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New York — A week of wild market swings has investors looking ahead to inflation data, corporate earnings and presidential polls for signals that could soothe a recent outbreak of turbulence in U.S. stocks. 

Following months of placid trading, U.S. stock volatility has surged this month as a run of alarming data coincided with the unwinding of a massive, yen-fueled carry trade to deal equities their worst selloff of the year. The S&P 500 .SPX is still down around 6% from a record high set last month, even after making up ground in a series of rallies after Monday’s crushing selloff.  

At issue for many investors is the trajectory of the U.S. economy. After months of betting on an economic soft landing, investors rushed to price in the risk of a more severe downturn, following weaker-than-expected manufacturing and employment data last week.  

“Everybody is now worried about the economy,” said Bob Kalman, a portfolio manager at Miramar Capital. “We are moving away from the greed portion of the program and now the market is facing the fear of significant geopolitical risks, a hotly contested election and volatility that is not going away.”  

Though stocks have rallied in recent days, traders believe it will be a while before calm returns to markets. Indeed, the historical behavior of the Cboe Volatility Index .VIX – which saw its biggest one-day jump ever on Monday – shows that surges of volatility usually take months to dissipate.  

Known as Wall Street’s fear gauge, the index measures demand for options protection from market swings. When it closes above 35 – an elevated level that it topped on Monday – the index has taken 170 sessions on average to return to 17.6, its long-term median and a level associated with far less extreme investor anxiety, a Reuters analysis showed.  

One potential flashpoint will be when the U.S. reports consumer price data on Wednesday. Signs that inflation is dropping too steeply could bolster fears that the Federal Reserve has sent the economy into a tailspin by leaving interest rates elevated for too long, contributing to market turbulence.  

For now, futures markets are pricing in a 55% chance the central bank will bring down benchmark interest rates by 50 basis points in September, at its next policy meeting, compared with a roughly 5% chance seen a month ago.  

“Slower payroll growth reinforces that U.S. economic risks are becoming more two-sided as inflation cools and activity slows,” said Oscar Munoz, chief U.S. macro strategist at TD Securities, in a recent note.  

Corporate earnings, meanwhile, have been neither strong enough nor weak enough to give the market direction, said Charles Lemonides, head of hedge fund ValueWorks LLC.  

Overall, companies in the S&P 500 have reported second-quarter results that are 4.1% above expectations, in line with the long-term average of 4.2% above expectations, according to LSEG data.  

Walmart WMT.N and Home Depot HD.N are among companies reporting earnings next week, with their results seen as offering a snapshot on how U.S. consumers are holding up after months of elevated interest rates.  

The end of the month brings earnings from chip giant Nvidia NVDA.O, whose shares are up around 110% this year even after a recent selloff. The Fed’s annual Jackson Hole gathering, set for Aug. 22-24, will give policymakers another chance to fine tune their monetary policy message before their September meeting.  

Lemonides believes the recent volatility is a healthy correction during an otherwise strong bull market, and he initiated a position in Amazon.com AMZN.O to take advantage of its weakness.  

The U.S. presidential race is also likely to ramp up uncertainty. 

Democrat Kamala Harris leads Republican Donald Trump 42% to 37% in the race for the Nov. 5 presidential election, according to an Ipsos poll published on Thursday. Harris, the vice president, entered the race on July 21 when President Joe Biden folded his campaign following a disastrous debate performance on June 27 against Trump.  

With nearly three months until the Nov. 5 vote, investors are braced for plenty of additional twists and turns in an election year that has already been one of the most dramatic in recent memory.  

“While early events suggested a clearer picture of US Presidential and Congressional outcomes, more recent events have again thrown the outcome into doubt,” analysts at JPMorgan wrote.  

Chris Marangi, co-chief investment officer of value at Gabelli Funds, believes the election will add to market volatility. At the same time, expected rate cuts in September could boost a rotation into areas of the market that have lagged in a year that has been dominated by Big Tech, he said.  

“We expect increased volatility into the election but the underlying rotation to continue as lower rates offset economic weakness,” he said. 
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BEIJING — Chinese authorities are chasing unpaid taxes from companies and individuals dating back decades, as the government moves to plug massive budget shortfalls and address a mounting debt crisis.

More than a dozen listed Chinese companies say they were slapped with millions of dollars in back taxes in a renewed effort to fix local finances that have been wrecked by a downturn in the property market that hit sales of land leases, a main source of revenues.

Policies issued after a recent planning meeting of top Communist Party officials called for expanding local tax resources and said localities should expand their “tax management authority and improve their debt management.”

Local government debt is estimated at up to $11 trillion, including what’s owed by local government financing entities that are “off balance sheet,” or not included in official estimates. More than 300 reforms the party has outlined include promises to better monitor and manage local debt, one of the biggest risks in China’s financial system.

That will be easier said than done, and experts question how thoroughly the party will follow through on its pledges to improve the tax regime and better balance control of government revenues.

“They are not grappling with existing local debt problems, nor the constraints on fiscal capacity,” said Logan Wright of the Rhodium Group, an independent research firm. “Changing central and local revenue sharing and expenditure responsibilities is notable but they have promised this before.”

The scramble to collect long overdue taxes shows the urgency of the problems.

Chinese food and beverage conglomerate VV Food & Beverage reported in June it was hit with an 85 million yuan ($12 million) bill for taxes dating back as far as 30 years ago. Zangge Mining, based in western China, said it got two bills totaling 668 million RMB ($92 million) for taxes dating to 20 years earlier.

Local governments have long been squeezed for cash since the central government controls most tax revenue, allotting a limited amount to local governments that pay about 80% of expenditures such as salaries, social services and investments in infrastructure like roads and schools.

Pressures have been building as the economy slowed and costs piled up from “zero-COVID” policies during the pandemic.

Economists have long warned the situation is unsustainable, saying China must beef up tax collection to balance budgets in the long run.

Under leader Xi Jinping, the government has cut personal income, corporate income, and value-added taxes to curry support, boost economic growth and encourage investment — often in ways that favored the rich, tax scholars say. According to most estimates, only about 5% of Chinese pay personal income taxes, far lower than in many other countries. Government statistics show it accounts for just under 9% of total tax revenues, and China has no comprehensive nationwide property tax.

Finance Minister Li Fo’an told the official Xinhua News Agency that the latest reforms will give local governments more resources and more power over tax collection, adjusting the share of taxes they keep.

“The central government doesn’t have a lot of responsibility for spending, so it doesn’t feel the pain of cutting taxes,” said Cui Wei, a professor of Chinese and international tax policy at the University of British Columbia.

The effectiveness of the reforms will depend on how they’re implemented, said Cui, who is skeptical that authorities will carry out a proposal to increase central government spending. That “will require increasing central government staffing, and that’s an ‘organizational’ matter, not a simple spending matter,” he said.

“I wouldn’t hold my breath,” Cui said.

Sudden new tax bills have hit some businesses hard, further damaging already shaky business confidence. Ningbo Bohui Chemical Technology, in Zhejiang on China’s eastern coast, suspended most of its production after the local tax bureau demanded 500 million yuan ($69 million) in back taxes on certain chemicals. It is laying off staff and cutting pay to cope.

Experts say the arbitrary way taxes are collected, with periods of leniency followed by sudden crackdowns, is counterproductive, discouraging companies from investing or hiring precisely when they need to.

“When business owners are feeling insecure, how can there be more private investment growth in China?” said Chen Zhiwu, a finance professor at the University of Hong Kong’s business school. “An economic slowdown is inevitable.”

The State Taxation Administration has denied launching a nationwide crackdown, which might imply past enforcement was lax. Tax authorities have “always been strict about preventing and investigating illegal taxation and fee collection,” the administration said in a statement last month.

As local governments struggle to make ends meet, some are setting up joint operation centers run by local tax offices and police to chase back taxes. The AP found such centers have opened in at least 23 provinces since 2019.

Both individuals and companies are being targeted. Dozens of singers, actors, and internet celebrities were fined millions of dollars for avoiding taxes in the past few years, according to a review of government notices.

Internet livestreaming celebrity Huang Wei, better known by her pseudonym, Weiya, was fined 1.3 billion yuan ($210 million) for tax evasion in 2021. She apologized and escaped prosecution by paying up, but her social media accounts were suspended, crippling her business.

The hunt for revenue isn’t limited to taxes. In the past few years, local authorities have drawn criticism for slapping large fines on drivers and street vendors, similar to how cities like Chicago or San Francisco earn millions from parking tickets. Despite pledges by top leaders to eliminate fines as a form of revenue collection, the practice continues, with city residents complaining that Shanghai police use drones and traffic cameras to catch drivers using their mobile phones at red lights.

Outside experts and Chinese government advisers agree that structural imbalances between local and central governments must be addressed. But under Xi, China’s most authoritarian leader in decades, decision-making has grown more opaque, keeping businesses and analysts guessing, while vested interests have pushed back against major changes.

“They have a hermetically sealed process that makes it difficult for people on the outside to know what is going on,” says Martin Chorzempa, senior fellow at the Peterson Institute for International Economics.

Beijing has been reluctant to rescue struggling local governments, wary it might leave them dependent on bailouts. So, the central government has stepped in only in dire cases, otherwise leaving local governments to resolve debt issues on their own.

“In Chinese, we have a saying: You help people in desperate need, but you don’t help the poor,” said Tang Yao, an economist at Peking University. “You don’t want them to rely on soft money.”

Economists say intervention may be required this time around and that the central government has leeway to take on more debt, with a debt-to-GDP ratio of only around 25%. That’s much lower than many other major economies.

Accumulated total non-financial debt, meanwhile, is estimated at nearly triple the size of the economy, according to the National Institution for Finance and Development and still growing.

“This is a huge structural problem that needs a huge structural solution that is not forthcoming,” said Logan Wright of the Rhodium Group, an independent research firm. “There’s really no way around this. And it’s getting worse, not better.”
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NEW YORK — U.S. stocks rallied Thursday in Wall Street’s latest sharp swerve after a better-than-expected report on unemployment eased worries about a slowing economy. 

The S&P 500 jumped 2.3% for its best day since 2022 and shaved off all but 0.5% of its loss from what was a brutal start to the week. The Dow Jones Industrial Average rose 683 points, or 1.8%, and the Nasdaq composite climbed 2.9% as Nvidia and other Big Tech stocks helped lead the way. 

Treasury yields also climbed in the bond market in a signal that investors are feeling less worried about the economy after a report showed fewer U.S. workers applied for unemployment benefits last week. The number was better than economists expected. 

It was exactly a week ago that worse-than-expected data on unemployment claims helped enflame worries that the Federal Reserve has kept interest rates too high for too long in order to beat inflation. That helped send markets reeling worldwide, along with a rate hike by the Bank of Japan that sent shockwaves worldwide by scrambling a favorite trade among some hedge funds. 

At the worst of it, at least so far, the S&P 500 was down nearly 10% from its all-time high set last month. Such drops are regular occurrences on Wall Street, and corrections of 10% happen roughly every year or two. After Thursday’s jump, the index is back within about 6% of its record. 

What made this decline particularly scary was how quickly it happened. A measure of how much investors are paying to protect themselves from future drops for the S&P 500 briefly surged toward its highest level since the COVID crash of 2020. 

Still, the market’s swings look more like a “positioning-driven crash” caused by too many investors piling into similar trades and then exiting them together, rather than the start of a long-term downward market caused by a recession, according to strategists at BNP Paribas.
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New York — U.S. stocks are bouncing back, and calm is returning to Wall Street after Japan’s market soared earlier Tuesday to claw back much of the losses from its worst day since 1987.   

The S&P 500 was rallying by 1.6% in midday trading and on track to break a brutal three-day losing streak. It had tumbled a bit more than 6% after several weaker-than-expected reports raised worries the Federal Reserve had pressed the brakes too hard for too long on the U.S. economy through high interest rates in order to beat inflation.   

The Dow Jones Industrial Average was up 480 points, or 1.2%, as of 11 a.m. Eastern time, and the Nasdaq composite was 1.7% higher. The vast majority of stocks were climbing in a mirror opposite of the day before, from smaller companies that need U.S. households to keep spending to huge multinationals more dependent on the global economy.   

Stronger-than-expected profit reports from several big U.S. companies helped drive the market. Kenvue, the company behind Tylenol and Band-Aids, jumped 12.7% after reporting stronger profit than expected thanks in part to higher prices for its products. Uber rolled 7.9% higher after easily topping profit forecasts for the latest quarter.   

Caterpillar veered from an early loss to a gain of 3.8% after reporting stronger earnings than expected but weaker revenue.  

Several technical factors may have accelerated the recent swoon for markets, beyond weak U.S. hiring data and other dispiriting U.S. economic reports, in what strategists at Barclays called “a perfect storm” for causing extreme market moves. One is centered in Tokyo, where a favorite trade for hedge funds and other investors began unraveling last week after the Bank of Japan made borrowing more expensive by raising interest rates above virtually zero.   

That scrambled trades where investors had borrowed Japanese yen at low cost and invested it elsewhere around the world. The resulting exits from those investments may have helped accelerate the declines for markets around the world.   

Japan’s Nikkei 225 jumped 10.2% Tuesday to claw back much of its 12.4% sell-off the day before, which was its worst since the Black Monday crash of 1987. Stocks in Tokyo rebounded as the value of the Japanese yen stabilized against the U.S. dollar following several days of sharp gains.   

“The speed, the magnitude and the shock factor clearly demonstrate” how much of the moves were driven by how traders were positioned, according to the strategists at Barclays led by Stefano Pascale and Anshul Gupta. That could indicate it wasn’t just worries about the U.S. economy.   

Still, some voices along Wall Street are continuing to urge caution.   

Barry Bannister, chief equity strategist at Stifel, is warning more drops could be ahead because of a slowing U.S. economy and sticky inflation. He’s forecasting both will be worse in the second half of this year than what much of Wall Street expects, while saying a measure of how expensive the U.S. stock market is still looks “frothy” when compared with bond yields and other financial conditions.   

The stock market’s “dip is not a blip,” he warned in a report, and called it “too soon to jump back in.”   

He had been predicting a coming “correction” in U.S. stock prices for a while, including an acknowledgement in July that his initial call was early. That was a couple days before the S&P 500 set its latest all-time high and then began sinking.   

While fears are rising about a slowing U.S. economy, it is still growing, and a recession is far from a certainty. The U.S. stock market is also still up a healthy amount for the year so far, and the Federal Reserve says it has ample room to cut interest rates to help the economy if the job market weakens significantly.   

The S&P 500 has romped to dozens of all-time highs this year, in part due to a frenzy around artificial-intelligence technology, and critics have been saying that’s sent stock prices too high in many cases.   

They’ve pointed in particular to Nvidia, Apple and the other handful of Big Tech stocks in the “Magnificent Seven” that were the main reason the S&P 500 set so may records this year. Propelled in part by the mania around AI, they helped overshadow weakness across other areas of the stock market, which were struggling under the weight of high interest rates.   

A set of underwhelming profit reports recently, kicked off by Tesla and Alphabet, added to the pessimism and dragged Big Tech stocks lower. Nvidia dropped nearly 19% from the start of July through Monday on such concerns, but it rose 4.8% Tuesday and was one of the strongest forces pushing upward on the market.   

Apple, though, fell another 0.8% and was the heaviest weight on the S&P 500.   

In the bond market, Treasury yields were ticking higher to claw back some of their sharp drops since April, driven by rising expectations for coming cuts to interest rates by the Federal Reserve.   

The yield on the 10-year Treasury rose to 3.86% from 3.78% late Monday. It had briefly dropped below 3.70% during Monday when fear in the market was spiking and investors were speculating the Federal Reserve could even have to call an emergency meeting to cut interest rates quickly. 
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Bangkok — Japan’s benchmark Nikkei 225 index soared more than 10% on Tuesday, rebounding after a rollercoaster start to the week that sent markets tumbling in Europe and on Wall Street.

European markets were mostly lower, with Germany’s DAX down 0.4% at 17,277.27 and the CAC 40 in Paris 0.7% lower, at 7,098.89.

In London, the FTSE 100 shed 0.4% to 7,974.44.

Those modest declines and gains in Asia suggested a respite from the turmoil of the past two trading sessions, when the Nikkei lost a combined 18.2% and other markets also swooned. U.S. futures showed solid gains, with the contract for the S&P 500 up 0.5% and that for the Dow Jones Industrial Average gaining 0.3%.

Monday’s plunge reminiscent of a crash in 1987 that swept around the world pummeled Wall Street with more steep losses, as fears worsened about a slowing U.S. economy.

The Nikkei gained nearly 11% early Tuesday and bounced throughout the day to close up 3,217.04 points at 34,675.46 as investors snapped up bargains after the 12.4% rout of the day before.

“Calm finally appears to be returning,” Bas van Geffen of Rabobank said in a report. The Nikkei’s 10% gain didn’t make up for Monday’s loss, he said, “but at least it takes some of the ‘panic’ out of the selling.”

The dollar rose to 144.87 yen from 144.17 yen. The yen’s rebound against the dollar after the Bank of Japan raised its main interest rate on July 31 was one factor behind the recent market swings, as investors who had borrowed in yen and invested in dollar assets like U.S. stocks sold their holdings to cover the higher costs of those “carry trade” deals.

Elsewhere in Asia, South Korea’s Kospi jumped 3.3% to 2,522.15. It had careened 8.8% lower on Monday.

Hong Kong’s Hang Seng index gave up early gains to close 0.3% lower at 16,647.34. The Shanghai Composite index, largely bypassed by Monday’s drama, rose 0.2% to 2,867.28.

In Australia, the S&P/ASX 200 advanced 0.4% to 7,680.60 as the central bank kept its main interest rate unchanged. Taiwan’s Taiex was up 1.2% after plunging 8.4% the day before and the SET index in Bangkok gained 0.3%.

On Monday, the S&P 500 dropped 3% for its worst day in nearly two years. The Dow declined 2.6% and the Nasdaq composite slid 3.4%.

The global sell-off that began last week and gained momentum after a report Friday showed that American slowed their hiring in July by much more than economists expected. That and other weaker than expected data added to concern the Federal Reserve has pressed the brakes on the U.S. economy by too much for too long through high interest rates in hopes of stifling inflation.

But sentiment was helped by a report Monday by the Institute for Supply Management said growth for U.S. services businesses was a touch stronger than expected, led by the arts, entertainment and recreation sectors, along with accommodations and food services.

The U.S. economy is still growing, so a recession is far from certain. The U.S. stock market is still up a healthy amount for the year, with double-digit percentage gains for the S&P 500, the Dow and the Nasdaq.

Markets have romped to dozens of all-time highs this year, in part due to a frenzy around artificial-intelligence technology and critics have been saying prices looked too expensive.

Other worries also are weighing on the market. The Israel-Hamas war and other global hotspots could cause sharp swings for the price of oil.

Early Tuesday, U.S. benchmark crude oil was up 12 cents at $73.06 per barrel. Brent crude, the international standard, picked up 3 cents to $76.33 per barrel.

The euro fell to $1.0910 from $1.0954.
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Islamabad — Pakistan’s military revealed Monday that millions of liters of Iranian oil are being smuggled into the country each day, but rejected long-standing allegations that it is also playing a role in the illegal trade.

Lt. Gen. Ahmed Sharif Chaudhry, the army spokesperson, told a televised news conference that “consistent efforts” are being made to enhance security along the country’s more than 900-kilometer border with Iran in order to restrict oil smuggling.

“If you look at the numbers, [the fuel smuggling] has come down from 15-16 million liters per day to 5-6 million liters per day, thanks to the combined efforts of the army, Frontier Corps [paramilitary force], law enforcement, and intelligence agencies,” Chaudhry stated.

He did not provide further details, but Chaudhry is the first Pakistani official to publicly share estimates regarding the ongoing large-scale illegal oil trade between the two countries.

A rare comprehensive investigative report on the long-running illicit trade, conducted by two Pakistani official spy agencies and leaked to local media last May, revealed that Iranian traders smuggle more than $1 billion worth of petrol and diesel into Pakistan annually.

The probe found that the illegal fuel supply accounted for about 14% of Pakistan’s yearly consumption, resulting in hundreds of millions of dollars in losses “to the exchequer.”

The report identified more than 200 oil smugglers as well as government and security officials benefiting from the lucrative illegal oil trade. 

It said that up to 2,000 vehicles, each with a capacity of 3,200-3,400 liters, are used daily to transport diesel across the border. Additionally, some 1,300 boats, each with a capacity of “1,600 to 2,000” liters, are also used to smuggle Iranian fuel.

Petroleum dealers attributed the surge in cross-border smuggling to years of U.S.-led Western sanctions on the Iranian oil sector, which compelled Tehran to seek alternative markets for its exports.

Iranian traders reportedly sell fuel in their local currency to buyers in Pakistan’s southwestern border province of Baluchistan and collect dollars from the Pakistani market. The illegal fuel is then transported elsewhere in the South Asian nation.

Islamabad mainly sources its fuel from the Middle East. The government has dramatically raised fuel prices in recent months as part of efforts to secure a new International Monetary Fund loan of about $7 billion. 

Due to depleting foreign exchange reserves, analysts believe cash-strapped Pakistan could be allowing Iranian oil to be smuggled into the country to fulfill domestic needs.

Chaudhry, while speaking Monday, cautioned that sealing the border with Iran to stop the long-standing oil smuggling without providing alternative livelihood opportunities could have disastrous consequences for poverty-stricken and underdeveloped Pakistani border towns.

The intelligence report published in May estimated that up to 2.4 million individuals in insurgency-hit Balochistan relied on the smuggling of Iranian oil for their sustenance, and they would be left without means of survival if the illicit trade were to cease.

Pakistani government officials did not immediately respond to VOA inquiries seeking a response to Monday’s revelations in time for publication.

Afghan border

Meanwhile, the military spokesperson criticized neighboring Afghanistan’s Taliban rulers for not effectively guarding their side of the nearly 2,600-kilometer border between the two countries.

Chaudhry stated that the Pakistani military has established more than 1,450 border posts while the Afghan side has only more than 200. He argued that the Taliban’s limited number of posts could result from apathy or lack of resources to staff the border crossings.

“Interestingly, it’s not just the lesser number of posts or the border guards,” the army spokesperson said. “We have also noticed that whenever illegal movement or smuggling attempts occur, or people are assisted in crossing the border, gunfire is typically initiated from the Afghan side, or other tactics are used to facilitate such activities.”

Pakistan maintains that anti-state militants have moved their sanctuaries to Afghanistan since the Taliban regained control of the country three years ago and intensified cross-border attacks, killing hundreds of Pakistani security forces and civilians.

There was no immediate reaction from Taliban authorities to Pakistani allegations, but they have previously rejected them as baseless, saying terrorist groups do not operate on Afghan soil and that nobody is allowed to threaten neighboring countries. 
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AMSTERDAM — Semiconductor industry group SEMI Europe called on the European Union on Monday to place as few restrictions as possible on outbound investment in foreign computer chip technology by companies based in the bloc. 

Proposals to screen outbound investment — European capital being invested in foreign semiconductor, AI and biotechnology companies — are being considered, though no EU decision is expected before 2025. 

The U.S. has issued draft rules for banning some such investments in China that could threaten U.S. national security, part of a broader push to prevent U.S. know-how from helping the Chinese to develop sophisticated technology and dominate global markets. 

“European semiconductor companies must be as free as possible in their investment decisions or otherwise risk losing their agility and relevance,” SEMI Europe said in a paper outlining its recommendations. 

It said policies under consideration by the EU appear to be overly broad and if adopted could force companies to disclose sensitive business information, adding that restrictions on cross-border research cooperation would be misplaced. 

“We encourage the European Commission to further address these aspects and to not infringe on the ability of European multinational companies to carry out the necessary investments to sustain their operations,” it said. 

SEMI Europe represents about 300 Europe-based semiconductor firms and institutions, including companies such as ASMLASML.AS, ASMASMI.AS, InfineonIFXGn.DE, STMicroelectronicsSTMPA.PA, NXPNXPI.O, and research centers such as imec, CEA-Leti and Fraunhofer. 

Alongside the proposals for outbound investment screening, the EU has also been moving towards a law that screens inbound investments of foreign capital that might pose a security risk, such as purchases of European ports, nuclear plants and sensitive technologies. 

 
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New York — U.S. stocks are tumbling Friday on worries about whether the U.S. economy can hold up amid the countdown for a cut to interest rates by the Federal Reserve, as a sell-off for stocks whips all the way around the world back to Wall Street.

The S&P 500 was sinking by 2.5% in late morning trading, potentially on pace for its worst day since 2022, and on track for its first back-to-back loss of more than 1% since April. The Dow Jones Industrial Average was down 806 points, or 2%, as of 10:45 a.m. Eastern time, and the Nasdaq composite was 3.1% lower.

A report showing hiring by U.S. employers slowed last month by much more than economists expected sent fear through markets, with both stocks and bond yields dropping sharply. It followed a batch of weaker-than-expected reports on the economy from a day earlier, including a worsening for U.S. manufacturing activity, which has been one of the areas hurt most by high rates.

It was just a couple days ago that U.S. stock indexes jumped to their best day in months after Fed Chair Jerome Powell gave the clearest indication yet that inflation has slowed enough for cuts to rates to begin in September.

Now, worries are rising the Fed kept its main interest rate at a two-decade high for too long in its zeal to stifle inflation. A rate cut would make it easier for U.S. households and companies to borrow money and support the economy, but it could take months to a year for the full effects to filter through.

“The Fed is seizing defeat from the jaws of victory,” said Brian Jacobsen, chief economist at Annex Wealth Management. “Economic momentum has slowed so much that a rate cut in September will be too little and too late. They’ll have to do something bigger than” the traditional cut of a quarter of a percentage point ”to avert a recession.”

Traders are now betting on a roughly two-in-three chance that the Fed will cut its main interest rate by half a percentage point in September, according to data from CME Group. That’s even though Powell said on Wednesday that such a deep reduction is “not something we’re thinking about right now.”

U.S. stocks had already appeared to be headed for losses before the disappointing jobs report thudded onto Wall Street.

Several big technology companies turned in underwhelming profit reports, which continued a mostly dispiriting run that began last week with results from Tesla and Alphabet.

Amazon fell 11.9% after reporting weaker revenue for the latest quarter than expected. The retail giant also gave a forecast for operating profit for the summer that fell short of analysts’ expectations.

Intel dropped even more, 27.9%, after the chip company’s profit for the latest quarter fell well short of forecasts. It also suspended its dividend payment and said it expects to lose money in the third quarter, when analysts were expecting a profit.

Apple was holding steadier, up 2.4%, after reporting better profit and revenue than expected.

Apple and a handful of other Big Tech stocks known as the “ Magnificent Seven ” have been the main reasons the S&P 500 has set dozens of records this year, in part on a frenzy around artificial-intelligence technology. But their momentum turned last month on worries investors had taken their prices too high and expectations for their profit gains are growing too difficult to meet.

Friday’s losses for tech stocks dragged the Nasdaq composite down by more than 10% from its record set in the middle of last month.

Helpfully for Wall Street, other areas of the stock market beaten down by high interest rates had been rebounding at the same time tech stocks were regressing, particularly smaller companies. But they tumbled too Friday on worries that a fragile economy could undercut their profits.

The Russell 2000 index of smaller stocks dropped 4.2%, more than the rest of the market.

In the bond market, Treasury yields fell sharply as traders raised their expectations for how deeply the Federal Reserve would have to cut interest rates. The yield on the 10-year Treasury fell to 3.82% from 3.98% late Thursday and from 4.70% in April.

Amid all the fear, some voices on Wall Street were still advising caution.

“While worries of a policy mistake are rising, one negative miss shouldn’t lead to overreaction,” according to Lara Castleton, U.S. head of portfolio construction and strategy at Janus Henderson Investors.

She points out the U.S. economy is still growing, and inflation is still coming down. The S&P 500, meanwhile, isn’t far off its record set two weeks ago. “Equities selling off should be seen as a normal reaction, especially considering the high valuations in many pockets of the market. It’s a good reminder for investors to focus on the earnings of companies going forward.”

In stock markets abroad, Japan’s Nikkei 225 dropped 5.8%. It’s been struggling since the Bank of Japan raised its benchmark interest rate on Wednesday. The hike pushed the value of the Japanese yen higher against the U.S. dollar, potentially hurting profits for exporters and deflating a boom in tourism.

Chinese stocks extended losses this week as investors registered disappointment with the government’s latest efforts to spur growth through various piecemeal measures, instead of hoped-for infusions of broader stimulus, and stock indexes fell across much of Europe.

Commodity prices have also had a rough ridet this week. Oil prices surged after the killings of leaders of Hamas and Hezbollah that fueled fears that a widening conflict in the Middle East could disrupt the flow of crude.

But prices fell back Thursday and Friday on worries that a weakening economy will burn less fuel. A barrel of benchmark U.S. crude tumbled 3.4% Friday to $73.73 and brought its loss for the week to 4.5%.

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BANGKOK — China’s powerful Politburo has endorsed the ruling Communist Party’s long-term strategy for growing the economy by encouraging more consumer spending and weeding out unproductive companies to promote “survival of the fittest.”

A statement issued after the meeting of the 24 highest leaders of the party warned that coming months would be tough, perhaps alluding to mounting global uncertainties ahead of the U.S. presidential election in November.

“There are still many risks and hidden dangers in key areas,” it said, adding that the tasks for reform and stability in the second half of the year were “very heavy.”

The Politburo promised unspecified measures to restore confidence in financial markets and boost government spending, echoing priorities laid out by a wider meeting of senior party members earlier in July. After that gathering, China’s central bank reduced several key interest rates and the government doubled subsidies for electric vehicles bought to replace older cars as part of the effort to spur growth.

The Politburo’s calls to look after low- and middle-income groups reflect pledges to build a stronger social safety net to enable families to spend more instead of socking money away to provide for health care, education and elder care. But it provided no specifics on how it will do that.

“This sounds promising on paper. But the lack of any specifics means it is unclear what it will entail in practice,” Julian Evans-Pritchard of Capital Economics said in a commentary.

The party’s plans for how to improve China’s fiscal policies at a time of burgeoning local government debt were “short on new ideas,” he said.

Instead, the emphasis is on moving faster to implement policies such as the government’s campaign to convince families to trade in old cars and appliances and redecorate their homes that includes tax incentives and subsidies for purchases that align with improved efficiency and reducing use of polluting fossil fuels.

China’s economy grew at a 4.7% annual rate in the last quarter after expanding 5.3% in the first three months of the year. Some economists say the official data overstate the rate of growth, masking long-term weaknesses that require broad reforms to rebalance the economy away from a heavy reliance on construction and export manufacturing.

Under leader Xi Jinping, China has prioritized developing industries using advanced technologies such as electric vehicles and renewable energy, a strategy that has made the country a leader in some areas but also led to oversupplies that are now squeezing some manufacturers, such as makers of solar panels.

The Politburo’s statement vowed support for “gazelle enterprises and unicorn enterprises,” referring to new, fast-growing companies and high-tech start-ups. It warned against “vicious competition” but also said China should improve mechanisms to ensure “survival of the fittest” and eliminate “backward and inefficient production capacity.”

The party has promised to help resolve a crisis in the property sector, in part by encouraging purchases of apartments to provide affordable housing and to adapt monetary policy to help spur spending and investment.

But the document issued Tuesday also highlighted longstanding concerns. The countryside and farmers need more support to “ensure that the rural population does not return to poverty on a large scale,” it said.

It also condemned what analysts have said is widespread resistance to fresh initiatives, saying that “formalism and bureaucracy are stubborn diseases and must be corrected” and warning that economic disputes should not be resolved by “administrative and criminal means.”

Chinese markets have not shown much enthusiasm for the policies outlined in recent weeks.

On Tuesday, the Hong Kong benchmark Hang Seng index sank 1.4%, while the Shanghai Composite index lost 0.4%. The Hang Seng has fallen 4.3% in the past three months while Shanghai’s index is down 7.3%.
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Auckland, New Zealand — Job losses and wage cuts from China’s economic downturn are hitting key industries, according to the South China Morning Post, and analysts say the situation could lead to political difficulties for the ruling Chinese Communist Party (CCP).

Rights groups say the situation has triggered a sharp increase in protests and strikes around the country – not enough to threaten the rule of the CCP or President Xi Jinping, but enough that an analyst sees a “hidden danger” for Chinese authorities unless they can rejuvenate the economy.

Mr. Wang, in his early 40s, lives in Bao’an District, Shenzhen, in southern China. He was formerly employed at a well-known business travel platform but was laid off earlier this year. He prefers not to disclose his full name or the company’s name due to the matter’s sensitivity.

Wang tells VOA, “In the area of business travel software, our company is at the forefront of China in terms of R&D and sales, and it is also one of the top 500 private enterprises in China.  But now many companies have run out of money, our sales have plummeted, and the layoffs finally fell on our group of old employees.”

He compares China’s economic slowdown to a high-speed train suddenly hitting the brakes, and everyone on the train hitting the ground, even those better-off, like himself.

China’s Gross Domestic Product (GDP) growth rate has been dropping since hitting 10.6% in 2010, well before the COVID pandemic, which cut growth to 2.2% in 2020, according to the World Bank.

The global lender says growth bounced back to 8.4% in 2021 but then fell to 3% in 2022 before a moderate recovery to 5.2% in 2023.  The World Bank expects China’s growth rate to drop back below 5% this year.

Several Chinese workers VOA talked with said they were unprepared for the economy to slow so quickly.

Two large IT companies laid off Mr. Liu in Guangzhou in the past two years, and his life has turned gloomy.  He also prefers not to disclose his full name due to the matter’s sensitivity. Still struggling to find a job, Liu has a second child, and his wife was diagnosed with early-stage breast cancer.

“When I was laid off for the first time, I got decent severance pay because I had worked there for a long time,” says Liu. “Later, when I came to a large company, I was laid off again, and I felt that I was quite unlucky.  Fortunately, we don’t have too much debt.”

According to South Morning China Post’s (SCMP) July analysis of the annual reports of 23 top Chinese companies, 14 of them carried out large layoffs in 2023, with technology and real estate companies among the worst hit amid a glut of empty buildings.

The online newspaper reports that one company, Poly Real Estate, laid off 16.3% of its workforce in the past year, or 11,000 people; Greenland Holdings, a Shanghai-based real estate company, also saw a 14.5% drop in the number of its employees.

The SCMP reports online retail giant Alibaba cut 12.8% of its workforce, or about 20,000 jobs, in the 2023 fiscal year, while technology conglomerate Tencent’s headcount fell 2.8% in 2023 to about 3,000, and in the first quarter of 2024, the company laid off another 630 people.

In addition, Chinese internet tech firms ByteDance, JD.com, Kuaishou, Didi Chuxing, Bilibili and Weibo have all conducted layoffs this year.

China’s National Bureau of Statistics (NBS) is painting a rosier picture this month, calling employment and the national economy “generally stable” and citing “steady progress.”  In June, it showed only a 0.2% drop in urban jobs compared with the same period last year.

The NBS also claimed China’s lowest youth unemployment rate this year, 13.2%, after it removed students from the calculation.  The new methodology was introduced after China hit a record high 21.3% youth unemployment in June 2023, prompting authorities to suspend publication of the statistic.

Chen Yingxuan, a policy analyst at the Taiwan Institute of National Defense and Security Studies who specializes in Chinese unemployment, tells VOA that Beijing’s job worries have shifted from fresh graduates and the working class to middle class and senior managers.

She says many have faced salary cuts or layoffs to reduce costs and increase efficiency as China struggles with a weak housing market, sluggish consumption, high government debt, foreign investment withdrawals, and trade barriers.

Even people with relatively stable incomes, such as workers at state-owned enterprises, are feeling the pinch.

Ms. Zhang, who works for a state-owned commercial bank in Guangzhou and prefers not to disclose her full name due to the matter’s sensitivity, says many bank employees are seeing paychecks shrink.

“State owned banks such as China Construction Bank and Agricultural Bank of China, or joint-stock banks, are now cutting salaries, let alone urban commercial banks in many places,” she tells VOA.  “Salary cuts already started last year, and it seems to be worse this year.” 

She projects the cuts will be 20% to 30% by the end of the year.

In July, China’s 31 provincial-level administrative regions issued regulations calling for party and government organs to “live a tight life,” focusing on budget cuts and reductions in public spending.

Analysts say further job and wage cuts could lead to intensified protests and strikes, leading to greater instability.

Rights group China Labor Bulletin (CLB) in 2023 counted 1,794 strike incidents in China, more than double the number in 2022.

In the past six months alone, the group documented about 1,200 incidents in protest of the wage cuts, unpaid wages, unforeseen layoffs, and unfair compensation, a more than 50% increase from the same period in 2023.

CLB estimates “only 5% to 10% of all collective actions of workers have been recorded,” suggesting many more protests are taking place.

But Chen of the Taiwan Institute of National Defense and Security Studies says the wage cuts and unemployment have not yet been severe enough to spark large-scale protests that threaten the power of the ruling party or President Xi.

“Although there has been an increase in protests, they are still relatively sporadic. There are no large-scale incidents, and local governments can easily quell them,” she says.  “So, for the legitimacy of the CCP and Xi’s third term, it is more of a hidden danger than an imminent crisis.”

While protests in China are usually by working class people, Wang notes the economic pain is spreading to other, more influential groups.

“Whether for blue-collar, white-collar, or even gold-collar workers, the economic losses are now very large,” says Wang.  “The worse the economy and the more emergencies there are, the more the CCP will suppress it with high pressure. It’s a vicious circle, where people suffer more, and stability is more costly.”

Meanwhile, analysts say Chinese authorities are struggling to come up with a plan to reverse the unemployment and wage cutting trend.

The communiqué of the Third Plenary Session of the 20th Central Committee of the Communist Party of China, released on July 18, mentioned employment only once, saying “it is necessary to improve the income distribution system and the employment priority policy.”
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MADRID — The global cruise industry expects to carry 10% more passengers by 2028 than the 31.7 million who took cruise holidays in 2023, when the sector surpassed pre-pandemic levels, but sees some routes exposed to protests over overtourism.

Long criticized for its impact on the environment and coastal communities, the industry has ordered 57 more cruise ships in addition to some 300 now in operation to meet the projected demand, said the European director of Cruise Lines International Association (CLIA), Marie-Caroline Laurent.

At the same time, companies are working to adapt the ships so they can switch to electricity from highly polluting marine fuel when they are moored at ports and to be ready to comply with EU maritime environment regulations by 2030.

But as travel continues to grow, cruise operators face a growing debate about excessive tourist numbers in crowded European port cities such as Spain’s Barcelona, the scene of protests this month in which a small group sprayed tourists with water pistols.

Cruise ship passengers represent just 4% of all tourists visiting Barcelona, CLIA representatives said.

Jaume Collboni, the mayor of Barcelona, which is the biggest cruise ship port in Europe, told Reuters his administration would seek a new deal with the port to reduce the number of one-day cruise calls.

CLIA’s Laurent said violent protests could have an impact on the itineraries in the future.

“There will be some consideration of adapting the itineraries if for some reason we feel that all passengers will not be well-treated,” she said.

Instead, the industry could offer more cruise holidays in Asia, in northern Europe and the Caribbean in the coming years, as well as different ports in the Mediterranean.

The World Travel & Tourism Council expects Spain’s tourism revenues to reach nearly 100 billion euros this year, 11% above pre-pandemic 2019 levels.

Meanwhile, the cruise industry forecasts a 5% increase in visitors in Spain during 2024, below the 13% increase in summer visitor arrivals projected by Spanish authorities.
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Washington — The nation’s economy accelerated last quarter at a strong 2.8% annual pace, with consumers and businesses helping drive growth despite the pressure of continually high interest rates.

Thursday’s report from the Commerce Department said the gross domestic product — the economy’s total output of goods and services — picked up in the April-June quarter after growing at a 1.4% pace in the January-March period. Economists had expected a weaker 1.9% annual pace of growth.

The GDP report also showed that inflation continues to ease, though still remaining above the Federal Reserve’s 2% target. The central bank’s favored inflation gauge rose at a 2.6% annual rate last quarter, down from 3.4% in the first quarter of the year.

Excluding volatile food and energy prices, so-called core PCE inflation increased at a 2.9% pace. That was down from 3.7% from January through March.

The latest figures should reinforce confidence that the U.S. economy is on the verge of achieving a rare “soft landing,” whereby high interest rates, engineered by the Fed, tame inflation without tipping the economy into a recession.

Helping to boost last quarter’s expansion was consumer spending, the heart of the U.S. economy. It rose at a 2.3% annual rate in the April-June quarter, up from a 1.5% pace in the January-March period. Spending on goods, such as cars and appliances, increased at a 2.5% rate after falling at a 2.3% pace in the first three months of the year.

Business investment was up last quarter, led by a 11.6% annual increase in equipment investment. Growth also picked up because businesses increased their inventories. On the other hand, a surge in imports, which are subtracted from GDP, shaved about 0.9 percentage point from the April-June growth.

Despite last quarter’s uptick, the U.S. economy, the world’s largest, has cooled in the face of the highest borrowing rates in decades. From mid-2022 through 2023, annualized GDP growth had topped 2% for six straight quarters. In last year’s final two quarters, GDP expanded by robust rates of 4.9% and 3.4%.

Fed officials have made clear that with inflation edging toward their 2% target level, they’re prepared to start cutting interest rates soon, something they’re widely expected to do in September.

“This is a perfect report for the Fed,” Olu Sonola, head of economic research at Fitch Ratings, said of Thursday’s GDP numbers. “Growth during the first half of the year is not too hot, inflation continues to cool, and the elusive soft-landing scenario looks within reach.”

The state of the economy has seized Americans’ attention as the presidential campaign has intensified. Though inflation has slowed sharply, to 3% from 9.1% in 2022, prices remain well above their pre-pandemic levels.

This year’s economic slowdown reflects, in large part, the much higher borrowing rates for home and auto loans, credit cards and many business loans resulting from the Fed’s aggressive series of interest rate hikes.

The Fed’s rate hikes — 11 of them in 2022 and 2023 — were a response to the flare-up in inflation that began in the spring of 2021 as the economy rebounded with unexpected speed from the COVID-19 recession, causing severe supply shortages. Russia’s invasion of Ukraine in February 2022 made things worse by inflating prices for the energy and grains the world depends on. Prices spiked across the country and the world.

Economists had long predicted that the higher borrowing costs would tip the United States into recession. Yet the economy kept chugging along. Consumers, whose spending accounts for roughly 70% of GDP, kept buying things, emboldened by a strong job market and savings they had built up during the COVID-19 lockdowns.

The slowdown at the start of this year was caused largely by two factors, each of which can vary sharply from quarter to quarter: A surge in imports and a drop in business inventories. Neither trend revealed much about the economy’s underlying health.
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JEFFERSON CITY, Mo. — As state treasurer, Vivek Malek pushed Missouri’s main retirement system to pull its investments from Chinese companies, making Missouri among the first nationally to do so. Now Malek is touting the Chinese divestment as he seeks reelection in an August 6 Republican primary against challengers who also are denouncing financial connections to China.

The Missouri treasurer’s race highlights a new facet of opposition to China, which has been cast as a top threat to the U.S. by many candidates seeking election this year. Indiana and Florida also have restricted their public pension funds from investing in certain Chinese companies. Similar legislation targeting public investments in foreign adversaries was vetoed in Arizona and proposed in Illinois and Oklahoma.

China ranks as the world’s second-largest economy behind the U.S.

Between 2018 and 2022, U.S. public pension and university endowments invested about $146 billion in China, according to an analysis by Future Union, a nonprofit pro-democracy group led by venture capitalist Andrew King. The report said more than four-fifths of U.S. states have at least one public pension fund investing in China and Hong Kong.

“Frankly, there should be shame — more shame than there is — for continuing to have those investments at this point in time,” said King, who asserts that China has used intellectual property from U.S. companies to make similar products that undercut market prices.

“You’re talking a considerable amount of money that frankly is competing against the U.S. technology and innovation ecosystem,” King said.

But some investment officials and economists have raised concerns that the emerging patchwork of state divestment policies could weaken investment returns for retirees.

“Most of these policies are unwise and would make U.S. citizens poorer,” said Ben Powell, an economics professor who is executive director of the Free Market Institute at Texas Tech University.

The National Association of State Retirement Administrators opposes state-mandated divestments, saying such orders should come only from the federal government against specific companies based on U.S. security or humanitarian interests.

The U.S. Treasury Department recently proposed a rule prohibiting American investors from funding artificial intelligence systems in China that could have military uses, such as weapons targeting. In May, President Joe Biden blocked a Chinese-backed cryptocurrency mining firm from owning land near a Wyoming nuclear missile base, calling it a “national security risk.”

Yet this isn’t the first time that states have blacklisted particular investments. Numerous states, cities and universities divested from South Africa because of apartheid before the U.S. Congress eventually took action. Some states also have divested from tobacco companies because of health concerns.

Most recently, some states announced a divestment from Russia because of its war against Ukraine. But that has been difficult to carry out for some public pension fund administrators.

The quest to halt investments in Chinese companies comes as a growing number of states also have targeted Chinese ownership of U.S. land. Two dozen states now have laws restricting foreign ownership of agricultural land, according to the National Agricultural Law Center at the University of Arkansas. Some laws apply more broadly, such as one facing a legal challenge in Florida that bars Chinese citizens from buying property within 16 kilometers of military installations and critical infrastructure.

State pension divestment policies are “part of a broader march toward more confrontation between China and the United States,” said Clark Packard, a research fellow for trade policy studies at the libertarian Cato Institute. But “it makes it more challenging for the federal government to manage the overall relationship if we’ve got to deal with a scattershot policy at the state level.”

Indiana last year became the first to enact a law requiring the state’s public pension system to gradually divest from certain Chinese companies. As of March 31, 2023, the system had about $1.2 billion invested in Chinese entities with $486 million subject to the divestment requirement. A year later, its investment exposure in China had fallen to $314 million with just $700,000 still subject to divestment, the Indiana Public Retirement System said.

Missouri State Treasurer Malek tried last November to get fellow trustees of the Missouri State Employees’ Retirement System to divest from Chinese companies. After defeat, he tried again in December and won approval for a plan requiring divestment over a 12-month period. Officials at the retirement system did not respond to repeated questions from The Associated Press about the status of that divestment.

In recent weeks, Malek has highlighted the Chinese divestment in campaign ads, asserting that fentanyl from China “is drugging our kids” and vowing: “As long as I’m treasurer, they won’t get money from us. Not one penny.”

Two of Malek’s main challengers in the Republican primary — state Rep. Cody Smith and state Sen. Andrew Koenig — also support divestment from China.

Koenig said China is becoming less stable and “a more risky place to have money invested.”

“In China, the line between public and private is much more blurry than it is in America,” Smith said. “So I don’t think we can fully know that if we are investing in Chinese companies that we are not also aiding an enemy of the United States.” 

A law signed earlier this year by Florida Gov. Ron DeSantis requires a state board overseeing the retirement system to develop a plan by September 1 to divest from companies owned by China. The oversight board had announced in March 2022 that it would stop making new Chinese investments. As of May, it still had about $277 million invested in Chinese-owned entities, including banks, energy firms and alcohol companies, according to an analysis by Florida legislative staff.

Florida law already prohibits investment in certain companies tied to Cuba, Iran, Sudan, Venezuela, or those engaged in an economic boycott against Israel.

In April, Arizona Gov. Katie Hobbs vetoed a bill that would have required divestment from companies in countries determined by the federal government to be foreign adversaries. That list includes China, Cuba, Iran, North Korea, Russia and Venezuela.

Hobbs said in a letter to lawmakers that the measure “would be detrimental to the economic growth Arizona is experiencing as well as the State’s investment portfolio.” 
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New Delhi — The government in India will spend $24 billion on boosting employment opportunities for young people, as job creation emerges as the biggest challenge confronting Prime Minister Narendra Modi in his third term. 

The government also announced financial support for development projects in two states ruled by its regional allies.

Modi’s Bharatiya Janata Party failed to win a clear majority in recent elections and has formed a coalition government. Although the country’s economy is growing briskly, high unemployment and distress in its vast rural areas were cited as the key reasons for the party’s loss of support.

Presenting the annual budget in parliament on Tuesday, Finance Minister Nirmala Sitharaman said the government will “facilitate employment, skilling and other opportunities” for more than 40 million young people over the next five years.

She said the government will provide paid internships in the country’s 500 top companies to improve opportunities for job seekers.

India posted 8.2% growth last year, the fastest among major economies in the world. But critics say only some have benefitted from the boom, while millions struggle to earn a livelihood.

The government’s announcement that it will raise spending on loans for small and medium-sized businesses to boost job creation was welcomed by several economists. Opposition parties have long criticized the Modi government for giving billions of dollars in subsidies to big business and not extending enough assistance to smaller ones.

“The support to smaller businesses is critical because these are the enterprises which create jobs. Big corporations on the other hand use capital intensive technologies, which don’t result in any significant employment generation,” economist Santosh Mehrotra told VOA. “The government appears to have taken serious note of the jobless crisis we face for the first time in 10 years since it has been in power.”

He said providing internships could be a crucial step in tackling the unemployment problem. Mehrotra said it remains to be seen how the proposals are implemented.

Economists say jobs have failed to grow because India’s manufacturing sector is relatively small, accounting for only 17% of gross domestic product.

According to official figures, the unemployment rate is close to 6%, but an economic research group, the Center for Monitoring Indian Economy, estimates that it is about 9%. The biggest challenge confronts young graduates, among whom the unemployment rate is about 29%. In the world’s youngest country, an estimated 10 million people enter the workforce every year.

A World Bank report released in April, “Jobs for Resilience,” said that while growth in South Asian countries like India is strong, the region is not creating enough jobs to keep pace with its rapidly increasing working-age population. According to the report, the employment ratio for South Asia was 59%, compared to 70% in other emerging market and developing economy regions.

India’s economy will continue expanding at a brisk pace, according to government estimates, which have pegged growth this year at 6.5% to 7% – lower than that posted last year but still high among major economies.

“The global economy, while performing better than expected, is still in the grip of policy uncertainties,” she said. “In this context, India’s economic growth continues to be the shining exception and will remain so in the years ahead,” Finance Minister Sitharaman said.

Modi said the budget will lead India toward “better growth and a bright future.”

With an eye on keeping its coalition allies on board, the government also announced financial assistance for two states — Andhra Pradesh and Bihar. The two regional parties that govern these states have pledged support to Modi and are crucial for his BJP to stay in power. 
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