The immediate impact: travellers waiting in long lines at some of the United States’ busiest airports, which in turn affected the facilities’ overall operations. The Donald Trump administration had to deploy federal agents from the US Immigration and Customs Enforcement (ICE) for airport security-related duties, despite the individuals lacking relevant training for the task.

Call-out rates (the ratio that deals with the absence of TSA staff from their airport duties), by the middle of March, reportedly increased to 10%, as the employees just couldn’t deal with the fact that they were working without salaries for the second time in six months.

The first crisis hit them during October-November 2025, due to the political flashpoint between Democrats and Republicans in the US Congress over budget negotiations.

The situation reminded Americans of a similar crisis in 2018-19, when over 50,000 TSA officers had to work without pay, leading to high absenteeism (near 10%), long airport security lines, and over 300 employee resignations. However, this time the problem has been much larger in nature.

Talking about TSA call-outs, major airports like New York, Atlanta, and Houston have seen staff absence of nearly 30% or higher. The visuals of travellers standing in long queues across the airports went viral, with many of them taking the social media route to allege that even after reaching airports well in advance to catch their flights, they ended up missing their journeys.

Trump Intervenes To Ensure Paycheques For TSA Employees

Just how bad was the situation? In the last week of March, Transportation Secretary Sean Duffy said that some 74 small American airports faced a shutdown scenario due to factors like staff shortages and TSA mass call-outs. The regional network of the US aviation sector faced a catastrophic situation. Also came out another shocking stat: assaults on these unpaid TSA workers (by frustrated flyers) increased by around 500%, since the start of the partial government shutdown on February 14.

The Department of Homeland Security (DHS), tasked with overseeing the TSA, has been unfunded since February 2026, after Congress failed to reach a budget agreement. Democrats have reportedly refused to agree on a funding deal without reforms to the US Immigration and Customs Enforcement (ICE) agency, triggering the partial shutdown.

Under the established protocols, TSA agents, considered essential workers, must work without immediate pay during a federal shutdown, as their salaries depend on congressional appropriations, which are, in turn, tied to a funding agreement in the DHS budget.

On March 27, Donald Trump issued a presidential memorandum, instructing Homeland Security Secretary Markwayne Mullin and Office of Management and Budget Director Russell Vought to pay TSA agents using existing funds that have a reasonable and logical nexus to TSA operations. Since then, things have improved, as TSA staff have started receiving their salaries.

Latest details (as of April 6) show that Hartsfield-Jackson Atlanta International Airport and New York’s LaGuardia Airport have security wait times of 10 minutes or less. John F. Kennedy International Airport was reporting wait times of roughly 30 minutes at four of its terminals. However, the TSA staff call-out ratio is still hovering above 20% in some places.

White House Proposal

Now comes the big news. The Trump administration is proposing to slash over 9,400 TSA workers and a little over $1.5 billion from the agency. It is already in the federal budget document. In April, Congress will likely conduct hearings on the White House budget request, in an attempt to ensure that the new budget deal gets concluded before ⁠September 30.

White House’s solution is radical: privatise airport security screenings by 2027. Some airports use a TSA partner screening programme, which helps manage lines at smaller airports while ensuring employees are paid on time. The proposal will also reduce the organisation’s nearly $8 billion budget by roughly 20% amid the agency losing over 1,600 workers during the federal government ⁠funding disruptions in 2025 and 2026.

Stalemate In Congress

However, the political duel continues. The stalemate in Congress will continue, as Democrats want a government restraint on immigration agencies. The high-profile deaths of American citizens like Renee Good and Alex Pretti during a Minnesota crackdown by federal agents raised questions about alleged high-handedness by the Trump administration during anti-immigration drives.

In November 2025, both Republicans and Democrats agreed to negotiate DHS funding ’at a later date’ to ward off the government shutdown. However, things haven’t progressed at all since then, and with TSA funding lapsing on February 14, all hell broke loose. Several bills put forward by Democrats to fund TSA while a larger deal on DHS is worked out have failed to pass. However, neither Republicans nor Democrats are ready to take the blame.

Post Trump’s executive order, TSA workers are finally getting paid. The hours-long passenger queues at security lines are easing up as well. However, there is no guarantee that something similar won’t be repeated.

According to Chris Edwards, Kilts Family Chair in Fiscal Studies, Cato Institute and Editor of DownsizingGovernment.org, security screening at American airports needs to be privatised. Screening operations need to be contracted out to private security agencies while shrinking the government’s role to regulatory oversight and intelligence.

The Arguments For Privatisation

While Edwards’ solution aligns with White House’s proposals and sounds radical, he cited the Canadian example, where the federal aviation authority provides contracts to security firms for five years, apart from periodically reviewing their performances. The system ensures that 95% of travellers get screened within 15 minutes. A similar method has been implemented in Europe as well, where about four-fifths of airports use private screening.

“In the United States, the TSA took over screening at 430 commercial airports over the past two-and-a-half decades since 9/11. It hasn’t been a glorious run. TSA has misallocated resources, delivered mediocre (at best) security evaluations, and wasted vast amounts of traveller time in queues. And it has long scored near the bottom of all federal agencies in annual rankings of best places to work. Thankfully, the 2001 bill creating the TSA allowed for some private airport screening in the Screening Partnership Programme (SPP). As part of SPP, San Francisco International and 19 smaller airports have been using private screening firms for years, and with good results,” Edwards said.

While claiming that an ’undercover test’ conducted in 2015 found a 95% failure rate for TSA, in terms of identifying banned items, Edwards said that another similar experiment found a failure rate of 80%. He also said that TSA has a conflict of interest, as it both performs screening and sets the standards, in terms of conducting screening and judging its own performance.

“By contrast, in the Canadian and European systems, the government authority sets the standards and can objectively judge the performance of private screeners at the various airports. Also, as a near monopoly, TSA has little incentive to improve efficiency or to innovate. But under a privatised system, companies would compete on their records to win contracts at airports, and they could draw on their broad international experience to continuously improve their operations,” Edwards commented.

On the other hand, the US Travel Association wants Congress to provide three years of funding for the TSA to help avoid an impact on paycheques. For the association, the onus is on both Republicans and Democrats to put their differences aside and fix the overall mess through reconciliation.

So, we have two schools of thought: one advocating privatisation, axing workers in the process, while the other wants further investment in the human resources. Which side will win? The answer can be expected after September 30, when the new budget deal is concluded.

The post IF Insights: Unpaid TSA employees make air travel in US painful appeared first on International Finance.

Trump has also made immigration tough, and the shooting of a woman in Minneapolis by ICE (Immigration and Customs Enforcement) agents has the whole nation on edge.

Amidst such developments, Suzanne Clark, the CEO of the US Chamber of Defence, urged corporate leaders to courageously defend free-market principles against expanding government intervention. Speaking in a dimmed ballroom, Clark emphasised that America must maintain its openness to global commerce, the exchange of talent, innovative ideas, and international trade partnerships.

While Clark avoided directly naming President Donald Trump or his specific policies, her remarks represented a subtle critique of the administration’s unprecedented interference in corporate affairs. The Republican has broken new ground in executive involvement with private business operations, taking positions in technology companies, dictating corporate equity arrangements, implementing sweeping tariffs, and pursuing immigration restrictions that the Chamber opposes.

Clark’s comments reflect a broader pattern emerging among American business leaders, including measured, careful criticism that stops short of confrontation. This cautious approach marks a significant shift from Donald Trump’s first presidential term, when executives were more willing to publicly break with the administration over controversial issues, including the president’s response to the 2017 white nationalist rally in Charlottesville, Virginia.

Selective Corporate Criticism

Several high-profile CEOs have recently voiced concerns about specific administration policies, though their objections remain narrowly focused on areas directly affecting their business interests. ExxonMobil CEO Darren Woods and JPMorgan Chase CEO Jamie Dimon both made headlines with tempered criticisms, but limited their remarks to Venezuela’s oil sector and Federal Reserve independence, respectively.

The muted nature of these responses has drawn criticism from governance experts and political observers. Richard Painter, a University of Minnesota law professor who served as chief ethics counsel under President George W. Bush, characterised the business community’s reaction as disappointingly weak.

He pointed to concerning developments, including immigration enforcement actions affecting US citizens in Minneapolis and Trump’s consideration of claiming Greenland, which could potentially isolate American companies from European markets.

Painter noted the stark contrast between the current administration’s authoritarian tendencies and Bush’s commitment to free-market economics. He emphasised that business leaders need to take a stronger stance against governmental coercion, regardless of whether it targets street protesters or corporate executives who resist presidential pressure.

Mark Levine, New York City’s Comptroller, overseeing substantial public pension fund investments in major US corporations, echoed these concerns. He characterised CEO responses as merely “baby steps,” with executives speaking up only when Trump’s actions directly threaten their bottom lines. Levine warned that capitalism cannot function properly if presidents with autocratic inclinations dictate corporate behaviour across American industry.

The Chamber’s Defence

Responding to criticism, a Chamber spokesperson referenced Clark’s media briefing, where she stated the organisation’s opposition to government intervention in business regardless of partisan source. Clark suggested that CEOs have been engaging in “quiet work” behind the scenes to promote sound public policy, avoiding what she termed a “rush to outrage.”

This approach aligns with the Chamber’s strategic positioning. In August 2025, the organisation’s chief policy officer, Neil Bradley, indicated that the group intended to respond to Trump in a nonpartisan manner to preserve broader support for free-market principles.

Presidential Pushback And Economic Perceptions

The public’s perception of Trump’s economic success contradicts his claims. He presently has a 36% approval rating on economic issues, which is lower than his 41% approval rating overall. Despite Trump’s claims that his policies have produced explosive growth, soaring productivity, booming investment, rising earnings, and conquered inflation, this mismatch still exists.

When CEOs have dared to question his approach, Trump has responded swiftly and sharply. After Woods expressed scepticism about Venezuela as an investment destination, calling it “uninvestable,” Trump threatened to exclude Exxon from future deals in the country, criticising the company for “playing too cute.” Similarly, when Dimon defended Federal Reserve Chair Jerome Powell’s independence following a criminal investigation into Powell’s conduct, Trump dismissed the CEO’s concerns outright.

Pfizer CEO Albert Bourla also voiced frustration over Health Secretary Robert F. Kennedy Jr.’s efforts to roll back childhood vaccine recommendations, calling the moves scientifically baseless. However, representatives from Exxon, JPMorgan, and Pfizer all declined to provide additional comments for this story.

A Climate Of Uncertainty

The dread that permeates business boardrooms is highlighted by recent surveys. According to the Conference Board’s most recent study, uncertainty will be the biggest risk factor for American CEOs in 2026. Chief economist Dana Peterson pointed out that executives are aware that the lobbying environment has drastically changed, even if the study did not specifically address Trump.

According to Gary Clyde Hufbauer, a senior scholar at the Peterson Institute for International Economics, CEOs might be carefully calibrating their public remarks to prevent reprisals while positioning their businesses to profit from Trump’s aims and policies. He cautioned, though, that this laissez-faire strategy might backfire and lead to even more stringent regulations after Trump leaves office.

Executives may see the current interventionist policies as transient anomalies, according to Hufbauer. However, he warned that since state capitalism appeals to both progressive Democrats and some MAGA Republicans, investors and business executives may be dangerously complacent about long-term defence of free-market values.

The conflict between corporate America and the Trump administration raises important issues regarding the balance between private industry and governmental authority, as business executives must balance safeguarding their own interests with upholding more general economic liberties.

The post IF Insights: Corporate leaders navigate tensions with Trump administration appeared first on International Finance.

Before each journey, he cleans both and loads only the information he will need. Lackey has even gone so far as to maintain separate travel sets for each country to forensically examine the devices upon his return home and look for indications of manipulation.

According to Lackey, the United States may also warrant a paranoid approach to travel. This applies not only to Americans like him but also to anyone with a foreign passport who might be subject to the increasingly harsh and unpredictable scrutiny of the United States Customs and Border Protection (CBP).

“All of this applies to America more than it has in the past. If I thought I were likely to be a targeted person, I would go through this same level of protection,” Lackey stated.

The number of foreign visitors to the United States who are denied entrance and sent back to their original destinations or detained appears to have increased since the beginning of the second Trump administration. When trying to enter the United States, citizens from Germany, the United Kingdom, and France have all reported being delayed, sometimes for weeks, or denied admission.

Several of these individuals claim to be legal residents with Green Cards. According to the country’s education minister, a French scientist was refused admission after immigration officers looked through his phone and discovered chats in which “he expressed a personal opinion on the Donald Trump administration’s research policy.”

Officials in Germany and Britain have revised their travel advice in response to the more stringent enforcement of visa and travel permit laws; Britain has warned that the rules are applied “strictly.”

If the Trump administration moves forward with its plan to implement a new “travel ban” on over 40 countries, that de facto border crackdown is expected to become much more explicit. The ban would reportedly completely bar entry from at least 10 countries and subject visitors from another five to additional scrutiny and automatic interviews at the border. The policy’s implementation would determine the status of another 26 nations, placing them in a third group.

Given all these developments, it appears that US borders will soon become less welcoming to visitors and even to Americans returning from outside. Additionally, there will undoubtedly be aggressive attempts to monitor travellers’ electronic devices in conjunction with these new border enforcement procedures. This poses a threat to digital privacy and free expression for foreigners and US citizens.

And warning signs are already emerging. In May 2025, workers building an apartment complex near the Florida State University campus were detained by agents from the US Homeland Security, the US Marshals Service, and the Florida Highway Patrol. After entering a construction site in Tallahassee, federal and state officials asked workers for identification and separated them into two categories. After that, some were allowed to go, while others were handcuffed and led onto white buses with metal-covered windows to be transported away from the worksite, escorted by the Highway Patrol.

The Trump supporters were not spared either. In Nashville, the restaurant named “Kid Rock’s,” owned by the conservative restaurateur Steve Smith, where undocumented kitchen staff were asked to go home to avoid rumoured immigration raids. The restaurant, licensed by the right-wing musician Kid Rock, who has also become one of the US president’s highest-profile backers, reportedly found itself struggling to serve post-concert crowds on one Saturday night after the order from managers instructing employees without legal status to leave.

“Around 9.30 pm on Saturday, our manager came back and told anyone without legal status to go home. Events at the Ryman, Ascend, and the Savannah Bananas’ baseball game all let out, and it was crazy busy. But there was no one in the kitchen to cook the food,” an anonymous employee narrated the ordeal to the Nashville Scene.

An aggressive immigration sweep began on 3rd May, when state troopers and unmarked ICE vehicles significantly increased traffic stops throughout South Nashville. The operation has resulted in at least 196 arrests, including 101 individuals with no criminal history, according to a Department of Homeland Security (DHS) press release. While Trump and the DHS secretary, Kristi Noem, have publicly celebrated “accelerated deportations” nationwide, these actions have created panic among legal residents as well.

Nathan Wessler, deputy director of the American Civil Liberties Union’s Speech, Privacy, and Technology Project, said, “We’re witnessing incredibly unsettling instances of retaliatory action based on people’s speech and political opinions. People of all political persuasions—as well as those with various citizenship and immigration statuses—should be especially concerned when that is coupled with extremely broad authority to search through the contents of our phones and laptops, looking at what we have written and what others have sent us.”

Customs and Border Protection (CBP) has long regarded US borders and airports as a Fourth Amendment loophole, granting them broad authority to detain and inspect travellers’ devices. With little official justification or supervision, the agency has long taken advantage of that chance to detain border-crossers based on the smallest suspicion and seek access to their phones and computers.

Citizens are not immune at all. Agents have confiscated the gadgets of CBP detainees, including journalists, filmmakers, and security experts.

The following tips from legal and security professionals have been compiled to assist in protecting your digital privacy when travelling across US borders, as those incursions become more frequent and forceful under the second Trump administration.

Call home

If you suspect you may be stopped or interrogated at the border, notify a lawyer or a loved one who can be contacted before crossing customs.

Then, get in touch with them again after you exit. You may not have access to your devices or other means of communication while in custody. Additionally, you’ll want legal counsel and an advocate for your release in the worst-case event of a protracted imprisonment.

Lock down devices

Don’t make it simple for customs officers to steal your electronics. Select a secure passcode and encrypt your hard drive using programmes like Apple’s FileVault, BitLocker, or VeraCrypt. Create a secure PIN on your phone.

The most effective way to secure your phone is to use a hard-to-crack alphanumeric code instead of biometrics or a four-digit PIN. Turn off “Allow Siri When Locked” from the Siri menu in Settings on an iPhone to prevent Siri from appearing on the lock screen.

Don’t forget to switch off your electronics before going through customs. Hard-drive encryption solutions only provide complete safety when a machine is completely shut down. An iPhone is the safest when it’s off because Face ID requires a PIN instead of a face scan when it initially boots up, eliminating any doubt about whether border officials may force you to unlock the device using your biometrics.

You can now keep sensitive apps separate from other apps on your phone by putting them in a different folder and adding an extra degree of verification. Apple and Google have made this feature possible in recent years. Private spaces on Android may be enabled through the security and privacy settings menu, and on iOS, you can choose to hide an app by long-tapping on it.

Lastly, Wessler advises visitors to make sure they update the operating systems on their phones and laptops before entering the country. This is because, in certain situations, CBP might utilise programmes like Cellebrite or GrayKey to take advantage of unpatched flaws in certain devices, gaining access to them without the user having to unlock them.

Wessler said, “Your device may be vulnerable if your operating system is six months out of date.”

Don’t divulge passwords

Wessler of the ACLU claims that Americans cannot be deported for refusing to disclose the passwords to their encrypted devices or social media accounts.

Accordingly, you may be arrested and have your devices seized, even taken to a forensic facility, if you refuse to give up your passwords or PINs, but you will ultimately escape with your privacy much more intact than if you reveal secrets.

“They can seize your device, even for months, while they try to break into it. But you’re going to get home,” Wessler added.

This protection also extends to green card holders, Wessler notes, notwithstanding the Trump administration’s startling treatment of foreign permanent residents in certain situations.

However, be advised that refusing entry to customs officers may result in hours of uncertain incarceration in a desolate, windowless CBP office, at the absolute least. Court rulings have limited the powers of CBP officials at some US airports and states, but these restrictions may not be enforced if border agents have your computer or phone unsupervised.

The CBP distinguishes between two kinds of device searches. Basic, in which the content of a device is examined “manually” by an officer, and advanced, in which a device is linked to other devices and its contents can be examined or copied.

According to CBP, the latter search necessitates a “reasonable suspicion” of criminal activity. The agency’s official advice avoids specifically stating that individuals must turn over passwords by stating that devices should be submitted “in a condition that allows for the examination.”

According to the agency’s website, “If the electronic device is protected by a passcode, encryption, or other security mechanism and cannot be inspected, that device may be subject to exclusion, detention, or other appropriate action or disposition.”

Wessler cautions that non-Americans entering the US with a visa or from a nation that waives visas face a much more difficult situation: you risk being refused entrance if you refuse to provide a passcode or PIN.

According to him, “People have to make a very practical assessment about what’s most important to them: entry into the country at the risk of being turned around at the border, either by sacrificing or by protecting your privacy.”

Reduce the amount of data you keep

The best approach to keep customs away from your data is to just not bring it on your trip. This is the obvious option for the most susceptible tourists. Set up travel devices that store the least amount of sensitive data possible, much like Lackey did.

Avoid connecting those “dirty” devices to your personal accounts. If you must, make new accounts with distinct identities and passwords, such as an Apple ID for iOS devices.

“If they ask for access and you can’t refuse, you want to be able to give it to them without losing any sensitive information,” Lackey explains.

Admittedly, social media accounts are difficult to delete. While keeping a more important account secret, some security experts advise developing backup personas that can be presented to customs agents. However, you may face extended detention and, in the case of noncitizens, even refusal of entry if CBP officers connect your name to an account you attempted to conceal.

To prevent border agents from accessing documents or data you store remotely, the Electronic Frontier Foundation also advises shutting down apps and cloud services like Google Drive and Microsoft OneDrive if you are unable to set up a separate travel device. Backing up files or images to cloud services before your trip might facilitate data removal from the phone.

According to Wessler of the American Civil Liberties Union, “The only sure way to protect yourself is to not carry information with you or to carry as little as possible. As long as you have a device and there’s stuff on it, that’s potentially vulnerable to search.”

In light of the current political climate and the increasingly unpredictable nature of US Customs and Border Protection (CBP) scrutiny, travellers are advised to take proactive steps to protect their digital privacy. While the methods outlined above offer some degree of protection, it is crucial to remember that there is no foolproof way to guarantee privacy at the US border.

The erratic and often undocumented practices of CBP mean that any traveller could be subject to scrutiny, and their electronic devices could be searched without warning. Therefore, it is essential to weigh the risks and benefits of each privacy protection method and choose the ones that best suit your individual needs and circumstances.

For US citizens, the risk of deportation for refusing to divulge passwords is low. However, non-citizens may face more severe consequences, including denial of entry. Therefore, non-citizens must carefully consider the potential repercussions of refusing to cooperate with CBP officials.

Regardless of citizenship status, all travellers should be aware of the potential for lengthy detentions and intrusive searches. By taking steps to minimise the amount of sensitive data they carry and by being prepared for the possibility of a device search, travellers can help to protect their privacy and avoid unnecessary complications at the border.

Ultimately, the responsibility for protecting digital privacy at the US border rests with the individual traveller. By being informed and prepared, travellers can navigate the complexities of border security while minimising the risk to their personal information. While the future of digital privacy at the US border remains uncertain, travellers can take comfort in knowing that they have options to protect themselves and their data.

Remember, the border is a zone of heightened security, and CBP officials have broad authority to search and detain travellers. By understanding your rights and taking proactive steps to protect your privacy, you can ensure a smoother and less stressful border crossing experience. Stay informed, stay prepared, and safeguard your digital privacy.

The post Crossing into America? Lock down your tech appeared first on International Finance.

Singapore’s geopolitical approach is intricately linked to its economic survival, particularly in light of its small population and limited resources. Singapore, being an important hub of international trade and finance, has to contend with the challenge of navigating an increasingly fragmented world, characterised by shifting allegiances and economic uncertainty.

Geopolitics and economics

The US, as a key security ally and major investor in Singapore, has a corresponding role. Meanwhile, China’s proportion of trade with Singapore makes the nation a key economic partner. To this end, Singapore has kept its word. The city-state has cultivated close ties with both superpowers and promoted multilateralism through ASEAN and other regional economic frameworks.

Today, geopolitical tensions in the form of South China Sea disputes and the United States efforts to exit Chinese supply chains have left Singapore in a challenging situation. Counterintuitively, the city-state is extending its trade treaties with emerging markets, as well as working to advance digital trade with other value-hungry nations like Australia, the European Union (EU), and Japan.

Being a small country, Singapore is sensitive to changes in international trade, investment flows, and technological progress. With its policy of globalisation, Singapore’s open economy has thrived. However, the global shift away from a rules-based multilateral system due to prevailing protectionist policies poses a threat to Singapore’s economic stability.

The pandemic-induced supply chain disruptions and global push toward self-reliance in producing semiconductors have shed light on the middleman vulnerabilities of Singapore. In response, Singapore has shifted its attention towards diversifying its economic base through giant investments in frontier industries such as artificial intelligence, biotechnology, and financial technology.

The government has implemented incentives to attract multinational companies while backing local firms, particularly those involved in green energy and sustainable finance. Additionally, Singapore is going digital, focusing on cross-border e-commerce and fintech products, all to stay relevant in a future where digital commerce is as significant as traditional trade corridors. Despite these strategic initiatives, Singapore is also facing some long-standing issues that could slow down its economic growth in the future.

“With our population ageing and fertility rates dropping, the labour shortage problem remains a top priority. The government is trying to attract foreign skilled talent while ensuring that domestic workers are able to remain competitive through lifelong learning and retraining opportunities,” says Faizal Bin Yahya, Senior Research Fellow at the Institute of Policy Studies at the Lee Kuan Yew School of Public Policy, National University of Singapore.

However, immigration remains an issue that provokes strong emotions, with individuals voicing growing concerns about how the newcomers fit into society and what it does to our national identity.

“Singapore’s limited geographical size restricts its ability to expand its physical footprint. This limitation has resulted in innovative urban planning strategies such as underground infrastructure development and land reclamation schemes. Climate change further compounds our challenges, as the rising sea level and climate-related disasters pose threats to Singapore’s long-term sustainability,” Yahya added.

The government has made significant efforts to mitigate this challenge through investment in green technology. The government is introducing renewable energy, funding carbon capture initiatives, and advancing financial instruments tied to sustainability, as the world economy moves towards sustainability.

One important aspect of Singapore’s economic policy is trade diversification, which can mitigate some adverse effects. Beyond strengthening trade relations with its immediate neighbours, Indonesia and Malaysia, Singapore has signed 27 bilateral and regional free-trade agreements.

Moreover, Singapore has further deepened sub-regional development cooperation with Indonesia and Malaysia. In Batam, Indonesia, for example, Singapore has jointly developed industrial and high-tech parks. Furthermore, it is a partner to the Johor-Singapore Special Economic Zone, which aims to open Johor, Malaysia, to Singapore-based companies.

Structural and demographic challenges

Singapore’s labour force and resources, particularly its land, limit its ability to grow and develop. The number of foreign workers rose from 1.2 million in December 2021 to 1.52 million in December 2023, despite strict regulations such as the dependency ratio ceiling, which limits the number of foreign workers in relation to the overall labour force.

As of June 2024, the population of Singapore includes 1.86 million non-residents, 3.64 million citizens, and 544,900 permanent residents. The median age of the citizens was 42.8 years old in 2022. As of today, it is 43 years old. It is worrying that 19.9% of its citizens are 65 years and above, and in 2030, this number is expected to rise to 24.1%.

In 2023, 34,491 people were granted permanent residence, and 23,472 people were granted citizenship, a 1.7% increase from the previous year. To manage the flow of new citizens, social integration, ethnic, and interreligious peace activities have been at the forefront, although the number of new citizens granted has remained stable recently.

Immigration and foreign labour have become significant issues, particularly as general elections like the one in 2025 approach. The politicisation of immigration and foreign labour issues draws attention to the importance of maintaining racial harmony and ethnic balance. Racial classification by the Singaporean government is done using the Chinese-Malay-Indian-Others model.

During his 2025 budget speech, Singapore Prime Minister and Finance Minister Lawrence Wong presented several measures to aid Singaporeans to ensure that the nation maintains its economic growth and social compact with its residents.

These policies aim to encourage lifelong learning, offer job assistance, and help with workforce transformation. These included regular training subsidies for certain full-time and part-time courses, and enhanced workfare skills assistance for low-income individuals.

As part of its National AI Strategy 2.0, which the Singaporean government updated in 2023, Singapore is focusing on building its AI capability alongside leveraging technology to drive economic growth. The aim is to triple the number of AI experts to 15,000 by 2023. Furthermore, by enhancing its connectivity, the state continues to utilise and maximise its locational advantage.

Among the most densely populated countries is Singapore. Singapore’s housing market is in a dilemma situation—while it has made many homeowners by providing housing to residents through the Housing Development Board (HDB), it has also seen escalating property prices that have created giant concerns regarding affordability.

The government has introduced stringent regulations to curb speculation and ensure stability, such as cooling measures, additional stamp duties, and restrictions on loan-to-value ratios. However, demand continues to outstrip supply, leading to record resale levels and increasing rental costs.

Increasing foreign investment in luxury homes and a rising tide of expatriates have been pushing housing costs sky-high, posing difficulties for younger Singaporeans and lower-income groups in being able to find housing that they can afford.

The rising price of private flats has contributed to inflationary pressures, and Singapore is now among the most expensive cities to live in globally. The government has taken measures by increasing the supply of Build-To-Order (BTO) flats and introducing first-time homebuyers’ subsidies. However, the extent of their impact remains uncertain.

The current cost-of-living crisis is not limited to housing alone; it affects our everyday essentials such as food, transport, and healthcare. The global supply chain disruptions and higher energy prices have driven the increasing cost of living. Singapore imports most of its food and products, leaving it exposed to price fluctuations.

The hike in the Goods and Services Tax (GST) from 8% to 9% in 2024 has caused consumer prices to go up, despite the assurance of assistance from the government to lower-income earners.

The government has rolled out schemes such as U-Save rebates, cash handouts, and transport subsidies to alleviate the burden. But concerns about wage stagnation and income inequality persist.

As Singapore attracts increasing numbers of high-net-worth individuals and multinational companies, a means of balancing economic expansion with affordability for residents will be a key issue for policymakers over the coming years. Trade hub, sustainable energy, and AI: Singapore must enhance its global connectedness to consolidate its position as a node within the global value chain.

Changi Airport served over 58.9 million passengers in the aviation sector in 2023. Singapore is now restarting the construction of Terminal Five, which will be larger than Terminals One to Four combined and accommodate 50 million annual passengers to help it compete with other airline hubs.

The aviation sector supports around 200,000 individuals and contributes to 3% of Singapore’s GDP. In its 2025 budget, the government injected S$5 billion (US$3.7 billion) into the Changi Airport Development Fund.

The maritime sector supports around 170,000 individuals and contributes 7% of Singapore’s GDP. With the development of the Tuas Mega Port, Singapore continues to enhance its geographical benefits.

Singapore’s aspiration to be zero-emitting by 2050 means that it will have to rely increasingly on its neighbours because it is resource-constrained. S$5 billion (US$3.7 billion) was allocated to the Future Energy Fund in the 2025 budget.

To achieve its target of importing four gigawatts of clean energy by 2035, Singapore would purchase 1.2 gigawatts from Vietnam. Singapore also has deals with Indonesia to import one gigawatt of clean energy and two gigawatts of low-carbon electricity from Cambodia.

It is enabled by automation and investments in emerging technologies, such as AI, but this strategy must be accompanied by the retraining and education of Singapore’s ageing workforce. There must be collaboration with key stakeholders, such as small and medium enterprises, global corporations, and trade unions.

Singapore is employing sub-regional development and digital trade, including e-commerce, with like-minded partners in a bid to seek alternatives to strengthen multilateral trade. In the transition to a greener economy for more sustainable growth, connectivity also needs to be enhanced, but this has to be paired with cooperation with sub-regional partners.

Singapore’s economy grew faster than expected into the end of 2024. The city-state’s economy grew 5.0% in the fourth quarter from a year earlier, higher than both an official advance estimate of 4.3% and economists’ forecast of 4.7% growth. However, the government anticipates slower growth in 2025, as trade frictions and ongoing geopolitical conflicts may lead to higher production costs.

Ultimately, the city-state needs creativity, collaborative partnerships, and a relentless policy reform drive to ensure its prosperity as a vital stakeholder in the global marketplace, while the trade war wages on.

The post Singapore: Balancing power and survival appeared first on International Finance.

As the world’s largest economy in the post-COVID years fought with headwinds like high inflation, not everything was bad. While a section of analysts has been talking about a potential downturn in the world’s largest economy, they have been proven wrong time and time again.

Take the December report for example, where the job gains were much higher than what the roughly 160,000 analysts had expected. American employers added 256,000 workers and the unemployment rate dropped from 4.2% in November to 4.1%. One of the positives of “Bidenomics” was the steady pace in the number of jobs added. In 2024, the tally was 2.2 million, with a monthly average of 186,000.

With a new administration taking over the proceedings, we will talk about what lies ahead for the American economy in 2025.

Where do things stand now?

The US Federal Reserve, charged with keeping both prices and employment stable, cut interest rates for the first time in more than four years in September 2024. While the move boosted hopes of the would-be borrowers in the world’s largest economy, as they were facing the highest borrowing costs in roughly two decades, the latest data on the job market now removes pressure on the Fed to act.

Investors had already been paring back bets on cuts in 2025, worried by signs that the bank’s progress on stabilising prices was stalling. There are also risks associated with policies proposed by Donald Trump, such as extensive border taxes and the deportation of migrants, which could increase prices or wages, thereby exerting pressure on inflation.

The interest rates set by the US central bank have a powerful influence over borrowing costs for many loans, and not only in America. Borrowing costs globally have increased, responding to expectations that American rates are likely to remain higher for longer. Expect the trend to continue for a few months more.

Biden administration’s Achilles’ heel has its over-the-top spending binge. The deficit for the fourth quarter of 2024 has reached a record $711 billion, $200 billion more than for the same period in FY2023-24. Revenues reached only $1.08 trillion and would have to be increased by two-thirds to match spending ($1.79 trillion). There was a decline in corporate income tax ($110 billion instead of $150 billion), while spending soared by more than 10%, or around $176 billion.

This increase leads to a record estimate of the next annual budget deficit, which would reach $1.88 trillion, above the $1.83 trillion of 2023-2024. It is the highest deficit in history (excluding the COVID period), or 6.2% of GDP. Such a figure during a time of growth, full employment and non-deployment of American troops abroad is a major signal that the world’s largest economy is in an untenable fiscal situation.

However, as per Biden’s Council of Economic Advisers (CEA), the country had become a magnet for foreign investment given the resilience of its post-pandemic recovery. The push for new investments in infrastructure, clean energy and semiconductor technology attracted global inflows, especially from close allies including Canada, Japan, South Korea and Britain.

The CEA report also noted the world’s largest economy receiving 41% of global gross capital inflows in 2022-23, the highest share of any country, and nearly doubling its pre-pandemic share of 23%. The dollar also remained the world’s biggest reserve currency and accounted for an outsized share of global trade and cross-border financial transactions.

Under Biden, the US also saw high levels of business investment, one-third of which has gone toward factory construction, thereby resulting in rising productivity and high rates of business formation driven in part by international financing. While total capital inflows remained below the peak of $2 trillion in 2007 just before the global financial crisis, portfolio investment in equity and debt markets totalled a record $1.23 trillion in 2023.

What awaits in 2025?

As per Brian Blank, Associate Professor of Finance, Mississippi State University and Brandy Hadley, Associate Professor of Finance and Distinguished Scholar of Applied Investments, Appalachian State University, the American economy did a great job in 2024 by displaying strong economic growth, moderating inflation, and efficiency gains, amid a global high-interest rate regime.

While the world’s largest economy is expected to continue its positive momentum in 2025, there will be some caveats. Both Blank and Hadley see interest rate cuts as short-term ones, as the policymakers are now bringing things like inflation and unemployment into the play, based on which they will take calls on whether to stimulate the economy or pump the brakes. The interest rate that neither stimulates nor restricts economic activity, often referred to as R* or the neutral rate, is unknown, which makes the Fed’s job challenging.

“However, the terminal rate – which is where Fed policymakers expect rates will settle in for the long run – is now at 3%, which is the highest since 2016. This has led futures markets to wonder if a hiking cycle may be coming into focus, while others ask if the era of low rates is over,” both analysts stated.

While some economists are concerned the recent uptick in unemployment may continue, others worry about sticky inflation. The Fed’s challenge will be striking the right balance, continuing to support economic activity while ensuring inflation, currently hovering around 2.4%, doesn’t reignite.

While GDP growth for Q3 was revised up to 3.1% and Q4 is projected to grow similarly quickly, in 2025 it could finally show signs of slowing from its recent pace. However, Blank and Hadley expect it to continue to exceed consensus forecasts of 2.2% and longer-run expectations of 2%.

The main concern here is the current average effective tariff rate, which stands at 2%. If this rate increases fivefold to 10%, it could cause significant disputes between Washington and its trade allies. Such a change would lead to economic challenges and complicate inflation forecasts.

Blank and Hadley expects tariffs to serve as more of a negotiating tactic for the “Trump 2.0” than an actual policy proposal. Also, stricter immigration policies can also create labour shortages and increased prices, while government spending cuts could weigh down economic growth.

Donald Trump has also promised tax cuts, which may offset some risk and spur growth, especially if coupled with productivity-enhancing investments. However, tax cuts may also result in a growing budget deficit, which is another risk to the longer-term economic outlook.

Talking about the labour markets, hiring rates are normalising, while layoffs and unemployment, 4.2%, up from 3.7% at the start of 2024, remain low despite edging up. The American economy, as per Blank and Hadley, could remain resilient into 2025, with continued growth in real incomes bolstering purchasing power. This income growth has supported consumer sentiment and reduced inequality, since low-income households have seen the greatest benefits.

Overall, the 2025 outlook remains promising, with continued economic growth driven by resilient consumer spending, steadying labour markets, and less restrictive monetary policy. However, higher-for-longer interest rates could put pressure on corporate debt levels and rate-sensitive sectors, such as housing and utilities.

Trump 2.0 and US economy

Trump 2.0 inherited vastly different economic circumstances than the one Republican witnessed while beginning his first term in 2017. Yes, the inflation has slowed down, but hasn’t completely disappeared. Then there are larger federal deficits and higher government borrowing costs than before, and a labour force that has grown faster than expected due to immigration, something he wants to curb.

In 2017, the economy had been growing steadily since the end of the 2007-2009 financial crisis, but the pace was often slow and employment had not fully recovered. There was room for the boost of Donald Trump’s signature Tax Cuts and Jobs Act, and while the import tariffs that followed dealt a blow to the global economy, the United States proved largely resilient.

Inflation was a distant concern during that period, seemingly anchored below the Federal Reserve’s 2% target. Homebuyers could find 30-year fixed-rate mortgages at about 4%, and the government was funding its operations with long-term Treasury bond rates at about 3%. In 2025, inflation is dependent on the Fed’s target, mortgage rates are close to 7%, something which is making the market doubt about whether inflation is contained.

While Donald Trump has created an unofficial Department of Government Efficiency (DOGE) to find savings, there is no plan to address the main drivers of the deficit: the health and retirement benefits for seniors. Key data like employment, inflation, consumer spending and overall growth may not offer much room for improvement without risks.

Analysts’ views on Trump’s road map for American economy are mixed: they see massive tariffs and deportations reigniting inflation and dampening economic growth. Yet they see the Republican’s pledge of expanding the sweeping tax cuts passed in his first term and easing the regulatory burden on businesses potentially juicing the economy.

Forecasters see 2025 as a transition year as the economy continues its post-pandemic recovery but at a lower temperature before Trump’s policies fully take effect. For workers, healthy wage growth is likely to keep outpacing slowing inflation, fuelling consumer spending and job gains. The Federal Reserve’s interest rate cuts, set to continue this year assuming inflation eases further, should provide a boost to growth.

Instead of the recession Moody’s Analytics forecast a few months ago, the research firm foresees a more slowly growing economy in 2025. Donald Trump promised to impose 60% tariffs on Chinese imports and 10% levies on shipments from all other countries to prod manufacturers to move production back to the United States. Recently, he threatened 25% tariffs on Canada and Mexico and 10% fees on China to pressure the countries to curtail the flow of illegal drugs and unauthorised immigration to the US.

By contrast, tax cuts likely won’t stoke growth until 2026 since the tax reform Trump spearheaded in his first term expires at the end of 2025. He and a Republican Congress, however, are expected to extend lower tax rates for all income levels, possibly increase immediate write-offs for business capital investments, and lower the corporate tax rate from 21% to 15%.

The post The return of Trump: Economy faces new tests appeared first on International Finance.

According to immigration authorities, 25.8 million foreign visitors were drawn to Japan in 2023, a six-fold increase from 2022. The Japan Tourism Agency claims that they spent a record ¥5.3 trillion (£28.3 billion) together. The government of Japan has set an ambitious target to welcome 60 million tourists and spend ¥15 trillion by the end of the decade.

A sensational comeback

In January 2024, Japan saw the arrival of over 2 million visitors gracing its, marking the eighth consecutive month of such numbers. According to data from the Japan National Tourism Organisation (JNTO), the January tally nearly matched December 2023’s figure of 2.73 million, which had set an all-time high for that month. Both the December 2023 and January 2024 tourist arrival figures remained on par with the 2019 tally. During that year, Japan received a record-breaking 39.9 million tourists.

“While tourism from China remains below pre-pandemic levels, with mainland Chinese visitors once constituting a significant portion, there are positive signs of recovery. Chinese visitors numbered 415,900 in January, representing a notable 33% increase from the previous month. Additionally, Japanese department stores reported robust sales of luxury goods and duty-free items in the first half of February, partly attributed to Lunar New Year celebrations,” TravelBiz Monitor reported.

Both tourist arrivals and spending have remained on a greener pasture for Japan and that bodes well for the nation’s economy. In 2023, visitors surpassed the JYP 5 trillion-mark, exceeding the government’s set target, reinforcing the economic significance of tourism to Japan.

Building upon the success

Japan National Tourism Organisation (JNTO) is now seeking out partnerships with the social media influencers to promote the country’s raw natural beauty. And it’s a strategic move, given the fact that a 2022 survey by the Japan Tourism Agency revealed that relatives and friends (22.8%), social media (21.9%) and video-sharing sites (21.4%) were the top three sources of travel information for foreign tourists.

The government has a goal of receiving 60 million inbound tourists in 2030, with a large chunk of it being the repeat travellers. The goal here is simple; ensure that people are arriving in the country with the goal of conducting offbeat travel. In that way, the already popular tourist spots gets a breathing space, in terms of crowd management, while the less explored ones prosper economically.

A very good example here was South Korean influencer Chomad, who with over a million followers on Instagram and nearly 780,000 on YouTube, posted about his visit to a place in Japan that’s not very well known. The video, which garnered over 37,000 views on YouTube and more than 24,000 likes on Instagram, showed Chomad visiting a small village where he grilled fresh seafood with a group of ama, Japanese female divers who collect seafood from the ocean by free diving without the aid of modern equipment, at the eponymous Ama Hut, an outdoor seafood grill they operate in Mie Prefecture.

Hideki Tomioka, JNTO’s executive director on overseas promotion, told Japan Times that his department had been engaging social media influencers to promote Japan overseas since around 2017.

JNTO’s 26 overseas branches typically invite multiple influencers for every tour, which they organise independently to cater to their specific markets. The same recipe has been picked up by marketing firms, who are now beginning to involve the influencers to promote Japanese products and tourism.

One such is Carta Marketing Firm, which is now offering services utilising influencers for clients including local governments who are looking to target markets primarily in Asia. Ryosuke Sasaki, Carta Marketing’s strategy planner leading the firm’s influencer-related services, said that even within the short time frame since the venture began offering such services from August 2023, they have received an overwhelming reception among its clients.

Within the first three months, the company, which used to primarily take on domestic marketing projects, shifted its focus; now, almost 50% of its projects are ones that target international markets.

Is ‘Over Tourism’ becoming a worry?

A section of the analysts believe that Japan is unprepared for an increase in tourists and this will put additional pressure on lodging, public transportation, and the service sector at a time when the nation is already grappling with a severe labour shortage.

According to Prime Minister Fumio Kishida, sustainable tourism hinges on allowing visitors to arrive without negatively impacting the standard of living for the local population. This is part of his vision for a new “Tourism Nation.” The government in 2023 unveiled plans to increase the number of buses and taxis, increase the cost of public transportation during rush hour, and launch new bus routes.

The subtropical island of Okinawa and rural eastern Hokkaido are among the 20 “model” destinations it has designated in the hopes of luring tourists away from Tokyo, Osaka, and Kyoto, which together accounted for 64% of overnight stays by foreign visitors in the first eight months of 2023. Less emphasis will be placed on consumption and more on immersing oneself in the culture, from learning to meditate in Zen and experience mountain asceticism to crafting sake and pottery.

In the 20 areas, local government officials and residents will draw up plans in fiscal 2024, which started on March of this year, to ease traffic congestion and raise awareness about tourist manners.

The most prominent examples of “Tourism Pollution” can be found in Kyoto, the former capital of Japan and the site of many of the nation’s most well-known temples and shrines, as well as the geisha district of Gion. About thirty times as many people visited Kyoto in 2022 as lived there: over 43 million tourists.

Geisha-themed walking tours are organised by longtime Canadian resident Peter MacIntosh, who told the Guardian that locals have been finding it difficult to reconcile the disruption caused by throngs of visitors with a sharp rise in spending.

To combat the “Tourism Pollution,” the city administration now has restricted walking through the ‘geisha district’. Isokazu Ota, the local district official, told The Associated Press about the installation of warning signs, which will apply mainly to pedestrians, and those who fail to comply with the rules will face a $66 fine.

The ban applies to several blocks of Gion, but the district’s public streets will remain open to tourists. And this is not the first time that Japan has thought about implementing restrictions on tourists. In January 2024, the authorities announced an entry fee for the routes to Mount Fuji.

The tourist destination is dealing with issues like pollution, littering, and unprepared visitors. From July 2024, there will be a daily visitor limit in this destination. Around 4,000 hikers will be allowed to visit the Yoshida trail, but climbers cannot begin their activities between 4 pm and 2 am. To preserve the area further, climbers have also been asked to voluntarily contribute a sum of ¥1,000 ($6.60) per person.

The entry fee to the UNESCO-listed Itsukushima Shrine is ¥100 (53p), and later 2024, visitors visiting the Taketomi islands will have to pay an amount that has not been decided upon to support the preservation of their immaculate beaches.

‘Two-Tier’ charging: A potential solution?

As per Tokyo-based journalist Jay Allen, since more tourists are arriving the country and taking advantage of the weak currency, Japanese businesses are too raising prices. However, since the price hike has been made for both the foreigners and the locals that have left some wondering whether businesses should implement separate pricing model for tourists. Still, the talk of the town is that the businesses must raise their prices.

The Bank of Japan’s policy of pursuing a weak currency has made it harder for those staying in the Asian country to get value from their money abroad. However, foreign tourists are finding their currencies, particularly dollars, going a long way.

“That has some wondering if local businesses shouldn’t jack up prices. After all, many businesses in Japan are struggling to stay afloat thanks to rising prices. And, as the prices at the popular ski resort town Niseko show, tourists don’t seem to mind paying more than locals,” Allen wrote in his article for “Unseen Japan.”

While Tsukiji is already up-charging a bowl of seafood ramen for 5,500 yen ($37), only foreigners can pay this much. The problem here is that Tsukiji, as Japan’s famous seafood market, serves both foreigners and locals. The tourists can pay the inflated price, not the locals.

Analysts are backing a “two-tier” pricing system for the businesses, under which a bowl of ramen that costs 1000 yen for locals would cost 3000 yen for visitors. These experts call it a “reverse discount,” operating similarly to how student and senior discount prices currently work in Japan.

There are examples like golf clubs in Hawaii charging tourists more than double what locals pay. Some Buddhist temples in Thailand also charge tourists for entering, while residents can enter for free.

“The idea has some traction. Loyalty Marketing, which runs the points programme Ponta, asked 1,200 people between their teens and their 60s whether a two-tiered pricing system was a good idea. Over 60% said yes, with the numbers pretty consistent across age groups. People in their 20s agreed the most, with 33% agreeing and 32% slightly agreeing. Those in their 30s and 40s agreed the most, at 35%. Only those in their 60s were slightly sour on the idea, at around 49% with 32% slightly opposed,” Allen added.

Analysts also believe that instead of charging tourists a high price, businesses can go for a “locals discount,” subject to the people producing their proof of residence, while going for an eat out or shopping.

“On the flip side, only businesses in highly trafficked tourist areas would implement the change at first. So, it’d only impact residents who are eating out while at work or on the go. However, once it takes off in tourist traps, it’s hard to see such a change not percolating throughout the country,” Allen noted.

“My initial reaction to the idea of a two-tier system was opposition. The more I think about it, however, the more I think it could be good for Japanese businesses and Japan’s economy in general. The tourism boom shows no signs of stopping, and businesses should strike while the iron is hot,” he concluded.

The post Japan’s over-tourism dilemma appeared first on International Finance.

Nearly one-quarter (24%) of Canadians between the ages of 18 and 34 say they might or probably will purchase a home in 2024, while 22% of those between the ages of 35 and 54 are considering buying this year, according to Wahi’s most recent 2024 Homebuyer Intentions Survey. Of those considering a home purchase, 49% await how home prices develop, and 48% want to wait to see how interest rates change.

Whether a first-time or seasoned home buyer or if you’re considering purchasing a home this year, there are a few things to consider before making the important call.

Economists’ perspective

As per the Canadian Real Estate Association (CREA), despite interest rates being at a 22-year high, there has been an increase in activity in the home market.

CREA chair Larry Cerqua said, “The market has been showing some early signs of life over the last couple of months, probably no surprise given how much pent-up demand is out there.”

Home sales activity increased 3.7% between December 2023 and January 2024, according to CREA data, building on the 7.9% month-over-month gain seen recently.

The Greater Toronto Area, Hamilton-Burlington, Montreal, Greater Vancouver the Fraser Valley, Calgary, and the majority of areas in Ontario’s Greater Golden Horseshoe and cottage region lead the nation in sales increases once again.

“The biggest year-over-year gain since May 2021 was observed in the actual (not seasonally adjusted) number of transactions, which came in 22% above January 2023,” CREA noted, as it added, “Having said that, the double-digit gain was more indicative of the base effect from the comparison to January 2023, which was the worst start to almost any year in the previous 20 years, given that current activity is still running below average levels.”

In January 2024, the number of newly listed homes increased by 1.5%, although it was still very near the lowest level since June 2023.

Robert Hogue, Assistant Chief Economist at RBC, stated that “the larger window of opportunity for buyers is likely to open only after interest rates have dropped materially—something we foresee in the latter stages of 2024 or 2025. This is particularly true for first-time purchasers who might have more limited funds.”

According to Hogue, “There will be a lot of pent-up demand to satisfy in the market once confidence returns, which could heat things in a hurry. If interest rates start to decline in the middle of the year as many predict. Expect little to no decline in home prices, nevertheless, since poor affordability conditions will restrain the recovery.”

Pent-up demand may drive up prices, but shocks from mortgage renewal payments (as mortgages renew at much higher rates) may cause more homeowners to list their properties on the market, balancing supply and demand.

Hogue projected a 9.2% increase in Canadian home resales for 2022, following declines of 25.1% and 11.1% in 2021.

A “return to the rollicking price gains of recent years, and previous highs for some locations, is unlikely at this point,” according to BMO Senior Economist Robert Kavcic. This is good news for purchasers in areas like Ontario, where he anticipates further pricing pressure in the spring. However, costs would remain high, and “the subsequent rebound will likely be temperate due to still-challenging affordability.”

The Bank of Canada is probably done raising interest rates and will start lowering them shortly, according to Kavcic, who agrees with most analysts: “We believe the Bank will be in a position to cut rates around mid-year, with 100 bps [or 1%] of easing through 2024. Mortgage rates will drop as a result of those reductions.”

Despite a spike in home sales in December 2023, Marc Desormeaux, Principal Economist at Desjardins, predicts lower prices and sales this spring.

Desormeaux does, however, also anticipate a broad-based increase in housing prices in the middle of the year that will last into 2025, in keeping with the Bank of Canada’s anticipated interest rate reductions in the middle of 2024.

He predicts that the more expensive areas of Toronto and Vancouver, which are more susceptible to changes in interest rates, would see the biggest recoveries. But by historical standards, price increases will be “mild,” particularly when compared to the pandemic-era real estate boom, when prices nationwide increased by more than 20% when loan rates were still low.

Bank of Canada’s stance

Because the Bank of Canada’s monetary policy influences mortgage interest rates, its perspective on the housing market is significant. To curb consumer spending when inflation increases, the Bank hikes rates; but, when inflation approaches its target of 2%, the Bank is more likely to lower rates. The prime rate, now 2.2% higher at 7.2% than the overnight rate, is impacted by increases in the overnight lending rate.

Lenders utilise the prime rate to determine the interest rate on various products, including variable-rate mortgages. Consequently, the cost of borrowing increases as the prime rate does. However, the shelter component of the Consumer Price Index, or CPI, the most widely used inflation indicator, includes mortgage interest rates in addition to rental expenses. Thus, high mortgage rates lead to pressure on inflation.

The Bank of Canada maintained its 5% overnight rate target in its most recent rate decision, stating that while inflation is declining, certain CPI components are still too high to lower rates just yet. One of the most prominent elements is housing: according to Bank Governor Tiff Macklem, “Inflation in shelter services remains high—close to 7%—because of rising mortgage rate costs, higher rents, and other housing costs.”

Macklem stated that while there was a “considerable uncertainty” around property prices, he anticipated that the market would “rebound” in 2024 with predictions for interest rate decreases later in the year. He stated that although buyer demand would determine whether or not the Bank anticipates a “modest increase” in property prices.

Nevertheless, Macklem also stated that the apex bank is powerless to address the issue of home affordability.

For many years, the supply of housing has lagged behind the demand for housing, according to Macklem.

“There are numerous causes for this, including labour shortages, zoning constraints, and ambiguities and delays in the approvals process. Monetary policy cannot solve any of these issues,” the official continued further.

Industry’s outlook

CREA has revised its projections for home sales and average home prices, citing the continued influence of interest rates as a primary factor shaping things for 2024 and 2025. The forecast anticipates a modest 2.3% increase in the national home price, reaching $694,173 in 2024, with further growth expected in 2025. National home sales are predicted to rise by 7.3% in 2025, accompanied by a 4% increase in average home prices.

Significant sales gains are anticipated in provinces with robust housing demand, such as Alberta, as well as in regions experiencing a rebound from lower sales volumes, including Ontario, and Nova Scotia. Moreover, several provinces, including Alberta, Quebec, New Brunswick, Nova Scotia, and Newfoundland, are forecasted to see price gains surpassing the national average. Conversely, British Columbia and Ontario are expected to see prices remain stable. Contextually, the decline in home sales by 11.1% in 2023, compared to 2022, marked the lowest annual level since 2008.

Immigration and housing

There has been a lot of finger-pointing as the nation’s housing crisis worsens: at foreign investors buying up residential real estate, at local governments and their onerous zoning laws, and now, at immigrants and international students, who are the most recent group to come under fire for making the situation worse.

Canada, leading among G7 nations in growth rate, crossed the 40 million population threshold in June 2023 after experiencing an increase of more than a million in 2022. Immigrants made up almost all of those new Canadian citizens. The number of international students has also increased dramatically; as the country is expected to welcome 900,000 overseas students in 2024, three times the number from 2013.

Immigration Minister Marc Miller stated that “volume is volume, and it does have an impact,” on the immigration wave, even though Canada’s main political parties have been careful not to hold immigrants responsible for housing issues. The federal government is thinking of capping the number of overseas students to relieve some of the burden, but it is not going to back down from its recently raised annual objective of 500,000 new permanent residents by 2025.

However, Carolyn Whitzman, a housing policy researcher at the University of Ottawa and a specialist advisor to the University of British Columbia’s Housing Assessment Resource Tools project, asserts that restricting immigration is not the answer.

“We have an inaccurate view of the problem because the millions of Canadians who currently live there as well as anticipated arrivals are not included in currently estimated housing needs. Immigrants are an easy target,” she stated, while adding, “We discussed the pressing need for a national social housing programme, the lack of statistics on who genuinely needs housing, and our eagerness to turn the conversation toward immigration.”

How is this significant?

Overall, economists anticipate interest rate reductions to commence in mid-2024, contingent upon the Bank of Canada’s assurance that inflation is managed. Interest rates impact the demand for property by potentially deterring purchasers from entering the market and influencing supply as homeowners with current mortgages may choose to sell when faced with interest rate fluctuations during renewal. This could result in a market favourable to buyers.

CMHC Senior Specialist of Housing Research Tania Bourassa Ochoa predicts that 2.2 million mortgage borrowers, accounting for 45% of all outstanding Canadian mortgages, will need to renew their mortgages between 2024 and 2025.

“The majority of these borrowers secured their fixed-rate mortgages at historically low interest rates, most likely during the peak of housing prices around 2020 to 2021,” she observed.

Decreasing interest rates may prompt potential buyers who have been holding off due to less favourable rates to re-enter the housing market. This can lead to an increase in house prices, which is anticipated by the middle of 2024. Sales volumes and prices are projected to rise nationwide.

As per the CREA, recent price decreases have mainly occurred in Ontario markets, especially in the Greater Golden Horseshoe region, and to a lesser degree in British Columbia. In most parts of Canada, prices remain stable, but certain regions, such as Alberta, New Brunswick, and Newfoundland and Labrador, continue to experience price increases.

Note that there are significant variations in market circumstances across different locations. A house located in a metropolitan area like Toronto will have a higher price compared to a house in a smaller town or village. Urban areas may have higher demand leading to competitive bidding among buyers, favouring the seller. In contrast, rural properties may take longer to sell, making sellers more willing to negotiate on price.

Will 2024 be favourable?

Borrowing costs are high, although home prices have decreased from their peak levels during the pandemic. Prices are anticipated to remain low in the first half of 2024, potentially encouraging buyers to enter the market. Affordability is a big concern in Canada, particularly in Ontario and British Columbia, where RBC’s Hogue highlights that high house ownership expenses have greatly reduced property resales.

Long-term trends indicate an increase in home prices, which can create pressure for first-time buyers to enter the market promptly. Let’s examine two situations to observe how interest rates and purchase costs impact your monthly budget. Both alternatives presuppose a minimal down payment.

Scenario A: Elevated interest rate, reduced house price. Buying a $500,000 home with a 5-year fixed-term mortgage at 5% will result in monthly mortgage payments of $2,873. By the end of the five years, you will have paid a total of $172,388, comprising $56,773 in principal and $115,615 in interest.

Scenario B: Involves a reduced interest rate and an increased house price. If the home’s value increases to $525,000 (a 5% increase) and you obtain a 5-year fixed-term mortgage at 4.75%, your monthly mortgage payment will be $2,934. By the end of the five years, you will have paid a total of $176,046, consisting of $61,242 in principal and $114,804 in interest.

During the five years of the mortgage, you will pay a higher amount towards the principal and a lower amount towards interest, resulting in slightly increased monthly mortgage payments. Based on this example, it appears more advantageous to purchase a property when interest rates decrease.

If the price of the $500,000 house increases to $550,000, your monthly mortgage payment at a 4.75% interest rate will be $3,067. Over the five-year term, you will have paid $64,022 towards the principal and $120,017 in interest. You have reduced the principal amount more significantly, although the total interest cost has increased. Additionally, you may not have the financial means to cover this increased monthly payment.

Setting aside these eventualities, it is hard to predict the timing of the housing market or the stock market, and these forecasts are not definitive.

According to the CREA, there was a 1.2% monthly decline in the Aggregate Composite MLS Home Price Index in January 2024. Compared to the 1.1% decline seen in December 2023, this indicated an acceleration of the decline.

The Greater Golden Horseshoe region of Ontario and, to a lesser extent, British Columbia has seen the most price reductions.

In other parts of Canada, prices are either barely changing or, in certain situations, notably in Alberta and Newfoundland and Labrador, are still rising.

In January 2024, the real, non-seasonally adjusted national average house price was $659,395, a 7.6% increase from the same month in 2023.

Senior economist at CREA Shaun Cathcart said, “Sales are up, market conditions have tightened quite a bit, and there has been anecdotal evidence of renewed competition among buyers; however, prices are still trending lower in areas where sales have shot up most over the last two months.”

When combined, these patterns point to a market that is beginning to recover from the past two years’ difficulties, but still navigating them. So before you start your house search, keep your finances organised.

The post The great Canadian housing saga appeared first on International Finance.

With a built-up area of 742,000 square meters, Terminal A is not only one of the largest airport terminals in the world, but it also boasts expansive, stunning architecture that combines heritage and modernity.

The design of the building, which is based on the idea of a “pearl in the desert” and is shaped like undulating sand dunes, is the most notable aspect of the international gateway. The exterior of Terminal A has a long, flowing, shell-like roof, while the interior is dominated by natural light and greenery, giving it a great sense of openness and space.

The symmetrical high ceilings add to the terminal’s expansive and airy appearance, while the discreet placement of the columns and supporting arches facilitates easy pedestrian movement.

Trial Period
The live trial of airport processes, including check-in and baggage, security screening, boarding gates, immigration, and customs, is now being conducted by more than 6,000 volunteers.

All systems including check-in and baggage handling, security screening, boarding gates, immigration, along with boarding routines and flight information procedures, were thoroughly tested by these volunteers, who also examined the speed and accuracy of check-in, including document and customs inspections.

The process for passengers’ speed and accuracy is being tested by volunteers, according to Elena Sorlini, managing director and interim CEO of Abu Dhabi Airports, who also added that document and customs inspections are being improved.

“Our commitment to excellence has driven our journey to get ready for the opening of Terminal A,” she said.

“We are focused on conducting extensive large-scale assessments to ensure the speed, efficiency, and delivery of operations,” the official remarked further.

The building will likely accommodate up to 45 million passengers per year, apart from processing 11,000 travellers an hour and operating 79 aircraft at any given time.

At 742,000 square metres, Abu Dhabi Airport’s new facility has become one of the largest airport terminals in the world. Etihad Airways, Wizz Air Abu Dhabi and Air Arabia Abu Dhabi will be moving to Terminal A on the opening day itself.

Modern Technology
In addition to having a highly stunning design, Terminal A is equipped with the most recent technologies for managing airports, such as integrated biometric systems that will give travellers a seamless journey from pre-travel to the boarding gate. Modern luggage handling systems, streamlined security checks, and self-service kiosks are available.

Additionally, the terminal will feature top-notch amenities like opulent lounges, calm areas, and spa facilities where passengers can unwind before or after their flights. There will also be shops and restaurants that appeal to different interests and inclinations.

Photo Credits: Abu Dhabi Airport

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The new service enables Emirates passengers to complete the security check and check-in from the comfort of their home, hotel or office and have their luggage transported to the airport prior to their flight. An Emirates check-in agent will arrive at the preferred location to weigh and tag the bags as well as check-in the customers and issue boarding passes. Customers can then make their own way to the airport and head directly to immigration, bypassing the check-in desks at the airport.

The service is available for AED 350 per trip for up to 7 pieces of luggage. AED 35 will be charged for each additional piece of luggage. Customers can book the service on emirates.com up to 12 hours before flight departure time. This latest initiative is part of the Emirates’ ongoing commitment to provide world class products and services for a more convenient travel experience.

Emirates has been running trials for its Home Check-in service since October to ensure that the customer experience and security checks are faultless. The service seals each bag and stores them in a separate hold in the van. Emirates Home Check-in will be operated with a new fleet of vans.

The new Home Check-in offering complements other luggage handling services already available for Emirates flights in Dubai. For a seamless travel experience, customers can pay for a concierge service to handle their luggage at the airport, enjoy preferred rates for pre-paid excess baggage, and bag wraps to protect their luggage.

For passengers arriving in Dubai, there is a luggage storage facility for those who wish to leave their bags and explore the city. Emirates also offers a Home Delivery service where luggage is retrieved, cleared at customs and delivered to the customers for a hassle free travel experience.

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The paper has been released as Brexit Secretary David Davis is about to meet French politician and EU chief negotiator Michel Barnier today. It is anticipated that the paper is targeted to define the ‘future relationship’ guidelines.

The UK has envisaged striking an agreement for the phase after Brexit Day on March 29, 2019. Theresa May said: “We will be setting out our immigration rules. We will negotiate with the EU.”

The research paper says: “It is normal in trade agreements to allow the movement of staff essential for the purpose of facilitating the flow of goods and services. However, the EU has never previously insisted upon liberalised border regimes or freedom of movement as a condition of a trade agreement.

“If they were to do so in the negotiations that are pending with the UK it would clearly be driven by political, rather than economic, considerations. The UK government must maintain a distinct separation between its trade negotiations and establishing a post-Brexit immigration policy.”

Chairman of Migration Watch UK Lord Green of Deddington, stated: “A sharp reduction in immigration from the EU must be a red line in these negotiations, not a bargaining chip.

“The Government has already caved in on rights for those arriving in the implementation period. They must not capitulate on longer term immigration arrangements. That would be a betrayal of the 17mn who voted for Brexit.”

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