s external trade seems to have risen of late, above all its exports (+14.5%), with its trade surplus vis-à-vis the USA equalling a record USD 34 billion. The cumulative surplus has risen to USD 225.79 billion since the beginning of this year. Twelve months is stood at USD 196 billion. These developments have not led to an ebbing in the flow of goods, even if the mood has damaged sea freight margins, amongst others, as Drewry has shown.
Not everything in the garden is rosy, however, as Geneva-based Unctad’s latest investment trend monitor has shown. It has stated that global foreign direct investment (FDI) declined by 41% in the first half of 2018, vis-à-vis the same half of last year, namely from USD 800 billion to an estimated USD 470 billion. The effect was due mainly to extensive foreign income that the subsidiaries of US parent companies were able to repatriate from abroad after tax reforms there. Whilst the USA may thus once again act as the leader, and the euro area, including the United Kingdom, remain at a high level, some emerging economies and developing countries remain the poor relations. This is not exactly welcome in the context of global economic growth, as it points to cautious investors. The safety first principle seems to have become absolutely ingrained today, so we hear, so that even a promise of high returns with limited risks is immediately rejected. We heard it at the Fiata World Congress in New Delhi and at the railway forum in Sochi, amongst other places. You can read our reports from there in this issue.
Can you remember the name of the famous – and financially very successful, I might add – silent film, in which Harold Lloyd is seen hanging from the dial of a giant clock on the side of a skyscraper? “Safety last!”
Enjoy your read!