Tuesday, May 31, 2011
Continuing downside risks in global economy
From The Hindu
The much-anticipated Economic Outlook of the Organisation for Economic Co-operation and Development will be revealed on Wednesday by Pier Carlo Padoan, Deputy Secretary-General and Chief Economist.
Speaking on background, officials said that the report may highlight some of the continuing downside risks in the global economy including persistent unemployment, low growth rates, inadequate fiscal consolidation and rising global imbalances.
However on the upside, there is a general recognition that the economic recovery was progressing at multiple speeds, with emerging markets growing faster and advanced economies less so, an official said.
Further, as the recovery was becoming more and more self sustained, it was seen to be driven increasingly driven by private sector demand and less by policy stimuli, and this was a positive development.
In comments toThe Hindu that were specific to India, another official said “India recovered very strongly from the crisis,” adding that the moderation in growth seen in the recent accounts data was welcome. He said that the OECD predicted continued moderate growth, around 8.5 per cent.
Officials further said that the Reserve Bank of India's move to tighten monetary policy was “entirely appropriate” given the prospect of inflationary pressures, and additional incremental tightening would also be warranted.
The OECD's next Economic Survey of India will be released on June 12, 2011.
The much-anticipated Economic Outlook of the Organisation for Economic Co-operation and Development will be revealed on Wednesday by Pier Carlo Padoan, Deputy Secretary-General and Chief Economist.
Speaking on background, officials said that the report may highlight some of the continuing downside risks in the global economy including persistent unemployment, low growth rates, inadequate fiscal consolidation and rising global imbalances.
However on the upside, there is a general recognition that the economic recovery was progressing at multiple speeds, with emerging markets growing faster and advanced economies less so, an official said.
Further, as the recovery was becoming more and more self sustained, it was seen to be driven increasingly driven by private sector demand and less by policy stimuli, and this was a positive development.
In comments toThe Hindu that were specific to India, another official said “India recovered very strongly from the crisis,” adding that the moderation in growth seen in the recent accounts data was welcome. He said that the OECD predicted continued moderate growth, around 8.5 per cent.
Officials further said that the Reserve Bank of India's move to tighten monetary policy was “entirely appropriate” given the prospect of inflationary pressures, and additional incremental tightening would also be warranted.
The OECD's next Economic Survey of India will be released on June 12, 2011.
Labels: economic situation, OECD Ministerial meeting
Tuesday, December 14, 2010
Deal on Bush-era tax cuts
From The Hindu
In an eleventh-hour compromise, United States President Barack Obama struck a deal with his entrenched Republican opposition to extend Bush-era tax cuts for another two years.
The cuts, introduced in 2001 by the former President, George W. Bush, were set to expire on December 31 since Congress was forbidden from making them permanent under rules at the time. The situation saw both the White House and the opposition digging in their heels as the deadline approached.
President Barack Obama had initially hoped to preserve the tax cuts for middle-class Americans while allowing the benefit to lapse for the richest two per cent — a distinction that Republicans sought to block.
Under the bargain struck this week, Mr. Obama will have his way at least on one item on the White House agenda — the extension of unemployment benefits and a payroll tax cut that will improve the lot of ordinary Americans.
In remarks following the negotiations, Mr. Obama said he “completely disagreed” with the Republican view that the tax cuts, including for the wealthiest, should be made permanent. “A permanent extension of these tax cuts would cost us $700 billion at a time when we need to start focusing on bringing down our deficit,” he said.
He, however, said he would not accept the “chilling prospect” faced by middle-class Americans of a tax rise on January 1, 2011, and unemployment insurance payouts drying up. “Make no mistake; allowing taxes to go up on all Americans would have raised taxes by $3,000 for a typical American family. And that could cost our economy well over a million jobs,” he said.
While the deal marks the breaking of a stalemate that could have spelt economic doom for millions of American households still reeling from the effects of the downturn, some experts noted that Mr. Obama has endangered the support of his liberal base.
Economist Paul Krugman recently argued against precisely such a deal, saying: “Mr. Obama should draw a line in the sand, right here, right now. If Republicans hold out, and taxes go up, he should tell the nation the truth, and denounce the blackmail attempt for what it is.”
Under the bipartisan deal, American families will retain not only the Bush-era tax cuts, but also those introduced under Mr. Obama.
Mr. Obama said that in exchange for a temporary extension of tax cuts for the wealthiest, middle-class tax credits such as the Earned Income Tax Credit and the Child Tax Credit would persist, as would the American Opportunity Tax benefitting nearly eight million students.
The agreement will also see unemployment insurance extended for a further 13 months, a direct benefit to nearly three million Americans.
Labels: Bush-era, economic situation, tax cuts, U.S.
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