Economy

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The participation of EU partner nations in a summit in Russia hosted by Vladimir Putin is a message for Brussels to stop “lecturing” other parts of the world, said the top official representing the bloc’s governments.European Council president Charles Michel told the Financial Times that the EU needed to show more respect towards developing countries with which the organisation has signed strategic, trade or political co-operation agreements if it wanted to combat Chinese and Russian efforts to expand their influence in Africa, Latin America and south-east Asia.“We are convinced that we know what is right and what is wrong. And we don’t make the effort, at least, to understand what are the reasons for which [other countries] think another way,” Michel said. “At the European level . . . there is a reflex which is close to a form of lecture,” he said. “We are not always very good in terms of communication, in terms of explanation, in terms of talking with them and showing a certain respect to them.”Michel spoke as two dozen leaders, including Recep Tayyip Erdoğan, the president of EU candidate and Nato member Turkey, as well as partners such as Egypt and the United Arab Emirates, joined a Brics summit hosted by Putin in Kazan, which has been pitched by the Russian president as a riposte to a western-led global ideology.“It shows something if a country like Egypt, very close to us and very close to the US from a military point of view, if a country like the Emirates, very close to us in terms of economic partnerships . . . are making the choice to be in Kazan, they want to send a message to the rest of the world,” Michel said.“One of the emirs in the Gulf countries once told me if there is a vacuum, very quickly someone will fill the vacuum. And if you are not there, others are there,” he said.Michel, who will step down on November 30 from his role, which involves chairing summits of EU leaders and representing the 27 countries internationally, said that Brussels should be proud of its record of developmental aid and upholding key values.“We are right to be active, to support a lot of countries across the world in terms of development, in terms of humanitarian aid . . . we are good in terms of mobilising means, money, providing support.”He added that many of these nations wanted to diversify their economic and security alliances, reducing dependencies on China and Russia. But the EU needed a new approach to win them over.He recalled one meeting with an unidentified African president in 2022 who said: “When you Europeans come to my country . . . you leave lessons. When the Chinese come, they leave infrastructure.”“I’m not saying that they are right or they are wrong. I’m just explaining that we are not making the effort to understand,” Michel added, saying that this approach did not help “to convince them and to influence them”.This month the EU delayed a punitive anti-deforestation law that would have banned tens of billions of euros of imports from the developing world. After complaints from countries including Brazil, Indonesia and even the US, Brussels decided to pause its introduction by a year to December 2025 to give them more time to set up systems proving their exports such as timber and palm oil did not contribute to forest loss.Michel said that the EU’s approach to enforcing its standards and regulations on trading partners, such as over fishing rules, was often “humiliating”.“We use the vocabulary: yellow card or red card,” Michel said, describing EU language on breaches of standards. “The words we use are really humiliating because we give the impression that we are a player on the pitch, and at the same time the referee.” More

Unlock the US Election Countdown newsletter for freeThe stories that matter on money and politics in the race for the White HouseThe writer is chief economist at UBS Global Wealth ManagementTraditionally, consumers’ views on the economy have been taken as a leading indicator for political trends. If consumers are happy, incumbent politicians generally do well. If consumers are unhappy, then “it’s the economy, stupid” and incumbent politicians swiftly swell the ranks of the unemployed. But in the Alice in Wonderland world of today, everything is turned upside down; politics is leading (and distorting) economics.Economic data is extremely reliant on survey evidence. Most official data is presented with authority as an absolute measurement of economic activity, but the reality is that this authority is constructed on the extremely dubious foundations of asking people how they feel. Fewer and fewer people can be persuaded to fill in any kind of survey nowadays. Falling participation rates mean that those who do answer surveys are (by definition) odd. Something peculiar has to motivate someone to fill in a survey form.One such motive is politics. Political partisanship takes people away from objectivity and into a world of fantasy. If someone is going to bother to answer a survey from political motives, they are unlikely to take the time and effort to objectively research their answers. Politically inspired survey respondents reply with their gut instincts.In the US, the Michigan consumer sentiment survey has shown a significant partisan bias. At the moment, there is a Democrat in the White House, and so Democrats will tell pollsters that all is for the best in this best of all possible worlds. Republicans, contemplating the Biden White House, tell pollsters that the economy is mired in the worst of times. Four years ago those positions were reversed. Likewise, the position four years before that was back to Democrat optimism and Republican despondency under the Obama administration. This partisanship is a relatively new thing, however. Before the Obama presidency, the evidence of political bias in survey responses was far more muted.Some content could not load. Check your internet connection or browser settings.Michigan sentiment rose higher in August and September, suggesting US households were more optimistic about the economy. However, the details showed increasing pessimism among Republicans. Only Democrats actually told pollsters that they were more optimistic. It cannot be a coincidence that Republican pessimism and resurgent Democrat optimism coincided with President Joe Biden withdrawing from the race and vice-president Kamala Harris taking the nomination. This fact alone did not alter the current economic situation, but it did change the polarised political filter through which everything in the US is viewed at present.This polarisation extends beyond the headlines of surveys. For example, Republicans are much more likely than Democrats to say they think inflation is high. Over the past three years, there have been some significant differences in regional inflation that might correlate with different political perceptions. However, regional differences have become more muted of late and do not justify the extent of the partisan perception gap. This particular political bias is all the more troubling, as US Federal Reserve chair Jay Powell has previously cited inflation expectations as a motive for policy changes.It should not be thought that this is solely a problem with consumers. Business sentiment data can just as easily be influenced by the political climate. Whenever an economist has had a bad week and is in need of some light relief, they can always turn to the US Dallas Fed manufacturing sentiment survey. The comments section of this report is often hilarious — naked partisan political views litter the remarks made by survey respondents. It is simply not plausible to expect that such bias does not extend to the supposedly objective answers in the data section of the report.In increasingly polarised societies, where world views are shaped by the partisan nature of the media we consume, survey evidence is less likely to capture economic realities. It is certainly true that in the US and elsewhere, people seem inclined to say one thing and do the reverse. The repeated pessimism in business sentiment data coincides with stable or improving business output. Consumer despondency in surveys has been accompanied by robust, rising overall spending.If political partisanship is polluting survey results, then economists and investors need to increasingly challenge the conclusions of survey-based evidence. In the absence of impartial opinions, we need to emphasise the data that is sourced from observable, objective facts. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.An Italian tomato sauce magnate has urged Brussels to protect farmers from the “unfair” competition posed by cheap paste made in China’s Xinjiang region and restore the “dignity” of Italy’s staple red fruit.Francesco Mutti, chief executive of the eponymous maker of ingredients including passata, pulp and canned tomatoes, said an EU ban or high import tariffs on the Chinese products were needed to safeguard Italian farmers. In 2021, the US banned tomato paste imports from Xinjiang citing forced labour concerns, but Brussels has not followed suit.“We should stop the import of tomato paste from China or add a 60 per cent tax on it so that its cost will not be so different from Italian [products],” Mutti told the Financial Times at the headquarters of his 125-year-old family business, which had revenues of €665mn last year.He warned that Italy’s tomato industry risked being undercut by tomato paste made by Chinese state enterprises in Xinjiang, where the UN human rights commissioner has documented widespread rights abuses against the local Muslim Uyghur minority — including forced labour. Beijing has denied the allegations.Francesco Mutti: ‘We have to protect [our farmers] from unfair competition’ More

BEIJING (Reuters) – Apple (NASDAQ:AAPL)’s iPhone sales in China in the third quarter of 2024 fell 0.3%, while Huawei surged 42%, data from research firm IDC showed on Friday.Overall, smartphone shipments rose 3.2% to 68.78 million units in China. More

WASHINGTON (Reuters) -Japanese Finance Minister Katsunobu Kato and U.S. Treasury Secretary Janet Yellen discussed recent exchange-rate moves, among other topics, in a bilateral meeting held on Thursday, a senior Japanese finance ministry official said.”The two sides discussed exchange-rate moves, and confirmed the need for the United States and Japan to communicate closely,” Atsushi Mimura, Japan’s vice finance minister for international affairs, told reporters.A weak yen has become a source of concern for Japanese policymakers as it hurts households and retailers by pushing up the cost of raw material imports.”We have recently seen one-sided, sharp moves in currency rates,” said Mimura, who oversees Japan’s currency policy.”It’s desirable for exchange rates to move in a way that reflects fundamentals. We will be increasingly vigilant to currency moves, including those driven by speculation,” he said in Washington on the sidelines of the G20 and IMF meetings.The dollar climbed above 153 yen for the first time in nearly three months on Wednesday as receding expectations of big interest rate cuts by the Federal Reserve drew renewed attention to the wide rate divergence between U.S. and Japan.The dollar stood at 151.83 yen on Thursday. More

Economic growth is likely to be still higher than the potential growth rate, Minister Choi Sang-mok said in a meeting with reporters in Washington D.C., according to the report.International organisations, such as the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD), estimate South Korea’s annual potential growth rate to be around 2%. South Korea’s economy barely grew in the third quarter as consumer spending showed signs of recovery but exports declined, data showed on Thursday. More

$1 for 4 weeksThen $75 per month. Complete digital access to quality FT journalism. Cancel anytime during your trial.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Companies that import critical minerals into Britain for use by manufacturers will be able to obtain financing for the first time from UK Export Finance, Rachel Reeves will announce in the Budget on Wednesday. The chancellor will say that the measure is needed to help Britain in the global race to secure materials such as lithium, graphite and cobalt that are key to making products ranging from phones to electric vehicles. The Treasury said this would be particularly beneficial for manufacturers in industries such as defence, aerospace and making batteries for electric vehicles. Carmakers Nissan and Jaguar Land Rover-owner Tata are building battery factories in the UK, which experts say is one important step towards growing a domestic critical minerals supply chain.The goal of shifting energy systems away from fossil fuels and towards renewable energy sources such as solar and wind will require a huge increase in the use of critical minerals. The UK is part of a coalition of 14 nations and the European Commission called the “Minerals Security Partnership”, which is trying to increase international collaboration and co-financing for the sector. The US and China have been embroiled in a trade war in which Washington has imposed export curbs on semiconductors and other advanced technologies, while Beijing has retaliated by restricting exports of some minerals. The tension has also spilled over into the EU, which this month said it would impose tariffs on imports of Chinese electric vehicles following months of ratcheting tensions between Brussels and Beijing.Chinese companies control 90 per cent of the world’s processing capacity for rare earths and more than half the processing capacity for nickel, lithium and cobalt.Jeff Townsend, founder of the Critical Minerals Association, said it was crucial that the UK develop a domestic critical minerals industry to secure long-term supply, a push that the government would need to support. “There might be projects that don’t work [commercially without government support] but where the strategic value to having your own supply chain far outweighs that,” he said. “You’ve got to build everything all at once,” from mines to processing and refining and battery manufacturing, he said. “We’re in a global race.”The government said the change would make it easier for UKEF, the UK’s export credit agency, to secure finance contracts for critical mineral suppliers in countries such as Australia with large mineral deposits. “This addresses a gap in the UK’s existing financial support for manufacturers looking to secure these key minerals, who previously would not have been able to access government support in order to do so,” a spokesperson said. They added that the decision strengthened “UKEF’s world-leading export finance support”, bringing the country in line with competitors. It comes on the back of the government’s launch of its modern industrial strategy, which will drive “long-term growth that is supportive of net zero, regional growth and economic resilience”, they said. More