Economic Digest – July 2015
The economy of Africa is growing steadily. Last year average growth was 3.9 per cent and it is set to accelerate this year spurred by foreign direct investment which is expected to reach US$55-billion in 2015, 20 per cent higher than in 2010. Inflows of capital are increasingly focussed on less-resource-rich countries as investors target the continent’s booming middle classes. The amount of investment in technology, retail and business services increased by 17 per cent between 2007 and 2013.
Engineers have produced an alloy that springs back into shape even after it is bent more than 10-million times. The new material, made from nickel, titanium and copper, shatters previous records and is so resilient it could be used for artificial heart valves, aircraft components and possibly a new generation of solid-state refrigerators which compresses and expands a liquid in its compressor. Memory alloys are already used in some situations, including surgical operations, a stent for example which is squashed into a small space and then springs into its designated shape to prop open a blood vessel.
The total value of support given by the Chinese government to farmers exceeds that of any other country for which comparative data exists. China paid out US$165-billion in direct and indirect agricultural subsidies. The next highest totals were those of Japan at $65-billion and America at just over $30-billion. The most lavish spenders are Japan, South Korea and Switzerland where subsidies account for more than half of farm income.
Last year, tourism accounted for US$36.4-billion of New Jersey’s GDP, or about 6.6 per cent of the state’s entire economy. Tourism there generated $4.6-billion in state and local tax revenues, including $1.4-billion in sales taxes. About 508,000 jobs, nearly 10 per cent of New Jersey’s total are in the tourism industry. However, there are worries about future tourism revenues as four of the 12 Atlantic City casinos closed last year. Without tourism revenues, each New Jersey household would have to pay an additional $1,460 in taxes.
According to the Writers Union of Canada, the average writer earns just C$12,879 from writing. For the 81 per cent who responded to the survey, income from writing actually falls below the poverty line which in Ontario was just under $20,000 in 2011. Taking inflation into account, writers are making 27 per cent less than they were in 1998. To be a member of the Writers Union which has 2,000 members, writers must have had at least one book published by a trade or university press or the equivalent in another medium. In Canada, publishing is a $2-billion industry.
Ontario farmers are stepping in to feed Canadians’ appetite for hazelnuts as the industry deals with a worldwide shortage, sky-high prices and the spread of nut-killing blight in British Colombia. Ontario farmers will harvest more than 240 hectares of the crop this year, up from 40 hectares last year. B.C., which had 330 hectares of hazelnut producing orchards as recently as 2012, saw its harvest fall by more than 60 per cent last year and 2015 promises to be even worse. Two years of poor harvests in Turkey, which produces more than two-thirds of the world’s hazelnuts, and the spread of eastern filbert blight across BC and Oregon have caused global hazelnut prices to triple since the first months of last year.
According to Statistics Canada, red meat available for consumption in Canada continues to decline reaching 37.2 kilograms per person in 2014. This was down 2.1 per cent from 2013 and 20 per cent lower compared with 2004 (46.6 kilograms per person). The availability of poultry for consumption edged up from 37.2 kilograms per person in 2013 to 37.5 kilograms per person in 2014.
China has announced that it will cut import taxes on clothing, cosmetics and some other goods by half in a new tactic to spur consumer spending and economic growth. Beijing is in the midst of a marathon effort to reduce reliance on trade and investment to drive economic growth by nurturing domestic consumption. The cuts apply to clothing, shoes, skin care products, baby food and supplies and kitchen utensils.
Corporate America is holding US$1.73-trillion in cash offshore, with the top five companies hoarding almost half a trillion between them. It is estimated that $1.1-trillion (or 64 per cent) of the total is being held abroad, a 16 per cent increase on the previous year as companies choose to take advantage of cheap borrowing costs at home to fund their spending, rather than face the tax bill when repatriating profits. Technology firms are increasingly responsible for this stockpiling of money. Tech companies now hold $690-billion in cash between them; more than double their 2009 holdings and 40 per cent of the total. Apple alone holds $178-billion
The US government is to boost research and preserve 7-million acres of habitat for bees, monarch butterflies and other insects as part of a wide-ranging strategy to bolster the population of pollinators that are vital to the nation’s food crops. The strategy aims to bring annual bee losses to 15 per cent, down from more than 40 per cent last year. Managed honeybee colonies provide pollination services to the nation’s crops that are valued at US415-billion. California almond growers pay upwards of $290-million a year to bring tens of thousands of managed honeybee colonies to their groves. There are about 2,000 to 3,000 commercial US beekeepers nationwide managing about 2.7-million colonies down from about 5.7-million in the 1950s.
The Liquor Control Board of Ontario (LCBO) has experienced record sales for the 18th year in a row. Thirsty Ontarians pushed wine, spirits and beer sales in 2012-13 to C$4.9-billion, an increase of 3.9 per cent or $182-million over the previous year. As a result the government-owned agency is pumping $1.7-billion into the provincial coffers. Gift card sales were up $10.8-million, or 20.7 per cent, to $62.9-million. Customer charitable donations at LCBO checkouts and employee fundraising raised $6.6-million for worthy causes representing a six per cent increase over the 2011 total.
The Gulf Island deer population is hitting crisis level and too many deer are threatening native plants such as Arbutus trees. While the problem is most acute on Mayne Island, alarm bells are ringing on nearby islands like Saturna and Galiano as deer are strong swimmers. Only four people on Mayne Island are allowed to hunt deer, an RCMP officer and three farmers on large properties. They shoot about 200 deer a year but that is doing little to control the population. Allowing more hunting would endanger humans in the island and the introduction of predators like wolves or cougars is not a popular option.
The growing global population is hungry for Canadian staples such as lentils. In 2014, Canada exported more than three billion tonnes of pulse products (which include lentils) to more than 100 countries. Saskatchewan already accounts for the bulk of India’s imports of lentils and two-fifths of the Canada-India commodities trade. Canada is the world’s leading supplier of pulses such as lentils and peas. Between 2002 and 2013, Canada’s trade in agricultural products grew by more than 80 per cent. This was second only to the growth in financial services and insurance and one of the top five fastest-growing export sectors.
Canada and Mexico are seeking World Trade Organization authorization to impose more than US$3-billion in sanctions against American exports in retaliation against contentious meat-labeling laws. US legislators have signaled they plan to repeal the 2009 laws which Canada and Mexico say makes their meat products more expensive. Canada wants to impose just over $2.4-billion in sanctions while Mexico is looking for $653-million worth of punitive measures. Ottawa is likely to target beef, pork, California wines, mattresses, cherries and office furniture.
Between 1999 and 2012, the average wealth (or net worth) of Canadian families rose from C$319,800 to $554,100, or 73 per cent (in 2012 dollars). The cumulative net worth of Canadian families increased by $4.17-trillion during this period. Half of the increase in the overall value of assets was due to real estate while the other half was due to other types of assets including employer pension plans. Between 1999 and 2012, the top 20 per cent of families by income saw their average net worth rise 80 per cent, climbing from $721,900 to $1,300,100. However, the bottom 20 per cent of families by income saw their average net worth rise by 38 per cent from $79,500 to $109,300
A record number of England’s beaches are at risk of failing to meet EU water quality standards this year. New EU regulations are making it much harder for beaches to attain the top “excellent” rating. More than 99 per cent of English beaches passed last year’s tests but are forecast to drop by 6 per cent this year with the water of 25 beaches possibly being classed as “poor.”
Manchester United is the world’s most valuable football brand replacing Bayern Munich. Despite winning no trophies again last season, the Manchester club’s brand is estimated to be worth US$1.2-billion. Six of the top 10 most valuable club brands were English. Barcelona, which recently won the Championship Final slipped two places from last year to the sixth most valuable brand worth $773-million. There were no Italian clubs in the top ten.
UK researchers from the University of Bristol claim that self-healing aeroplane wings could be introduced in the next five to 10 years. They have developed tiny microspheres containing a liquid-based “healing agent” which are interspersed in the ‘plane’s wing itself. The spheres burst when damaged, releasing liquid which hardens. The technology could also be applied to other products made of carbon composite materials, including bicycle frames and wind turbines. The “healed” wings are often as strong as they had been originally.
China is planning to invest up to US$50-billion in Brazil for new infrastructure projects. The money will go towards building a railway link from Brazil’s Atlantic coast to the Pacific coast of Peru to reduce the cost of exports to China. Brazil currently exports much of its iron ore to China. As well as the giant railway project, the money will be invested in car parts, energy, ports, hydroelectric power and other railways. Brazil’s economy, once among the fastest–growing in the world, has flagged in the past five years.
It is estimated that American museums get about 61-million visitors a year. Figures indicate that American museums receive just 18 per cent of their revenue from public sources, a far smaller proportion than 25 years ago, during which time museums have doubled in size and attendance has grown by 90 per cent. Museums get their remaining revenue from admissions, shops, renting out facilities and other commercial activities (31 per cent) and endowment income (21 per cent). The largest proportion however, just under a third, is the fruit of private and corporate fundraising.
After years of preparation, electricity-generating tidal turbines will soon be deployed in the intense underwater current of the Bay of Fundy and linked to the power grid. An Irish-led consortium will place two five-storey-tall, 300-tonne turbines, which look a bit like giant jet engines on the ocean floor, near the town of Parrsboro, Nova Scotia. Tidal power has been touted for decades as a potential source of electricity, but aside from a few installations around the world, it has not gained much traction. Tidal power has one huge advantage over solar and wind in that it is completely predictable and reliable.
The European Union has outlined a strategy to create a digital single market. The thrust of the proposals include establishing standard rules for buying goods online, pruning cross-border regulations on telecoms and reducing the tax burden on businesses. The plan also calls for a comprehensive assessment of whether the major internet platforms distort competition. The EU expects it will generate US$468-billion a year for the economy and produce 3-million new jobs.
Canadian Government records show that navy mechanics in Halifax had to scour the Internet and use eBay to find parts for one of its two supply ships.