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Economic Digest

Economic Digest – October 2017


Figures released recently show that the economy of Australia has racked up the longest stretch of growth in modern history: 104 quarters. The Netherlands, the previous title-holder has dipped into recession, which is defined as two consecutive quarters of contraction. Australia’s success has been built on the structural reforms of the 1980s and ‘90s when trade barriers crumbled and foreign-exchange controls were removed. Australia’s trade has soared as it churned out coal and iron ore to feed its neighbours’ factories. By 2013, household incomes were about 13 per cent higher than they would have been without the bonanza.


Although the number of disasters keeps rising, far fewer people are dying as a result of them. In 1970, 20,000 people perished annually. That figure has been dramatically reduced, thanks to safety measures such as improved buildings and flood-prevention schemes. To reduce it still further, urban planners will have to operate on the assumption of even more extreme events. Since 1970, the number of disasters worldwide has more than quadrupled to around 400 a year. Currently, there are six times more hydrological events than there were in 1980. The US sits alongside India and China in suffering the greatest number of natural disasters.


It started in the US last February. By May all 20 of the top-selling toys on Amazon, were either fidget spinners or fidget cubes, a close relation. The fidget spinner was originally designed to help calm children with attention-deficit hyperactivity disorder or autism, but has swept the world as a toy everyone can play with. It is estimated that over 50-million have been sold worldwide. No person or company has a patent on spinners, so with no patent or licensing fees, anyone has been able to make one. Many schools have banned the fidget spinner as being too distracting for pupils. The successor to the spinner may be the roller, an oblong-shaped object weighted at either end.


China dominates international trade in many goods, but few more than waste for recycling. It sucked in more than half the world’s exports of scrap copper and waste paper in 2016, and half of its used plastic. In all, China spent over US$18-billion on imports of rubbish last year. America, meanwhile is an eager supplier. In 2016 nearly a quarter of America’s biggest exporters by volume were recyclers of paper, plastic or metal. One California-based supplier of waste paper exported a whopping 333,900 containers, almost all of them to China. Between 1995 and 2016, Chinese imports of waste grew tenfold, from 4.5-million to 45-million tonnes.


Canadians are richer than they’ve ever been according to a new report, and thanks to rising real estate and stock markets, the country now boasts four cities where the average household net worth is more than C$1-million: Vancouver, Toronto, Calgary and Victoria. The national household net worth rose 12 per cent over the past year to $770,635 while household debt rose 4.4 per cent. Canadians also increased their savings by 5.6 per cent. Although British Columbia implemented a 15 per cent foreign-buyers tax last year in an attempt to cool the market, prices have already rebounded from the impact of the tax and real estate prices have jumped five per cent in the first quarter of this year.


Russia has emerged as one of the winners from the trade dispute between Canada and the US over lumber. The US is importing more softwood lumber from overseas after it slapped tariffs on Canadian supplies, making it more expensive. Russian shipments are 42 per cent higher so far in 2017. While Russia accounts for a relatively small proportion of the total, European countries such as Germany and Sweden are among the biggest suppliers to the US. German imports of softwood lumber have increased ten-fold in the first half of this year. But the shift in volumes illustrates how a political spat has quickly altered the flow of international trade. The recent storms in Texas and Florida are bound to have an impact on lumber supplies to the US because of an inevitable jump in house-building or repairs.


Scientists have now decoded the secrets behind a goldfish’s ability to survive in ice-covered lakes. They have worked out how and why the fish turn lactic acid in their bodies into alcohol as a means of staying alive. Some goldfish were found to have levels well above legal drink-driving limits in many countries. While humans and most vertebrates die in a few minutes without oxygen, these fish are able to survive for months in icy conditions in ponds and lakes in northern Europe.


The number of “mishandled” or lost airline bags is at an all-time low, but six out of 1,000 passengers can expect to be separated from their luggage for longer than expected, or possibly even forever. However, from June 2018 travellers’ frustrations should ease when the International Air Transport Association’s (IATA) Resolution 753 comes into effect. It will require mandatory tracking at the four stages of a checked bag’s journey: when it is first handed to the airline, when it is loaded onto the aircraft, when it is delivered to the transfer area and when it is returned to the passenger. The resolution was agreed to by the 275 members of IATA that account for 83 per cent of global air travel. Qatar Airways has already complied with the resolution and already complied made an app available to their passengers allowing them to track their luggage.


A French shipping group plans to build nine of the world’s largest container ships at two Chinese shipyards. The ships will be capable of carrying 22,000 20-foot equivalent unit containers (TEU). The largest ones currently can carry 21,413 TEUs. Global container shipping lines in recent years have been competing to build the biggest ships in order to gain economies of scale to slash shipping costs. However, such mega-ships are also being blamed for contributing to the overcapacity glut plaguing the container industry.


Leaders of the major auto unions in Canada and the USA have stated that strengthening the rules of origin for vehicles made in Mexico under a new North American free-trade agreement will not stop the flood of jobs of automotive jobs into that country. Canada and the US will not get a larger share of the auto industry jobs until wages and standards of living for Mexican workers rise.


The Spanish island of Mallorca could be virtually razed of vegetation under an EU plan to halt the march of the deadly bacteria known as the “Ebola of the olive.” The bacteria which has infected thousands of olive trees in southern Italy is now raging across the Balearic Islands with carrier species multiplying. The bacteria, which can infect some 300 species, was first discovered in a cherry tree in a Mallorca garden centre a year ago. Spain is the world’s largest producer of olive oil.


At 30,000 feet the skies may be clear but the oxygen certainly is not. Nearly all aircraft draw in air by way of the plane’s engine compressor and it is common for a small amount of oil to leak over the engine which then contaminates the air that crew and passengers breathe. Researchers examined hundreds of aeroplane crew members and discovered a direct link between air contamination and respiratory, cognitive and even neurological problems. Out of 274 pilots questioned, 63 per cent reported health problems consistent with breathing tainted air.


The EU has banned the sales of inefficient vacuum cleaners that produce more noise and heat than suction. Vacuums that use more than 900 watts and emit more than 80 decibels will be banned when stocks run out. But energy experts say that the best low-power appliances clean just as well as high-wattage machines. The UK Climate Change Committee claims that since 2008, electricity demand is down 17 per cent, despite all the gadgets, and gas demand is 23 per cent lower thanks to tougher standards on energy efficiency in homes and appliances.


In the next five years, McDonald’s Corp will nearly double the number of restaurants it has in China eventually surpassing Japan as the chain’s second biggest market outside the US. The company expects to have 4,500 restaurants in China by 2022, up from 2,500. With fewer people eating at US locations, it hopes to boost sales in China by double digits in each of the next five years. Slowing traffic at home has other companies turning to China for growth. Starbucks for example wants to have 5,000 coffee shops in the country by 2021


Switzerland has changed its laws and now allows the sale of grasshoppers, crickets and mealworms for human consumption. Switzerland’s second largest supermarket chain is now offering insect burgers. Insects must be bred under strict supervision for four generations before they can be eaten by humans and must be inspected by the national food safety authorities.


Russia is now pitching itself as an important transporter of European gas to Asia as a super tanker recently sailed to South Korea using the Northern Sea Route with a load of liquefied natural gas (LNG) from Norway. The shipment is a major step for Russia to enter the global gas transportation market. The Northern Sea Route cuts the travel time from Europe to Asia by a hefty 40 per cent and will cover the distance in just 15 days. The ship is able to sail the Northern Ice Route as it can cut through two meters of pack ice.


Fewer than two-in-five Canadians believe it is safe to eat genetically modified foods. But a recent survey makes it clear that most Canadian lack an understanding of what exactly genetically modified organisms (GMOs) are or how they are produced. Despite this the vast majority of Canadians (83 per cent) say at least some GMOs should be subject to mandatory labelling in grocery stores.


The International Energy Agency says growth in production, as fracking opens up shale oil and gas deposits, will see the US become one of the world’s gas exporters by 2020 and will rival Russia and Norway. The increase in gas production over the next five years will see the country begin liquefying and shipping gas to Asia, Europe and the Middle East.


Researchers have discovered 381 new species during a two-year study in the Amazon region. All were found in areas at risk from human activity such as farming and logging. Found were: 216 previously unknown plants, 93 fish, 32 amphibians, 20 mammals, 19 reptiles and one bird. The Amazon rainforest, the largest in the world, is famous for its diversity of species and habitats. Scientists are concerned that economic activities in the area are causing species to become extinct before they are even discovered.


From fashion to energy, the rind and seeds of Sicily’s most famous citrus fruit, the humble orange, are being used in a range of greener, healthier business initiatives. Now it is possible to make whole items of clothing using fibre that originated from the fruit where cellulose is being extracted from orange rinds. Thousands of tonnes of citrus fruits are juiced every year, leaving massive amounts of waste that would otherwise be thrown away or fed to cattle. Oranges can also be used to make baked goods healthier, and stay fresher, thanks to a new procedure which transforms them into an innovative fat-free flour.


A car was destroyed in a parking lot in Essex, England, with its doors windows and roof completely blown out when, according to fire fighters, the gases from an air freshener in the car were ignited by a cigarette.