Gita Gopinath joins International Monetary Fund as first female chief economist

Agencies
January 8, 2019

Washington, Jan 8: Prominent Indian-American economist Gita Gopinath has joined as the chief economist of the International Monetary Fund, becoming the first woman to occupy the top post at the global lender.

Gopinath, 47, joined last week at a time, when she believes the world is experiencing a retreat from globalisation, posing challenges to multilateral institutions.

The John Zwaanstra professor of International Studies and Economics at Harvard University, Gopinath, a US citizen, succeeds Maurice (Maury) Obstfeld as Economic Counsellor and Director of the IMF's Research Department. Obstfeld retired December 31.

Announcing her appointment on October 1, IMF Managing Director Christine Lagarde described her as "one of the world's outstanding economists with impeccable academic credentials, a proven track record of intellectual leadership and extensive international experience."

The 11th chief economist of the IMF, Mysore-born Gopinath in a recent interview to The Harvard Gazette described her appointment at the IMF as a "tremendous honour" and said the appointment of the first ever woman for this position speaks highly of IMF's Managing Director Lagarde.

"She is phenomenal, not just in her leadership of the IMF but as a role model for women around the world," she said.

Identifying some of her top priorities at the IMF, Gopinath told The Harvard Gazette that she would like the IMF to continue to be a place that provides intellectual leadership on important policy questions.

“Among the research issues that I would like to push, one would be understanding the role of dominant currencies like the dollar in international trade and finance. We could do more on the empirical side to try to understand countries' dollar exposures and on the theoretical side in terms of the implications for international spillovers, consequences of dollar shortages, etc,” she said.

Most countries invoice their trade in dollars and borrow internationally in dollars. This is a central part of the international price system and the international financial system and it will be exciting to explore its consequences in greater depth with the IMF, she said.

Gopinath considers the perceived retreat from globalisation as one of the top challenges being faced by the IMF.

"The one (biggest issues being faced by the IMF) that is absolutely clear and present is that we are seeing the first serious retreat from globalisation. This has not happened in the past 50 or 60 years when the world moved toward lower tariffs and increasing trade across countries,” she told the prestigious Harvard publication.

"Over the past several months, we have the US-imposed tariffs and retaliation to them from China and other nations. There is in general growing uncertainty about trade policy, including the one arising out of Brexit (the British move to leave the European Union).

"While the trade has reduced global poverty and raised livelihoods, its consequences for inequality, and on whether the rules of engagement are fair, are real concerns that need to be addressed,” she said.

Gopinath said there is also a concern about whether there is the right multilateral institutions and frameworks in place to make sure everybody feels that there is fairness in trade. “And the same goes for capital flows," she added.

"Foreign direct investment (FDI) was always viewed very favourably by countries. But because most of the FDI is now in tech-heavy firms, there are growing concerns about national security and international property theft. So I believe this retreat from globalisation and this retreat from multilateralism is quite unique to the times we are living in," Gopinath said.

Another important concern, she said, is the health of emerging markets as the US continues to normalize its interest rates.

The capital flows to several markets have reversed, putting pressure on their exchange rates and consequently on inflation, and on balance sheets, given that several emerging markets borrow heavily in dollars, said the IMF chief economist.

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News Network
February 28,2020

Feb 28: The best economic tonic for the coronavirus shock is to contain its spread and worry about stimulus later, said Raghuram Rajan, former head of the Reserve Bank of India.

There’s little central banks can do, and while more government spending would help, the priority should be on convincing companies and households that the virus is under control, he said.

“People want to have a sense that there is a limit to the spread of this virus perhaps because of containment measures or because there is hope that some kind of viral solution can be found,” Rajan told Bloomberg Television’s Haidi Stroud Watts and Shery Ahn.

“At this point I would say the best thing that governments can do is to really fight the epidemic rather than worry about stimulus measures that comes later,” said Rajan, who is currently a professor at the Chicago Booth School of Business.

The spread of coronavirus is pushing the world economy toward its worst performance since the financial crisis more than a decade ago.

Bank of America Corp. economists warned clients Thursday that they now expect 2.8% global growth this year, the weakest since 2009.

“We have moved from extreme confidence in markets to extreme panic, all in the space of one week,” said Rajan, who previously was chief economist at the International Monetary Fund.

The virus outbreak will force companies to rethink supply chains and overseas production facilities, he said.

“I think we will see a lot of rethinking on this, coming on the back of the trade disruption, now we have this,” Rajan said. “Globalization in production is going to be hit quite badly.”

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Agencies
August 4,2020

Washington, Aug 4: US President Donald Trump gave popular Chinese-owned video app TikTok six weeks to sell its US operations to an American company, saying Monday it would be "out of business" otherwise, and that the government wanted a financial benefit from the deal.

"It's got to be an American company... it's got to be owned here," Trump said. "We don't want to have any problem with security."

Trump said that Microsoft was in talks to buy TikTok, which has as many as one billion worldwide users who make quirky 60-second videos with its smartphone app.

But US officials say the app constitutes a national security risk because it could share millions of Americans' personal data with Chinese intelligence.

Trump gave the company's Chinese parent ByteDance until mid-September to strike a deal.

"I set a date of around September 15, at which point it's going to be out of business in the United States," he said.

Whatever the price is, he said, "the United States should get a very large percentage of that price because we're making it possible."

Trump compared the demand for a piece of the pie to a landlord demanding under-the-table "key money" from a new tenant, a practice widely illegal including in New York, where the billionaire president built his real estate empire.

"TikTok is a big success, but a big portion of it is in the country," he said. "I think it's very fair."

But Trump also threw a surprise new condition in any deal, saying the sale of TikTok's US business would have to result in a significant payout to the US Treasury for initiating it.

"A very substantial portion of that price is going to have to come into the Treasury of the United States, because we're making it possible for this deal to happen," Trump told reporters.

"They don't have any rights unless we give it to them," he said.

Sell or shut down

The pressure for a sale of TikTok's US and international business, based in Los Angeles, left the company and ByteDance facing tough decisions.

Trump has made TikTok the latest front in the ongoing political and trade battles between Washington and Beijing.

The app has been under formal investigation on US national security grounds because it collects large amounts of personal data on all its users and is legally bound to share that with authorities in Beijing if they demand it.

Both its huge user base and its algorithm for collecting data make it hugely valuable.

But being forced by the US government to sell at least its US business or be shut down -- and to then split the sale price with the US Treasury as Trump is demanding -- was an almost unheard-of tactic.

Shutting down could force users to switch to competitors, and many content creators are already encouraging followers to follow them on other social media platforms.

"The most obvious beneficiaries are Snapchat, Facebook and Twitter, with Snapchat likely being the biggest beneficiary," said investment analysts at Lightshed Partners.

Earlier Monday, ByteDance founder Zhang Yiming acknowledged the hefty pressure and said in a letter to staff, reported by Chinese media, that they were working around-the-clock "for the best outcome."

"We have always been committed to ensuring user data security, as well as the platform neutrality and transparency," Zhang said.

However, he said, the company faces "mounting complexities across the geopolitical landscape and significant external pressure."

He said the company must confront the challenge from the United States, though "without giving up exploring any possibilities."

According to Britain's The Sun newspaper Monday, as a possible consequence of the pressure, ByteDance is planning to relocate TikTok's global operations to Britain.

Pushing back

China's foreign ministry pushed back Monday, calling Washington hypocritical for demanding TikTok be sold.

"The US is using an abused concept of national security and, without providing any evidence, is making presumptions of guilt and issuing threats to relevant companies," said spokesman Wang Wenbin.

"This goes against the principle of market economy and exposes the hypocrisy and typical double standards of the US in upholding so-called fairness and freedom," he added.

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News Network
May 23,2020

Karachi, May 23: Ninety-seven people were killed and two survived when a passenger plane crashed into homes in Pakistan's southern city of Karachi, health officials said Saturday.

The Pakistan International Airlines (PIA) plane had made multiple approaches to land at the city's airport when it came down in a residential area, damaging buildings and sparking a rescue operation that lasted into the night.

All passengers and crew had been accounted for and the bodies of those killed had been recovered from the crash site, the Sindh Health Ministry said, adding that 19 had been identified.

A local hospital earlier reported it had received the bodies of people killed on the ground.

The site remained cordoned off on Saturday morning.

The crash sent plumes of smoke were into the air as rescue workers and residents searched the debris for people and as firefighters tried to extinguish the flames.

An AFP reporter witnessed charred bodies being loaded into ambulances.

PIA said the plane lost contact with air traffic control just after 2:30 pm (0930 GMT) travelling from Lahore to Karachi.

The disaster comes as Pakistanis prepare to celebrate the end of Ramadan and the beginning of Eid al-Fitr, with many travelling back to their homes in cities and villages.

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