As per Jon Holden, vice president specialising in training and apprenticeships at the International Association of Machinists and Aerospace Workers (IAM), Boeing’s unionised factory workers in the Pacific Northwest (region having major production hubs in Everett, Renton, and Auburn, Washington) now number more than 34,000 and are “heading higher.”

“We’re seeing strong interest as we hire in Puget Sound and across the enterprise to support our production rate increases,” a Boeing spokesperson told Reuters, confirming Holden’s remarks.

The IAM represented about 33,000 Boeing workers in the Pacific Northwest region in 2024 when Holden headed that local union during a seven-week strike over a new contract.

“Boeing needs to staff a fourth Seattle-area production line, known as the North Line, for the planemaker’s strong-selling 737 MAX narrowbody jet,” Holden said, adding that the aviation giant further faces the challenge of supporting production of the 777X widebody that is still awaiting certification.

Boeing is also working to expand its satellite production capacity and launch a new satellite platform. It is targeting 26 satellite deliveries in 2026, up from four in 2025.

In Washington, aerospace manufacturing ‌jobs had dropped to around 79,000 in August 2025, before climbing back to 81,800 in February 2026, according to the state’s Employment Security Department.

The aviation sector, in general, is looking at the prospect of witnessing a major employment boom, as companies are hiring to meet demand from airlines for more fuel-efficient jets, apart from addressing growing industrial activities in the space sector and rising defence spending due to geopolitical tensions around the globe.

Karen Arlak, chief human resources officer at Honeywell Aerospace, told Reuters that the supplier giant expects to add over 1,200 positions in 2026 in areas such as engineering and manufacturing due to growth in the commercial aftermarket, defence, and space sectors.

Talking about Boeing, the company’s current demand for factory workers still trails its aggressive hiring from ⁠2023 to 2024, when it needed to add workers following the COVID pandemic and the earlier grounding of the 737 MAX after two deadly crashes in 2019.

“This is more, I think, a sustained ramp that I feel good about, as long as the economy continues to go, as long as airlines continue to keep their orders,” Holden concluded.

The post Boeing ramps up its hiring pace, highest since 2024 appeared first on International Finance.

A lot of businesses come and go without ever making the news, but it’s still exciting to think about investing in a start-up that eventually becomes global.

Over the last ten to fifteen years, there have been almost as many crowdfunding platforms as there are products and businesses to fill them. Crowdfunding was an early fintech trend that sought to open up some of this investment potential to regular people, not just so-called angel investors.

During this time, peer-to-peer lending also gained traction as a model that spares investors from the stock market but still has the potential to yield returns. It also provides SMEs with the funding they require to expand, eliminating the need for institutional or angel investment and, ideally, accelerating start-up growth.

These platforms may appear to offer a way for those who would like to invest in start-up companies but lack the influence of angel investors to do so at a rate of return that beats the market. The current interest rates offered by traditional banks are competitive for regular savers, but the risk is still higher.

As such, it may not be as clear-cut if this is a wise or even feasible investment plan in comparison to, say, broad-based index trackers. What does crowdfunding or peer-to-peer lending and investing look and feel like now, in light of the recent stock market crashes, COVID-related huge business disruption, and challenging circumstances facing small and medium-sized businesses? Does it withstand a more thorough, impartial business study, as demanded by investors, individual consumers, and entrepreneurs wishing to list their goods or services on a platform?

There are numerous platforms available for retail (individual) investors that allow them to select a firm they like the appearance of and make a financial commitment to it. Nevertheless, diversifying your investments is a smart move to avoid putting all of your eggs in one basket. One immediate issue with traditional crowdfunding is that you probably won’t see a return unless you spread your money across hundreds of small investments.

People often invest in small businesses or kickstarter because they enjoy the concept, but the chances of any of these ventures becoming the next big thing are low. Think about venture capital firms that fund their investments in early-stage companies; by spreading the risk among hundreds of investments, they hope that one of them will cover the entire fund.

Planting the seeds of possibility

The good news is that you may still use a diversified fund to trade equity for cash investments in a variety of start-ups. Upon its introduction in 2012, Seedrs stood alone among crowdfunding platforms authorised by the Financial Conduct Authority of the United Kingdom. In 2017, the digital challenger bank Revolut raised £4 million through Seedrs, creating its own unicorn success story.

To foster growth for both small enterprises and small lenders, lending platforms first appeared several years ago. The platforms, which supply the technology, platforms, contacts, and marketing to support their lending model, are a part of the rapidly expanding fintech industry.

Established as one of the first five platforms to receive approval from the UK’s Financial Conduct Authority, the 36H group is subject to regulation. As a result, one of its objectives is to advocate for additional regulation of the nascent sector. By banding together, they were able to speak out for the nascent industry, interact directly with policymakers over regulations, and amplify their voices across the fintech and financial sectors.

During the COVID phase (2020-21), the UK government moved quickly to establish a system of financial assistance for companies that suffered from a series of lockdowns. This requirement led to the creation of the Coronavirus Business Interruption Loan Scheme and, subsequently, bounce-back loans. In favour of its sector, the 36H group contended that although fintech lenders received approval to provide these services sooner than traditional larger banks, they did it more slowly.

Regulation was undoubtedly necessary for P2P lending, which some have dubbed the “Wild West” of the financial sector. However, with the global disruption to businesses and industries brought about by the pandemic, fewer members of the original 36H group are standing in the same position as before.

Circle of funding

Founded in 2010, Funding Circle, one of the “Big Three” lending platforms, provided retail investment services for ten years until discontinuing the service in 2023. Before that, the company had put a two-year halt on this service because of the pandemic.

As investors’ loans matured, the platform went through a process to return their money. However, this didn’t sit well with all investors, who had to wait for their money to be paid back in chunks before they could move it to another platform and maintain its ISA status.

According to press releases from the time, Funding Circle concentrated on government-backed initiatives throughout the pandemic. They were the first platform of that kind to access and participate in the government’s small company support programmes and bounce-back loans. At some point, the businesses decided to close their P2P division permanently and stop employing ordinary investors to finance their commercial clients.

Establishing rates

One of the Big Three P2P lending platforms, RateSetter was a pioneer in the industry and operated nearly solely on its retail investment strategy. A news release from 2019 celebrated the introduction of stricter rules in the peer-to-peer (P2P) sector, asserting that the new laws would “decisively remove any sense that P2P is weakly regulated” by raising standards in risk management, governance, disclosure, marketing, and wind-down planning.

Ironically, RateSetter ended up becoming one of the big-boy banks they had initially aimed to challenge.

RateSetter CEO Rhydian Lewis said, “We will look back on this as a watershed moment for our industry – the moment that peer-to-peer investing came of age as an asset class, competing against other mainstream investment options and the banks as an attractive way to put money to work.”

The new restrictions are intended to lessen the negative reputation of the peer-to-peer lending industry. However, in 2020, RateSetter declared that Metro Bank had acquired them and that they, too, would cease making loans through crowdfunding, with all proceeds for new loans coming from their new parent firm.

Zopa

As the last of the original Big Three, Zopa was the first P2P lending platform in the UK. However, like the others, it was unable to survive its retail investment division due to a combination of factors, including growing regulation and investor mistrust, which CEO Jaidev Janardana cited.

In 2018, Zopa became a bank in its own right, but amid the pandemic, the company determined that its costs were too expensive to uphold its responsibilities to borrowers and provide retail investors with sufficient returns.

The distinction is that, as a bank, Zopa repurchased the investments of about 60,000 RI clients at face value, meaning that individuals who had an ISA with them could move their investment elsewhere without having to wait for loans to mature or for any other wind down.

How lending works

After eight years in the business, loan Works, another consumer loan company, ended its P2P structure in 2021. Established in 2014 with support from angel investors, the platform’s primary function was to offer personal loans. By 2023, the business has changed its name to Fluro and has institutional financial lines supporting it.

In addition to providing personal loans with the now-standard features of pre-approval, flexible payback plans, and decisions in minutes, the company also offers lending-as-a-service, which powers household names like GoCompare and Direct Line in the UK.

By diversifying its business and abandoning its loan crowdsourcing model, Lending Works has been able to weather the COVID-19 storm and create innovative new products for the fintech industry. But it also decided to use a progressive runoff strategy to repay its P2P loans until all of its lenders were satisfied.

CrowdProperty

Curated in 2014, CrowdProperty is a different company that has survived the epidemic by adhering to its initial business plan and continues to grow today. It was first established to address two issues: the difficulty SME real estate companies were having obtaining the funding they required, and the fact that investors had been receiving lower-than-average returns for years following the 2008 financial crisis. However, the platform surely profited from the pandemic’s movement toward property, not away from it.

While the tourism, leisure, and lifestyle industries suffered greatly, house prices skyrocketed as demand far outpaced supply. One of the company’s stated goals is to address the housing shortage in the UK. Despite millions of pounds being spent both through CrowdProperty and other channels, the housing crisis is still very much present, thus demand is expected to be high for some time to come.

Coping with COVID-19

Four of the five largest lending platforms have reduced or eliminated retail investment. Ironically, several of the platforms that challenged large banking models went under due to the coronavirus outbreak, which killed thousands of businesses.

SMEs have more fintech options and alternatives to institutional lending, and their growing size and power give them lending power and stability. However, platforms have mostly ignored retail investors.

The government-backed financing initiative for small business COVID recovery was one of the 36H group’s first actions in 2020. This achievement seems great and in line with these platforms’ goal of helping SMEs. COVID’s other feature and the relative ease of institutional lending may have compelled platforms to reconsider their crowdfunding approach.

The early 2020 stock market crash showed how investors worldwide became more hesitant to invest in crowdfunding. Retail investors may have had doubts about putting more money into it, and many more financially secure people were instead turning to savings or splurges.

This reduced retail investor interest and income, forcing P2P platforms to fund loans through institutional ways to meet their SME commitment.

Retail investors have likely moved on to other investments. CrowdProperty persists. It may be niche, offering investment only in the property sector rather than to SMEs or individuals.

Coronavirus helped its area, thankfully. However, that is only one issue in the considerably more complex UK property and financial system and the lack of traditional access to either. CrowdProperty’s magic sauce seems to be using its niche market to allow anyone with a few hundred pounds to invest in property.

It allows property investors to earn predictable but not guaranteed returns. It avoids stock market exposure and the difficulty and expense of buy-to-let properties and other financial and energetic burdens.

Property is still a popular investment class in the UK and worldwide, and the media shows numerous reasons why, from supply and demand to social media property stars influencing younger generations.

CrowdProperty lets ordinary individuals invest in a whole property portfolio without buying anything personally, providing extensive ISA diversification. You can invest enormous amounts of money in any one project, but it also features an auto-invest mechanism that protects you from overexposure and diversifies your money among all approved projects. The platform has offered higher rates of return than banks and building societies for years, even while they raise their interest rates post-COVID. No surprise many like this.

Index tracker funds dedicated to real estate investment trusts (REITs) and the property industry worldwide allow investors to participate in property on the open stock market. In the UK ISA or other tax-free wrappers, such as the Roth in the US, you can access funds that focus solely or mostly on property, from housing estate development to construction materials. It goes beyond residential property. Some REITs specialise in logistics, others in healthcare, real estate, or office buildings.

An investor seeking property exposure has solid diversification alternatives that incur risk. This is different because you are still investing in the free market and may get back less than you put in. Every page of CrowdProperty’s website warns against investing unless you understand the risk, but it’s confined to debtors who may default.

The platform’s rigorous due diligence process and several non-negotiable backups protect RI lenders from this risk, including ‘first charge security,’ which gives CrowdProperty the same rights as a mortgage lender to repossess a property if a borrower defaults for any reason. The platform appears to have solved the problem by simplifying, regulating, minimising risks, and presenting itself as a specialist investment vehicle. It started as a fintech start-up and raises funds through traditional and non-traditional channels. CrowdProperty raised funds to expand in the first half of 2023 from where? Seedrs.

Where the smart money is

When considering the possibility of picking the next unicorn through a P2P platform, remember that businesses that choose crowdfunding may do so because they are not confident in getting large investor backing or because they have tried and failed. Local pubs and hospitality firms in the US are increasingly using crowdfunding to launch their enterprises in exchange for beer tokens, goods, or other rewards, but not shares. This boosts engagement but not investment. It’s vital to distinguish between the low possibility of finding a start-up business with high growth potential through a crowdfunding platform and using P2P as part of a diversified portfolio.

Investing in small and rising enterprises is possible with ‘safer’ vehicles. Most internet brokers have unicorn funds and high-quality start-ups you can invest in. The old advice of investing most of your money in broad index trackers of stable markets like the FTSE 100 and maxing out rare investments like unicorn businesses at maybe one per cent of your investment capital to minimise risk remains.

Though more accessible than ever, most crowdfunding in individual start-ups may still be best for knowledgeable investors who know how to value a business, understand the dangers, and realise they may lose money. You may wish you had invested in Uber or Tesla when they were young, but for every unicorn success story, hundreds more fail before reaching that stage. Be practical, diversify your portfolio, and comprehend start-up investments.

The original goal of crowdsourcing and P2P lending was to give money-savvy investors who could invest but not afford the risks of these opportunities. This idea may have worked, but education and implementation are crucial.

The post The world of crowdfunding appeared first on International Finance.

Since September 2024, the Xi Jinping government has announced several initiatives aimed at reviving the nation’s flagging consumption and resolving the protracted and crippling debt crisis in the massive real estate industry.

While property investment fell more than 10% in the first nine months of the year, retail sales and industrial production increased in September. Officials still expressed confidence the economy can achieve the Xi Jinping government’s full-year growth target of around 5%, and flagged another cut to banks’ reserve ratio by 2024-end.

Following a ferocious market surge propelled by anticipations of a much-needed “bazooka stimulus,” confidence has subsided as officials declined to disclose the precise amount of the bailout or the specifics of any of the commitments.

The economy grew by 4.6% year over year in the 2024 third quarter, according to data released by Beijing’s National Bureau of Statistics (NBS). This was the lowest growth rate since early 2023, when China was beginning to ease out of its stringent zero-Covid policy. An “intense and complex external environment” was recognised by the NBS. as well as fresh issues with home economic growth.”

Thoughts were clouded by a run of subpar readings on a variety of indicators, including inflation, trade, and investment, until data from September retail sales, a measure of consumer activity, beat expectations.

Before the release of the data, state media reported that the nation’s leading banks had reduced interest rates on yuan deposits for the second time this year to increase lending.

Beijing claims to be “full confident” in reaching its 5% annual growth target, but analysts believe further direct fiscal stimulus is required to boost the economy and business confidence.

Authorities have unveiled many initiatives in recent weeks to inject capital into the economy, such as a series of rate reductions and a relaxation of home-buying restrictions.

One such initiative, a swap facility for funds and insurers with an “initial application quota exceeding 200 billion yuan” (USD 28.11 billion), was introduced by China’s central bank, according to state media.

Meanwhile, the world’s second largest economy has now cut benchmark lending rates as anticipated at the monthly fixing, following reductions to other policy rates as part of a package of stimulus measures to revive the country’s prospects.

The one-year loan prime rate (LPR) was lowered by 25 basis points to 3.10% from 3.35%, while the five-year LPR was cut by the same margin to 3.6% from 3.85% previously. The lending rates were last cut in July 2024.

The PBOC announced cuts to banks’ reserve requirement ratio by 50 basis points and the benchmark seven-day reverse repo rate by 20 basis points on September 24, kicking off the most aggressive stimulus since the COVID pandemic that includes measures to support the ailing property sector and boost consumption. It also cut the medium-term lending facility rate by 30 basis points last month.

Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages.

“Since the September 24 measures, the CSI300 Index has broken records for daily moves and is up more than 14% overall. The yuan is down 1% against the dollar in that period. Stocks have wobbled in recent sessions, though, as initial enthusiasm gave way to concerns about whether policy support would be big enough to revive growth,” stated Reuters.

The post China posts slowest GDP growth in over a year as property woes drag appeared first on International Finance.

Companies’ expansion led to a 16th consecutive month of employment growth, and the nation’s 12-month outlook remained optimistic.

Qatar’s Purchasing Managers’ Index (PMI) headline figure increased to 55.9 from 53.6 in May, with anything above 50.0 points indicating growth in business activity.

The Qatar Financial Centre (QFC) report stated that although input prices have increased slightly since May 2024, prices for goods and services have decreased, indicating a lack of inflationary pressures.

The headline number indicated the largest improvement in business conditions in the non-energy private sector economy since July 2022 and was above the long-run trend.

According to the report, there was a notable acceleration in the growth of manufacturing and construction, along with notable expansion in other sectors. Incoming new work expanded at the fastest rate in 13 months.

In June, businesses managed to further decrease the amount of outstanding work, even despite the growing demand for goods and services. Positive projections were associated by businesses with marketing campaigns, new branch openings, and new clients.

The cost of goods and services decreased as businesses reported offering discounts to increase their competitiveness and attract new clients, for the sixth time in the previous eight months.

In June 2024, financial services companies in Qatar reported an even stronger increase in both new contracts and overall business activity.

The seasonally adjusted Financial Services Business Activity and New Business Indexes increased to levels above their long-term trend levels since 2017, reaching 13- and 9-month highs of 61.1 and 59.2, respectively.

The CEO of QFC, Yousuf Mohamed Al-Jaida, stated that the June PMI index was higher than all pre-COVID months, except October 2017, when it was 56 points.

“Growth has now accelerated five times in the first half of 2024 as the non-energy economy has rebounded from a moderation in the second half of 2023,” Mohamed Al-Jaida said, as reported by the Zawya.

Talking about Qatar’s economy, the Gulf nation, along with Turkey, saw the fastest growth in individual household wealth in local currency terms in 2023 as global wealth resumed its rising trend following the impacts of the COVID-19 pandemic and inflation.

Wealth per adult grew in Turkey by 157% in local currency terms, with the low value of the lira playing a role, but it also grew by 63% in dollar terms. Growth in Qatar and Russia was around 20% in local currency terms during the same period, A UBS report showed.

Turkey has seen the fastest growth in average wealth per adult in local currency terms since UBS began publishing the report in 2008, growing 1708% to 2023.

Samuel Adams, economist, UBS Global Wealth Management said at the launch of its annual Global Wealth Report that Qatar, which like other Gulf states has a dollar-pegged currency, saw one of the sharpest falls in household wealth during the COVID-19 pandemic.

The last few years, including 2023, have been a story of recovery, both for the economy and household wealth.

“This has meant that the growth rate of wealth in Qatar has been quite strong most recently, outpacing Saudi Arabia, which didn’t experience the same contraction in 2020, but has seen wealth stagnate last year, and similarly, the UAE saw some wealth growth last year but not as strongly as Qatar,” Adams noted, while adding, “The Qatar growth story is of a country returning to its previous trend rather than a sharp divergence with the rest of the region.”

The post Qatar sees fastest growth in non-energy sectors and household wealth appeared first on International Finance.

Profit shifting, a tactic employed by businesses with subsidiaries across numerous nations, was used to evade paying all of this money. They record an excessive portion of their profits in tax havens, which are areas with little to no taxes, reported DW.com.

Despite the fact that the profits were earned abroad, this still occurs. But how does profit shifting operate, and what are the winners and losers, and why does it matter?

How does profit shifting work?

Imagine a global corporation with operations in two nations. The majority of the work is completed in a nation with high taxes. However, patents and design blueprints are examples of intellectual property that is owned by a subsidiary in a tax-haven jurisdiction.

For the subsidiary to use the registered properties, payment must be made by the company in the first country where profits are earned. Given its control over both entities, the multinational has the ability to determine the transaction price. Ultimately, it forces the high-tax jurisdictional company to make large payments to the tax-haven subsidiary.

Following the transaction, the tax haven subsidiary’s balance rises while the first company’s profit ledger declines. The multinational corporation can now declare a lower level of profit where taxes are higher and a higher level of profit where taxes are lower.

US footwear giant Nike experienced the above situation recently. According to a leaked document, the company’s local units were required to pay royalties to a subsidiary in Bermuda, where taxes are essentially non-existent, even though the production and sales of sneakers took place in high-tax countries. Multinational giants like Apple and Microsoft were the subject of similar schemes.

Why does it matter?

In 2020, when the COVID-19 pandemic hampered economic activity, the global tax revenue lost to profit shifting was estimated to be USD 200 billion. The year 2019 saw USD 250 billion as that amount.

According to estimates from a group of expert economists who convened at the COP27 in Egypt, the revenue loss in 2020 represents approximately one-fifth of the investments that developing nations require to mitigate the effects of climate change.

The EU Tax Observatory’s data coordinator, Idann Gidron, stated that only big businesses can afford to establish subsidiaries in offshore tax havens and engage in cross-border commerce. In this manner, the largest stakeholders experience a reduced tax burden.

“This creates fiscal injustice because the smaller actors in the economy have to contribute more than the wealthiest,” he said, as reported by the DW News.

Who wins?

Of course, companies that save money on taxes are the main beneficiaries of profit shifting. Their number from the United States is disproportionate.

Multinational corporations based in the US account for about 40% of all global profits.

Tax havens gain from this, but conglomerates also save billions of dollars by shifting profits.

Countries having effective tax rates of less than 15% are deemed tax havens, according to Gidron’s research. Due to the frequent use of legal loopholes to lower taxation levels, it takes into account the rates that are actually applied rather than what is stated on paper.

The research also includes nations where the profits made by multinational corporations are disproportionately large when compared to the total amount of wages paid locally; this suggests that the profits being booked are being transferred from locations where the actual work was completed.

Even in some small nations that have no taxation policies, there is more local economic activity, which is advantageous. Smaller economies may find value in local units, even if they represent very small operations for multinational corporations.

Conversely, larger tax havens can apply their reduced tax rates to the profits that have been shifted. They put money in their pockets that they wouldn’t otherwise have access to, even though the taxes are relatively small.

Where are the tax havens?

“People tend to think that profit shifting is related to countries in the Caribbean, but the tax havens that are attracting most of the profits are actually in Europe,” Gidron said.

Tropical paradises like Panama or Bermuda receive less shifted profits than nations like the Netherlands, Ireland, Switzerland, Luxembourg, and Belgium. In those nations, this leads to budget surpluses. For instance, in 2020, shifted profits accounted for nearly 60% of Ireland’s corporate tax revenue.

Profit shifting resulted in an additional USD 32 billion in taxes for the major tax havens in Europe when combined in 2020. This indicates that they are earning an amount that is roughly equal to the GDP of nations like Senegal, Honduras, or Bosnia, simply from additional taxes.

Another major contributor to tax abuse is crown dependencies and overseas British territories. Profits totalling USD 76 billion were moved to the British Virgin Islands, Bermuda, the Cayman Islands, and Jersey in 2020.

Who loses?

Countries with higher tax rates lose out on the additional revenue tax havens receive. Ultimately, this means that governments around the world have less access to public funds.

Other members of the European Union and other nations in the Organisation for Economic Cooperation and Development (OECD) are the biggest losers. The nation most impacted, Germany, might have received 26% more in corporation taxes in 2020.

But emerging and developing nations are also losing out on sizable profits: in 2020, they will lose about USD 60 billion, down from USD 75 billion in 2019 as a result of COVID-19.

Brazil serves as one example, having lost out on USD 7 billion in possible tax revenue in 2020. With that sum, 4 million more families could have been enrolled in Bolsa Familia, a basic income initiative designed to end poverty.

Is it legal?

Since profit shifting and other tax schemes operate in legal grey areas, Liz Nelson, director of the research and advocacy group Tax Justice Network, claims that the legality of these schemes is frequently determined only in courts of justice.

Multinational corporations are allowed to establish branches abroad and engage in internal trade with one another. However, profit shifting typically occurs in conjunction with the transfer of immaterial goods and services for a reason.

Although it is possible to achieve the same tax reduction goals by deceitfully pricing material goods sales, intangible assets are typically not exchanged on an open market. This is significant because prices paid between a multinational corporation’s units should reflect what is typically seen in transactions by unaffiliated parties, per international regulations.

When there’s no clear indication of what a normal price is, it’s harder for tax authorities to build a case against abusing multinationals.
“Such schemes may not be criminal in a legal sense, but morally they’re wrong. Governments are complicit, and multinationals are complicit. They are creating hardship for people that might be their employees,” Nelson said.

What can be done to solve it?

Notwithstanding initiatives from organisations like the OECD, the amount of profit shifting has remained steady worldwide since 2015, according to the EU Tax Observatory. Although prior policies might have stopped the amount from rising, the researchers point out that this does not imply that they had no impact at all. They do concede, though, that more needs to be done.

About 140 nations came to an agreement in 2021 to impose a 15% global minimum corporation tax rate. However, the researchers from the EU Tax Observatory assert that because of loopholes that would let some nations continue to tax businesses at lower rates, the tax agreement is insufficient.

Rather, they are suggesting eliminating all tax breaks and raising the tax bracket to 20%. There could be an additional USD 250 billion in tax revenue collected globally annually as a result, they claim.

The post Tax haven: Knowing the winners & losers appeared first on International Finance.

Virtual businesses operate entirely online without a central location. Virtual businesses are cheaper to start than traditional enterprises with offices or stores.

Should you create a virtual business? Consider the advantages of a virtual business.

Online Version Excels in Crucial Areas

Admit it: online business approaches can’t replace in-person experiences. Buying a bike online or driving through the neighbourhood on a virtual real estate tour prevents test riding. However, taking your start-up online can benefit your clients.

Besides the convenience, an online business offers more flexibility—a simple alteration to your website and social media channels can change how the public views your firm. Virtual services may collect consumers’ digital data more easily than actual connections, making them more customised. Online businesses can feel less intrusive because clients don’t interact with annoying salesmen.

Virtual Businesses Function sans Frills

In addition to their items, traditional retailers must worry about the store’s design and atmosphere, product organisation, employee uniforms, and music. These worries disappear for internet businesses, which focus on product, price, and supply chain. Your firm saves time and money by focusing on what it sells rather than the experience.

Consider ghost kitchens, a gastronomic craze that becomes a large industry. Ghost kitchens are virtual restaurants that share kitchen facilities at an unidentified location and offer food to consumers via third-party meal delivery services.

Demand for ghost kitchens shows that the product is more important than the physical surroundings; a consumer may not require a well-educated waitstaff or an elegantly designed dining room to enjoy a good meal. For them, “a burger I enjoy gets brought to my house” suffices.

Pandemic Changed Games

Although the COVID pandemic is over, its effects remain. Corporate leaders and teachers have learnt more about virtual meetings and learning. The epidemic boosted food delivery app income, with many customers likely to keep using them due to convenience or disease fears.

Previously, consumers were unfamiliar with or unsure about your goods in an online environment. Today, they may be more willing to conduct business with you online.

Trust Customers to be Inventive

An online business approach reduces client face-to-face interaction, which may be a negative. Social media debates and online groups allow loyal customers to build their connection chances.

What if you use video product previews and worry they won’t be as appealing as seeing them in person? Promote their use in images and videos on your site or elsewhere (once you’re large enough, they’ll probably do it themselves).

Yes, you may use social media’s creativity to reach more customers. During the COVID pandemic, luxury businesses used virtual games, cooking instructions, and fitness classes in their marketing, which worked. Engagement advertising can only happen online, but if done well, it can boost brand loyalty and product perception.

Virtual Businesses Can Expand Globally

International expansion can be frightening for some organisations, but if your site is accessible worldwide, it’s easy. If you offer an online service, you can expand into international markets without a physical presence, unlike shipping real goods internationally.

A corporation without an office can potentially hire people from around the world. International employees might bring new insights and growth prospects.

Create a simulated startup success tale. Many start-ups have succeeded by moving more operations online or being virtual. Nobody knows unless they try, but you could be the next virtual success story.

The post Charting the benefits of starting a virtual business in today’s world appeared first on International Finance.

The London-based research group also stated that it based its latest calculation on its survey of over 1,000 ACP recipients as well as data from Recon Analytics, the FCC and the Benton Institute, along with the commentary from companies in the ACP programme and data obtained during the COVID pandemic.

The Affordable Connectivity Programme, which has kept millions of low-income American families with a low-cost high-speed internet connection since the beginning of the COVID pandemic, is now facing the prospect of being shut down, as the funds required to run the programme are about to end in April 2024.

New Street Research’s survey found that 27% of ACP beneficiaries would drop internet services if their bill increases by USD 30 (the amount of the ACP subsidy). However, the research body’s analysts estimated that around 1.2 million households may end up performing the move, given the fact that survey responses often do not directly correlate with actual consumer behaviours.

The firm also estimated that around 1.6 million households will cut their telecom spending by USD 15 per month if the ACP ends. The ACP gets support under the United States government’s Emergency Broadband Benefit (EBB) programme, instituted during the COVID pandemic, and distributes subsidies of up to USD 30 per month to low-income households for telecom services. As of March 2024, the programme has some 23 million American households as beneficiaries.

Companies in the programme were required to warn customers by March 19 about the uncertain future the scheme faces.

The Federal Communication Commission (FCC) also noted that May would be the last month where partial ACP funds would be made available. As per the government agency, ACP benefits will be between USD 7 and USD 16 per household in May, instead of USD 30.

Top lawmakers and the White House have reached a preliminary deal to avoid a US government shutdown and continue to fund key government agencies. According to an Axios report, that agreement would represent a milestone for House Speaker Mike Johnson, given the fact that his predecessor wasn’t able to pass a budget.

However, analysts are sceptical whether the legislators can reach a similar agreement over extending the ACP programme.

“The odds of passage have not improved,” summarised Blair Levin, a policy adviser to New Street Research and a former high-level FCC official, in a note to investors. The expert also noted that 197 House members are now listed as sponsors of a bill designed to keep the ACP programme intact.

However, most of those co-sponsors are Democrats and “the bottleneck for passage is the speaker, who we don’t think will allow a vote.”

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On the other hand, there is Europe, whose economy avoided a recession by the narrowest of margins. GDPs across the 20 countries using the currency Euro stagnated in the October-December 2023 quarter compared with the previous three months. Over the whole of 2023, GDP rose 0.5% both in the Eurozone and in the European Union.

Europe’s economy has been hit hard in the post-COVID period, affected by high inflation and rapid interest rate hikes. The Ukraine War 2022 also took the countries here to the verge of an ‘Energy Poverty’, as natural gas prices soared high in the continent, amid falling supplies.

Talking about the French economy, Europe’s second-largest, it grew 0.7% throughout 2023. German inflation fell in January to 3.1% in a buoying sign for the continent’s largest economy, whereas the United Kingdom saw an inflation of 4% in December. It is to be pointed out that the country faced the worst of the inflation and the cost-of-living crisis, throughout 2022 and for a good part of 2023, with food and energy bills remaining on the upward trajectory. The inflation hit a record-breaking 11.1% in October 2022.

Experts Not Happy

According to Christoph Weil, a senior economist at Commerzbank, “This (the current data on the European economy) does not really change the picture. The massive tightening of monetary policy brought economic growth to a standstill in the summer. It is unlikely that the economy will emerge from this weak phase before the spring.”

Weil also pointed out the “persistently high inflation” making it unlikely for the European Central Bank (ECB) to lower its key interest rates, apart from noting that the positive economic impact of the rate cuts (if happen) will only be felt from 2025 onwards. If the ECB doesn’t reconsider revising its interest rate, it will result in higher costs dampening the borrowing activities of households and businesses.

As per Jack Allen-Reynolds, a Eurozone economist at Capital Economics, “The region dodged a technical recession. This is just semantics though. The big picture is that Eurozone GDP has been flat since Q3 2022 when gas prices surged and the ECB started raising interest rates.”

Allen-Reynolds also expects the Eurozone economy to “flatline” in the first half of 2024 “as the effects of past monetary tightening continue to feed through and fiscal policy becomes more restrictive.”

The fact of the matter is United States has already outpaced Europe in terms of GDP and the trend will continue in 2024 too.

Government Spending Making The Difference

As the COVID pandemic disrupted the economy from 2020 to 2022, the United States mitigated it through a USD 2.2 trillion economic stimulus bill, named the Coronavirus Aid, Relief, and Economic Security Act (CARES).

The CARES Act, which stood as the largest financial rescue package in US’ history, provided benefits like unemployment assistance, business relief packages, tax breaks and credits, mortgage, student loan and rent relief, hospital and health care assistance, help for the state governments and last but not the least, earmarked spending for the sectors.

Economists credit these expenditures for the swift recovery of the US economy, with the pandemic-related recession lasting only three months.

“What the money did was to basically make sure that when we could reopen, people had money to spend, their credit rating wasn’t ruined, they weren’t evicted and kids weren’t going hungry,” said Louise Sheiner, an economist with the Brookings Institution, while interacting with the New York Times.

Meanwhile, Joe Biden became the United States President in 2020. His administration had to deal with the COVID and the economic fallouts caused by the Ukraine war. Domestic inflation soared to more than 9% in 2022. There were talks among economists on whether American households and businesses would be cutting back on their spending.

However, the American economy grew faster than expected in 2023. Things have been more than manageable for American households, in comparison to their European counterparts.

The Biden government spent massive money in the form of unemployment allowances, universal stimulus checks, and expanded child tax credits. All these moves resulted in the Americans accumulating enough savings to fight inflation. Also, average pay increases peaked at 6.4% and rose as high as 7.5% among the lowest-wage workers, which helped things further.

Uncle Sam went big and bold with his forceful fiscal spending, which helped to sustain consumer spending, which accounts for 70% of US’ economic activity.

In comparison, the United Kingdom provided 330 billion pounds in emergency support for businesses, apart from introducing a furlough scheme for employees, as COVID kicked in. There were plans like stamp duty holiday, cut to value-added tax (VAT) for the hospitality sector, job retention bonus for employers and the ‘Eat Out to Help Out scheme’, to boost the hospitality industry. The ‘Winter Economy Plan’ helped the British economy to sail through the pandemic disruptions throughout 2021.

As the cost of living crisis started in 2022, the UK came up with a 5 billion pound windfall tax on energy companies to help fund a 15 billion pound support package for the public. However, everything was undone by a 50-day disastrous rule of Liz Truss.

US’ Resilient Jobs Market

The unemployment rate in the US has been below 4% since February 2022. Despite inflation reaching close to 10% in 2022, real wages rose as well, with low-income households especially benefiting from the trend.

As per the Bureau of Labour Statistics, the unemployment rate remained flat for the third month in a row at 3.7% for January 2024. Job gains for the month were double the expected amount with the total coming in at 353,000.

For the week ending February 3, weekly jobless insurance claims decreased too, after remaining steady throughout 2023.

Now talking about the similar ratios in Europe, the Eurozone’s unemployment rate fell to 6.4% in November 2023, a record low since the ‘2008 Great Recession’.

However, the ratio is higher than that of the US. As per the International Labour Organisation, the global unemployment rate will rise to 5.2% in 2024, whereas in the United States, the same ratio has been below 4% since 2022.

Despite interest rate hikes (which cooled demand, borrowing and investment), the world’s largest economy, by October 2023, had been generating new jobs for 33 consecutive months. Some 14.4 million jobs were created at a record pace. The unemployment rate remained below 4% for 20 consecutive months, the best streak in half-a-century.

There were a record 161.6 million employed people in the country and the number has been at the higher territory since then.

If one makes the assumption of Uncle Sam outpacing Europe in the ‘Race of Economy’, he/she won’t be that dead wrong. While Washington has been able to prove the ‘Recession Alarmists’ wrong to some extent, Europe’s tale has been the opposite one, with the continent somehow avoiding ‘Technical Recession’ till now.

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Wolf, however, said that there would be a sense of uncertainty about a possible escalation in various directions, while commenting “Uncertainty is bad for the world economy – it affects people’s willingness to take risks.”

We have already seen what the Russia-Ukraine war has done to the global economy. As the battle completed its one year on February 2023, daily necessities like food items and electricity became dearer in significant pockets of the world, as trade disruptions became a routine affair. Add the price rise into it, the problem gets murkier. Even though the developed economies around the world tried to be resilient in front of the crisis, they too felt the pinch of skyrocketing inflation.

Even though the situation is easing now, the central banks and experts are predicting a growth slowdown in the coming days.

Listing down the risks

“A world ordered for decades by globalisation and geoeconomics has quickly become a world grounded in geopolitical risk. Accumulating shocks such as the COVID-19 pandemic and the Russia-Ukraine conflict have persisted, significantly reorganising global structures and relationships in 2023,” commented a report from S&P Global, clearly implying the role of the geopolitical risks in deciding the economy’s course.

In fact, the above report, which came out in June 2023, listed the principal geopolitical risks for the global economy in the coming days. These were Russia-NATO tensions in Ukraine (resulting in greater risk exposures in capital flows, trade and commodity markets worldwide), cyber-attacks (Russia-linked threat actors wreaking havoc in United States and Europe), US-China strategic competition (Beijing’s increased military presence in the South China Sea, technological advancements and ongoing trade tensions with Washington in the domains like semiconductor), climate risks (growing incidents of hurricanes, droughts, floods and wildfires across the world) and energy security (Europe’s energy supply from Russia facing uncertainties as Ukraine conflict continues).

Add the impacts of the COVID pandemic too. Although the global supply chains are at the final stages of their recovery period, no one can predict that what we witnessed during the 2020-2021 period was the last such occurrence on our planet.

Understanding the pattern

“A potential decoupling of the global trading system into two blocs – a US-centric and a China-centric bloc – would reduce global welfare in 2040 compared to a baseline by about 5%. Losses would be largest (more than 10%) in low-income regions that benefit most from positive technology spillovers from trade,” comments a VOXEU article.

We are all part of the globalised world and such ‘Decoupling’ efforts will complicate matters further.

In fact, we are living in the era of ‘Open Markets’ (an unrestricted market with free access by and competition of buyers and sellers, governed by the principles of supply and demand, with limited interference/outside influence from large conglomerates/governmental agencies) and ‘Free Trade’ (international buying and selling of goods, without limits on the amount of goods that one country can sell to another, and without special taxes on the goods bought from a foreign country), an international order which emerged from the ruins of the Second World War.

“A large consensus on the benefits of lower trade costs and prioritising gains from trade led to a continuous deepening of the international trade regime. With the end of the Cold War, that consensus moved eastwards. The EU expanded to the east and many countries joined the WTO, including Russia and China,” commented economists Carlos Goes and Eddy Bekkers in their research titled “The impact of geopolitical conflicts on trade, growth, and innovation: An illustrative simulation study.”

“However, the last decade has witnessed the beginning of a backlash against global trade integration. Political scientists conjecture that the emergence of China as a new superpower against the incumbent US might lead to strategic competition between these countries, one in which geopolitical forces and the desire to limit interdependence take primacy over win-win international cooperation,” the experts commented further.

To prove their point, Goes and Bekkers took the Ukraine war as an example. As the battle broke out in February 2022, the United States-led Western Bloc imposed sanctions on anything and everything Russian.

The West thought of hurting Russia’s energy trade, the same resource on which Europe’s entire economy keeps running. Moscow countered it by diverting much of the commodity to allies like China and India. It resulted in the United Kingdom’s domestic population almost sliding into the ‘Energy Poverty’ in 2022.

The European country’s economy too got plagued due to inflation and the cost-of-living crisis. Although the energy scarcity situation is not so severe now, the uncertainties are there as the West is in no mood to give up on capping Russia’s trade revenues.

The Black Sea Grain Deal, signed in 2022 by Ukraine, Russia, Turkey and the United Nations has constantly come under the worry of breaking down. The deal, which till August 2022, saw some 32.9 million metric tonnes of food items to be exported from Ukraine, helped some of the developing and impoverished regions of the world to feed their populations under the World Food Programme (WFP). In July 2023, Russia pulled out of the deal, thereby putting the arrangement in jeopardy.

“The Russian invasion of Ukraine led to sanctions imposed by a group of Western economies and has reinforced the debate on decoupling between blocs of regions. Although the sanctions are so far focused on Russia and Belarus, there is a risk that the conflict could widen and reinforce support for a policy driven by geopolitical considerations. This raises the question of how much real income might be lost if win-win international trade cooperation were given up and the global economy were to decouple, disintegrating into an Eastern bloc and a Western bloc,” Goes and Bekkers summarised the situation perfectly.

In fact, what we are now witnessing is not only a geopolitical crisis dominating the global economy, it literally challenging the concepts of ‘Open Markets’ and ‘Free Trade’, as one can’t dismiss the notion of Russia, armed by the Chinese support, may end up severely challenging the concept of a ‘Globalised World Order’, thereby leading to the restoration of the Cold War-era ‘Eastern Bloc’ and ‘Western Bloc.’

Fragmentation of the global order

The worry raised by Goes and Bekkers gets further backing from the Atlantic Council which stated that the geopolitical tension between China and the United States has fragmented the world on political, economic, trade, and financial fronts. This is challenging the existing globalised monetary and financial system, so much so that the International Monetary Fund (IMF) whose core mission is to ensure that the market remains in a liberal, deregulated and reformed manner, to facilitate easy capital flows, may face operational difficulties as well. A rigid global economy divided into two camps, will spell doom for the emerging markets as well.

In 2017, the then United States President Donald Trump criticised China’s ‘unfair trade practices’ behind substantial and persistent US trade deficits and “hollowing out its manufacturing base”. Since then, the world’s largest economy has kept on punishing China economically, be it unilaterally imposing tariffs on imports from Beijing, restricting the latter’s access to cutting-edge technologies like semiconductors, and acting against Chinese telecom companies. The Inflation Reduction Act is incentivising high-tech investment and manufacturing in the United States through the use of subsidies, tax incentives, and other favourable regulatory treatments.

Europe too has followed the lead by launching the ‘Critical Raw Materials Act’ to reduce its dependencies on countries that are not union members. Targeting China, some nations in this part of the world have restricted the use of Huawei equipment in their telecom infrastructures. The reality is instead of liberalising the global economy, developed nations are taking the lead to make the system a rigid one by adopting protectionist policies.

China, under the leadership of Xi Jinping, has termed these moves as unfair ones, born out of ‘suspicion’, and countering them by promoting a ‘multipolar world’, something which has increased manifold after Moscow came close to Beijing after being globally isolated post Ukraine war.

Be it projecting its BRICS alliance as an alternative to the West-led groupings or promoting the idea of ‘de-dollarisation’, China has been playing an aggressive game since 2022. In addition to participating and hosting a series of government-to-government groups like BRICS and the Shanghai Cooperation Organisation (SCO), China is also conducting meetings with the Association of Southeast Asian Nations (ASEAN) and Central Asia, Africa, Middle East, and Latin America groupings.

China is also creating international development banks like the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB).

“The aim is to build up alternative international institutions to facilitate cooperation between China and other countries on China’s terms and not under the tutelage of the United States and Europe—which has contributed to the fragmentation and weakening of the current global order and its institutions,” commented Atlanta Council.

If China wants a global order sensitive towards its geopolitical aspirations, global bodies like the IMF, World Bank and World Trade Organization are coming under a severe threat. While China is now taking a key role in giving out loans to some of the world’s small and emerging economies, IMF, World Trade Organisation and World Bank have been and will be at the forefront, when it comes to bailing out world economies from any sticky situation, while protecting the low-income and vulnerable nations from the crisis’ fallouts.

IMF’s ability to continue functioning seamlessly looks secure as of now, as voting power is weighted by members’ capital contributions. while the United States commands 16.5% of the total votes, the G7 has 41.25% of the voting shares. West is in the driver’s seat here. However, the Atlanta Council feels that the rising level of mistrust and hostility between the United States and China will make it very difficult for the IMF to develop an international consensus to reform its governance structure and give more voice and representation to emerging markets and developing countries (EMDCs).

Is globalisation under threat due to the existing geopolitical crisis? Yes. Will we see the restoration of ‘Eastern Bloc’ and ‘Western Bloc’ kind of economic order? Maybe, that’s a subject of debate. However, the unanimous verdict here says that geopolitics is certainly dictating the 21st century world economy and it doesn’t augur well.

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Additionally, it wasn’t a true boom in many ways; rather, a post-COVID-19 spike assisted a technical boom. However, after years of stagnation, Japan’s economy is starting to gather steam. The results were also convincing enough to compel analysts to revisit their spreadsheets; private-sector expectations for growth in the March-ending fiscal year now range between 2.0 and 2.5%, virtually double earlier projections.

Since the middle of the 1990s, Japan has served as the paradigm of a struggling economy. It has been trapped in a rut, with growth often flatlining at 1.0–1.5%, weighed down by deflationary forces. While a significant portion of this was due to the drag of steadily declining asset values for the majority of the previous 30 years, it also highlighted Japan’s position as the top “mature economy,” an uncomfortable club that now includes the majority of its G-7 peers.

Since more affluent people spend a smaller percentage of their income, and the large infrastructure spending necessary to create an industrialised economy has already occurred, these economies are characterised by slower development than developing economies. This is because there is less room for future expansion. A declining population that includes fewer young people makes this worse for Japan and other nations.

Even if the Japanese economy was, in some respects, stagnant, life wasn’t all that horrible. Growth as a concept began to lose its appeal, but the government kept public infrastructure at a high standard, and businesses demonstrated their willingness to keep employees even when business was slow. In 2002, unemployment reached a high of 5.5%. As the population inevitably declines, there are currently 1.3 jobs for every job seeker, bringing the unemployment rate down to only 2.7%.

In sharp contrast to their Chinese counterparts, college graduates in Japan have no concern about getting full-time staff positions when they graduate. They do not have to deal with the uncertainties of the gig economy because they have high job security, required health insurance, and other benefits from a staff job. It may not come as a surprise that Japan isn’t innovating if the need is the mother of invention.

What is fuelling the increase in activities?

Several technical aspects of the technique used to calculate the GDP contributed in part, but some encouraging indicators for the future also played a part.

According to the most recent data, a surge in exports and a drop in imports were two of the main factors driving growth. Imports are counted as a negative within this, whereas exports are counted as a positive. According to a traditional paradigm, a country imports goods at a cost and then exports goods with a higher value, increasing the country’s wealth.

Therefore, there would typically be a timing issue between Japan’s Q2 export growth of 3.2% and Q2 import growth of 4.3%. Imports will eventually need to increase once more to replenish the merchandise that has been sold overseas. Statistics from a single quarter can be especially misleading in this situation.

But for Japan, something that doesn’t seem to be an export—the entrance of thousands of foreign tourists—plays a significant role in the export column. Foreign tourists are back with a fury, as any traveller in Tokyo’s chic enclave of Ginza can attest. Foreign visitors to Japan increased by more than 1,600% from COVID-affected levels a year earlier, amounting to roughly 2.1 million in June 2023. That is four times the amount when Japan began a significant drive to promote tourism abroad in 2012. Japan is now a bargain on the global market because of an approximately 33% decline in the yen’s value over the past ten years.

Since the figures exclude China’s August 10 decision to once again permit tour groups to visit Japan, there is still plenty of room for growth. However, a fresh row over Japan’s decision to release wastewater that was used to cool the Fukushima nuclear power plant has put that back in jeopardy. Chinese travellers made up the largest percentage of foreign tourists before the COVID-19 outbreak and were among the top spenders per person.

The decline in consumer spending, which has a significant impact on overall domestic demand, was identified by economists as a weakness. The recent (and long-needed) rise in inflation, which is currently hovering around 3%, is partly to blame for this. However, the picture is ambiguous.

Other official statistics demonstrate that during the last eight months, consumer confidence has been increasing and is currently at its highest level since December 2021. Additionally, the GDP numbers demonstrate that as employees demand higher wages, salary rises now appear to be catching up with price increases. Real salaries saw their first increase in more than two years, rising by 0.6% from the prior quarter.

Is the Japanese economy operating as usual or undergoing a fundamental transition? Economists are divided on this issue.

“The story of de-risking from China is a long-term one, but for now, we are not seeing any impact on the data, to be honest,” said Kentaro Koyama, the chief economist for Japan at Deutsche Securities.

Positively, investment is increasing due to a weaker currency, solid infrastructure, and surprisingly low labour costs that make it more alluring to both Japanese and foreign businesses. The fact that Japan is not China (which American businesses are increasingly decrying as “uninvestable”), but rather a strategically advantageous nation in East Asia with a sizable amount of government funding accessible to aid, adds to the appeal of investing there.

The restoration of Japan’s once-dominant high-tech manufacturing base is a top aim for Prime Minister Fumio Kishida as part of his “new form of capitalism.”

Government payments of 476 billion yen ($3.2 billion) to chip powerhouse Taiwan Semiconductor Manufacturing Company (TSMC) for the construction of its first Japan factory and a second facility are among the subsidies that have been provided.

Officials from TSMC claim in confidence that the Japanese factory is on schedule and within budget, in contrast to a similar facility in Arizona that is running late and over budget due to higher-than-anticipated labour costs.

More people are joining. While U.S.-based Micron Technology will invest up to 500 billion yen ($3.4 billion) in Japan over the next few years, including expansion at its Hiroshima plant, and semiconductor equipment maker Applied Materials has recently announced plans to hire over 800 new engineers for its Japan operations, Sony is currently building a new image sensor plant close to the TSMC facility.

More significantly, Japanese businesses are now focusing inward. “Japanese corporations have made relatively little capital investments in Japan over the previous 20 to 30 years, particularly in the manufacturing sector. However, the scenario has shifted amid a change in the geopolitical environment,” according to Koyama of Deutsche, who pointed out that, according to data from the Bank of Japan, big Japanese companies expect to boost their capital spending this year by 13.4%, which is more than they anticipated just three months prior.

Japanese economists concur that the rate of future wage rises, particularly those resulting from union discussions in the 2024 spring, will play a significant role in boosting future domestic demand and preventing growth from fizzling out.

“Consumers anticipate that wages will rise higher in the upcoming year,” claimed Takahide Kiuchi, a former member of the BOJ policy board who is currently working for the Nomura Research Institute in Tokyo. However, if pay growth is underwhelming in 2024, then expect a drop in consumption.

Another significant challenge for Japan is opening up a labour market that is still heavily skewed toward lifetime employment. Again, claiming that businesses won’t raise salaries for workers who aren’t at risk of leaving, the government has started yet another scheme to promote labour mobility.

Even though millennials in Japan exhibit some of the carefree attitudes observed in millennials elsewhere, it is unclear whether this new campaign will be any more successful than the long list of past projects dating back a decade. Mid-career job moves continue to be unusual as employees choose security over increased income.

China, however, presents numerous hazards to the expansion of the Japanese economy. The possible impact of China’s stalled growth on Japanese exports is the most urgent problem. Even though the government advocates for onshoring and de-risking, China continues to be Japan’s largest trading partner, receiving 20% of all exports from that country.

In the long term, geopolitics and the potential for a Taiwan war can become the main risks. This could have an impact on shipments to Taiwan, which is Japan’s fourth-largest export market, in addition to possibly harming exports to China.

The disruption to the supply chain that would result from a halt in Taiwan’s semiconductor manufacturing is an additional factor. According to Kiuchi, this alone would reduce Japan’s GDP by 3%.

There may be more to come. Given the military logistics that have brought war to Japan’s doorstep, the country will be drawn into the battle. If this happens, commerce with the rest of Asia—which accounts for 50% of all of Japan’s trade—could be in jeopardy.

According to Kiuchi, the potential harm to the Japanese economy in the event of an incident in Taiwan “could be unprecedented.”

The future, he believed, is genuinely promising if all of this can be prevented.

“Japan’s economic share has been falling for many years, but the government has adopted a high-growth policy, and that gives Japan the opportunity to improve its presence in the global economy,” the expert concluded.

While there are concerns about the sustainability of Japan’s growth story and potential risks to the island country’s economy, the government’s high-growth policy and investments in key industries are promising.

Japan’s unique position, with a highly educated workforce, advanced infrastructure, and government funding available to support businesses, makes it an attractive destination for investors.

By addressing challenges such as labour market reform and increasing domestic demand, Japan has the potential to continue its economic resurgence and play a more prominent role in the global economy.

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