IMF and World Bank meeting to address global economic climate
Today, finance ministers and central bank chiefs from around the world will gather for the annual meeting of the IMF and the World Bank in Washington DC.
Over the past week, the IMF has released revisions to its biannual economic forecasts, predicting global growth rates of 3.6% in 2017 and 3.7% in 2018—the highest in a decade. The fund cited global increases in investment, credit supply and consumer confidence as the primary drivers of growth.
Regardless, many developing countries—particularly oil exporters and states experiencing climate disasters or political instability—did not receive favourable predictions. For example, Saudi Arabia, which is experiencing OPEC-mandated cuts in oil production, is expected to have weaker growth than was originally predicted
But the IMF has qualified its optimism, stating that growth may be unsustainable given sluggish inflation rates and weak wage growth, especially in developed economies. More dramatically, the report warned that a strong global economic performance was contingent on a relatively stable geopolitical landscape. Should tensions from any number of crises—from North Korea to Ukraine, NAFTA renegotiations to Brexit talks—flare, shockwaves could be sent through the global economy, potentially creating another financial crisis.
Vice-chair to step down, creating another Fed opening
Today, Stanley Fischer, the vice chairman of the US central bank, will officially step down. Mr Fischer announced his departure last Friday, citing “personal reasons”.
Fischer’s exit leaves the Fed Board with only four out of its seven seats filled. Appointments for these vacancies must be made soon, giving Donald Trump the opportunity to shape the central bank’s policy for years to come, as governors serve 14 year terms.
Last week, Mr Trump appointed Randal Quarles to craft a more anti-regulatory Board without Yellen at the head. While the president has toyed with the idea of reappointing the Board’s chair, he seems to diverge with Yellen’s support for stricter banking regulations. A shortlist of five candidates has been produced, including the likes of Kevin Walsh, Gary Cohn, and others who similarly oppose banking regulations.
While it is unclear who President Trump will tap to be the next Fed chair, it has been reported that Treasury Secretary Steven Mnuchin is pushing for Jerome Powell, potentially giving the current Fed governor a slight lead.
Australian High Court nears ruling on deputy PM’s eligibility
Today, the High Court adjourns for four days as it imminently nears a ruling on whether Barnaby Joyce can continue serving parliament after he was revealed to be a dual citizen of Australia and New Zealand. The challenge is based on section 44 of the constitution, which prohibits foreign nationals from sitting in parliament.
Joyce is one of seven politicians caught up in the citizenship imbroglio since the resignation of the Green Party Senator and New Zealander, Scott Ludlam, in July. With both claiming ignorance, the court will determine whether it was reasonable for them to have suspected holding dual citizenship.
Joyce’s disqualification could potentially provoke “genealogical witch hunts”, and will require a by-election in his New England seat. The situation places the governing coalition’s precarious one-seat majority in the House of Representatives under threat. This comes at a bad time for a low-polling PM Turnbull, who is still battling internal division over climate and energy policy.
Trump’s Iran speech, Australia-South Korea talks, Puerto Rico aid
Donald Trump will deliver a major policy speech outlining his strategy to confront Iran. Our take here.
The foreign and defence ministers of Australia and South Korea will hold high-level talks in Seoul. Yesterday, Foreign Minister Julie Bishop visited the demilitarized zone, an experience she described as “tense”. Along with the North Korea threat, the Australian delegation is expected to discuss building on a $22 billion trade relationship.
A number of US lawmakers, including House Speaker Paul Ryan, will land in Puerto Rico to survey the damage left by Hurricane Maria. His visit comes a day after the House voted on a $36 billion disaster-relief package, $4.9 billion of which will be earmarked for Puerto Rico and the US Virgin Islands. Three weeks after the hurricane hit, more than two-thirds of the island-territory is still without power and half the population lacks access to cellular networks.