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South Korea’s birthrate, the lowest in the world, rose in 2024 for the first time in nine years, as more couples tied the knot after pandemic delays, and as policy efforts to incentivise companies and Koreans to embrace parenthood start to pay off. Nam Hyun-jin, 35, who had her second daughter last August, said she has seen a social shift, driven largely by the government’s broadened policy support and more companies joining the efforts. “The society as a whole is encouraging childbirth more than five years ago when we had our first child,” Nam said. And, more importantly, “it’s the company culture of encouraging childbirth that is providing huge help,” said Nam, whose employer – Booyoung – started to give out 100mn won ($70,000) from last year to its employees for childbirth bonus. That shift in societal norms could prove pivotal in a country that over the past decade has seen its birthrate plummet to the lowest in the world, as women prioritised career advancement over marriage or parenthood due to the rising cost of housing and raising a child. The stakes are high, as the demographic crisis has become the biggest risk to growth in Asia’s fourth-largest economy and its social welfare system, with the country’s population of 51mn on track to halve by the end of this century. In 2024, however, the glum statistics on South Korea’s fertility rate turned a corner. It rose to 0.75, still a global record-low, from 0.72 in 2023, after eight consecutive years of declines from 1.24 in 2015 despite billions of dollars spent by the country to try to reverse the trend. While the rise mostly reflected an increase from pandemic-disrupted marriages, other numbers suggest it could be more than just a Covid blip and that government policies are having an effect. Quarterly data showed the number of second newborns, such as Nam’s, jumped 12% in the second half of 2024, versus an 11% rise in first-born babies. “There is a high possibility of further rises (in fertility rate) in coming years, and we are right at the inflection point,” You Hye-mi, presidential secretary for population policy, told Reuters. Last year, now-impeached President Yoon Suk-yeol proposed a new ministry devoted to tackling the “national demographic crisis”, aiming for a broader approach from earlier years of less-effective cash-focused support. Interviews conducted by Reuters over the past week with policymakers, industry experts, economists and Korean mothers credited the government’s policy support – in three areas of work-family balance, childcare and housing – and a campaign to encourage business to incentivise employees on parenthood for the positive turn. The government plans to spend 19.7tn won ($13.76bn) in the three focus areas this year, up 22% from 2024. “Korea faces some of the world’s most challenging demographics. The government didn’t overstate the case when it declared a national demographic emergency in June,” says Kathleen Oh, Morgan Stanley’s chief Korea and Taiwan Economist. “The good news is that the sense of urgency appears real, with authorities moving toward structural reforms and away from short-term fixes.” Policy changes over the last year include employees being paid 100% of their salary for a maximum of six months, if both parents take parental leave, compared with a maximum of three months earlier. Additionally, the maximum period was extended to 1-1/2 years, from 1 year, if both parents take leave. Paternity leave has also been extended to a maximum of 20 days from 10 days. The government will pay employees at small and medium sized enterprises (SME) their wages during the leave. From this year, the government is making it mandatory for listed companies to include their childcare-related statistics in regulatory filings, with incentives for government projects and financial support for SMEs. The policies appear to be bearing fruit. In 2024, marriages rose even more sharply, at the fastest pace on record, after climbing in 2023 for the first time in 12 years on a post-pandemic boost. In last year’s government survey, 52.5% of South Koreans expressed positive views about marriage, the highest since 2014. “The government has prepared as much as it could at an institutional level, and now we need more companies embracing it,” said Shin Kyung-ah, sociology professor at Hallym University. Last year Booyoung saw a surge in childbirths among employees after the construction firm announced the bonus scheme. “After all, it is for companies to survive. We build apartments, and they will be sold only if there are enough people to live in,” said Kim Jin-seong, human resources director at Booyoung. Booyoung’s move was later followed by more incentives from the government, such as tax exemption on childbirth bonuses, and similar efforts by other companies, including game developer Krafton which is also planning a 100-mn-won scheme. “We need to make sure to keep the spark alive, which was hard to make, by quickly filling in the blind spots of low-birth policies, such as free-lancers and the self-employed,” Choi Sang-mok, the finance minister who is currently serving as acting president, said this month. For some, however, especially among the younger generation, the “spark” is missing. “I think it is not that welcomed, because it is difficult and costs a lot of money to get married, have a baby and family in the Korean society,” said Kim Ha-ram, 21, a student. South Korea’s last baby boom was in 1991-1996. It now aims to raise the fertility rate to 1 by 2030, which is still far below the rate of 2.1 needed for a steady population. Hallym University’s Shin sees South Korea’s temporary workers, the second-highest rate among Organisation for Economic Co-Operation and Development countries at 27.3%, compared with the average of 11.3%, as a demographic challenge. “The gap is huge between big and small companies in South Korea, and between those employed permanently and temporarily, so the government needs to be more creative to have the system established for all,” Shin said. Jung Jae-hoon, a professor of social welfare at Seoul Women’s University, endorsed Shin’s view that companies should do more to complement government efforts. “Childcare systems are well established now at a society level through government investments, but we still need companies to change to become more family-friendly, which makes it a job half done,” Jung said.

The Trump Administration’s tariffs on Canada, Mexico, and China took effect on March 4, though some have been temporarily postponed since. Notably, the 25% tariff on imports from Canada and Mexico was subsequently granted a one-month exemption by President Trump of the United States. China responded swiftly, declaring its readiness for a tariff war or “any other type of war,” signalling its intent to retaliate decisively. As the world’s second-largest economy braces for countermeasures, global investors are preparing for prolonged economic turbulence marked by market volatility and financial uncertainty. Some prominent US economists, including Greg Howard, caution that the imposition of these tariffs could provoke retaliatory measures that may ultimately impact American consumers. Howard noted, “It will be interesting to see how the rest of the world responds. It has been a long time since we have seen trade wars of this scale, but historically, such disputes have led to widespread tariff increases across multiple industries and countries. This will not only affect US consumers but also American producers.” Market trends reflect growing investor concern. Global money market funds recorded a surge in inflows, with investors seeking safer assets in response to the United States’ decision to escalate its trade dispute. According to LSEG Lipper data cited by Reuters, global money market funds attracted $61.32bn in the week ending March 5, following net purchases of $39.55bn the previous week. Conversely, demand for global equity funds declined, reaching a four-week low as they secured only $2.97bn in inflows. US equity funds, in particular, experienced significant net outflows of approximately $9.54bn, while European and Asian funds saw strong inflows of $5.87bn and $5.83bn, respectively, during the same period. Despite the Trump Administration’s assertions that tariffs will bolster America’s economic position, the reality may prove more complex. Increased import costs force businesses to either absorb financial losses or pass them on to consumers, potentially driving inflation and reducing household purchasing power. Higher import costs often get passed on to consumers, increasing inflation in countries around the globe. Domestic businesses relying on imported materials also face higher costs, reducing profitability. Nigel Green, CEO of deVere Group, warns: “Tariffs are an act of economic warfare. This aggressive escalation could cause the most severe economic disruption since the global financial crisis, excluding the pandemic. “The fallout extends far beyond tariffs alone, with ripple effects threatening corporate profits, inflation rates, and supply chain stability. Trade barriers of this magnitude are not a pathway to strength; they are self-inflicted wounds that raise costs for businesses, dampen consumer spending, and weaken economic resilience.” Higher tariffs increase the cost of trade, reducing economic activity and slowing global GDP growth. The International Monetary Fund (IMF) has repeatedly warned that trade wars reduce business confidence and investment, leading to slower expansion. Trade wars typically produce more economic drawbacks than advantages. While they may offer temporary protection to certain industries, ultimately they hinder global trade, increase costs, and generate uncertainty that weighs on economic growth. Given that the global economy is still recovering from the disruptions of the Covid-19 pandemic, it is ill-equipped to endure a tariff war at this juncture.

There has only been a marginal rise in the number of announced greenfield FDIs in the GCC in 2024, according to Emirates NBD.In a recent research, the bank said the number of greenfield FDIs in the GCC grew just under 1% to 1,830 in 2024 from 1,813 in 2023.Despite the low pace of growth, the number of new projects remains well above the pre-Covid average.There does, however, appear to have been a decline in the average project value across the GCC, with the total value of projects having fallen by 26% year-on-year (y-o-y) in 2024.The primary sources of FDI into GCC economies in 2024, on a value basis, included the US (25%), China (17%), the UK (9%) and India (9%).The UAE also made a material contribution to greenfield FDI in the rest of the GCC, accounting for 5% of announced projects in 2024. Sectors seeing the highest value of greenfield projects include communications (18%), renewables (14%), metals (8%), electronic components (8%), as well as coal, oil and gas (8%).Global FDI flows declined in 2024 in both value and volume. UNCTAD estimates that the number and value of announced greenfield FDI projects declined by 8% and 7% y-o-y respectively.Despite the annual decline, the value of greenfield project announcements remains high by historical standards because of several large-scale projects related to the manufacturing of semiconductors and AI technology.The UAE features as the source country for two of the top 10 projects by value of investment, including a real estate investment into Ras El-Hekma in Egypt by ADQ and an investment by Mubadala in semiconductor manufacturing in the US.While the aggregate value of greenfield projects fell in 2024, there were pronounced differences across geographical regions.Developed economies saw a 15% y-o-y rise in the value of announced greenfield projects, disproportionately driven by large increases in the value of projects in the US (+93% y/y) and the UK (+32% y/y).In contrast, developing economies in saw a 24% y-o-y decline in the value of announced greenfield projects, Emirates NBD noted.

As US President Donald Trump’s administration prepares to impose “reciprocal tariffs” on America’s trading partners, it is clear that firms can no longer assume that their business models will not be disrupted by new trade barriers – and even a full-blown trade war. Could this be the final nail in the coffin of globalisation?It is no secret that globalisation has been in retreat for a while. But as my co-authors and I show in a new paper, this process began earlier that many realise, with the 2008 global financial crisis (GFC) as the turning point. From 1990-2008 – call it the period of hyper-globalisation – trade, as a share of GDP, rose by more than one percentage point annually, on average. In 2000-07 alone, the share of total inputs advanced economies sourced from developing countries almost tripled. But after the GFC, this expansion ended abruptly, before reversing in 2011, and overall trade growth has since stagnated.The likely explanation for this change is relatively straightforward: the GFC was the first in a long series of negative shocks. In 2012, the eurozone faced a sovereign-debt crisis. In 2016, the United Kingdom voted to leave the European Union. In 2018, Trump’s first administration launched a tariff campaign against major US trading partners, especially China (which continued under Joe Biden). In 2020, the Covid-19 pandemic began. In 2022, Russia launched its full-scale invasion of Ukraine. And in 2024, Trump – the self-proclaimed “Tariff Man” – was elected for a second term.When trade uncertainty is high, so is risk – and that makes global value chains costly. If firms fear that new tariffs might make imports of key inputs more expensive, or that new trade barriers or other disruptions might prevent those inputs from arriving at all, they will question whether buying those items from foreign suppliers still makes sense. With rapid technological advances enabling the automation of a fast-growing range of tasks, they may well conclude that it does not.In this case, firms might “reshore” production, whether by increasing their reliance on domestic suppliers or by moving production in-house (vertical integration). We found that higher uncertainty in developing economies leads to significant increases in the share of inputs produced in high-income countries – but only in highly robotised industries. In industries where automation is less widespread or feasible, the cost of local labour appears to be prohibitive for many firms.We also found that, when reshoring, firms tend to favour vertical integration over dependence on domestic suppliers, whether because they want to exercise as much control as possible over their value chains – yet another hedge against uncertainty – or because it is too costly to source inputs from new suppliers. (Building relationships with suppliers typically involves investment, including the provision of knowledge and technology.) Small and medium-size firms are especially likely to take this route, as they generally lack the sprawling multinational networks that might facilitate a larger firm’s search for new suppliers.While firms in high-income countries engaged in some reshoring before the GFC, the reshoring response to uncertainty has more than tripled since 2008. The low-interest-rate environment that prevailed for over a decade after the GFC probably contributed to this shift – along with increased risk aversion and advances in automation technologies – by making investment in robots more attractive.Of course, reshoring is not the only possible response to uncertainty. Policymakers and consultancies often recommend that firms facing geopolitical, climate, or trade risks bolster supply-chain resilience by diversifying their input suppliers across locations, thereby limiting the impact of disruptions in one or more. But we find little evidence that firms heed this advice, largely because finding new suppliers is so costly. Moreover, some types of production are highly concentrated geographically. For example, rare-earth minerals and electric-vehicle batteries originate mostly in China.Another strategy for coping with uncertainty is nearshoring – relocating supply chains to nearby countries, especially friendly ones (friendshoring). But we find little evidence that firms are embracing this approach, either. On the contrary, in industries where automation is an option, countries have been reshoring even from neighbours with which trade barriers are unlikely to emerge. Germany is a case in point: far from shifting production to its fellow EU members in Central and Eastern Europe, where labour costs are lower, it has moved production from those countries back onto its own territory. US firms have also reshored production from Mexico – though, again, having the option to use robots, rather than expensive domestic labour, is essential.Since the GFC, rising economic, geopolitical, and climate risks, together with progress on automation, have fundamentally changed firms’ calculations regarding global value chains, with offshoring viewed as increasingly costly. While firms have reason to keep some production on foreign soil – if it cannot be automated at home – the reshoring trend is likely to accelerate, driven not least by Trump’s rapidly escalating trade war. Globalisation might not die, but it will never be the same. – Project SyndicateDalia Marin, Professor of International Economics at the School of Management of the Technical University of Munich, is a research fellow at the Centre for Economic Policy Research and a non-resident fellow at Bruegel.

What do Rachel Reeves, Javier Milei, and Elon Musk have in common? All are preaching the gospel of austerity as a necessary cure for what ails their respective economies.Hence, Reeves, the United Kingdom’s Chancellor of the Exchequer, has tightened rules for government spending and investment, despite the fact that fiscal constriction has been a major cause of the country’s problems over the past 15 years. Similarly, Milei has framed austerity as the price Argentina must pay for 20 years of overextension. He argues that defeating inflation is the only path to prosperity, even if doing so deepens an already deep well of poverty.And for Musk, the United States supposedly needs austerity to spare it from bankruptcy. This argument is just a ruse: states with sovereign currencies, especially the main global reserve currency, cannot go bankrupt. Musk’s obvious motivation for slashing public budgets is to make room for tax cuts, and to fire public employees who do not share his agenda.The last time we heard the drumbeat of austerity was during the global financial crisis. In the US, the prescribed response took the form of a milquetoast “sequester” (spending caps). But in Europe, the fiscal tightening went much further, destroying a decade’s worth of growth, undermining public investment, and contributing to many of the problems that the continent is still struggling with today.What was obviously a failure of private finance was rechristened a crisis of runaway state spending. Bilateral loans to the European Union’s periphery states were little more than disguised bailouts of core countries’ banks “paid for” by fiscal contractions. Those offering elaborate arguments about the expansionary power of fiscal tightening were denying the obvious: When the private sector is trying to save and the public sector does the same, the economy inevitably will shrink, and the debt stock will grow larger as a share of GDP.This was the essence of Europe’s self-defeating experiment with austerity in the 2010s. By 2016, even the European Commission had begun to change its tune; and by the time that Covid-19 had struck, the days of “growing the economy by shrinking it” seemed to be over. How wrong we were.As John Quiggin argued at the time, austerity is a zombie idea: It cannot be killed, because it is immune to empirical refutation. The wisdom of the Covid crisis – when the sound response was to bail out the economy in the face of a global shutdown – thus became another “runaway debt crisis” that threatens to bankrupt the state.Back in the 2010s, austerity in the EU was supposed to stabilise public finances by “restoring confidence” in the bond market. But cutting spending when the economy was already in recession simply compounded the problem. Fear of inflation owing to “all that spending” quickly turned into fear of deflation and declining confidence. Austerity in a recession simply produces more recession and unemployment. We have known that since the Bruning Chancellorship in Weimar Germany.But what about austerity under other conditions? The current cases of the US and Argentina are interesting in this regard. For its part, the US is nowhere near a recession. The economy is powering ahead and facing inflationary pressures. In addition to freeing up fiscal space for tax cuts, another possible explanation for pursuing austerity under such conditions concerns geopolitics and global imbalances.When Joe Biden took office in early 2021, he kept most of Donald Trump’s tariffs in place and embarked on a path of “green” reindustrialisation. Now that Trump is back in power, he is raising tariffs further to force adjustments in exporting economies, and replacing Biden’s green reindustrialisation strategy with a fossil-fuelled approach.But this isn’t the whole story. Musk and his Department of Government Efficiency (DOGE) are pursuing the long-held Republican (and libertarian) dream of dismantling the modern administrative state. They would much prefer the nineteenth-century state, which used tariffs both to protect domestic industry and raise government revenue. The implication is that Silicon Valley’s tech lords will reprise the role played by the robber barons during the Gilded Age. Thus, austerity is being dusted off for a whole new set of purposes.Argentina, by contrast, faces permanent high inflation without real (inflation-adjusted) GDP growth. More than a dozen stabilisation plans have come and gone, and Milei has achieved what seemed impossible: a broad electoral coalition in favour of austerity.Milei owes his success (so far) to the distributional politics of permanent inflation. The Peronists lost their long hold on the poor and the working class because these are the voters who spend the greatest share of their incomes on consumption, and rising prices consistently eroded their purchasing power.The Peronist coalition managed to shelter unions from inflation by indexing wages accordingly, and the professional classes sheltered themselves with US dollar holdings. For a while, this arrangement was sufficient for Peronists to win elections. But those without these protections suffered falling consumption, and poverty increased year after year. Milei offered a way out. He would embrace austerity, destroy the Peronist networks, disrupt the middlemen, and deregulate everything. It would hurt for a while, but it would crush inflation and destroy Peronist insiders’ ability to protect themselves. Their pain would be your gain. Thus, austerity has become a form of schadenfreude politics, much like the war on federal employees and other “elites” in the US.Will it work? In Argentina, if the point is to defeat inflation despite rising poverty, then yes, it is working. But it will be electorally sustainable only if lower inflation leads to more investment and rising real wages. If it leads to ever deeper poverty for those who voted for it, Milei will lose his base.In the US, if the goal is to dismantle the administrative state, austerity will work. But in a country where 53% of counties – most of them Republican-leaning – are dependent on government transfers for a quarter or more of their incomes, it may backfire badly. Still, if Republicans get $4tn worth of tax cuts for the top 10%, the scheme might just be worth it.Austerity is back, but this time it is not just a bad idea. It is also a political weapon and a dangerous redistributive tool. — Project SyndicateMark Blyth, Professor of International Economics and Director of the Rhodes Centre for International Economics and Finance at the Watson Institute for International and Public Affairs at Brown University, is the co-author (with Nicolò Fraccaroli) of the forthcoming Inflation: A Guide for Users and Losers and the author of Austerity: The History of a Dangerous Idea.

Tens of thousands of US government workers have been fired in recent weeks, according to a Reuters tally of announcements tracking President Donald Trump's plan to shrink the federal workforce. So far, few indications of those lost jobs have appeared in the various formal measures of the US job market.Economists will be keeping an eye on the data because federal government hiring has been a steady contributor to overall US employment growth as the pace of private-sector hiring has eased. Over the last two years through January, the ranks of non-US Postal Service federal workers as a share of overall payroll employment has edged up to 1.52% from 1.47%.Despite that rise, the federal civilian worker share of total U.S. employment is near its historic low of 1.4% from late 2000. The federal workforce share peaked at just over 4% in the early 1950s.Also, Trump's cuts - being carried out under the direction of Tesla CEO Elon Musk's Department of Government Efficiency - have not just been aimed at those directly on government payrolls but also at private companies and individuals performing contract work for the government. A 2020 Brookings Institution study estimated that for every one federal employee there are two contractors. With that in mind, Torsten Slok, chief economist at Apollo Global Management, estimated that with a "consensus" estimate of ultimately 300,000 DOGE-related federal job cuts, the total employment reduction could be closer to 1 million.So when will these reductions start to materialise in the official data? Here's a guide:Each Thursday, the Labor Department's Employment and Training Administration reports the number of people who the previous week had filed for state unemployment benefits for the first time. The report includes a running tally of all those who continue to collect benefits beyond one week, a figure called "continued claims" and reported with a one-week lag.Federal employees who have lost their jobs, though, are not included in the state claims data. They are tracked separately under the Unemployment Compensation for Federal Employees (UCFE) program, and the data is reported with a one-week lag.In the latest week ended February 8, 613 initial claims had been filed by former federal workers, and that figure has not climbed above 1,000 in more than two years. It also remains below the level typically seen during comparable seasons in the years immediately before the Covid-19 pandemic.In the previous week, 7,110 former federal workers were receiving continued benefits, around the same number seen at this time of year in the last two years. Moreover, those continued claims tended to be much higher during comparable times of year before the pandemic.Since the Trump and Musk cuts are not aimed only at those earning a government paycheck, some indications of the extent of job losses may start appearing soon in data from individual states with high concentrations of jobs supported by federal government activities.Washington and the neighboring states of Maryland and Virginia are home to hundreds of thousands of workers whose employers perform work under federal contracts, making them key locations to watch.Only Washington has shown an uptrend in new benefits filings. In the latest week ended February 15, the advance number of new filings was about 1,700 and the highest in nearly two years. It is also well above the level typically seen in the years just before the pandemic, with the exception of a short-lived spike in January 2019 due to a government shutdown over a budget impasse.New claims in Maryland and Virginia, meanwhile, have both averaged about 2,800 per week since Trump took office on January 20, both within the trend range over the last year.Texas, Florida, California and Georgia also have high numbers of federal workers and associated contractors.There are some caveats.Not everyone who loses a job is eligible for jobless benefits, and this includes certain contract workers. So some job losses will never appear in the weekly claims data.Also, not everyone files for benefits immediately after losing a job - or at all. Many people don't file for a week or more after their job was eliminated, and some among them will find new work promptly and never have a need to seek government support. That said, a generally slowing job market may mean that final dynamic is less at play this time around.Each month, typically on the first Friday, the Bureau of Labour Statistics reports the US employment situation, which updates the unemployment rate as well as the total level of employment and levels and changes by sector, including local, state and federal government employment.The next report is due on March 7, covering February. It is based on a survey conducted during the week when the 12th day of the month falls. In this case, that was a week when news reports about firings within the federal government began circulating widely, so there is a chance that the level of non-USPS civilian employment was affected by that development.Net federal hiring outside the postal service totaled 3,700 in January. It has averaged about 5,700 a month over the last two years and has shrunk in just one month in that span. It is unclear whether the reports of firings that surfaced during the week of February 9-16 would have been made official and reported in that week's BLS survey.Trump shrunk federal civilian employment by about 17,000 workers in his first year of office during his first term, including about 13,000 in his first three months. But it began growing again, and by the time the pandemic struck he had overseen an expansion in the federal workforce of 60,000 people.The Job Openings and Labor Turnover Survey (JOLTS) measures the number of posted job vacancies on the last day of each month, and also estimates the monthly number of gross hirings and job separations, including people who quit, are laid off, or leave for another reason such as retirement.It is not as timely as the payrolls report. The next report, for instance, will be issued on March 11, covering January. As a snapshot of where things stood at the end of the month, it could reflect Trump's January 20 hiring freeze order, which directed that all job postings be removed and many job offers rescinded.The latest figure, for December, showed 140,000 federal government job vacancies, roughly in line with the monthly average over the term of former President Joe Biden. Monthly federal openings totaled about 110,000 during Trump's first term from January 2017 to January 2021.Gross federal hiring, meanwhile, totaled 30,000 in December - unchanged for three months and the lowest number since May 2018.The BLS also provides monthly state and local employment reports.The next State Employment and Unemployment report will be issued on March 17, covering January. This report shows employment levels, job gains and losses and unemployment rates across all 50 states, Washington, Puerto Rico and the US Virgin Islands.It shows government employment levels but combines state, local and federal government figures. Still, it will be another resource for indications of government contractors shedding jobs, especially in areas of high concentrations of these employers.However, it is not likely that this will make itself evident before the report for February is issued in mid-April.The Metropolitan Area Employment and Unemployment Summary, meanwhile, tracks employment across nearly 400 metropolitan areas across the US This has an even longer delay, of two months, and shows payroll employment levels, changes and jobless rates but does not show employment sector activity.The earliest this might be expected to reflect the effects of federal firings at the local level will be in late April when the report for February is issued. - Reuters

Gulf nations are acquiring developed market status as more advanced nations further increase their debt. The bond markets are signalling profound shifts in the global economyIn a highly significant move, Qatar has been upgraded in category from emerging market to developed market, by the investment bank JP Morgan Chase & Co, along with Kuwait. The bank announced that the two Gulf nations will be removed from its Emerging Markets Bond Index in a phased manner, over a six-month period beginning end-March. The bank will consider the same reclassification for the United Arab Emirates next year. It is possible that the higher ranking for Qatar and Kuwait will be followed by other index providers.At around the same time, in mid-February, Qatar concluded a heavily over-subscribed bond issuance on two tranches. A $1bn tranche maturing in three years carries a coupon rate of 4.5%, while a $2bn tranche maturing in 10 years has a coupon rate of 4.875%. The rates represent respectively 30 basis points and 45 basis points over 10-year US Treasuries. This represents a tightening by 30 and 35 basis points respectively compared with the Initial Price Target (IPT). The issuance was 5.8 times over-subscribed; orders topped $17bn.The ability to attract such high demand even after tightening the price, along with the upgrading to developed market status, is a fair reflection of the economic progress the state has made across a range of issues: Not just fiscal responsibility, but infrastructure improvements, developing a sound tax base, and strengthening export earnings through the expansion of extraction from the North Field gas reserves.Qatar had become an outlier in terms of its strong fiscal position not only within emerging markets, but more widely. Its public debt is below 50% of GDP, and has been progressively reduced since the Covid-19 pandemic and the investment for the 2022 FIFA World Cup.By contrast, the proportion of public debt to GDP is around 100% or higher for some developed nations, notably France, the UK and the US. If an emerging economy had such high debt levels, this would potentially result in strict measures being imposed by the IMF, and difficulty in finding investors for bond issuance, risking default. In part, the richer nations can continue to sustain this owing to the depth and liquidity of their capital markets, strong tax base and diversified economies, but there are signs this year from the bond markets that no government can be complacent.Central banks have reduced interest rates, which normally would cause yields on government bonds to fall, but this has not consistently been the case. Mortgage rates have not fallen either. Investors are anticipating higher inflation, and interest rate levels that may stay the same or even be increased. The average fiscal deficit across the G7 countries for 2025 is 6% of GDP; the US is expected to issue bonds totalling 7% of GDP, which amounts to $2tn. The largest economies have also engaged in quantitative tightening, meaning more investors have to be attracted to bond issuances.These are colossal sums. Will the confidence hold? Probably: The debt levels were as high or higher during the Second World War, while inflation and interest rates were much higher in the 1970s and 1980s, which caused investors to shun government bonds.China and Japan have been reducing their exposure to US Treasuries, and several central banks, notably that of China, have been buying gold. For the foreseeable future, however, the shifts are not sufficient in scale to cause a major spike in yields or a collapse in confidence, given the depth and liquidity of the capital markets, growth prospects for the US and the dollar’s status as the world’s reserve currency. There are concerns, nonetheless, about the potential impact of tariffs and tax cuts by the Trump administration, and little sign that the fiscal deficit will be reduced. There is pressure on all western governments to increase defence spending owing to geopolitical tensions.But while a spectacular default by a major economy is unlikely – although bond investors did force a U-turn and a change in Prime Minister in the UK in late 2022 – what the dynamics reveal are a shifting economic world order, in which some emerging markets are beginning fully to emerge as developed economies, and with lower debt than the largest western economies. The changes may not be sudden, but they are profound.The author is a Qatari banker, with many years of experience in the banking sector in senior positions.

A Qatar-based payment infrastructure startup has witnessed significant growth since its establishment in 2021, from providing small merchants with digital solutions some four years ago to processing transactions for the country’s major enterprises today.Speaking to Gulf Times on the sidelines of Web Summit Qatar 2025, Dibsy co-founder Ahmed Isse said the company has established its role as a key player in the country’s digital payment landscape, helping a diverse range of domestic businesses accept payments through multiple channels, including credit and debit cards, as well as mobile wallets like Apple Pay and Samsung Pay.Since its inception during the Covid-19 pandemic, Isse and co-founders Loyan Farah and Anouar el-Mekki have focused on helping small businesses that didn’t have a website or mobile app. Soon after, Isse said large companies also tapped their expertise in innovations like embedded checkout and tokenisation, as well as anti-fraud solutions.Dibsy’s latest achievement, according to Isse, is the company’s partnership with QNB, allowing it to be the first bank in CEMEA (Central and Eastern Europe, Middle East and Africa) to launch the updated version of Visa’s ‘Click to Pay’ service.Asked about other partnerships with other local companies, Isse noted that as a regulated payment service provider under the Qatar Central Bank (QCB), Dibsy exclusively serves Qatar-based businesses.“We’re focused on providing digital payment solutions to local companies in Qatar as the Qatar Central Bank regulates us. From small businesses to large entities, we can onboard these businesses within 48 hours, provided they have the proper documentation,” Isse explained.Asked about Dibsy’s expansion plans, Isse noted that the company currently focuses on the Qatari market. “But we are planning to expand hopefully soon; we will make the necessary announcements,” he said.Regarding Web Summit Qatar, Isse was impressed by the growth from last year's inaugural event. He revealed that Dibsy’s foundation was born in Web Summit when he and el-Mekki met in Lisbon, Portugal. “The presence of Web Summit in Doha is a great advantage to many entrepreneurs and the event has opened Qatar to many international startups,” he said.When asked about artificial intelligence (AI) integration, Isse indicated that while it is not an immediate focus for Dibsy, AI could eventually help with fraud management and automate repetitive tasks.

The global air travel industry has experienced a significant resurgence since the Covid-19 pandemic, though the pace of recovery has been uneven across different regions and sectors.As borders reopened and travel restrictions eased, demand surged in 2022 and 2023, signalling a strong rebound.Domestic travel led the recovery, particularly in top three markets - the United States, China, and India.Meanwhile, international travel took longer to regain momentum due to border restrictions, visa processing delays, and lingering concerns over new Covid-19 variants.By mid-2023, global passenger traffic had reached approximately 90% of pre-pandemic levels, with some markets even surpassing the 2019 figures.Airlines, which faced severe financial distress during the pandemic, saw a return to profitability in 2023. While leisure travel rebounded swiftly, business travel remained sluggish due to the rise of virtual meetings and corporate cost-cutting measures.However, premium travel segments, including first and business class, demonstrated resilience, supported by the growing trend of blended travel — combining business and leisure trips.According to the International Air Transport Association (IATA), 2024 underscored travellers' strong desire to fly, with demand increasing by 10.4%. Both domestic and international travel reached record levels.Airlines responded by optimising efficiency, achieving an average seat occupancy rate of 83.5% — a new industry high, driven in part by supply chain constraints that limited capacity growth.IATA data also revealed that, in 2024, international traffic exceeded its 2019 peak by 0.5%, with growth observed across all regions. Capacity remained 0.9% below 2019 levels, while the load factor improved by 0.5 percentage points to reach a record high of 83.2%.Middle Eastern airlines, in particular, experienced a 9.4% increase in traffic compared to 2023, with capacity rising by 8.4% and the load factor climbing to 80.8%. December 2024 saw a 7.7% increase in demand compared to the same period in 2023.GCC-based carriers have significantly contributed to the region's traffic growth.Highlighting aviation's broad economic impact, IATA Director General Willie Walsh stated: "Aviation growth reverberates across societies and economies at all levels through jobs, market development, trade, innovation, exploration, and much more."Looking ahead, industry leaders remain optimistic. Walsh projected continued growth in 2025, albeit at a moderated pace of 8.0%, aligning more closely with historical trends.However, he also emphasised the challenges ahead. "The tragic accident in Washington (in January) reminds us that safety needs our continuous efforts. Our thoughts are with all those affected. We will never cease our work to make aviation ever safer," he stated.On January 30, an American Airlines commuter jet collided with a military helicopter during a landing approach in Washington, DC, causing both aircraft to crash into the frigid Potomac River and killing some 67 people in the worst US commercial aviation disaster in years.Meanwhile, sustainability remains a top priority, with airlines committed to achieving net-zero carbon emissions by 2050. Despite record investments in Sustainable Aviation Fuel in 2024, SAF met less than 0.5% of the industry’s fuel needs due to supply shortages and high costs.Walsh called for greater government support, suggesting that prioritizing renewable fuel production and reallocating subsidies from fossil fuel extraction to sustainable energy initiatives could enhance energy security and economic growth.Clearly, the pandemic has forced airlines to reevaluate their financial strategies, focusing on cost efficiency, digital transformation, and fleet modernisation. Sustainability initiatives have gained traction, with significant investments in SAF and fuel-efficient aircraft.Additionally, industry consolidation has accelerated as airlines seek to strengthen their market positions.Airports have also embraced technological advancements, incorporating automation, biometric screening, and AI-powered operations to enhance efficiency and passenger experience.Despite strong growth prospects for 2025, concerns remain regarding economic uncertainties, geopolitical tensions, and their potential impact on the industry.Airlines continue to grapple with pilot and crew shortages, contributing to operational disruptions such as delays and cancellations.Additionally, evolving sustainability regulations and carbon emission targets will necessitate the adoption of greener technologies.While the air travel industry has largely recovered from the pandemic’s disruptions, it continues to evolve in response to shifting travel behaviours, economic conditions, and sustainability imperatives.The coming years are likely to bring further innovations, industry restructuring, and transformations in global travel patterns.Pratap John is Business Editor at Gulf Times. X handle: @PratapJohn.

Prime Minister Keir Starmer said yesterday he would increase annual defence spending to 2.5% of GDP by 2027 and target a 3% level last seen just after the Cold War, a signal to US President Donald Trump that Britain can boost Europe’s security. On the eve of his departure to meet Trump in Washington, Starmer told parliament he was bringing the increase in defence spending forward to offer Europe more support as the US spearheads peace talks with Russia over its war in Ukraine. With public spending already stretched in Britain, Starmer said the increase from its current 2.3% would be fully paid for by a 40% cut to international aid, an announcement he said he was not happy to make but one which was necessary to offer Ukraine and Europe support in a “new era”. Since Trump seemingly abandoned the United States’ more Ukraine-friendly approach to Russia’s war, blindsiding much of Europe, Starmer and other European leaders have stepped up diplomatic efforts to show a united front to support Kyiv. “Starting today, I can announce this government will begin the biggest sustained increase in defence spending since the end of the Cold War,” Starmer said, adding that combined with spending on intelligence services it would reach 2.6% from 2027. “We must go further still. I have long argued that ... all European allies must step up and do more for our own defence,” he said. He added that Britain would set a target for spending 3% of gross domestic product in the next parliament, which will convene after a national election due in 2029. US Defence Secretary Pete Hegseth welcomed the spending rise after speaking to British defence minister John Healey. “A strong step from an enduring partner,” Hegseth said on X. The increase would see Britain spending €13.4bn ($17bn) a year more on defence in 2027 than it does now, Starmer said, a figure which includes expected growth in GDP over the period. He told a later press conference the extra money would help rebuild Britain’s industrial base, create jobs and boost growth. Britain’s defence ministry said it spent €53.9bn in the 2023/24 financial year. To meet the increase in spending, the international aid budget will be cut from 0.5% of gross national income to 0.3% in 2027, meaning borrowing levels would not change, Starmer said. Britain last cut its aid budget in November 2020, during an economic crisis resulting from COVID, reducing the level to 0.5% of GNI from 0.7%, a move criticised by some development groups for diminishing the nation’s global influence. “This is a short-sighted and appalling move,” said Romilly Greenhill, chief executive officer of Bond, a network for organisations working in international development and humanitarian assistance. Starmer’s statement was a clear opening gambit before meeting Trump in Washington, signalling Britain will try to lead other European countries in offering more support to the US-led military Nato alliance – a demand Trump has repeatedly made, suggesting nations should spend 5% of GDP. Nato Secretary-General Mark Rutte has also called on member states to step up defence spending beyond their common goal of 2% of national output set a decade ago. According to Nato, Britain was the third-largest spender in cash terms in 2024, behind the United States and Germany. Germany’s likely next chancellor, Friedrich Merz, has pledged to significantly raise defence spending but will need to navigate the possibility of far-right and left parties blocking his plans. Starmer heads to Washington, hoping to reassure Trump that Europe will provide support and security guarantees to Kyiv if peace talks with Russia are successful. The British leader has said he is open to British troops providing security guarantees to Ukraine alongside other European nations. Starmer also wants some form of US “backstop” for any security guarantee from Europe, which, he says, “will be vital to deter Russia from launching another invasion in just a few years’ time”. “The US is our most important bilateral alliance,” he said. “So this week when I meet President Trump I will be clear. I want this relationship to go from strength to strength.”

The Executive Director of Unicef, Catherine Russell, has emphasised that Qatar is a strong and very important partner for Unicef, noting that this co-operation includes several areas, especially education.In remarks to Qatar News Agency (QNA), Russell said that Her Highness Sheikha Moza bint Nasser, Chairperson of Education Above All (EAA) Foundation, has played a prominent leadership role on the international stage in promoting the importance of education, especially for children living in conflict zones or who have been deprived of education due to crises, adding that she expressed her gratitude for this role during her meeting with Her Highness.She also commended the efforts of the Qatar Fund for Development (QFFD) and the EAA Foundation in supporting the educational process for children, stressing that these efforts contributed to keeping many children in school despite the challenges.Russell explained that there is a strategic partnership between Unicef, Qatar's government, and relevant institutions, as intensive meetings were held to discuss ways to enhance co-operation and benefit from Qatari resources and expertise in this field. She added that this partnership requires significant resources in addition to intellectual leadership, which enhances the organisation's ability to achieve a broader impact worldwide.She pointed out that Unicef co-operates closely with Qatar in education, stressing that education represents a basic right for all children, and has a direct impact on achieving other sustainable development goals.She explained that education, as the fourth goal of the Sustainable Development Goals (SDGs), contributes to improving public health and enhancing economic participation.She added that the challenges facing education are multiple, including poverty and debts that hinder some countries' spending on education, in addition to the ongoing effects of the Covid-19 pandemic, which has kept children out of school for long periods.She noted that estimates indicate that more than 250mn children worldwide are deprived of education, emphasising that returning them to schools and ensuring quality education for them represents a major challenge.Russell praised Qatar's role in providing educational support and humanitarian aid in areas such as Yemen and Syria, urging other countries to benefit from Qatar's approach in this field.She affirmed that the relationship between Qatar and Unicef is strong and developed.Russell expressed her optimism about the possibility of enhancing co-operation with Qatar in the field of digital and innovative solutions to support education, stressing that technology plays a pivotal role in reaching children, especially in remote areas.Regarding the situation in Gaza, she stressed that Unicef has been working in the Strip for decades and that the organisation continues to provide assistance to children despite the difficult circumstances.

China’s apparent breakthrough in AI and rapprochement with tech giants has sent Hong Kong stocks and Internet giants soaring, but the buyers behind it are flighty and brokers say global investors are wary of big bets while markets swing wildly.Hong Kong’s Hang Seng has roared back from a run of lean years to vie with Germany’s DAX as the world’s best-performing market for the year so far, with gains of 13% and 13.1% respectively, against a 4% rise for the S&P500.Hong Kong tech shares have surged 31% since the middle of January to hit three-year highs on Monday, while President Xi Jinping sat down with top tech leaders in Beijing.Prices gyrating as investors scoured pictures and footage of the meeting for the faces of top bosses neatly underscored the fevered speculation and the degree of hope behind the rally.Trading also illustrates what has become an adage of investing in China in recent years — that the biggest prize goes to the earliest movers, especially if they can get out as soon as the euphoria begins to fade.“As with moves in the past two years or so in HK/China, it’s very retail driven (and volatile) - a trading market,” said Wong Kok Hoong, head of equity sales trading at Maybank.“Hedge funds or the more Hong Kong-China centric funds are well aware of the dangers of not rushing in from the onset.”Data from brokers seems to show that is exactly who is buying.CICC estimates that cumulative southbound flows — that is, buying by mainland investors — have reached HK$26.6bn ($3.4bn) since the Lunar New Year holiday in early February, on par with a record-breaking rush in September.A Morgan Stanley note on hedge fund positioning showed net exposures near their highest in a year, with buyers mostly in Asia and taking long positions, rather than covering short bets.“Hot money is driving the market for the past two weeks,” said Steven Leung, who handles institutional clients at brokerage UOB KayHian in Hong Kong, referring to funds controlled by investors seeking short-term returns.The rally’s triggers include the sudden popularity of Chinese AI startup DeepSeek, which has developed an AI model far cheaper than US rivals, relief that China has not been hit with big US sanctions, and the sight of Xi meeting with tech leaders.Shares in Alibaba have headlined the rally on news of an AI partnership with Apple along with the appearance of founder Jack Ma, who has kept a low profile over years of crackdowns on China’s tech giants, at this week’s symposium with Xi Jinping.The stock touched a three-year high on Monday and is up nearly 50% for the year so far.The volume of Alibaba shares traded in Hong Kong last week was the largest since listing in late 2019 and weekly volume for its US-listed ADR was the highest for two years.“(Jack Ma’s) presence would be hugely symbolic of how the government’s stance towards the tech sector has changed,” said Christopher Beddor, deputy China research director at Gavekal Dragonomics in Hong Kong.“If there’s one person associated with the tech crackdown, it’s Jack Ma... it’s more or less a total reversal of the policy stance from a few years ago, when officials vowed to curb the ‘disorderly’ expansion of capital.”To be sure, Morgan Stanley said in a note last week that global investors were starting to reassess China’s investability, after a long period of limited attention, though it added that as of late January they had been underweight.On Monday, Goldman Sachs analysts raised forecasts for the MSCI China index to 85 from 75 and there are investors who see a sustainable rally.Still, for many the lesson from disappointments after rallies on China’s post-Covid reopening and pledges of stimulus in September has been to move fast and think short-term.Maybank’s Wong said that amongst themselves, retail investors in China say: “The early believers get to eat the chicken; the subsequent ones get to drink the chicken soup; and the late true believers will have to take over the empty plates.” — Reuters