Aurelia Butler

    The law extends one passed last year and sets tax rates of between 5% and 20% for newly declared funds invested in construction, with the rate depending on how soon the funds are declared.”The first objective is to transform dormant savings, which are often not declared before the treasury, into investment and work,” Massa said at a ceremony in Buenos Aires, calling construction the “mother of industries.”The plan also offers state benefits to workers who become formally employed in construction. Massa, who was sworn in at the beginning of the month, said he hopes the plan will bring the number of Argentines employed in construction from 430,000 to 450,000 during its year-long mandate. The government of President Alberto Fernandez is seeking to revive Latin America’s third-largest economy, which is suffering from growing poverty and an inflation rate that could end the year around 90%. Argentina’s economy is slated to grow 3.4% in 2022, according to analysts consulted by the central bank, after recovering 10.3% in 2021.The Federal Administration of Public Revenues (AFIP) and the ministry will provide details in the coming days on the conditions of the plan. More

The outlook for Asian markets on Tuesday is pretty bleak, as investors digest Wall Street’s battering and surge in global bond yields the day before, and look nervously ahead to PMI data from Australia and Japan.Indonesia’s central bank could also add to the gloom, if it delivers a surprise interest rate increase at its scheduled policy meeting. Economists polled by Reuters expect it to hold its 7-day reverse repo rate steady at 3.50%. Rising bond yields – the 10-year U.S. Treasury yield shot back above 3% on Monday – helped slam stocks, lift the dollar, and deepen U.S. recession fears, while Gazprom (MCX:GAZP)’s announcement that it will halt natural gas supplies to Europe for three days later this month blackened the mood there even further. U.S. 10-year Treasury yield: https://fingfx.thomsonreuters.com/gfx/mkt/akpezklqqvr/US10Y.png This is the backdrop to the Asian trading day Tuesday, with local sentiment already wobbling after yet another rate cut in China and the yuan’s slide to a two-year low against the rampant dollar.The latest purchasing managers index data out of Australia and Japan could show the services sectors in the two countries slipping closer to contraction territory, offsetting the relative strength of manufacturing activity in recent months.On the corporate front, China’s e-commerce firm JD (NASDAQ:JD).com releases second-quarter earnings. JD.com is one of the 723 companies the U.S. Securities and Exchange Commission said last December were at risk from finalised rules to potentially prohibit trading in Chinese companies under the Holding Foreign Companies Accountable Act. Also last December, technology giant Tencent announced the divestment of around 86% of its stake in JD.com, worth $16.4 billion.Key developments that should provide more direction to markets on Tuesday: PMI data for euro zone, Germany, UK (August)U.S. new home sales (August) More

PORT-AU-PRINCE (Reuters) – Thousands of Haitians on Monday joined rallies around the Caribbean country to protest rampant crime and soaring consumer prices as its central bank reported that inflation had hit a 10-year high.Protesters set up burning barricades in some areas including the capital of Port-au-Prince, some of whom said they were angry over the growing scarcity of gasoline and diesel that could force some businesses to close their doors. Jean Baden Dubois, Haiti’s central bank governor, said the economy would likely contract by 0.4% this year, following a sharp depreciation of the gourde currency.”If I take the numbers from June 2022, inflation has reached 29%,” Dubois said in a press conference, referring to annualized inflation. “It’s the highest rate we’ve had in 10 years.”The demonstrations coincided with the anniversary of a 1791 slave uprising that triggered a long struggle for Haiti’s independence from France in 1804. Demonstrators held rallies in cities including Cap-Haitien, Petit-Goave, and Jacmel, many wearing red shirts emblazoned with the word “endepandans” or “independence.”Chronic gang violence has left much of the country’s territory out of control of government authorities, and outbreaks of bloody turf battles between rival gangs have left hundreds dead and thousands displaced.Haitians in recent weeks have also struggled to find fuel, which has left some unable to work. The country’s fuel stocks have run low as fuel importers struggle to get paid for subsidies that keep fuel prices low in Haiti, and due to difficulties in obtaining dollars from the central bank, according to two sources with knowledge of the situation. More

The companies signed up for $10.1 billion in new loans, leases and lines of credit last month, compared with $9.9 billion a year earlier. “Despite higher interest rates, continued supply chain disruptions, and higher inflation, the equipment finance industry continues to deliver value to businesses which rely on it to acquire necessary capital equipment to run their operations,” ELFA Chief Executive Ralph Petta said in a statement.ELFA, which reports economic activity for the nearly $1 trillion equipment finance sector, said credit approvals totaled 78%, down from 78.1% in June.The Washington-based body’s leasing and finance index measures the volume of commercial equipment financed in the United States.The index is based on a survey of 25 members, including Bank of America Corp (NYSE:BAC), and financing affiliates or units of Caterpillar Inc (NYSE:CAT), Dell Technologies (NYSE:DELL) Inc, Siemens AG (OTC:SIEGY), Canon Inc and Volvo AB (OTC:VLVLY).The Equipment Leasing & Finance Foundation, ELFA’s non-profit affiliate, said its confidence index in August is 50%, an increase from 46.1% in July. A reading above 50 indicates a positive business outlook. More

Central bankers will be in the line of fire at their annual symposium in Jackson Hole this week — and they should be ready to engage with their critics. Last year, US Federal Reserve chair Jay Powell used his keynote speech to suggest price pressures would be “transitory”. Annual inflation in the US was then just above 5 per cent. Last month it reached 8.5 per cent. Elsewhere, Eurozone inflation hit 8.9 per cent, and Citigroup now forecasts UK inflation will hit 18.6 per cent in January — nine times the Bank of England’s 2 per cent target.Price pressures have proved anything but ephemeral, and interest rates are rising sharply to bring them down. Central bankers need to engage in some soul-searching if they are to usher economies back towards price stability, and safeguard their own, vital, independence.Politicians are now putting the blame firmly on central bankers for the inflation numbers. Liz Truss, frontrunner to become UK prime minister, has made criticism of the Bank of England a plank of her platform. Australia has already launched a review of its central bank. This may help governments to distract from their own shortcomings. But it further saps the reputations of central banks, which had already been damaged by the financial crisis.The danger now is that monetary policy will be subsumed further into government hands. History offers ample proof that politicians cannot be trusted with deciding monetary policy. Rather than simply parrying criticism and hiding behind their previously largely successful track records since gaining independence, it is in central bankers’, and the public’s, best interest for them to set about restoring their reputations.To blame monetary policymakers wholly for the cost of living crisis would be unfair. A lot has been outside their control, and shrouded in uncertainty. The unprecedented pandemic made it hard to judge where exactly demand and supply capacities were in relation to one another. Supply chain disruptions and new Covid-19 waves muddied estimations further. Vladimir Putin’s unforeseen invasion of Ukraine led to historic surges in oil, gas, and food prices. In hindsight, the mistakes look more obvious than they did at the time. Central banking is at best an art, not a science.Nonetheless, both the technicalities and legitimacy of independent monetary policy are now under scrutiny. With credibility such a vital tool in anchoring inflation expectations of households and businesses, this year’s Jackson Hole meeting should catalyse a re-evaluation of central bank models, approaches, and philosophies.Central banks also need to become more adaptable. The past two years have shown that traditional economic models offer little help when geopolitical, public health and supply chain factors become so decisive. The wisdom of offering forward guidance has been cast further into doubt. And reliance on historic trends — such as the previous decade of low and stable inflation — must not blind policymakers to the idiosyncrasies of present and future trends. Indeed, the Fed and ECB both amended their strategies during the pandemic, essentially making them more tolerant of higher inflation. Visible efforts to learn the lessons will go some way to restore confidence.The former Fed vice-chair Alan Blinder is said to have described price stability as when ordinary people stop talking and worrying about inflation. Right now, that is a distant prospect. Europeans are struggling to pay energy bills, US rents are surging, and politicians are circling monetary policymakers like sharks. Central bankers need to reflect on where mistakes were made and show they can get a grip on the consequences. More

The writer is chair of the International Sustainability Standards BoardGovernment action is essential if we are to tackle climate change. However, no single jurisdiction can succeed by only imposing rules on its local market participants. There must be a global approach but multilateral policymaking is currently at a low ebb. To address challenges of this magnitude, nations must harness what Gelsomina Vigliotti, vice-president of the European Investment Bank, has called the “power and ingenuity” of markets. Markets are the self-generating sources of financing that shape business models and transform economies. Properly harnessed, they can deliver solutions at scale. Ahead of this November’s COP27 climate talks in Egypt there is debate around the $100bn funding commitment made by developed countries to support poorer nations in transitioning to lower carbon economies. However, Pascal Lamy, former director-general of the World Trade Organization, has argued that the creation of the International Sustainability Standards Board (ISSB) is “a real breakthrough”. Capital markets can move trillions if properly guided and informed. But they can only play this pivotal role if they operate with high-quality, comparable sustainability information that can be relied upon to make investment decisions. The ISSB, supported by G20 leaders and other international institutions, is responsible for providing such language and developing standards that establish a comprehensive global baseline of sustainability disclosures for the capital markets. The ISSB has also created forums to deliver multilateral solutions — such as a Jurisdictional Working Group that brings together China, the EU, Japan, UK and USA — and specific bilateral dialogue, including with the EU. The need for international alignment is clear. A recent EU directive states that the bloc’s standards should “contribute to the process of convergence of sustainability reporting standards at global level” and integrate the ISSB’s global baseline if it is consistent with EU objectives.The objectives of the European Green Deal will not be met without putting global capital markets to work, and this requires interoperability between the two approaches. Conversely, there is a lot that the EU can contribute to the work of the ISSB. Currently, there is a debate in the market around different approaches to “materiality” — in other words, what should be disclosed. This concept, as it is used in accounting requirements and in the language employed in the capital markets, should not be ignored. The standards proposed by the ISSB require a company to clearly disclose information that provides a robust basis for investors to consider sustainability matters in making their investment and voting decisions. This information will align with the established definition of materiality in accounting standards, ensuring completeness and clarity. The definition requires companies to disclose all information which, if missing, misstated or obscured, could reasonably have been expected to influence an investment decision. Its application requires judgment and regular analysis. What is considered material in the area of sustainability is constantly evolving. The term “dynamic materiality” is an acknowledgment that capital markets, policymakers and scientific researchers are making rapid advances in their assessment of the importance of sustainability.In the standard accounting model, for example, we do not fully incorporate the fact that enterprise value, the measure of the total value of a company, is a function of the demand and supply of capital, not disconnected from investors’ choices. The multi-dimensional nature of sustainability might shed a different light on the nature of those choices.This evolution is a necessary part of our work because what matters to investors is dynamic and changing. The consultation period on the ISSB’s first two proposed sustainability disclosure standards has just finished. The rich feedback we have already received will allow us to create a set of standards that can enable capital markets to be a true ally of global efforts to deliver a just climate transition. More

The coronavirus pandemic dealt the UK economy a larger blow than previously estimated, according to official data on Monday that showed the country recorded its biggest fall in growth in gross domestic product since 1709.The Office for National Statistics said it had revised down annual volume GDP growth in 2020 by 1.7 percentage points, meaning that it fell by 11 per cent, the largest in more than 300 years and the worst recorded among G7 countries.Craig McLaren, ONS head of national accounts, said “the updated estimates for 2020” showed that “overall, the economy fared worse than we initially estimated”. The revision means that the economy could now be smaller than initially estimated, and could suggest that the UK faced a cost of living crisis before it managed to recover fully from the hit of the pandemic.Because of the downward revision for 2020, “growth in 2021 and 2022 will be starting from a lower point than we previously estimated”, added McLaren. Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said that, assuming growth rates since the fourth quarter of 2020 are not altered, the revision implied that GDP in the second quarter of 2022 was 1.7 per cent below its peak in the fourth quarter of 2019, rather than 0.6 per cent above it.“The UK economy’s structural problems, therefore, look even worse than before, with output still well below levels before Covid struck, despite very low unemployment and significant increases in government spending,” said Tombs.Even before the revisions to the 2020 data, the UK’s economic recovery was lagging that of other countries. In the second quarter of this year, output in the US was 2.5 per cent above pre-pandemic levels, while eurozone output was 1.4 per cent larger.In 2020, Covid-19 restrictions resulted in a sharp drop in output in most countries, but the double-digit fall registered in the UK compares with contractions of between 3.4 per cent and 5.2 per cent in the US, Canada, Japan and Germany. The ONS’s revision could also lead to the Bank of England’s already bleak economic forecast proving optimistic, unless there are upward revisions to the latest data or forecasts.The BoE this month forecast that by the third quarter of 2025, the latest forecast period, the UK economy would be 0.8 per cent smaller than before the pandemic. This is because the central bank expects the economy to enter a prolonged recession from the end of this year as a result of inflation, which it forecasts to reach 13% in the autumn. But its estimates were based on stronger growth rates in each quarter of 2020 than the revised ones.

The ONS now forecasts that the economy fell 21 per cent in the second quarter of 2020, rather than by 19.4 per cent as estimated previously. It also revealed that the GDP contraction was marginally larger in the first three months and the recovery weaker in the third and fourth quarters of 2020.The revised data showed the health sector performed worse than previously calculated. Retailers and wholesalers also sold less than initially thought during the pandemic. Meanwhile, manufacturing output is now estimated to have notched up 0.1 per cent, revised up from a previous 8.9 per cent fall.However, Martin Beck, chief economic adviser to the EY ITEM Club, warned that it might be too early to judge the status of the economy as the ONS had yet to calculate the implications for 2021 and 2022.“Eventually, the ONS is likely to say that while the downturn was deeper in 2020, the recovery afterwards was stronger, essentially keeping things in the same place as before,” he added. More