Evelyn Reynolds

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    Global Economic Leaders Confront a New Era of Industrial Policy

    Policymakers brace for more protectionism and the demise of “neoliberalism” if Donald J. Trump is re-elected in the U.S.At the annual meetings of the International Monetary Fund and the World Bank this week, Kristalina Georgieva, the head of the I.M.F., expressed a mix of relief and trepidation about the state of the world economy.Policymakers had tamed rapid inflation without causing a global recession. Yet another big economic problem loomed. Rising protectionism and thousands of new industrial policy measures enacted by countries around the world over the last year are threatening future growth prospects.“Trade, for the first time, is not the engine of growth,” Ms. Georgieva said at an event sponsored by the Bretton Woods Committee.Economic policymakers who convened in Washington showed little indication that they might heed the warnings.Eighty years after the International Monetary Fund and the World Bank were created to stabilize the global economy in the wake of World War II, the role of those organizations and the guiding principles behind their creation has largely fallen out of fashion. The I.M.F. and World Bank were designed to embrace a new system of economic order and international cooperation, one that would stitch the world economy together and allow rich nations to help poorer ones through trade and investment.But today, those who espouse such “neoliberal” notions of open markets are increasingly lonely voices.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Alabama Prison Labor Program Faces Legal Challenges

    In the back of a nondescript industrial park on the outskirts of Montgomery, Ala., past the corner of Eastern Boulevard and Plantation Way, there is a manufacturing plant run by Ju-Young, a car-part supplier for Hyundai. On a Tuesday in May, about half of the workers there — roughly 20 — were prisoners.Listen to this article with reporter commentaryThey were contracted to the company by the Alabama Department of Corrections as part of a “work-release” day labor program for inmates who, according to the state, have shown enough trustworthiness to work outside prison walls, alongside free citizens.The inmates bused there by the state make up just one crop of the thousands of imprisoned people sent to work for private businesses — who risk disciplinary action if they refuse.Sitting against a chain-link fence under the shade of a tree in the company parking lot, commiserating over small talk and cigarettes with fellow assembly workers, one of the imprisoned men, Carlos Anderson, argued that his predicament was simple. He could work a 40-hour week, at $12 an hour — and keep a small fraction of that after the state charges transportation and laundry fees, and takes a 40 percent cut of pretax wages — or he could face working for nothing at the prison.Under Alabama prison rules, there are thin lines between work incentives, forced labor and “involuntary servitude” — which reforms to the Alabama Constitution in 2022 banned. From the viewpoint of Mr. Anderson and more than a dozen other Alabama inmates interviewed by The New York Times, the ultimate message, in practice, is straightforward: Do this, or else.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    German finance minister warns of retaliation if U.S. kicks off trade war

    German Finance Minister Christian Lindner on Friday warned that if the U.S. kicked off a trade war with the European Union, there could be retaliation.
    “Trade controversy sees never winners, only losers,” Lindner told CNBC’s Karen Tso on the sidelines of the International Monetary Fund’s annual meeting in Washington, D.C.
    Trade is a key pillar of the German economy, and the U.S. is one of its most important trading partners.

    Christian Lindner, Germany’s finance minister, during a meeting Janet Yellen, US treasury secretary, not pictured, at the annual meetings of the IMF and World Bank in Washington, DC, US, on Thursday, Oct. 24, 2024.
    Ting Shen | Bloomberg | Getty Images

    German Finance Minister Christian Lindner on Friday warned that if the U.S. kicked off a trade war with the European Union, there could be retaliation.
    “Trade controversy sees never winners, only losers,” Lindner told CNBC’s Karen Tso on the sidelines of the International Monetary Fund’s annual meeting in Washington, D.C.

    What U.S. trade policy could look like if Donald Trump were elected as president is a key issue, Lindner suggested. “In that case we need diplomatic efforts to convince whoever enters the White House that it’s not in the best interest of the U.S. to have a trade conflict with [the] European Union. We would have to consider retaliation,” he said. Lindner belongs to the pro-business Free Democratic Party which is currently in coalition with Chancellor Olaf Scholz’s Social Democratic Party.
    The U.S.’ problem with trading lies with China rather than the EU, Lindner said, adding that the EU “should not become a negative side effect” of controversy between the U.S. and China.

    Trump has floated the idea that, if he were elected, blanket tariffs of 10% to 20% could be imposed on almost all imports, no matter where they came from.
    If such a 20% tariff were implemented by the U.S., the EU’s and Germany’s gross domestic product would fall in the coming years, Reuters reported Thursday citing a study by German economic institute IW. Trade is one of the main pillars of the German economy, suggesting heightened tensions, uncertainty and tariffs would hit the country harder than others.
    Earlier this month, the German statistics office, Destatis, said that the U.S.’ importance as a trading partner for Germany has been growing. The agency said that since 2021, the U.S. had been the second-most important trade partner for Germany behind China, but in the first half of 2024, foreign trade turnover with the U.S. was higher than that with China. In 2023, around 9.9% of German exports went to the U.S., according to Destatis.

    Trade tensions between the U.S. and China, and the EU and China, have been rising throughout the year. Both the U.S. and EU have implemented higher tariffs and on some goods imported from China, citing unfair trade practices.
    China in turn has also announced higher temporary tariffs on some imports from the EU. Several probes and investigations into one another’s competition, subsidy, and other practices are also ongoing as the tit-for-tat measures continue.

    After the EU voted to impose tariffs on Chinese-made electric vehicles, Germany’s Lindner urged the union not to start a trade war. Germany had previously advocated against higher duties, raising concerns about what they could mean for the country’s struggling carmakers.
    Earlier in the week, Gita Gopinath, deputy managing director of the IMF, told CNBC that an escalation of trade and tariffs tensions between the U.S. and China would be “costly for everybody.” More

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    Russia Raises Interest Rate to 21 Percent, Its Highest in Decades

    Military spending and recruitment are causing the country’s economy to overheat, leaving regulators in a struggle to rein in rising prices.Russia’s central bank raised the cost of borrowing in the country to its highest level in more than two decades on Friday in an effort to slow inflation that is being fueled by record military spending and recruitment.The central bank raised Russia’s benchmark interest rate to 21 percent during its regular monetary policy meeting. That makes borrowing in the country even more expensive than at the start of Russia’s invasion of Ukraine in February 2022, when the central bank sharply increased interest rates to calm the economy. The effective cost of borrowing in Russia is now the highest since 2003.It was the third increase in a row, and Elvira Nabiullina, the central bank’s president, said that interest rates could rise further later this year.“We don’t see inflationary pressures slowing down,” Ms. Nabiullina, who maintains some policy independence from the Kremlin, told reporters after announcing the new rate.The increase underscores the challenges that Ms. Nabiullina faces as she tries to cool inflation, which she forecasts will average 8.8 percent this year. At that level, prices are rising more than twice as quickly as the central bank considers healthy for the Russian economy.Ms. Nabiullina implicitly blamed Russia’s war in Ukraine for the continued price increases. She said the Kremlin’s decision to raise spending by $15.5 billion next year, mostly to cover war-related costs, was overheating the economy and feeding inflation.In particular, she said, high government spending blunts the central bank’s main tool for controlling inflation — setting interest rates. This is because companies that receive military contracts are willing to take out loans at any cost to meet production deadlines.Labor shortages resulting from military recruitment during the war have also fueled inflation.The war has left hundreds of thousands of Russian men dead or seriously injured, according to Western intelligence agencies. Hundreds of thousands more have left the country to avoid being called up. And hundreds of thousands of others have joined the army to benefit from ever-rising payouts, leaving the civilian economy deprived of workers.“Spare hands no longer exist in the economy,” Ms. Nabiullina said, which leaves companies competing for workers by offering them higher wages.In turn, those rising wages spur consumer spending, further contributing to inflation.Military spending has caused a boom in the Russian economy: The International Monetary Fund said this week that Russia’s economy would grow 3.6 percent this year, 0.4 percentage points higher than its previous forecast. But economists say that the situation is breaking the balance between supply and demand, with potential long-term consequences for the country’s financial stability.Yet the Kremlin is showing no signs of letting up on war spending.“Our main priority are the goals of the special military operation,” Finance Minister Anton Siluanov told RBC, a business newspaper, this week, referring to the war in Ukraine. “We will spend as much money as we need on the battlefield, on the victory.”Oleg Matsnev More

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    Russia’s central bank raises key rate to 21% to rein in higher-than-forecast inflation

    Russia’s central bank on Friday raised its key interest rate by 200 basis points to 21%, citing consumer price increases considerably above its forecast and warning of ongoing high inflation risks in the medium term.
    The move exceeds the 100 basis-point hike expected by analysts and brings the institution’s benchmark rate to its highest since February 2003, according to Reuters.
    The key rate was previously taken up by 100 basis points to 19% in September.

    09 June 2024, Russia, Moskau: A guardhouse of the Kremlin (l) and the Foreign Ministry (M, background) stand in the center of the capital. Photo: Ulf Mauder/dpa (Photo by Ulf Mauder/picture alliance via Getty Images)
    Picture Alliance | Picture Alliance | Getty Images

    Russia’s central bank on Friday raised its key interest rate by 200 basis points to 21%, citing consumer price increases considerably above its forecast and warning of ongoing high inflation risks in the medium term.
    The key rate was taken up by 100 basis points to 19% in September.

    The Friday move exceeds the 100 basis-point hike expected by analysts and brings the institution’s benchmark rate to its highest since February 2003, according to Reuters. It was last near similar levels in February 2022, when Russia’s policymakers lifted it to 20% to soothe local markets within days of Moscow’s invasion of neighboring Ukraine.
    The bank struck a hawkish tone regarding further policy steps on Friday. In a briefing following the decision, Russian Central Bank Governor Elvira Nabiullina said that the institution’s board of directors had considered boosting the benchmark rate above 21% and leave open the possibility of further hikes at the next meeting in December, according to Google-translated comments carried by Russian state news agency Tass.
    It noted annual seasonally adjusted inflation hit an average of 9.8% in September, up from 7.5% in August. It now anticipates the print will sit in a 8.0–8.5% range by the end of 2024 — and is running “considerable above” a July forecast of near 6.5-7.0%.
    “Over the medium-term horizon, the balance of inflation risks is still significantly tilted to the upside,” the bank said in a statement. “The key risks are associated with persistently high inflation expectations and the upward deviation of the Russian economy from a balanced growth path, as well as with a deterioration in foreign trade conditions.”
    The bank anticipates annual inflation will decline to 4.5–5.0% in 2025 and to 4.0% in 2026.

    Russia’s economy has been constrained by depressed global prices for its key oil exports and by Western sanctions, which have restricted trade to deplete Moscow’s coffers for the war in Ukraine and contributed to declines in the ruble. The U.S. dollar was up 0.36% against the ruble at 12:52 p.m. London time.
    The Russian interest rate hikes — which take place at a time when the European Central Bank and the U.S. Federal Reserve are embarking on steps to ease monetary policy — have raised concerns over a potential stifling of the nation’s economic growth.
    The International Monetary Fund forecasts Russia’s inflation will average 7.9% this year, noting in its World Economic Outlook of October that the country’s GDP will decline from 3.6% this year to 1.3% in 2025, “as private consumption and investment slow amid reduced tightness in the labor market and slower wage growth.” More

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    China schedules meeting expected to reveal fiscal stimulus details

    China’s parliament will hold a highly anticipated meeting Nov. 4 to 8, state media said Friday, according to a CNBC translation.
    Last year, the committee’s meeting in late October oversaw a rare increase in China’s fiscal deficit to 3.8%, from 3%.
    This parliamentary meeting is a key part of the process, if China once more wants to press ahead with adjusting the national budget or deficit, said Bruce Pang, chief economist and head of research for Greater China at JLL.

    A general view shows the skyline over the central business district in Beijing on Feb. 28, 2023.
    Jade Gao | Afp | Getty Images

    BEIJING — China’s parliament will hold a highly anticipated meeting Nov. 4 to 8, state media said Friday, according to a CNBC translation.
    Investors have been awaiting news of the gathering of the standing committee of the National People’s Congress, which is expected to announce details on any fiscal stimulus.

    Last year, the committee’s meeting in late October oversaw a rare increase in China’s fiscal deficit to 3.8%, from 3%, which was subsequently reported by state media.
    This parliamentary meeting is a key part of the process, if China once more wants to press ahead with adjusting the national budget or deficit, said Bruce Pang, chief economist and head of research for Greater China at JLL.
    He pointed out that the last month of Chinese stimulus measures have all underscored the need for more fiscal support.
    Earlier this month, China’s Minister of Finance Lan Fo’an told reporters that there was room to increase the deficit and issue more bonds. He indicated at the time that significant changes had to be processed before being announced.
    His remarks followed a meeting of top leaders in late September led by Chinese President Xi Jinping, which called for strengthening fiscal and monetary policy.

    The People’s Bank of China has cut various rates and extended real estate support policies. Chinese stocks have surged in the weeks since the late-September meetings, with trading turning volatile in the absence of more concrete measures.
    Pang said the upcoming parliamentary meeting should confirm how the budget will be adjusted and communicate any potentially planned bond issuance.
    Analysts have tempered expectations that large-scale fiscal stimulus would directly pillar consumption, instead noting how struggling local governments would likely get support first. 
    China’s economy grew by an annual 4.8% in the first three quarters of the year, slightly slower than the 5% pace observed in the combined first half of the year. Beijing has a target of around 5% economic growth for the whole of 2024. More

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    ‘Trump Trade’ of Large Tariffs and Deficits Looms as Market Braces for 2024 Election

    As investors have focused on the potential fiscal and economic impact of the Republican candidate’s proposals, yields on Treasury debt have risen.The $28 trillion Treasury market is arguably the most foundational financial market in the world. It’s where the U.S. government auctions its debt to investors who buy and trade that debt, influencing borrowing costs across the globe.It has also become one of the main places for investors to express their views on the race for the White House.Vice President Kamala Harris and former President Donald J. Trump have each pledged tax and spending policies that would most likely increase federal deficits, leading to more government borrowing.But it is Mr. Trump’s proposals — including steep tariffs and extra-large tax cuts — that investors have become focused on, especially as his odds of winning have risen in some betting markets.His policies have drawn higher estimates of government debt from economists. One nonpartisan group, for instance, has projected that Mr. Trump’s platform would lead to an additional $7.5 trillion in U.S. Treasury debt issuance over a decade — more than twice its estimate for Ms. Harris’s policies.“Trump wins, you short bonds” — bet that their value will fall and yields will rise further — and “lever up” on stocks, said David Cervantes, the founder of Pinebrook Capital, an asset management firm. He is a believer in what has come to be called the “Trump trade” in finance: a bet that Mr. Trump’s assuming power would boost inflation and interest rates but might also juice corporate earnings in the near term.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Boeing Union Workers Reject New Contract and Extend Strike

    The vote, hours after Boeing reported a $6.1 billion loss, will extend a nearly six-week-long strike at factories where the company makes its best-selling commercial plane.Boeing’s largest union rejected a tentative labor contract on Wednesday by a wide margin, extending a damaging strike and adding to the mounting financial problems facing the company, which hours earlier had reported a $6.1 billion loss.The contract, the second that workers have voted down, was opposed by 64 percent of those voting, according to the union, the International Association of Machinists and Aerospace Workers. The union represents about 33,000 workers, but it did not disclose how many voted on Wednesday.“There’s much more work to do. We will push to get back to the table, we will push for the members’ demands as quickly as we can,” said Jon Holden, president of District 751 of the union, which represents the vast majority of the workers and has led in the talks. He delivered that message at the union’s Seattle headquarters to a room of members chanting, “Fight, fight.”Jon Holden, president of the union’s District 751, announcing the vote results on Wednesday in Seattle: “We will push to get back to the table.”M. Scott Brauer for The New York TimesBoeing declined to comment on the vote, which was a setback for the company’s new chief executive, Kelly Ortberg, who is trying to restore its reputation and business with a strategy he described in detail earlier on Wednesday. In remarks to workers and investors, Mr. Ortberg said Boeing needed to undergo “fundamental culture change” to stabilize the business and to improve execution.“Our leaders, from me on down, need to be closely integrated with our business and the people who are doing the design and production of our products,” he said. “We need to be on the factory floors, in the back shops and in our engineering labs. We need to know what’s going on, not only with our products, but with our people.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More