Implications of rising wages in Eastern Europe; Israel's actions in Gaza and improvement in China-Australia trade relations; China's trade tactics, pork problem, concerns over deflation, and consumer price index data.
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Quick takeaways
Rising wages in Eastern Europe are outpacing productivity growth, making the region less attractive to Western European companies.
Israel intends to maintain overall security responsibility for Gaza indefinitely, with no clear political horizon for resolving the situation and establishing a Palestinian state.
Deep dives
Soaring wages in Eastern Europe could hurt the region's attractiveness
The International Monetary Fund warns that rising wages in Eastern Europe have outpaced productivity growth, making the region less attractive to Western European companies. The IMF also predicts that this wage increase is unlikely to help these countries tackle inflation, which is higher than the EU average. However, some countries, like Poland, are expected to further increase wages in response to labor union pressure.
Israel plans to maintain control of Gaza indefinitely
Prime Minister Benjamin Netanyahu stated that Israel will continue to have overall security responsibility for Gaza indefinitely to prevent the eruption of Hamas terror. This stance is a reversal of previous Israeli statements during the war with Hamas. The future of governance in Gaza remains uncertain, with questions about infrastructure, civil servants, and the viability of a transitional authority. There is currently no clear political horizon for resolving the Gaza situation and establishing a Palestinian state.
The IMF has warned rapid wage increases in eastern Europe risk eroding the region’s competitive edge, Israel’s prime minister Benjamin Netanyahu said the country will maintain indefinite control over Gaza, and Australia’s prime minister went to China this week in a dramatic turnround in relations between the two countries. Plus, economists are worried falling pork prices in China might tip the country back into deflation.
The FT News Briefing is produced by Fiona Symon, Sonja Hutson, Kasia Broussalian and Marc Filippino. Additional help by Joanna Kao, Sam Giovinco, Peter Barber, Michael Lello, David da Silva and Gavin Kallmann. Our engineer is Monica Lopez. Topher Forhecz is the FT’s executive producer. The FT’s global head of audio is Cheryl Brumley. The show’s theme song is by Metaphor Music.