Latest news with #AliciaGarcia-Herrero
CNBC
14-07-2025
- Business
- CNBC
EU in a difficult position with China amid U.S. tariff negotiations, says economist
Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis and senior fellow at Bruegel, discusses the impact of EU-U.S. tariff negotiations on EU-China relations ahead of the upcoming summit.
The Print
26-06-2025
- Business
- The Print
India has the fastest growing number of billionaires. This isn't a good thing: Veerappa Moily
McKinsey Global Institute has quoted in its report—'India needs to increase the relatively low participation of its citizens in labour markets and sustain fast productivity growth as the country has just 33 years until it is as 'old' as advanced economies. 'India still has some time to benefit from its demographic dividend for economic growth but is aging faster than many realize.' Despite very fast progress, India is still a low-income country. If India is to achieve the status of being the fourth-largest economy by the end of 2025 and to be a real powerhouse in the world, our policies must be transformative. Citing IMF data, NITI Aayog CEO BVR Subrahmanyam has expressed confidence that India could become the third-largest economy in two and a half to three years. The 2024-25 Economic Survey stated, India will need to improve its global competitiveness through grassroots-level structural reforms and deregulation to reinforce its medium-term growth potential. The survey pitched for less state control and easier rules, stating that lowering the cost of business through deregulation will make a significant contribution to accelerating economic growth and employment amid unprecedented global challenges. It also said that India is projected to reach the same support ratio (number of working-age individuals per senior 65 or older) in the 2050s as seen in advanced economies, but its GDP per capita is just 18 per cent of the World Bank's high-income threshold. Also, in per capita terms, we are still near the bottom of the global scenario tables—136 in nominal GDP and 119 in PPP terms. India still has the lowest GDP per capita among G20 nations. Human Development Indicators are still poor, with challenges in education, healthcare, and poverty reduction. Referring to the reports that India is set to pass Japan as the fourth largest economy, Alicia Garcia-Herrero, chief economist for the Asia-Pacific region at Hong Kong investment bank Natixis, said. 'Inequality is also an issue, certainly compared to Japan.' As of 2023, nearly 45 per cent of India's workforce was still employed in agriculture, while Japan's was at around 3 per cent, with a considerable rise in employment in industrial and service sectors. The share of salaried workers with formal employment contracts was just 23.9 per cent in India, while that of Japan is around 91 per cent. Apart from these criteria, the life expectancy in India is 72, while that of Japan is 84. India's Human Development Index is just 0.685 out of a highest possible of 1. Japan's HDI has crossed the 0.9 mark. India needs to increase the relatively low participation of its citizens in labour markets and sustain fast productivity growth. Additionally, India is ranked 142 out of approximately 190 countries in terms of press freedom, with a nominal per capita GDP of around $2700. India's GDP growth of 6.5 per cent in FY 2025 is the lowest since the Covid-19 pandemic of 2020-21. The risk is that a GDP growth of 6.5 per cent will not be able to generate enough jobs to fully absorb the labour force growth. The most worrying factor is that industries are not adding capacity that will generate more jobs. Creating more jobs in the organised sector is also seen as the biggest challenge to the government. Considering the magnitude of joblessness, there is an urgent need to incentivise state governments to improve the business environment and investments, which in turn will augment the labour force and sustain growth. A growing gap Surprisingly, India is also home to the largest and fastest growing number of billionaires—India has around 200 billionaires today—third globally in billionaire count. The Economic Survey has also warned of the disproportionate rise in corporate profits concentrated largely among a few large corporations. No wonder the gap between the rich and the poor, economic inequality and wealth distribution are widening day by day. The imbalance between profit growth and declining wages will have major macroeconomic consequences. If household earnings do not increase, consumer demand will weaken, undermining the very growth of GDP. This depicts the dark side of India's growth story that we are celebrating! Again, the share of manufacturing in India's GDP in 2023-24 is the same as it was in 2013-14. Where does the PM's favourite 'Make in India' sloganeering stand today? More so, as per the RBI's KLEMS database, the contribution of manufacturing to job creation is lower at 10.6 per cent compared to 11.6 per cent in 2013-14. As per the data from the PRICE ICE 360 survey, the richest 20 per cent of households, which account for Rs 155 trillion in income, save Rs 57 trillion and consume just 63.6 per cent. The bottom 20 per cent earn Rs 22 trillion but spend Rs 23 trillion, resulting in negative savings and the highest debt-to-income ratio of 15.4 per cent. The middle 60 per cent, earning Rs 159 trillion and saving Rs 28 trillion, are the backbone of consumption but remain economically vulnerable, highlighting a macro-micro disconnect. To bridge the gap, we need to shift focus from redistribution to empowerment of the bottom 20 per cent—creating job opportunities and skilling youth, affordable insurance, pension schemes, and tax-friendly saving instruments. The bottom 20 per cent must live without the fear of debt traps or income loss. We also need to look at rationalising GST. The GST council should work out a roadmap for levying petroleum products, electricity and real estate and bring it into the GST regime. Both slabs and rates have to be rationalised. Liberate financial markets to ensure adequate and reasonable business borrowing rates. RBI should also create a roadmap to phase out the Statutory Liquidity Ratio (SLR), which compels commercial banks to buy government bonds. Tariffs on intermediate goods and inputs are too high to push manufacturing in India Roadblocks to growth The harsh reality faced by millions in the country, with rising inequality, stagnating wages, and weak job creation, should prompt serious introspection by the government. The benefits of the so-called economic growth have been concentrated among a minuscule segment of the population, while the wage earners and informal sector workers continue to struggle. India's ascension to the fourth position in global GDP ranking is masked by foundational cracks in the economy. According to the International Monetary Fund's 'World Economic Outlook' released in April 2025, India's GDP is projected at $3.91 trillion for FY 25, while Japan is estimated at $4.03 trillion for FY 25. These figures put India in the fifth spot for now. Niti Aayog CEO saying India has overtaken Japan to become the world's fourth-largest economy is premature. And if India has to overtake Germany to become the third-largest economy in the world, we need to have faster, sustainable, and inclusive growth at all levels. India needs to fast-track the infusion of new technologies and infuse greater investment in research and development both in the government and private sector along with upgradation of human capital with training, skilling and employability. The current trend is dangerous unless growth translates into better livelihood for people and reduces inequalities. M Veerappa Moily is former Chief Minister of Karnataka & former Union Minister. Views are personal. (Edited by Theres Sudeep)
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Business Standard
27-05-2025
- Business
- Business Standard
China's soft spot in trade war with Trump: Risk of huge job losses
US President Trump taunted China in his first term, claiming his tariffs had led to the loss of five million jobs there. In a 2019 tweet, he said his trade policies had put China 'back on its heels.' Economists sharply disputed how much pain Trump's tariffs caused, but the message underscored the centrality of jobs to China's export-reliant economy. Four months into Trump's second term, the United States and China are again negotiating over tariffs, and the Chinese labour market—especially factory jobs—is front and centre. This time, China's economy is struggling, leaving its workers more vulnerable. A persistent property slowdown that worsened during the Covid-19 pandemic has wiped out jobs and made people feel poorer. New university graduates are pouring into the labour pool at a time when the unemployment rate among young workers is in the double digits. 'The situation is clearly much worse,' said Alicia Garcia-Herrero, chief economist for the Asia-Pacific region at investment bank Natixis. As employment opportunities in other sectors disappear, she said, the importance of preserving China's 100 million manufacturing jobs has grown. Natixis said that if US tariffs stayed at their current levels of at least 30 per cent, exports to the United States would fall by half, resulting in a loss of up to six million manufacturing jobs. If the trade war resumes in full, job losses could surge to nine million. China's economy has struggled to recover from the pandemic, expanding more slowly than during Trump's first term, when growth topped 6 per cent a year. Although the Chinese government has set a target of around 5 per cent growth this year, many economists predict the actual figure will fall short. In early 2018, China reported its urban jobless rate had fallen to a 15-year low and that the country had created a record number of new jobs. Since then, government crackdowns and tighter regulations have subdued industries like technology and online education—once-thriving sectors that generated numerous jobs. Over those years, unemployment climbed, especially among young people. The jobless rate among 16-to-24-year-olds was 15.8 per cent in April, a slight improvement from the previous month. However, the figure is expected to surge again when 12 million new college graduates enter the workforce this year. In 2023, when youth unemployment reached a record 21.3 per cent, the Chinese government suspended the release of the figures. At the time, one prominent economist claimed the real figure was closer to 50 per cent. Beijing resumed publishing the data last year using a revised methodology that lowered the reported rate. At the same time, even those with jobs are in a more precarious position. Fewer companies are offering full-time roles, relying instead on gig workers for services like food delivery and manufacturing. While those jobs offer flexibility, they typically pay less and come with few protections or benefits. In late April, Yu Jiadong, a senior official at China's Ministry of Human Resources and Social Security, said the government had prepared measures to maintain employment stability, particularly for Chinese exporters.
Time of India
18-05-2025
- Business
- Time of India
Chinese job markets shiver as US-China trade talks fall cold
A breakthrough in US-China trade talks in Geneva has brought some hope for China's battered manufacturing sector, but the damage may have already wrecked many factory workers, as the job market remains tight. Tensions in the trade war have relaxed, sparing Beijing from a potentially severe crisis, widespread job losses that could have threatened social stability, a cornerstone that has helped the Communist Party to retain power and legitimacy. Dampened by the US tariff hikes of 145%, the Chinese economy continues to struggle, even after the trade talks, hurting the job market and slowing down the economy, Reuters reported. Will tariff cut bring back the sentiment ? While the talks have helped avert the crisis, challenges remain. A senior policy adviser close to the matter described the outcome as 'a win for China,' adding, 'factories will be able to restart operations and there will be no mass layoffs, which will help maintain social stability.' However, with tariffs still standing at around 30%, on top of pre-existing duties, businesses remain cautious. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Gentle Japanese hair growth method for men and women's scalp Hair's Rich Learn More Undo 'It's difficult to do business at 30%,' the adviser said. 'Over time, it will be a burden on China's economic development.' Before the Geneva meeting, signs of distress were evident. Beijing had grown alarmed at rising bankruptcy risks in labour-intensive sectors such as toys and furniture, according to sources cited by Reuters last week. Lu Zhe, chief economist at Soochow Securities, estimated that the number of jobs at risk has fallen to below 1 million, down from a range of 1.5 to 6.9 million before the tariff cut. Even so, Alicia Garcia-Herrero, chief Asia Pacific economist at Natixis, warned the threat hasn't vanished, predicting the current tariff levels could still lead to 4 to 6 million job losses. 'When you increase the tariffs to such a high level, many companies decide to stop hiring and to start basically sending the workers back home,' she said. 'At 30%, I doubt they will say, okay, come back.' To cushion the impact, the Chinese government is stepping in with targeted investment and other measures. Last week, the People's Bank of China unveiled a scheme to direct cheap funding toward service industries and elderly care, sectors seen as having potential to absorb displaced workers. 'On employment, the most important driver will come from increased government investment given that the enthusiasm for corporate investment has yet to rise,' said Jia Kang, president of the China Academy of New Supply-Side Economics. Despite official efforts, the mood remains bleak on the ground. While Beijing may have avoided the worst-case scenario, for many, the scars of the tariff war are likely to linger far longer. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
South China Morning Post
28-01-2025
- Business
- South China Morning Post
DeepSeek breakthrough, Nvidia rout raise concerns over massive AI spending
DeepSeek, a little-known Chinese start-up whose affordable technology matches the likes of the most formidable American tech titans such as OpenAI and Meta Platforms, has raised investor concerns over the necessity of pouring billions of dollars into research and development. The Chinese artificial intelligence (AI) company released its open-source reasoning model, R1, earlier this month. The model's capabilities roughly match those of advanced models from OpenAI, Anthropic, and Google while having significantly lower training costs. 'The impressive performance/cost dynamics have raised investor concerns about the necessity of the billions of dollars of capital expenditures by large US tech companies and the billions more they are planning to spend on generative AI in the coming years,' said Malik Ahmed Khan, an equity analyst from Morningstar. Large US tech companies may follow suit and replicate some of the AI training techniques that DeepSeek leveraged to drive the cost of R1 down, he said in a research note on Tuesday. When DeepSeek launched, it quickly became the most downloaded app in Apple's US AppStore. The better-than-expected performance of DeepSeek led to a sell-off of Nvidia and tech peers on Wall Street on Monday. Its shares plunged 17 per cent to US$118.58, erasing almost US$600 billion of market value. Nvidia's logo and a decreasing stock graph are seen in this illustration taken January 27, 2025. Photo: Reuters 'This was bound to happen, and it could have come from anywhere,' said Alicia Garcia-Herrero, chief economist for Asia-Pacific at French investment bank Natixis. 'It came from China, all the more so, in a way, to see a correction.'
