Economy

NEW YORK (Reuters) – Violence and crime absorb almost 3.5% of Latin America and the Caribbean’s (LAC) economic output, depleting funds that could be used in education and assisting the vulnerable, a report by the Inter-American Development Bank (IDB) showed.Beyond the human toll, the cost of crime amounts to almost 80% of the region’s public budgets for education, twice as much as what is spent on social assistance, and 12 times the budget for research and development, the study, using data from 2022 and published on Monday (NASDAQ:MNDY), showed.Crime “limits growth, drives inequality, and diverts private and public investment. We must join and redouble efforts to change that reality,” IDB President Ilan Goldfajn said in a statement.The study calculates the direct cost of crime in three areas: loss of human capital as productive time, spending on crime mitigation by businesses, and public spending on crime prevention and criminal justice. In 2022, security expenses by private businesses accounted for 47% of the total cost of crime, while state spending on crime prevention represented 31% and the loss of human capital made up 22%.For comparison, a set of data from Poland, Ireland, the Czech Republic, Portugal, Netherlands, and Sweden showed their costs are 42% lower than in LAC. If the region got to the levels of its European counterparts, it would have near 1% of GDP to invest in social welfare and other programs, according to the IDB.A parallel study from the International Monetary Fund cites Latin America as accounting for a third of homicides globally despite holding less than 10% of the world’s population, with organized crime being especially costly.”The presence of gangs and drug trafficking amplify the costs of doing business,” the IMF report said. “A novel analysis of Mexican firms suggests that the damage costs of crime are four times higher for firms that report gangs operating in their vicinity.”The fiscal cost for governments is also considerable, according to the IMF, which states that spending on public order and safety in the region averages around 1.9% of GDP and over 7% of overall spending.”While spending more on security and deploying more police seems to contribute to lowering crime, other factors are likely more important in LAC, with spending efficiency playing a critical role. For example, despite a high proportion of spending on the judiciary, the courts’ ability to punish crimes remains weak.”Among policy proposals the IMF says LAC should establish a “regional knowledge platform” to collect, exchange, and analyze data, alongside the dissemination of best practices on effective economic and security policy responses. More

More than 220 people died after torrential rains on Oct. 29 triggered floods that swept through the suburbs south of the regional capital Valencia. The measures are on top of the 10.6 billion euros in aid announced last week.”There are still streets to be cleaned, there are garages to be drained, there are many infrastructures to be repaired and, above all, many lives, many homes and many businesses to be restored to normal,” Sanchez told reporters after the weekly cabinet meeting.The package, with 110 measures, extends aid to rental households and includes a 500 million-euro package to remove mud in the affected area and 200 million euros in aid to farmers.Sanchez said it includes an additional 12-months of mortgage relief for vulnerable households, in addition to the one-year moratorium announced last week.Sanchez also said the government will assign 150 houses or flats in or near the damaged areas to affected families and will earmark 25 million euros for buying houses. ($1 = 0.9380 euros) More

Leftist leader Luiz Inacio Lula da Silva told broadcaster RedeTV! “I beat them once and I will win again,” after market jitters over the sustainability of Brazil’s public finances sent the local currency tumbling and interest rate futures soaring.Brazil’s real has recently dropped to its weakest against the dollar since March 2021, piling pressure on the government to introduce spending cuts quickly to show it is committed to fiscal discipline.”I am in a very, very serious discussion process with the government… We can no longer play, every time we have to cut spending, on the shoulders of the people most in need,” Lula said.”It’s a responsibility of the executive, it’s a responsibility of the judiciary. I want to know if they are also willing to give up what is excessive, I want to know if Congress is also willing to cut spending,” Lula added. Lula’s has typically viewed spending on things like education and social security as investments rather than expenses, but many economists have warned the fiscal framework will become unsustainable unless changes are made.Even the central bank underscored the need for fiscal discipline to counter inflation as it accelerated the pace of monetary tightening at its last meeting.The fiscal framework combines primary budget targets with a cap for overall spending growth to a certain threshold above inflation. However, with many mandatory expenses – such as social benefits and pensions – growing at a faster rate, the framework restricts room for investments and operational spending. More

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LONDON (Reuters) – Hedge funds snapped up bank stocks at the quickest clip in three years while taking bets against renewable electricity producers last week, a Goldman Sachs note showed, as investors reacted to Donald Trump’s win in the U.S. presidential election. Financial stocks, such as banks and trading companies, were the most popular and most net bought sector on Goldman Sachs’ prime brokerage trading desk last week, the note from Friday and seen by Reuters on Monday (NASDAQ:MNDY) showed. While the note did not specify which region’s banks attracted the most attention, a second note also sent from Goldman Sachs’ prime brokerage the same day said U.S. banks would benefit.Financial stocks are expected to get a boost from a lighter regulatory touch which many believe will come with the new Trump term, the second note said.Finance companies were also seen benefiting from expected tax reform, it added. “There is scope for U.S. Financials positioning to rise further,” the second Goldman note said, adding that current hedge fund positioning in this stock sector remained on the lower side, historically. U.S. bank stocks rose as much as 11.1% on Nov. 6, from the previous day’s close after the news of Trump’s election win. Prime brokerage desks lend to and arrange trades for hedge funds. Long stock bets, expecting rising prices, were led by banks as well as companies offering consumer finance, capital markets and financial services, the first note said. Bullish bets centered on U.S. stocks but included equities in developing markets in Asia. In Europe, hedge funds exited short positions and added long ones. A short bet anticipates the value of an asset price will fall. Utilities companies were net sold for the first time in four weeks, “driven almost entirely by short sales,” Goldman Sachs’ first note said. Independent (LON:IOG) power and renewable electricity producers were the most sold, with hedge fund bets against U.S. utilities companies numbered at two shorts for every long position, the bank said. More

TOKYO (Reuters) – Japan’s government will propose a $65 billion plan to boost its chip industry with subsidies and other financial assistance over a period of “multiple years”, a draft seen on Monday (NASDAQ:MNDY) by Reuters showed.The plan, with financial support worth 10 trillion yen ($65.10 billion) or more, comes as countries look to strengthen their control over chip supply chains after global shocks including trade tensions between the United States and China.Japan’s government intends to submit the plan, including bills to financially help mass production of next-generation chips, to the next parliament session, the draft shows.It specifically targets chip foundry venture Rapidus and other suppliers of chips for artificial intelligence.Rapidus is headed by industry veterans and is targeting mass production of cutting-edge chips on the northern island of Hokkaido from 2027 in partnership with IBM (NYSE:IBM) and Belgium-based research organisation Imec.Last year, the Japanese government said it would allocate some 2 trillion yen ($13 billion) to support its chip industry.The latest plan is part of the government’s comprehensive economic package to be approved by cabinet on Nov. 22 and will also call for a total of 50 trillion yen public and private sectors investment in chips over the next 10 years.The government expects the economic impact to total around 160 trillion yen, according to the draft.($1 = 153.6000 yen) More

BERLIN (Reuters) – German legislators on Monday (NASDAQ:MNDY) scrapped a crucial budget planning meeting as parties continued to wrangle over the timing of an election to end a period of political uncertainty after Chancellor Olaf Scholz’s coalition broke up last week.The cancellation of what was to have been the final meeting of the parliamentary budgetary committee this week risks delaying Germany’s 2025 budget at a time when calls are mounting for government intervention to avert the economic crisis in Europe’s largest economy.Scholz’s government has been without a parliamentary majority since Wednesday when the neoliberal Free Democrats (FDP) quit the coalition over its more left-wing partners’ desire to spend more, using government borrowing if necessary.The scrapping of the committee meeting makes it less likely that a majority can be cobbled together in the Bundestag to approve a budget, even if Scholz’s Social Democrats and the Greens, who remain in government, manage to propose one.The opposition conservatives, comfortably ahead in polls, say Scholz is delaying the election for political gain, hoping to score political wins in the time remaining before a vote takes place.They want President Frank-Walter Steinmeier to intervene to force an earlier election to ensure Germany has a strong government as soon as possible.”I call on the President to remind the Chancellor of his constitutional duties,” said senior conservative legislator Matthias Middelberg.Scholz, who originally planned to hold fresh elections by the end of March, on Sunday signalled willingness to ask the Bundestag to dismiss him earlier if leaders of the parliamentary parties decided that was necessary.That could lead to earlier elections, though possibly at the cost of overburdening a bureaucracy unused to organising votes to such tight deadlines. Planning elections over the winter period, when many days are lost to public holidays and illness, is harder than in the traditional spring and summer months.The heads of the national and regional election committees are due to hold a video conference on Monday to discuss how soon an election can be held. More

Priority should be given to reclaiming residential and commercial land that enterprises are either unwilling or unable to continue developing, as well as land that has been supplied but not yet developed, the ministry said in a statement.Reclaimed land will not be made available for real estate development within the same year in principle, it said, adding that strict control on scale would be applied if development is necessary. More