Aurelia Butler

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Falling fertility rates in most countries over the next quarter century will drive a global demographic shift that will have a far-reaching social and economic impact, according to a new study.Three-quarters of nations are projected to fall below population replacement birth rates by 2050, leaving growth concentrated in a minority of low-income states in sub-Saharan Africa and Asia that face acute threats from resource shortages and climate change.The research published in The Lancet medical journal on Wednesday highlights the ever-sharper divide between the countries still powering population growth and those where birth numbers are dwindling.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.“We are facing staggering social change through the 21st century,” said Stein Emil Vollset, the paper’s senior author and a professor at the Institute for Health Metrics and Evaluation. “The world will be simultaneously tackling a ‘baby boom’ in some countries and a ‘baby bust’ in others.”The study of 204 countries and territories forecasts 76 per cent will dip below population replacement rates by 2050 — a number that will rise to 97 per cent by 2100. The proportion of live births in low-income countries is projected to all but double from 18 per cent in 2021 to 35 per cent by the end of the century. Sub-Saharan African countries are forecast to account for half of global births by 2100.“The implications are immense,” said Natalia Bhattacharjee, co-lead author of the study and lead research scientist at IHME. “These future trends in fertility rates and live births will completely reconfigure the global economy and the international balance of power — and will necessitate reorganising societies.”You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.The UN forecasts the global population could grow from the current figure of about 8bn to 9.7bn in 2050 and peak at nearly 10.4bn in the mid-2080s. But those figures mask how the so-called total fertility rate (TFR) — the average number of children born per female per lifetime — has already fallen in some countries below the level of roughly 2.1 needed for population replacement.Western Europe’s TFR is forecast to be 1.44 in 2050, while South Korea’s 0.82 will be the world’s lowest. By 2100, just six countries are expected to have TFRs higher than 2.1: Tajikistan in central Asia, the Pacific islands of Tonga and Samoa, and the African nations of Somalia, Chad and Niger.Generally, as countries become richer, women tend to have fewer babies — a trend reinforced by state policies such as the one-child rule China imposed between 1980 and 2016.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Some countries, such as Japan and Hungary, have in recent years tried to boost birth rates through incentives such as tax breaks and cheaper childcare, although no measures appear to have had the hoped-for degree of impact.Governments need to accept and plan for the reality that women should be able to have the number of children they want and be supported accordingly, said Sarah Harper, a professor of gerontology at Oxford university.That required “joined-up thinking” in areas such as migration policy, and consideration of how smaller populations could have the beneficial effect of easing pressure on land, housing, biodiversity and the climate, she added.“We live on a finite planet, and falling populations — while novel historically — have many advantages for the 21st century, albeit requiring new economic models,” Harper said.Data visualisation by Janina Conboye More

LONDON (Reuters) – The Bank of England looks set to keep its cards close to its chest on Thursday and not speed up its progress towards cutting interest rates, as it awaits clearer signs that the country’s hot inflation problem has been doused.The BoE is widely expected to keep Bank Rate at 5.25%, its highest level since 2008, in its March policy announcement at 1200 GMT, a day after data showed inflation fell to its lowest in almost two-and-a-half years but stayed too high for comfort.Investors will be watching closely for any hint of an acceleration of discussions within the Monetary Policy Committee about when to cut borrowing costs for the first time since the onset of the COVID-19 pandemic.The U.S. Federal Reserve indicated on Wednesday that it remained on course to cut rates three times this year but stayed on alert about the path of price growth ahead.The European Central Bank has tried to cool talk about a run of rate cuts that has gathered steam as investors increasingly consider the fight against global inflation to have been won.Britain’s headline inflation rate – which topped 11% in October 2022 and led to a historic living standards squeeze – fell by a bit more than expected to 3.4% in February from 4.0% in January but was still the highest in the Group of Seven.Although it is expected to drop to the BoE’s 2% target in April, it is forecast to pick up again slightly after that, and services inflation – which largely reflects strong wage growth – remains high at 6.1%.Analysts polled by Reuters expect the BoE’s Monetary Policy Committee to split three ways for a second time in a row but this time with only one vote for a hike and one for a cut with the other seven in favour of keeping Bank Rate at 5.25%.At February’s meeting, two MPC members voted for an increase to 5.5% and one for a cut to 5.0% with six backing a hold.CUTS LATER THIS YEARMost analysts and investors think the BoE will only cut rates for the first time in the third quarter, probably at its August meeting.But financial markets currently put a roughly 60% chance on the BoE cutting rates in June with almost three quarter-point reductions priced in for borrowing costs over 2024.The central bank wants to see wage growth slowing further before making its move.Britain’s minimum wage will rise by nearly 10% next month, and retailers that often pay staff only slightly more have raised salaries ahead of the increase.Employers overall have offered pay settlements of about 5% since the start of 2024. Average wage growth is about 6%, higher than about 4% in the United States and the euro zone.James Smith, an economist with ING, said stronger-than-expected falls in services inflation and wage growth data could lead to a BoE rate cut in June. “But more likely we think the Committee will wait for a few more numbers and also a new round of forecasts, which makes August a more likely candidate for the first rate cut,” he said.As well as employers, mortgage-holders and consumers, the ruling Conservative Party is also keen to see rates come down as it struggles to rein in the opposition Labour Party’s strong lead in opinion polls with an election expected later this year.Finance minister Jeremy Hunt took the unusual step of commenting on what Wednesday’s inflation data might mean for the BoE, saying: “As inflation gets closer to its target that opens the door for the Bank of England to consider bringing down interest rates.”The BoE will not hold a press conference on Thursday as no new economic forecasts are due to be published. More

From his house in Prek Takeo on the banks of the Mekong river, an hour’s drive from Phnom Penh, Cambodia, Mao Sarin can watch ships laden with containers chug by on their way to Vietnam and the river’s giant delta.If the government of newly installed Cambodian Prime Minister Hun Manet follows through on plans, future shipments could travel along a $1.7bn, Chinese-funded canal — a project that would eliminate Mao Sarin’s tin-roofed home. The Funan Techo canal would directly connect Phnom Penh with Cambodian ports along the Gulf of Thailand, bypassing Vietnam’s traditional hold on the mouth of one of Asia’s biggest waterways.“I have seen the development team come here to take measurements almost 20 times,” said Mao Sarin, a motorcycle-taxi driver and former soldier who has lived beside the river for more than three decades. “We are waiting in suspense.”So is Hanoi. Vietnam has formally raised alarm over the canal’s potential effect on the Mekong Delta in the absence of a publicly available environmental impact assessment. The controversy also reflects deeper geopolitical tensions as Cambodia attempts to shift away from dependence on Vietnamese-controlled trade routes, undermining Hanoi’s regional leverage while further elevating Beijing’s influence in the southern Mekong.This article is from Nikkei Asia, a global publication with a uniquely Asian perspective on politics, the economy, business and international affairs. Our own correspondents and outside commentators from around the world share their views on Asia, while our Asia300 section provides in-depth coverage of 300 of the biggest and fastest-growing listed companies from 11 economies outside Japan. Subscribe | Group subscriptionsCambodia’s economic interests remain tightly intertwined with Vietnam, which considers the kingdom a “special strategic partner.” Vietnam is Cambodia’s second-largest trade partner behind China, and trade between the two neighbours exceeded $6bn in 2023. Yet the canal could become a faultline between the two countries amid increasing regional polarity.Chhengpor Aun, a research fellow at the Cambodian think-tank Future Forum, described the canal as the fulfilment of a “national imagination” by addressing Cambodia’s deep psychic wound from the perceived loss of the entire Mekong Delta when the area was formally merged with Vietnam under French colonial rule in 1949.The canal’s nickname derives from the ancient Funan kingdom which extended across southern Vietnam and is seen in Cambodia as a precursor of the Khmer empire. Officially, the canal is known as the Tonle Bassac Navigation Road and Logistics System Project.The grand Cambodian plans show the 100-metre-wide, two-lane canal, projected to begin operating in 2028, tracing a path from the banks of the Mekong just downstream from the Phnom Penh Autonomous Port, before cutting across to the Bassac river and continuing for 180km to the south-west coastal province of Kep.Cambodia’s transport minister Peng Ponea has claimed the project will break ground this year, even though a feasibility study launched in October last year by the canal’s developer, state-owned China Road and Bridge Corporation, is not yet complete.In Kep province, at the canal’s projected end point along a boardwalk overlooking a group of local fishermen, there is little indication of the ambitious plans under way. These would service a long-standing deep seaport inside Kampot’s sleepy cow pasture and rice field-filled special economic zone.Down the road, an unmarked stretch of dirt protrudes into the sea, bustling with trucks filling in land for a $1.5bn port under construction since May 2022 by Kampot Logistics and Port. Last year China Harbour Engineering, a subsidiary of CBRC, signed a contract to help build the port.Cambodian officials and business leaders have framed the canal as part of a broader logistics overhaul to reduce shipping costs by as much as 30 per cent, helping make the kingdom more competitive in key export sectors such as the garment industry.But as Center for Southeast Asia Studies researcher Sothearak Sok has noted, there is an underlying rhetoric of reclaiming sovereignty — what Hun Manet has described as “breathing through our own nose”.Hanoi raised environmental concerns over the canal with Hun Manet during his first state visit in December, a few months after he succeeded his father Hun Sen following the strongman’s nearly 40 years in power. A top Cambodian official told local media that the visit included the presentation of “the results of a number of studies” confirming “no impact on the environment”. The studies have not been made public.Motorcycle-taxi driver Mao Sarin, 63, has lived for years with his wife and daughter along the Mekong river but will be displaced by the planned route of the canal project More

The central bank ended eight years of negative interest rates on Tuesday, making a historic shift away from its focus on reflating growth with decades of massive monetary stimulus.”Additional hikes are of course on the table,” a BOJ source told Nikkei.Market expectations on the timing of the next rate hike centre on October, as investors believe it would give the BOJ more time to evaluate how the ending of negative rates was affecting prices and the economy, the newspaper reported.Markets also see a July rate increase as another possibility as a weak yen could raise the price of imports and increase inflation, in turn forcing the BOJ to step in, Nikkei added. Some in the BOJ feels that an early hike “leaves room for us to consider rolling out another increase before the end of the year,” the Nikkei reported.(This story has been refiled to clarify throughout that financial markets, not the BOJ, views July or October as the likely timing of the next rate hike) More

TOKYO (Reuters) – Confidence at big Japanese companies rebounded to a three-month high in March, and the service-sector mood rose to a seven-month high, a Reuters poll showed, in a sign businesses are growing more optimistic for a recovery in the world’s No. 4 economy.The monthly Reuters Tankan survey, which serves as a key indicator for the Bank of Japan’s quarterly tankan survey, due on April 1, comes days after the central bank ditched years of unconventional easing in a shift towards normalising policy.The BOJ ended eight years of negative interest rates and other remnants of its unorthodox policy on Tuesday, making a historic shift away from decades of massive monetary stimulus. But it is expected to keep rates around zero for some time to support fragile growth.The latest poll canvassed 240 manufacturers and 258 non-manufacturers, of which roughly 237 firms responded during the March 6-15 period. The tankan is among various indicators the BOJ scrutinises in deciding policy steps.The headline manufacturers’ sentiment index stood at plus 10 in March, versus minus 1 in the previous month, reflecting gains in the auto industry, oil refining and chemicals.As for manufacturers, the Reuters Tankan sentiment index was 2 points lower than three months ago, likely indicating a slight deterioration in the BOJ tankan’s manufacturing sector. Service-sector sentiment rose to plus 32, a seven-month high, led by the retail, wholesale, information, and communications sectors. The Reuters poll underscored the delicate situation facing the Japanese economy, which narrowly dodged a recession late last year, while the country’s key share index recently broke past the bubble-era’s high, topping 40,000 for the first time ever.The spectre of a soft landing in a resilient U.S. economy, the world’s largest, and a bottoming out of the Chinese economy could provide some comfort for trade-reliant Japan’s economy.Major Japanese firms last week offered average 5.28% wage hikes this year, the largest pay raise in 33 years, the country’s largest trade union group Rengo said, helping pave the way for the BOJ to make its historic policy shift in the hopes that it would spur stronger household spending. More

TOKYO (Reuters) – The majority of Japanese firms expect the central bank to lift interest rates further this year, with many looking to front-load capital spending before lending costs rise, a Reuters survey showed on Thursday.The poll, conducted before the Bank of Japan announced an end to its negative rate policy on Tuesday, showed that just over 60% of respondents expect rates, currently around zero, to rise to 0.25% by the end of the year.Two-fifths of companies polled said they are looking to boost capital spending in the financial year beginning in April from what they expect to have spent in current financial year. A similar number also said they aimed to undertake much of that spending ahead of rate hikes.Only 11% expect to reduce business investment from this financial year.”We’re drawing down on retained earnings to engage in capital investment,” an executive at a metal products manufacturer wrote in the comments section of the poll. A manager at a retail company said the company is front-loading bank loans, while a construction firm responded that it was cutting down on interest-bearing debt.The survey of 498 firms was conducted for Reuters by Nikkei Research from March 6-15, with companies responding on condition of anonymity. A total of 237 companies responded. The BOJ has been a holdout among central banks in maintaining a spigot of easy money to spur the economy and halt deflation. But corporate Japan is now seeing rising wages and inflation.Sentiment at the companies remains lacklustre with 63% saying business conditions were not good and another 8% saying they were bad. That was, however, a marginal improvement from February when 60% said business conditions were not good and 14% said they were bad.Asked about expectations for operating profit in the upcoming financial year compared to their estimates for the current business year, 39% said they expect roughly the same amount, while 23% saw increases of about 10% in income and 13% saw gains of more than a fifth.For those saying profits were likely to climb, 87% ascribed the gains to improved sales.On expectations for the yen, 61% predicted it to trade between 140 to 149 yen to the dollar, while 20% saw it still weaker at 150 to 159 yen. Eighteen percent saw it trading between 130 to 139 yen. (For a table of poll data, click here) More

WASHINGTON (Reuters) -The Federal Reserve is nearing a decision on slowing the pace of its balance sheet run-off, central bank Chair Jerome Powell said on Wednesday, a tapering move that may allow it to shed more bonds than it once expected.Powell’s remarks, the most explicit so far about plans to slow a process that has seen about $1.4 trillion of bonds roll off the Fed’s balance sheet, was seen by several Wall Street analysts as a signal that a tapering plan will be unveiled as early as the Fed’s next meeting on April 30-May 1. “It will be appropriate to slow the pace of run-off fairly soon,” Powell said at a press conference following a Federal Open Market Committee meeting. He did not offer a specific time frame for the decision, saying only that officials are now debating the issue. Powell was addressing the central bank’s ongoing efforts to reduce the size of its holdings, commonly referred to as quantitative tightening, or QT. Officials aggressively increased the central bank’s balance sheet as part of the response to the coronavirus pandemic. Starting in the spring of 2020, the Fed bought Treasury and mortgage bonds in great numbers, first to stabilize financial markets and then to provide stimulus when the Fed’s interest rate target was at near zero levels and could be cut no further. That quantitative easing, or QE, caused Fed holdings to more than double, topping out at $9 trillion by the summer of 2022. The Fed began to shrink the size of its holdings later that year, having embarked in March 2022 on what would be a robust campaign of interest rate increases aimed at bringing high levels of inflation back to its 2% target. Since the fall of 2022 the Fed has been allowing up to $60 billion per month in Treasuries and $35 billion per month in mortgage bonds to expire and not be replaced. The Fed is seeking to reduce the size of its holdings in a way that will ensure the financial system has enough liquidity for the Fed to retain firm control over the federal funds rate, its chief tool to influence the economy’s momentum, and to allow for normal levels of volatility in money market rates. To achieve that, Fed officials have been signaling for some time that they would first lay out a plan to slow, or taper, the pace of QT given uncertainty over how far they’ll need to shrink their overall holdings. Officials are mindful of the events of September 2019, when a QT effort then in play unexpectedly drew too much liquidity out of the financial system, causing significant interest rate churn, requiring the Fed to add liquidity back by once again expanding its balance sheet.Thomas Simons, economist at investment bank Jefferies, said in a note that Powell’s comments may have moved forward the start of the tapering process. “We had been thinking that the tapering of QT would begin in June or July, but this guidance suggests that perhaps the announcement could come sooner, possibly the next meeting on May 1,” he wrote.Simons’ view was echoed by others.”We now expect the Fed may make this announcement as early as the May FOMC meeting, ahead of our previous expectation of a June announcement,” Tiffany Wilding, managing director and economist at PIMCO, said in a note. In his press conference, Powell said slowing the drawdown from its current pace may allow the central bank to compress the size of its holdings by a greater degree. “We may actually be able to get to a lower level because we would avoid the kind of frictions” that might happen by shedding bonds too quickly, he said. Powell noted the endgame for Fed holdings envisions a level of banking sector liquidity that’s large enough to navigate normal volatility and periods of stress. But he cautioned there’s no easy rule-of-thumb for stopping QT, saying “there’s not a dollar amount or percent of GDP or anything like that” to look to. Ahead of the FOMC meeting, a bare majority of economists in a Reuters poll had been expecting the QT taper process to begin in June and wrap up early next year. More