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Global Growth Remains Strong; Risk of Trade War Presents a ‘Clear and Present Danger’ to Ongoing Expansion



Global Growth Remains Strong; Risk of Trade War Presents a 'Clear and Present Danger' to Ongoing Expansion

Scotiabank Economics Global Economic Outlook Report: July 2018

Scotiabank Economics released its quarterly Global Economic Outlook today. This quarter, the Global Economic Outlook remains optimistic about underlying global growth possibilities, but the economic horizon is clouded by developing and wholly unnecessary trade conflicts touched off by the US with its major trading partners.

“The uncertainty surrounding trade policy in the US and potential responses by US trade partners will continue to weigh on financial markets, and likely act as a drag on growth into 2019,” said Jean-François Perrault, SVP & Chief Economist at Scotiabank. “While the global economy remains sufficiently robust to deal with reasonably minor trade skirmishes such as the tariffs on steel and aluminum, we fear we have reached an inflection point, where all future trade actions could dampen global growth in a meaningful way while raising inflation.”

The Report includes several additional economic indicators and forecasts:

On the US economy:

• US economic growth is accelerating and the Fed is on track to raise rates to 3% by end-2019, with two more rate hikes in 2018 and two further hikes in 2019.
• The pace of the Federal Reserve’s balance sheet unwinding will peak this autumn, which will impose unconventional policy tightening concurrently with the forecast rate hikes.
On the Canadian economy:
• Our central view on the Canadian economy remains little changed from the previous quarter.
• Canadian growth is moderating, but capacity pressures are increasing. Combined with strong demand from the US, we expect recent business investment gains to continue as Canada’s marginal additional sources of growth shift from residential real estate and consumption to trade and business activity.
• The expansion anticipated across all provinces this year, led by British Columbia and Alberta, will benefit from strengthening business investment to address capacity constraints in key industries.
• The Bank of Canada is expected raise rates another 125 basis points, to 2.50%, by end-2019. We continue to expect two more 25 bps increases during 2018 in the Bank of Canada’s target overnight rate, with the first of these coming this month, and three additional 25 bps increases during 2019.
• Commodity prices continue to benefit from strong economic growth and increasingly tight conditions across both upstream production capacity and supporting supply chains.
• WTI crude is forecast to average US$68/bbl in 2018 and US$71/bbl in 2019. The discount on WCS is expected to remain wide owing to bottlenecks in take-away capacity.
On the Pacific Alliance countries, Mexico, Chile, Colombia and Peru:
• A key challenge facing emerging markets this year is the transition to a more hawkish stance on the part of the Federal Reserve. Capital flows to emerging markets have fallen, though this has been concentrated in high-risk countries, such as those with high current account and fiscal deficits. The countries of the Pacific Alliance have been generally insulated from these movements.
On the economy in Asia:
• Prospects in Asia remain reasonably strong, though new trade frictions between the US and China have the potential to significantly affect the region.
• An escalation of the trade dispute with the US would have negative impacts on the Chinese economy, but Chinese authorities have a range of tools at their disposal to blunt the impact of more aggressive US trade policy. Principal among these is the exchange rate, which the Chinese authorities are allowing to depreciate.
• Our forecast assumes cooler heads prevail on the trade side and that an all-out bilateral trade war is averted given the damage it would cause in both China and the US.
• We continue to believe a revamped NAFTA will be ratified in 2019, though NAFTA-related uncertainty, along with tariffs on steel and aluminum, will exert a modest drag on growth.
• The foundations of the global expansion remain solid, and we remain optimistic that political and economic pressure will ensure that trade tensions will not lead to a full-blown trade war.

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Duo glide around world’s largest fountain in Dubai



Duo glide around world's largest fountain in Dubai 1

Paragliders Llorens and Goberna take magical flight above the Palm Fountain.

Horacio Llorens and Rafael Goberna defied gravity to perform The Breaking Pointe flight around the world’s biggest fountain at The Pointe, Palm Jumeirah in Dubai. Here is all you need to know:

– Spaniard Llorens is a five-time world champion and Infinity Tumbling Guinness World Record holder, who has performed a series of spectacular projects during the last five years including paragliding with a flock of starlings and with the beautiful Aurora Borealis as a backdrop.

– Brazilian Goberna was a Guinness Book of World Records winner at only 12-years-old and, in December 2016, he took to the skies above one of the seven wonders of the natural world when paragliding at Iguazu Falls.

– This time around, the duo teamed up in Dubai to showcase The Palm Fountain at the Pointe, Palm Jumeirah. They overcame a tricky preparation period to expertly glide between the fountain’s powerful jets of water.

– Spanning across the boulevard, the Palm Fountain features two giant floating platforms covering 14,000 square metres of sea water. Reaching an impressive 105 metres high and lighting up the Dubai sky with 3,000 LED lights, the fountain “dances” to hit songs from sunset until midnight.

– They undertook training first at Paramotor Desert Adventure on January 12 to test out their brakes and motors with technician Ramon Lopez finally arriving after being held up by the heavy snow in Madrid.

– Training was crucial for the challenge of flying during the night with low visibility as safety director Alan Gayton ensured they had a reserve parachute in case of a technical issue with the main parachute. Llorens and Goberna also had to study the movement of the water with great precision in order not to get caught up in the jets of water

– Flying over water, it was also mandatory to have a lifejacket with rescue boats, jet skis and divers on hand which came handy when Goberna suffered a technical malfunction on the first January 14 practice run.

– After repairs long into the night, they returned to Paramotor Desert Adventure to test out the motors again before completing the stunning flight on January 15 with Llorens and Goberna performing in harmony.

– Llorens, 38, revealed: “As soon as we got the opportunity, we wanted to fly there. We needed to know the area really well beforehand and we needed to know how to ‘play’ with the fountain – this was new for us. Such strong streams of water shooting 100 metres up is a lot, so we had to be really prepared.”

– Goberna, 26, explained: “The motor wasn’t flying so good because, prior to arriving in Dubai, it was last used in Europe at high altitude. I needed to adjust the carburettor in the air inside the motor. In the first practice flight over the water, I broke one propeller. I really couldn’t understand what was happening and then another one broke. Eventually, a backup motor was required. After a long journey, the final result was beautiful! The team worked incredibly hard to make it.”

– Llorens added: “The highlight for me was playing between the super shooters with Rafael, because it’s something we’ve never done before; it felt really new and really powerful.”

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EU sets itself jobs, training and equality targets for 2030



EU sets itself jobs, training and equality targets for 2030 2

By Jan Strupczewski

BRUSSELS (Reuters) – The European Commission on Thursday announced goals for the 27-nation bloc to reduce poverty, inequality and boost training and jobs by 2030 as part of a post-pandemic economic overhaul financed by jointly borrowed funds.

The EU executive arm said the European Union should boost employment to 78% in 2030 from 73% in 2019, halve the gap between the number of employed women and men and cut the number of young people neither working nor studying to 9% from 12.6%

“With unemployment and inequalities expected to increase as a fallout of the pandemic, focusing our policy efforts on quality job creation, up- and reskilling and reducing poverty and exclusion is therefore essential to channel our resources where they are most needed,” the commission said.

The goals, which will have to be endorsed by EU leaders, also include an increase in the number of adults getting training every year to adapt to the EU’s transition to a greener and more digitalised economy to 60% from 40% now.

Finally, over the next 10 years, the EU should reduce the number of people at risk of poverty or social exclusion by 15 million from 91 million in 2019.

“These three 2030 headline targets are deemed ambitious and realistic at the same time,” the commission said.

The goals are part of the EU’s set of 20 social rights, agreed on in 2017, to make the EU more appealing to voters and counter eurosceptic sentiment across the bloc.

They say everybody has the right to quality education throughout their lives and that men and women must have equal opportunities in all areas and be paid the same for work of equal value.

The unemployed have the right to “personalised, continuous and consistent support”, while workers have the right “to fair wages that provide for a decent standard of living”.

(Reporting by Jan Strupczewski; Editing by Nick Macfie)

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UK aero-engineer Meggitt eyes return to growth after pandemic slump



UK aero-engineer Meggitt eyes return to growth after pandemic slump 3

LONDON (Reuters) – British engineer Meggitt said that it could return to profit growth in 2021 provided there are no further lockdowns, despite a weakening in the struggling aviation market at the end of 2020 and early this year.

Pandemic restrictions halted much flying globally last year and forced plane makers Boeing and Airbus to cut production rates, dragging down suppliers like Meggitt, which makes and services parts for such aircraft.

Meggitt’s underlying operating profit plunged by 53% to 191 million pounds ($267 million) in 2020, it said on Thursday, despite continued growth in its defence business which makes parts for military jets and accounts for about 45% of the business.

Meggitt, however, said it expected air traffic to recover in the second half of the year which would help it return to profit growth over the year, although its guidance for flat revenue disappointed analysts who had expected growth of 6%.

Meggitt’s Chief Executive Tony Wood said in November that he had expected flying to start to recover by Easter, but new variants have led to more restrictions and delayed the recovery.

“It has gone back a couple of months… it’s now very much in the summer,” Wood said of the recovery in an interview on Thursday.

Further in the future, Meggitt is positioning itself for the move to lower emissions flying, and its sensors and electric motors will be used on electric urban air mobility platforms, such as flying taxis, and in hybrid aeroplanes being developed.

But Meggitt said new tax breaks announced in Britain’s annual budget on Wednesday aimed at encouraging investment would not change its plans.

“Yes, it will be a benefit. Are we looking at any acceleration as a result specifically of that? Not really,” Woods said.

Shares in Meggitt were down 1% to 427 pence at 0943 GMT. The stock has risen by 50% since news of a COVID-19 vaccine last November, but is still down 23% on where it was pre-pandemic.

($1 = 0.7165 pounds)

(Reporting by Sarah Young; Editing by Alistair Smout and Susan Fenton)

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