(CNN) – It’s not for nothing economics is called “the dismal science,’ so leave it to an economist to rain on today’s royal wedding in London.
As tens of thousands of tourists flock to London and hundreds of millions more watch on television and online, the assumed wisdom is that the influx of tourist dollars and attention will be good for the struggling UK economy.
Indeed, PricewaterhouseCoopers estimates that the city of London will reap £107 million ($177 million) commercially from the influx of revelers. Retail researcher Verdict estimates the boost to the UK economy could approach $1 billion.
Estimates of actual costs of the wedding vary wildly (and the royal family is reportedly paying most of the costs privately) but the security costs are estimated to hit £20 million ($33.2 million), according to the Daily Mail.
But the real cost to the British economy could be a 0.1% hit to UK GDP this year – “if you want to monetize that … that comes something between £1.5 billion to £2 billion ($2.5 billion to $3.3 billion),” said Philip Shaw, chief economist at Investec.
Richard Quest sits with 'The Boss' Sarah Curran for a one-on-one about her experiences and life outside her business.
(CNN) – The hackers who hit Sony’s online PlayStation videogame service not only forced the company to take down its 70 million-plus user network, known as PSN, but struck a blow against the company’s strategic long-term plans.
“Sony has positioned PlayStation 3, not as a games console,” Tim Ingham of Computer and Video Gaming Magazine told CNN. “Indeed, it’s come out and said it sees it as an entertainment hub that sits in the middle of the lounge and provides movies, TV.”
Sony took down the network on April 20, yet waited nearly a week before telling customers that personal data may have been compromised, much to the ire of users.
The hackers have taken personal details – such as name, birth date, email address, user name and password – and other information that may have been taken includes credit card number, expiration date, billing address and password security questions.
Sony has recommended changing passwords and watching for suspicious billing activity. Others recommend cancelling credit cards as a precautionary measure.
“This is very, very serious – I think it’s hard to overstate how bad this is from Sony and potentially for consumers,” Johnny Minkley, editor of EuroGamer.net, told CNN.
PSN along with Qriocity – Sony’s online music and movie stores – are seen as Sony’s foothold in future plans to eventually go head-to-head with the likes of the iTunes store.
“PlayStation Network is a hugely profitable part of not only Sony PlayStation, but Sony itself,” Ingham said. “And online services are at the very heart of what Sony sees its 10-year game plan as, in entertainment. So, for it to pull the plug for a week is a really, really big deal.”
A larger issue lurks in the minds of businesses that are dependent on credit card purchases via customers online – will cases like this hurt not only Sony, but the public’s trust of e-commerce?
Business leaders and political bigwigs will soon meet in Cape Town for the World Economic Forum. There is a clear understanding that the dialogue has shifted in recent years when it comes to understanding Africa’s role in the world.
No longer dismissed as a business basket case, the global community knows that money is being made on the continent. Growth rates are strong. Investment is flowing. Returns are good.
The big question for Africans is to ensure that they too get a share of the spoils.
But how do they do this?
The answer for many is the rather wordy phrase “beneficiation at source.” Politicians like to throw this buzz phrase into conversations because it describes how local communities should “benefit” from their own natural resources.
Traditionally, foreign companies buy Africa’s raw materials, whether they are metals, oil or crops, and then sell the finished product back to Africa.
Now, there is a political push for more African control over its refining capacity, to have more influence over the end product.
While this makes sense, economists and analysts all point to two significant challenges that Africans face as they try to unlock the potential of their continent and grab the opportunities “at source.”
Over and over again, I hear the same two concerns - that a lack of infrastructure and a skills deficit continue to hold back Africans.
If Africa’s working-age youth - an estimated half-a-billion people by 2050 - are to seize the chances that lie before them, then more investment has to be plowed into education.
African engineers, farmers and architects are urgently needed to create a better infrastructure to underpin the continent’s economic potential.
Highways linking big cities and regional hubs need to be built. Fertile agricultural lands need to be farmed strategically. Electricity and power grids need to be upgraded and maintained.
The world and African leaders cannot talk about economic growth unless they increase investment in the critical areas needed to sustain that potential.
(CNN) – Time may be running out much faster than we thought for the United States.
In just five years, China may lay claim to the title “World’s Largest Economy”. This is not coming from China fearmongers or doomsayers – this is according to the International Monetary Fund and its new GDP forecasts.
The numbers: China’s gross domestic product will rocket $8 trillion in the next five years to $19 trillion. The U.S. GDP will grow $3.5 trillion in the same timeframe to $18.8 trillion. And it will be in that year - 2016 - that China's slice of world output will start to edge past the United States': 18% versus 17.7%. In the years after, that gap is forecast to widen.
So how can this be? And so soon? Especially after numerous prior estimates have forecast China’s #1 status to occur in the 2020s, if not 2050? Well, the IMF has based its predictions on numbers for purchasing power parity, or PPP. This gauges the strength of China's domestic consumption, which is then compared to that in the U.S. The famous Big Mac index is based on this. That operates on the notion that the iconic McDonald’s burger should cost the same in each of the more than 120 countries it’s produced. If a Big Mac costs less in another country, then that country’s currency is considered undervalued. This year, you’ll pay 40% less for a Big Mac in China than in the United States. Digest the implications of that morsel as you keep reading.
I interviewed Frederic Neumann, HSBC’s Managing Director of Asian Economics Research, here in Hong Kong. He confirmed PPP is one credible way to measure GDP, but that there are also other credible ways. Those 'other' ways, he says, show that China’s path to economic #1 is much longer than the IMF’s forecast leads us to believe.
Neumann says U.S. dollar terms are a different way to measure China growth. Using this "it would take much longer for the Chinese economy to overtake the U.S. - probably 2025," And while PPP measures domestic purchasing power, U.S. dollars are a better gauge for purchasing power on the world stage.
Per capita income is a third way to measure economic power. The CIA World Factbook estimates that China’s 2010 figure was $7,400, compared with $47,100 for the United States. With this in mind, Neumann says China might not overtake the U.S. until the 2040s or 2050s - a date more in line with past estimates.
Regardless, it is not a question of "if" but “when” China - which last year overtook Japan as the world’s second largest economy - will be the world’s biggest economy. Whenever it happens, that day will herald a new dawn for China and the end of an age for America.
CNN's Andrew Stevens talks with the man behind Hong Kong's bustling nightlife district, who's also put a dent in Disney.
Shanghai, China (CNN) – At the Shanghai Auto Show, car exec after car exec is talking about big investment plans - finding Chinese partners, setting up factories, possibly building cars here for other parts of the world.
It's hard to imagine Detroit – home to the American auto giants – maintaining its prominent role in the industry. However, there are rumblings in China that perhaps Detroit could be a good launch pad for Chinese companies looking to break into the U.S. market.
Detroit already has great talent - a solid pool of Chinese engineers, I was told. Execs say the technology is top notch and customers close by. Michigan officials have also been welcoming.
Pacific Century Motors is the latest Chinese company to inject money into Detroit. PCM is partly owned by the Beijing city government. For $450 million, PCM bought Nexteer, a storied unit of General Motors that makes steering equipment. Nexteer employs thousands of people in Michigan. (The sale was coordinated by Chinese auto parts maker Tempo. Tempo was also an investor in a $100 million deal to buy a brakes division of former GM parts maker Delphi.)
It does not take much to get the market in Athens agitated these days. Not a trading session goes by without rumors of a pending restructuring of Greek debt.
But what seemed on the surface to be a straightforward exchange of internal thoughts at Citigroup created a storm matching the famously dry Meltemi winds that are a trademark of Mediterranean summers.
An email from London-based bond trader for Citigroup Paul Moss, the contents of which were shared from a government source, raised concerns Wednesday about “increased noise over Gr [Greek] debt restructuring as early as this Easter weekend.”
A close examination of the email shows Moss was not suggesting that the restructuring was happening, but that market interest rates and general discussion in the trading pits were suggesting this may transpire.
Beijing, China (CNN) – Hundreds of thousands of Chinese are expected to stream through the Shanghai Auto Show, but walking around the convention center, it feels as though everyone is here at once. Crowds of people are gawking at the new designs and concepts – the eco-friendlier GM Chevy Malibu, the "masculine" VW Beetle, the Geely motorcycle cum mini car "McCar" that can transport your elderly mother in her wheelchair.
This show is running concurrently with the New York Auto Show, but I'm told the difference is the number of people eager to buy their first car. Auto analysts say 3 out of 4 Chinese car customers are first time buyers - and nearly all of them pay in cold, hard cash; No wonder carmakers are racing in to the Chinese market.
Executives here have been playing up the potential growth; however, many have also voiced their concerns about a recent trend. GM, Ford, and PSA Peugeot Citroen have acknowledged the push here by Chinese authorities for indigenous brands.
Philippe Varin, CEO, PSA Peugeot Citroen, said government pressure crept in to the European carmaker's recent discussions to expand in China. He said it's clear that today a critical matter for the Chinese government is to promote local brands. "That is the reason why we have decided to have a local brand," he said at the unveiling of the company's DS5 model.
Doing business in China is getting tougher for international businesses and the big car brands are feeling the pressure. Despite the government's restrictions on foreign carmakers, companies like GM and VW are highly successful here. The reason is that Chinese people like to buy foreign branded cars. This is not the case for many other industries - such as white goods – where Chinese players reign.
Even though international carmakers would earn money off a Chinese brand, there is still some concern that the new demand could curb brand loyalty among Chinese consumers to foreign cars.
Which car brands will come out ahead in China?
About Business 360
CNN International's business anchors and correspondents get to grips with the issues affecting world business, and they want your questions and feedback.