A season of bumper profits for some of the world’s biggest corporations provides a shocking contrast to the low rates of growth and high levels of unemployment in most developed economies.
Economists say the divergence is mainly due to a comparison with the worst months of the global economic crisis last year, as well as the ability of multinationals to generate profit in high-growth emerging markets.
“People don’t have the impression that everything’s getting better. There’s a huge discrepancy” with some of the recent earnings results, said Franklin Pichard, director of investment service Barclays Bourse in Paris.
Companies listed on the Paris CAC 40 benchmark stock index have seen their profits nearly double this year on a 12-month comparison, while the unemployment rate in the country is still nearly 10 percent.
The picture is similar in the US, where economic growth is under pressure and employment is nowhere near pre-crisis levels.
Karine Berger, an economist at Euler Hermes, a French credit insurance company, said the figures to watch for are those from the small and medium-sized enterprise sector, which gives a truer picture.
“The real economy is small and medium-sized enterprises. Judging the situation by the earnings of major companies is falsifying the model,” she said. “Many of the profits have been made outside of Europe or the United States. In Europe in particular, the level of activity is far below what it was before.”
“There’s hasn’t been a real recovery in activity ... The profits are being realized mainly on economies of scale,” Pichard said.
Experts said profit margins for big firms are also helped by government stimulus and some of the restructuring programs launched in recent months, which have lowered labor costs and decreased stocks.
Some analysts believe that while profit margins may not reflect the current health of the economy, they bode well for the future.
As former German chancellor Helmut Schmidt said: “Today’s profits are tomorrow’s investments and the day after’s jobs.”
Jean-Luc Proutat, an economist at French bank BNP Paribas, agreed.
“In the first stage of recovery, the priority is to rebuild margins ... This is often the preliminary stage to hiring and investing,” he said.
The big question for economists is what happens over the next few months as governments that have underwritten large amounts of private debt now try and shed some of their own debt with a series of austerity programs.
“On an 18-month horizon, it’s the main risk,” Berger said.
The government is aiming to recruit 1,096 foreign English teachers and teaching assistants this year, the Ministry of Education said yesterday. The foreign teachers would work closely with elementary and junior-high instructors to create and teach courses, ministry official Tsai Yi-ching (蔡宜靜) said. Together, they would create an immersive language environment, helping to motivate students while enhancing the skills of local teachers, she said. The ministry has since 2021 been recruiting foreign teachers through the Taiwan Foreign English Teacher Program, which offers placement, salary, housing and other benefits to eligible foreign teachers. Two centers serving northern and southern Taiwan assist in recruiting and training
WIDE NET: Health officials said they are considering all possibilities, such as bongkrekic acid, while the city mayor said they have not ruled out the possibility of a malicious act of poisoning Two people who dined at a restaurant in Taipei’s Far Eastern Department Store Xinyi A13 last week have died, while four are in intensive care, the Taipei Department of Health said yesterday. All of the outlets of Malaysian vegetarian restaurant franchise Polam Kopitiam have been ordered to close pending an investigation after 11 people became ill due to suspected food poisoning, city officials told a news conference in Taipei. The first fatality, a 39-year-old man who ate at the restaurant on Friday last week, died of kidney failure two days later at the city’s Mackay Memorial Hospital. A 66-year-old man who dined
‘CARRIER KILLERS’: The Tuo Chiang-class corvettes’ stealth capability means they have a radar cross-section as small as the size of a fishing boat, an analyst said President Tsai Ing-wen (蔡英文) yesterday presided over a ceremony at Yilan County’s Suao Harbor (蘇澳港), where the navy took delivery of two indigenous Tuo Chiang-class corvettes. The corvettes, An Chiang (安江) and Wan Chiang (萬江), along with the introduction of the coast guard’s third and fourth 4,000-tonne cutters earlier this month, are a testament to Taiwan’s shipbuilding capability and signify the nation’s resolve to defend democracy and freedom, Tsai said. The vessels are also the last two of six Tuo Chiang-class corvettes ordered from Lungteh Shipbuilding Co (龍德造船) by the navy, Tsai said. The first Tuo Chiang-class vessel delivered was Ta Chiang (塔江)
EYE ON STRAIT: The US spending bill ‘doubles security cooperation funding for Taiwan,’ while also seeking to counter the influence of China US President Joe Biden on Saturday signed into law a US$1.2 trillion spending package that includes US$300 million in foreign military financing to Taiwan, as well as funding for Taipei-Washington cooperative projects. The US Congress early on Saturday overwhelmingly passed the Further Consolidated Appropriations Act 2024 to avoid a partial shutdown and fund the government through September for a fiscal year that began six months ago. Under the package, the Defense Appropriations Act would provide a US$27 billion increase from the previous fiscal year to fund “critical national defense efforts, including countering the PRC [People’s Republic of China],” according to a summary