It’s hard to write about international investing today without obsessing about the crackdown on peaceful protesters in Egypt, the future of Saudi Arabia and the direction of grain and oil prices.
But I’m going to try. Because affecting and important as these stories are, there are others that matter at least as much to everyone’s economic well-being.
For example, while the opinions of Egyptian students on democracy are nothing short of inspirational, the opinions of Chinese factory managers about their immediate business prospects proved reassuringly boring. Sentiment cooled a bit in the last month without telegraphing a serious slowdown in an economy still growing 10% a year.
Asian growth, the long-term trend lifting half the planet’s population out of poverty, remains on track despite an early salvo of interest-rate hikes aimed at slowing inflation. If anything, Egypt’s example will have Beijing erring on the side of jobs and price controls over rapid monetary tightening.
Ed Yardeni agrees. “It is very unlikely that central bankers in the emerging economies will tighten to the extent that economic growth will be impacted much,” the economist writes. “This is especially so now that more of them need to worry about social and political instability. In other words, they will talk tough and maybe tighten some more, but they will learn to live with the inflationary consequences of rising commodity prices.”
Run Rabbit, Run
China starts the Year of the Rabbit with plenty of positives to chew on, not least of them the economic recovery
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