US economy likely to pick up, though pain may linger for some

US President Donald Trump agreed to reopen the government for three weeks after having forced a shutdown over funding for a wall on the Mexico border. (AP)
Updated 27 January 2019

US economy likely to pick up, though pain may linger for some

BALTIMORE: The US economy will likely resume its steady growth now that the government has reopened, though economists say some scars — for the nation and for federal workers — will take time to heal.
Most analysts estimate that the 35-day partial shutdown shaved a few tenths of a percentage point from annual economic growth in the first three month of 2019. They say growth should pick up in the coming months, though some of the money federal workers and contractors didn’t spend in the past five weeks — on such items as movie tickets, restaurants and travel — will never be made up. Having gone without two paychecks, many federal workers were forced to visit food banks or to borrow money. Federal workers will now receive backpay, though some contractors might not.
President Donald Trump agreed to reopen the government for three weeks after having forced the shutdown in hopes of compelling Democrats to approve billions for a wall on the Mexico border. Trump failed to secure any such money.
During the shutdown, a shortage of airport security and air traffic controllers disrupted travel at such major hubs as LaGuardia Airport in New York and Newark Liberty International Airport in New Jersey. The pressure on Trump to reopen the government intensified Friday after a delay of about 3,000 flights by mid-afternoon because six of 13 air traffic controllers didn’t show up to work at a critical center in Virginia.
S&P Global Ratings estimates that the economy lost $6 billion because of the government closure — a sizable but relatively negligible sum in a $19 trillion-plus US economy.
“If the shutdown had lasted much longer, the economic impacts would have snowballed — travel problems, tax refunds, etc.,” said Stephen Stanley, chief economist at Amherst Pierpont Securities.
Still, the damage isn’t likely to lift immediately. And some federal employees had expressed anxiety during the shutdown about the stability and security of their jobs. The most skilled or talented among them may be likelier to leave government service, a potential problem for an economy already facing worker shortages in some areas.
Job searches by employees at multiple federal agencies jumped during the shutdown, according to clicks tracked by the jobs site Indeed. Employees who had gone unpaid at the Department of Homeland Security, Census Bureau, the IRS and the Transportation Safety Administration were much more likely to be hunting for a new job compared with the past two years of searches.
One lingering risk is if Trump chooses to shutter the government again after the three-week agreement lapses on Feb. 15. Should that occur, it would sabotage consumer confidence and hurt the economy, predicted Mark Zandi, chief economist at Moody’s Analytics.
“It would wipe out confidence,” Zandi said.


Indonesia hails ‘historic’ $22.9bn mega-investment deal with UAE

Updated 17 January 2020

Indonesia hails ‘historic’ $22.9bn mega-investment deal with UAE

  • Leaders agree initial $6.8bn projects plan, including initiative to build a replica of Abu Dhabi grand mosque in Java

JAKARTA: Indonesia’s business community on Thursday welcomed the UAE’s pledge to pump tens of billions of dollars into a wide range of key sector projects.

President Joko Widodo and his entourage secured an overall $22.9 billion deal during an official two-day visit to Abu Dhabi earlier this week covering the fields of energy, logistics, port construction, mining, and agriculture.

It was also revealed that the delegation brokered a UAE commitment to assist in establishing an Indonesian sovereign wealth fund.

At a bilateral meeting, the Indonesian leader and the Crown Prince of Abu Dhabi Sheikh Mohammed bin Zayed Al-Nahyan witnessed the signing of 11 business accords between the two countries. Indonesia’s Minister for Foreign Affairs Retno Marsudi said the UAE had committed to investing $6.8 billion out of the total agreed spending package into the initiatives.

Luhut Pandjaitan, Indonesia’s chief minister for maritime affairs and investment, described the UAE’s pledges as possibly being “the biggest deals in Indonesia’s history, secured with the UAE within only six months,” referring to the crown prince’s visit to Indonesia last July.

While most lauded the deal, some Indonesian business leaders remained cautious over the long-term prospects for the projects.

Fachry Thaib, head of the Middle East Committee and OIC at the Indonesian Chamber of Commerce, said the schemes could trigger a wide-ranging domino effect through job creation and other business ventures.

“The government needs to have a strong lobbying team that can follow up these deals and push them into investment realizations. We have had such commitments from other Gulf countries, but there was no further lobbying and the pledges were hardly realized,” he told Arab News.

Zaini Alawi, a businessman who exports and imports between Indonesia and the Middle East, said: “It would set a good precedent to attract other Gulf countries to invest here if Indonesia shows it could aptly manage these investment deals.”

Director for Middle East affairs at Indonesia’s Foreign Ministry, Achmad Rizal Purnama, told Arab News that the $6.8 billion commitment from the UAE was only the first phase of a long-term program.

Widodo and the crown prince also witnessed the signing of five government cooperation agreements in health, agriculture, Islamic affairs, and counterterrorism.

Indonesian Minister of Religious Affairs Fachrul Razi said one of the main aspects of the cooperation agreement would be the promotion of religious moderation and raising awareness of the dangers of extremism.

FASTFACT

The UAE has pledged to assist in establishing an Indonesian sovereign wealth fund.

Noting that the UAE had pledged to fund the construction of a replica of the Abu Dhabi grand mosque in Solo, the president’s hometown in Java, the minister pointed out that the grant was part of a commitment by the two countries to establish a mosque that welcomed all people and served a pivotal role in promoting the middle path of Islam.

Riza Widyarsa, a Middle East expert at the University of Indonesia, told Arab News that the cooperation deal could help more Indonesians to understand that not all countries in the Middle East observed conservative Islam. “They are also very active in countering religious extremism and radicalism,” he said.

In addition to the multi-billion-dollar projects, Purnama said Indonesia had also secured the UAE’s commitment to assist in establishing an Indonesian sovereign wealth fund into which the UAE, the US International Development Finance Corporation, and Japan’s SoftBank would inject funding.

And according to Pandjaitan, the UAE had pledged to be “the biggest contributor” to the fund.

The fund would be used to finance Indonesia’s ambitious infrastructure development projects and the construction of its proposed new capital in East Kalimantan, a relocation that has been estimated to cost $33 billion and of which Indonesia could only afford 19 percent.

He said all parties involved would meet in Tokyo soon to set up the structure of the fund and to finalize the plan, which the government expected to launch by mid-2020, a year after the crown prince proposed the idea to Widodo.

“This could be the first time that big capitalists work together in a single project,” Pandjaitan added.