YCLOAK

Apple Inc. reported a surprise fall in iPhone sales for its second quarter on Tuesday, indicating that customers may have held back purchases in anticipation of the 10th-anniversary edition of the company’s most important product later this year.

Under pressure from shareholders to hand over more of its $250 billion-plus hoard of cash and investments, Apple boosted its capital return program by $50 billion, increased its share repurchase authorization by $35 billion and raised its quarterly dividend by 10.5 percent.

Investors were unmoved, sending shares of the world’s most valuable listed company down 1.9 percent at $144.65 in after-hours trading.

Apple sold 50.76 million iPhones in its fiscal second quarter ended April 1, down from 51.19 million a year earlier.

Analysts on average had estimated iPhone sales of 52.27 million, according to financial data and analytics firm FactSet.

Apple Chief Financial Officer Luca Maestri argued the decline was not as bad as it looked, given the peculiarities of how phone sales are calculated.

The company reports what are called “sell-in” figures for the iPhone, a measure of how many units it sells to retailers, rather than “sell-through” figures, which measure how many phones are actually sold to consumers.

Maestri said the company reduced the volume of inventory going through its retail channel by about 1.2 million units in the quarter, meaning the company sold about 52 million phones to customers on a sell-through basis.

Despite the dip in unit sales, iPhone revenues rose 1.2 percent in the quarter, helped by a higher average selling price.

10th anniversary

Expectations are building ahead of Apple’s 10th-anniversary iPhone range this fall, with investors hoping that the launch would help bolster sales.

Apple typically launches its new iPhones in September.

A big jump in sales usually follows in the holiday quarter, before demand tapers over the next few quarters as customers hold back ahead of the next launch.

Apple’s 10th-anniversary iPhone range might sport features such as wireless charging, 3-D facial recognition and a curved display.

“There is a general softening in phone demand to contend with as well as expectations of a big upgrade, all of which softens the blow of this quarter’s miss,” said James McQuivey, a Forrester Research analyst. “If we see Apple downplaying expectations before the next upgrade cycle, it might mean that the company isn’t confident it will beat those expectations.”

The company forecast total revenue of between $43.5 billion and $45.5 billion for the current quarter, while analysts on average were expecting $45.60 billion, according to Thomson Reuters I/B/E/S.

Analysts on average expect the company to sell 42.31 million iPhones in the current quarter, according to FactSet.

For the second quarter, the company’s net income rose to $11.03 billion, or $2.10 per share, compared with $10.52 billion, or $1.90 per share, a year earlier.

Analysts on average had expected $2.02 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 4.6 percent to $52.90 billion in the quarter, compared with analysts’ average estimate of $53.02 billion.

A 17.5 percent jump in the company’s services business – which includes the App Store, Apple Music, Apple Pay and iCloud — to $7.04 billion, boosted revenue.

“We are particularly encouraged by the fact that service revenue is nowhere near as cyclical as product revenue,” Neil Saunders, Managing Director of GlobalData Retail, wrote in a note to clients.

Apple’s revenue from the Greater China region fell 14.1 percent to $10.73 billion in the quarter, as cheaper rivals in the region chipped away at sales.

Maestri said that sales of Macs and the company’s services were strong in China during the March quarter. “The performance we’re seeing in China should get better going forward this year,” he said.

Apple’s gross margin hit 38.9 percent, slightly ahead of analysts’ average expectation of 38.7 percent, despite higher prices for memory chips. The company said it expects gross margins next quarter between 37.5 percent and 38.5 percent, versus analysts’ expectation of 38.3 percent, according to FactSet.

“NAND and DRAM [memory chips] are under pressure right now in terms of some price pressure. We saw that in the March quarter and expect that to continue into the June quarter, but for all the other commodities, we see prices declining,” Maestri said.

 

 

 

 

 
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U.S. lawmakers have put the nation’s airlines on notice: Improve customer service or we will make you.

The House Transportation and Infrastructure Committee held a hearing for top airline executives to testify, and to determine how Congress might respond after a passenger was violently dragged off an overbooked United Airlines flight.

“Seize this opportunity,” committee Chairman Bill Shuster, a Pennsylvania Republican, told United CEO Oscar Munoz and other airline executives at a hearing. Otherwise, “we’re going to act and you’re not going to like it,” he said, predicting a “one-size-fits-all” solution that may serve some airlines but not all.

Munoz apologized repeatedly for the removal of David Dao, 69, who last month refused to give up his seat to make room for airline employees. The video of airport police dragging Dao from his seat went viral.

“In that moment for our customers and our company we failed, and so as CEO, at the end of the day, that is on me,” Munoz said. “This has to be a turning point.”

Munoz was joined at the hearing by United President Scott Kirby and executives from American Airlines, Southwest Airlines and Alaska Airlines.

American Airlines experienced its own public relations fiasco last month when a passenger video went viral, showing a woman on a plane in tears holding a child in her arms and another at her side after an encounter with a flight attendant over a baby stroller.

United and other airlines have announced policy changes regarding overbooked flights. Airlines have said they routinely overbook flights because a small percentage of passengers do not show up.
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Greece reached a deal with its European lenders Tuesday for more reforms in exchange for a badly needed bailout installment so Athens could avoid possible bankruptcy.

After months of often tough talks, Greek officials agreed to more pension cuts and tax increases.

The European Commission and European Central Bank will bring the deal to their finance ministers at their May 22 meeting.

Greek Prime Minister Alexis Tsipras’ leftist government says it is confident parliament will approve the new round of cuts.

Greece desperately needs about $8 billion to meet a debt payment in July or stare possible bankruptcy in the face.

International Monetary Fund official Poul Thomsen says while the IMF welcomes the deal between Greece and its eurozone lenders, the country needs debt relief and restructuring. Thomsen says the Greek debt of close to 180 percent of its gross domestic product is unsustainable.

The IMF has balked at taking part in the latest Greek bailout unless the debt is renegotiated.

Greece has been relying on international bailouts since 2010, when the outgoing conservative government badly underreported the country’s debt.

The harsh economic reforms, including cuts in social spending and tax hikes, have caused pain and chaos for many Greeks. But the bailouts have helped Greece fend off total collapse.
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President Donald Trump’s nominee to be the U.S. ambassador to China said on Tuesday he would do everything possible to address what he called China’s “unfair and illegal” sales of underpriced steel in the world market.

“I want to do everything I can to make sure that we stop the unfair and illegal activities that we’ve seen from China in the steel industry,” the nominee, Iowa’s Republican Gov. Terry Branstad, said at his U.S. Senate confirmation hearing.
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African military expenditures have finally slowed down after more than a decade of steady increases, according to a new report on global defense spending. The main reason, the report found, is a drop in oil prices.

“The sharp decreases in oil prices has affected quite a number of African countries, namely South Sudan and Angola.  This has kind of driven almost the entire regional trend,” said Nan Tian, a researcher at the Stockholm International Peace Research Institute’s (SIPRI) Arms and Military Expenditure Program, the organization that authored the report.

The SIPRI report found military spending in Africa in 2016 was down by 1.3 percent from the previous year and totaled about $37.9 billion.

Despite the drop, Africa’s military spending remains 48 percent higher than it was a decade ago.  “A few of the top spenders within these regions are generally oil economies, so the low oil prices have meant sharp cutbacks in government financing and that includes military spending,” he said.

Some of Africa’s biggest spenders in recent years have included oil-rich Angola, which has sought to modernize its air force and navy, and Algeria which has tried to preserve its stability amid the collapse of Libya and the rise of extremism in North Africa.  Both of those countries have slowed spending recently, Tian said.

Weighing spending against needs

Tian said that perhaps the most important question to ask, is whether military spending in Africa is at appropriate levels.

Ten African countries have military expenditures greater than 3 percent of their GDP. The highest are the Republic of the Congo where military expenditures totaled 7 percent of GDP in 2016, and Algeria where military spending totaled 6.7 percent of GDP.

Globally, military spending is 2.2 percent of GDP or about $227 per person.

 

“You have the security aspect also in Africa.  We have the opportunity costs,” Tian said.  “It is the poorest continent.  The question is: should this continent be spending?  Are they spending enough or are they spending too much on military based on their current income levels?  Should they rather be prioritizing other aspects of spending maybe health care, maybe education, maybe infrastructure?”

Not all African countries saw a decline in military spending.  According to the report, Botswana’s military spending grew by 40 percent, or about $152 million.  Botswana is regularly noted for having a long record of peace and good governance, and is undergoing a military modernization program.

Nigeria increased its military spending by 1.2 percent to $1.7 billion as it strives to defeat the radical Islamist group Boko Haram.  Similarly, Kenya and Mali increased military spending due to extremist threats in their regions.
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India-based technology company Infosys said Tuesday it will create 10,000 jobs in the United States, growing its American footprint at a time when it has become a political target in the U.S.

Infosys has been a big user of H1-B visas in the U.S., a program under which overseas firms, most often technology companies, move foreign workers to the United States after the overseas businesses declare they cannot find enough qualified U.S. workers. Critics of the visa program say the foreign firms have cost U.S. workers their jobs, however, because the foreign companies usually pay the temporary workers less than they would have had to pay American employees to do the same job.

As part of his “America First” pledge, President Donald Trump recently ordered government agencies to review the visa program. Trump said he wants to bring in the “best and brightest” foreign workers and reform immigration laws as they relate to work and border security. But one suggested reform – that companies paying the highest wages be granted the work visas – would directly affect Infosys.

The U.S. Citizenship and Immigration Services, which manages the visa petitions, says that about 70 percent of the 85,000 H1-B visas issued annually go to Indians, and more than half of them are working for information technology companies like Infosys, which then outsource the workers to American firms.

Infosys has been one of the biggest users of the H1-B visa program, sending more than 15,000 workers to the U.S. in the last two years, although it has trimmed its visa requests for this year. Under the program, foreign-born workers typically can be employed for three years by a sponsor company and apply to stay longer.

Infosys said it would hire the 10,000 U.S. workers over the next two years, opening four technology centers, with the first in the midwestern state of Indiana, where Vice President Mike Pence was governor before Trump tapped him as his running mate in last year’s national political campaign.

Infosys chief executive Vishal Sikka told Reuters, “The reality is, bringing in local talent and mixing that with the best of global talent in the times we are living in and the times we’re entering, is the right thing to do. It is independent of the regulations and the visas.”
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Republicans who eagerly awaited a GOP president so they could take a heavy knife to many of the regulatory requirements for banks, insurers and other financial institutions finally get their chance.

The House Financial Services Committee, led by Texas Rep. Jeb Hensarling, is slated to begin work Tuesday on legislation to largely undo the Dodd-Frank law, which Congress passed and Democratic President Barack Obama signed after the financial meltdown in 2008.

 

The GOP argues that the law hurts the economy by making it harder for consumers to get credit to buy a new house or a car, or for entrepreneurs to start or expand a small business. Hensarling has complained that banks are offering fewer credit cards and free checking accounts, while community banks report that compliance with Dodd-Frank’s regulatory burdens make it harder to provide more mortgages.

 

With Donald Trump in the White House, Republicans are counting on an ally for their effort.

 

Democrats fear that the changes would allow the kind of risky practices that crashed the economy.

 

Sen. Elizabeth Warren, D-Mass., called the bill “a 589-page insult to working families.” She told the committee that banks of all sizes are posting record profits and access to consumer credit and small business lending is at historically high levels.

 

“This bill doesn’t solve a single real problem with the economy or with our financial system, but it does make some big-time lobbyists happy,”  Warren said.

 

Hensarling’s bill would repeal about 40 provisions of Dodd-Frank, targeting the heart of the law’s restrictions on banks by offering a trade-off: Banks could qualify for most of the regulatory relief in the bill so long as they meet a strict basic requirement for building capital to cover unexpected big losses. He says the capital requirements will work as an insurance policy against a financial institution going out of business.

 

Republicans are likely to pass the measure in the House, but face significant obstacles in the Senate where leaders have emphasized their desire to find areas of agreement to enhance economic growth.

 

Hensarling also goes after the consumer protection agency that Congress established after the financial crisis, the Consumer Financial Protection Bureau, reducing its powers and making it easier for the president to remove its director.

 

Hensarling disputed Democratic Rep. Maxine Waters’ assessment that the bill is “dead-on-arrival.”

 

“I do not consider this to be an exercise in futility,” he told reporters. “I think it is important to move this bill forward, and I think at the end of the day, end of the Congress, we will see major portions of the Choice Act enacted into law.”

 

 
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The U.S. Federal Reserve is expected to hold interest rates steady at its meeting this week as it pauses to parse more economic data but may hint it is on track for an increase in June.

The central bank is scheduled to release its policy decision at 2 p.m. EDT (1800 GMT) on Wednesday at the conclusion of its two-day meeting. Fed Chair Janet Yellen is not due to hold a press conference.

Most policymakers have already made plain that in contrast to previous years, the Fed feels more confident in its forecast of two more rate increases this year.

“The bar to disrupting the Fed’s plans is higher now than it was in previous years,” said Michael Gapen, chief economist at Barclays in New York in a note to clients.

The Fed is in its first tightening cycle in more than a decade. A quarter percentage point increase last December was followed two meetings later by another hike in March.

Economists polled by Reuters see little chance of a move at this week’s meeting. Investors next see an interest rate rise in June, according to Fed futures data compiled by the CME Group.

The rate-setting committee also is still waiting to see to what extent Trump administration policies on tax, spending and regulation will be able to get through Congress. A stimulus package could speed up the pace of hikes.

LIKELY TO DOWNPLAY WEAKNESS Since the last meeting economic data has been mixed. The economy grew at a sluggish 0.7 percent annual pace in the first quarter as consumer spending almost stalled.

However, a surge in business investment and the fastest wage growth in a decade suggest activity will regain momentum as the year progresses.

Jobs growth also slowed sharply in March but the unemployment rate dropped to a near 10-year low of 4.5 percent.

Economists have largely attributed the weak first-quarter reading to perennial issues with the calculation of growth during the January-March period and the pullback in hiring in March to weather effects.

“There won’t be a lot of changes to the policy statement,” said Sam Bullard, senior economist at Wells Fargo Securities. “I think they will downplay the soft first-quarter print and focus a little bit more on the labor market.”

The Fed will have two more employment growth reports to hand before its next meeting.

Policymakers are also gearing up to announce sometime this year when and how the Fed will begin shrinking its $4.5 trillion balance sheet, according to minutes from the March meeting.

An announcement this week on a concrete timeline is not expected but there could be tweaks to language in the statement to show the matter is an increasing priority for the Fed.
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Innkeepers, restaurateurs and landscapers around the U.S. say they’re struggling to find seasonal help and turning down business in some cases because the government tightened up on visas for temporary foreign workers.

At issue are H-2B visas, which are issued for seasonal, nonagricultural jobs.

The U.S. caps the number at 66,000 per fiscal year. Some workers return year after year, and Congress has allowed them to do so in the past without being counted toward the limit. No such exception was passed for 2017 after the presidential election.

Cape Cod restaurant owner Mac Hay has organized seasonal businesses to lobby Congress. He says many can’t function full time without these workers.

A government spending bill unveiled Monday would allow for more H-2B visas, but processing them would take weeks.
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Oystermen, pirates and police clashed violently more than a century ago over who could collect the Chesapeake Bay’s tasty and lucrative oysters. As the shellfish makes a comeback, a modern-day oyster war is brewing, this time between wealthy waterfront property owners and working-class fishermen.

Over the past five years, oyster production has doubled on the East Coast, driven by new farming methods, cleaner water and Americans’ growing taste for orders on the half shell. The resurgence has led to unprecedented resistance from coastal Virginians who want to maintain picturesque views from their waterfront homes and has fueled a debate over access to public waterways.

“These people can’t have it all,” said Chris Ludford, an oysterman in Virginia Beach who sells to nearby farm-to-table restaurants.  

 

Ludford said he faces fierce pushback along a Chesapeake Bay tributary from people with “a $2,000 painting in their house of some old bearded oysterman tonging oysters.

 

“But they don’t want to look out their window and see the real thing,” he said.

Views spoiled, privacy lost

 Homeowners say the growing number of oystermen — dressed in waders and often tending cages of shellfish — spoil their views and invade their privacy. Residents also worry about less access to the water and the safety of boaters and swimmers.

 

Low tides often expose oyster cages, usually accompanied by markers or warning signs that protrude from the surface. In some places, cages float.

 

“All of sudden you have people working in your backyard like it was some industrial area,” said John Korte, a retired NASA aerospace engineer in Virginia Beach who’s among residents concerned about oyster farming’s proliferation. “They may be a hundred feet away from someone’s yard.”

 

Ben Stagg, chief engineer at the Virginia Marine Resources Commission, said the state is poised to break its record of leased acreage for oyster growing. But nearly 30 percent of more than 400 new lease applications face opposition, an unprecedented number that’s led to a backlog of leases awaiting approval.

 

 “Occasionally I can resolve those by having the parties get together and adjust the area further offshore,” Stagg said. “But oftentimes, I can’t.”

Oysters make a comeback

There hasn’t been this much interest in oysters in Virginia since the early 1960s. Since then, disease and overfishing took hold and growers started to disappear.

 

Over the last few decades, breeding programs have produced more disease-resistant and faster-growing oysters. The water’s cleaner. American palettes have evolved, increasing demand.  

 

Farming techniques also changed. Traditionally, oysters are grown on the bottom of a calm and salty river or bay, then harvested with tongs or dredges that pull them onto boats.  

 

Now, fishermen are increasingly using cages to grow oysters over a two-to-three year period. The equipment keeps predators away and produces oysters with a more uniform shape and size, which restaurants prefer.

 

 But the cages are often placed in shallower water closer to shore — and people’s homes.  

 

Virginia Beach is perhaps ground zero for today’s oyster war. The state’s largest city sits at the mouth of the Chesapeake Bay. And oysters thrive in the city’s Lynnhaven River, a network of bays and creeks flowing past expensive homes. Lynnhaven oysters are well-known for their salty taste and size.

Solution is not easy to find

A state task force was formed to find compromise. It recommended giving residents more power to block nearby oyster leases. But the idea was rejected by the Virginia Marine Resources Commission, with the majority of commissioners saying state lawmakers should step in.  

 

Proposals in the Statehouse have included raising the cost of an oyster farming lease from $1.50 an acre annually to $5,000. But legislators haven’t found a solution.  

 

Conflicts also have flared up along Maryland’s Patuxent River, the coastal lagoons of Rhode Island and on Martha’s Vineyard in Massachusetts.  

 

In Delaware, a group of people who mostly own vacation homes successfully blocked potential oyster farming along their part of an inland bay.

 

“Oftentimes, affluent and new members of the community have the point of view that they own the water in front of them, which is really not true,” said Bob Rheault, executive director of the East Coast Shellfish Growers Association. “We need to win back our social license to farm.”

 

Rheault said he’s seen these battles “up and down the East Coast” — even before the crop began to double five years ago.

 

 “The industry was there before the waterfront mansions were built,” Rheault added. “But it hasn’t been there for this generation.”

 

Ludford, who also works as a Virginia Beach firefighter, is relatively new to the business. He and other relatives started growing oysters in 2010 after leaving the crab industry.

Is zoning the answer?

On a recent morning, Ludford sorted through cages as he stood in the Lynnhaven River, hundreds of yards from the nearest home.  

 

He dragged cages into view as grass shrimp wriggled on the shells. He and two helpers retrieved more than 500 oysters, which he sold at 75 cents apiece to three restaurants — totaling about $375.

“Really, people haven’t seen an oysterman behind their houses in 50 to 60 years,” Ludford said.

 

Steven Corneliussen, who owns a waterfront home in Poquoson, Virginia, said he’s among a group that successfully protested new leases along his corner of the Chesapeake. He said waterways should be subject to zoning, like land.     

 

“That water out in front of me doesn’t belong to me,” he said. “But it doesn’t belong to them, either.” 
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With the U.S. economy on solid footing and unemployment at a near-decade low, the Federal Reserve remains in the midst of a campaign to gradually raise interest rates from ultra-lows. But this week, it’s all but sure to take a pause.

The Fed is widely expected to keep its key short-term rate unchanged after having raised it in March for the second time in three months. Most analysts foresee the Fed raising its key rate again at least twice more before year’s end, a testament to the durability of the U.S. economic recovery and a more stable global picture.

 

One reason for the Fed to stand pat this week is that even though the job market has shown steady strength, the economy itself is still growing in fits and starts. On Friday, the government estimated that the economy, as gauged by the gross domestic product, grew at a tepid 0.7 percent annual rate in the January-March quarter. It was the poorest quarterly performance in three years.

 

Though some temporary factors probably held back growth last quarter and may have overstated the weakness, the poor showing underscored that key pockets of the economy — consumer spending and manufacturing, for example — remain sluggish. On Monday, the government said U.S. consumer spending stalled in March for a second straight month. And the Institute for Supply Management reported a drop in factory activity.

 

“Given all the uncertainties they still face and especially with growth coming in so weak, the less the Fed says at this meeting, the better,” said Diane Swonk, chief economist at DS Economics.

 

Most economists have expressed optimism that the economy is strengthening in the current April-June quarter, fueled by job growth, higher consumer confidence and stock-market records. Many think that annualized growth could accelerate to around 3 percent and that the Fed will feel more confident to resume raising rates at its June meeting.

 

“The Fed will probably say in their statement that they expect the economy to rebound in the second quarter,” said Sung Won Sohn, an economics professor at the Martin Smith School of Business at California State University.

 

It isn’t just the Fed’s short-term rate — a benchmark for other borrowing costs throughout the economy — that will likely occupy attention at this week’s meeting. Officials will also likely discuss how and when to start paring their extraordinary large $4.5 trillion portfolio of Treasurys and mortgage bonds. The Fed amassed its portfolio — commonly called its balance sheet — in the years after the financial crisis erupted in 2008, when it bought long-term bonds to help keep mortgage and other borrowing rates low and support a frail economy. At the time, the Fed had already cut its short-term rate to a record low.

 

The balance sheet is now about five times its size before the financial crisis hit. The Fed stopped buying new bonds in 2014 but has kept its balance sheet high by reinvesting the proceeds of maturing bonds. The Fed’s thinking has been that reducing the balance sheet could send long-term rates up and work against its goals of fortifying the economy.

 

Now, as the Fed becomes more watchful about inflation pressures, the time is nearing when it will need to shrink its balance sheet, a process that could have the effect of raising some borrowing rates, at least modestly. The Fed jolted investors when it released the minutes of its March meeting, which showed that most officials thought that process “would likely be appropriate later this year.” This was sooner than many investors expected.

 

Could the Fed clarify its timetable for paring its balance sheet in the statement it will issue when its policy meeting ends Wednesday? It may decide against doing so, given that this meeting won’t be accompanied by a news conference with Chair Janet Yellen to explain any shifts in the Fed’s policy or thinking.

 

Mark Zandi, chief economist at Moody’s Analytics, said the more likely signal the Fed could send is to reinforce the markets’ view that it intends to raise its short-term rate again next month.

 

“I expect two more rate hikes — one in June and then one in September,” Zandi said. “Then I expect the Fed to begin allowing its balance sheet to run off.”

 

Some Fed officials have suggested that they would prefer not to be raising the short-term rate at the same time that they are beginning to reduce their balance sheet. Giving investors too much to digest at once risks unsettling financial markets. In 2013, the Fed triggered a brief storm in bond markets when then-Chairman Ben Bernanke raised the possibility that the Fed would start tapering its bond purchases later that year, catching investors by surprise.

 

“They learned their lesson with the taper tantrum of 2013 that they need to give the markets plenty of warning of changes in their bond policies,” Sohn said.

 

Some analysts say they think the Fed will reveal nothing this week about its timetable for reducing its balance sheet, in part because the policy committee has yet to reach a consensus on when or how to do so.

 

“I have a feeling we are going to get much less information than we want,” Swonk said. “The Fed wants to move slowly, but they don’t have a consensus yet on how to proceed.”

 
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A United Nations economic and social report released Monday warns Asia’s positive economic outlook “faces significant risk” from rising trade protectionism, especially concerns over U.S. trade policy with key partners such as China.

The U.N.’s Economic and Social Commission for Asia and the Pacific (UNESCAP) survey is largely positive for the region, which now accounts for some 30 percent of total global output. If sustained, the survey said this could reach 50 percent by 2050.

For more than 70 years, Asia’s export-led growth has helped lift millions out of poverty with such target markets as the U.S. and Europe.

But in more recent years the economies have come to rely more on domestic demand given the “prolonged weakness in external demand and global trade,” the survey said.

Regional growth is forecast by the U.N. economists at close to 5 percent, with China — a cornerstone of the region’s economies — expanding at 6.5 percent in 2017, and India growing by 7.1 percent.

China’s economic conditions are seen as ‘stable’ with rebalancing, restructuring and deleveraging [debt] leading to “new normal growth trends.” Russia, buoyed by higher oil prices, is also forecast to show positive growth in 2017.

But the general positive outlook is being overshadowed by concerns of trade protectionism impacting employment and economic growth.

“The most significant risk to the broadly positive economic outlook is rising trade protectionism,” the survey said.

It noted recent shifts in U.S. policies concerning trade, currency and immigration along with negotiations over Britain’s exit from the European Union, “have increased global policy uncertainty and could have negative impacts on the region, including for China’s goods exports and India’s services exports.”

US new stance

U.S. President Donald Trump adopted an aggressive stance over China’s trade and currency policies ahead of the U.S. presidential election. But Trump has recently toned down his comments as Washington has looked to Beijing to back measures to curb North Korea’s development of nuclear weapons.

Shamshad Akhtar, UNESCAP executive secretary, said the debate over protectionism and “distrust of globalization” needs to be addressed.

“The region now accounts for nearly one-third of the world output. Yet there is growing distrust of globalization and emerging protectionist tendencies that have created global uncertainty,” she said.

“If not addressed, [it] has implications for growth prospects in [the] Asia and Pacific region that has traditionally been dependent on its exports for jobs and prosperity,” Akhtar said.

The UNESCAP said growing global trade has led to wide-ranging regional economic benefits over decades. But the debate is being challenged by opposition to globalization, especially in the U.S. and Europe.

But Akhtar said it was difficult to “arrest globalization because of labor mobility, capital mobility and so on, [that] have been instituted now for years”.

“So I want to be rightly understood that distrust [of globalization] is really [a] public and politicians’ gimmick more than anything else — but of course we have to take appropriate policies,” she said.

The U.N. survey said projections show if trade protectionism and global uncertainty increase, growth for major developing countries could be lower by up to 1.2 percentage points.

The survey noted while the Asia Pacific region remains “the engine of global growth,” expansion was insufficient in the face of several challenges.

The commission pointed to rising income inequalities, with the expansion of decent employment also a challenge.

The region was also “falling behind the rest of the world in terms of social protection, financing and coverage” in contrast to levels of spending in developed economies.

Environment

Environmental damage was a key concern in the face of rapid economic expansion over several decades, with growth coming at a steep environmental cost.

“On average developing Asia–Pacific economies use twice as many resources per dollar of GDP as the rest of the world. Environmental degradation and carbon emissions not captured in GDP [growth data] undermine the sustainability of economies,” the survey said.

The survey called for improved governance and accountability, seen as a measure for improved economic outcomes.

Countries, it said, that perform better on governance measures, focusing on the rule of law, regulations and control corruption and government effectiveness also “tend to mobilize and spend their fiscal resources efficiently and effectively.”
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