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G20 faces balancing act to safeguard recovery

In Uncategorized on June 4, 2010 at 10:13 am

BUSAN, South Korea (AFP) – Finance ministers from the world’s biggest economies were urged to balance efforts to shore up a fragile global recovery with the need to slash deficits when a G20 meeting begins Friday.


With the sovereign-debt crisis in Europe forcing countries there to accelerate debt-reduction measures, fears are growing that moves towards tough austerity could hit growth and derail a recovery whose durability is at risk.

(L-R) IMF Managing Director Dominique Strauss-Kahn chats with US Treasury Secretary Tim Geithner and France’s Finance Minister Christine Lagarde following their meeting at IMF Headquarters in Washington, DC in April 2010. AFP file

Officials said the meeting was also unlikely to reach a conclusion on the contentious issue of tighter banking regulation as viewpoints diverge.


“It’s important that we understand just how fragile the recovery is,” said Trevor Manuel, minister in the presidency for South Africa and former finance minister.


“Economies around the world are raising the spectre of a double-dip recession and this presents the opportunity to take decisions to prevent the world from going into a fresh recession.”


Officials are wary of shifting too quickly towards emphasising deficit cuts at the cost of growth despite the threat of bond markets hammering debt-hit governments, as witnessed recently with Greece’s soaring borrowing costs.


“We shall have to achieve economic recovery, at the same time we cannot give up fiscal prudence,” India’s Finance Minister Pranab Mukherjee told AFP.


“So striking a balance between two apparently contradictory situations is to be achieved. That is the challenge.”


Europe’s debt crisis will dominate the talks. But ministers are unlikely to single out either the euro or the yuan — which China is under pressure to let appreciate — for specific discussions in Busan, a G20 official said Friday.


“This issue may come up but I don’t think, as separate individual actions, it will be on agenda items,” said Sakong Il, chairman of Seoul’s presidential committee for the G20 summit.


As ministers start two days of meetings in Busan, there were also indications that they would struggle to carve out a consensus on how to impose tougher restrictions on the banking sector.


“Further deliberation of this issue” was needed, said Sakong.


The International Monetary Fund is expected to present a revised draft proposal on a bank levy at the meeting, an IMF spokeswoman said Friday.


A final proposal will go to a G20 meeting in Toronto later this month for review, but US officials say it is unlikely that the summit will reach an agreement on a unified approach.


A global banking tax is supported by European powers and the United States but resisted by some developing nations plus Canada and Australia, who argue that they should not have to pay to clear up a mess they did not create.


“Our banking system could withstand the trouble which counterparts in Europe and America had to face, mainly because of well-placed regulations,” said Mukherjee.


“Well-placed regulations can achieve the job… we are not in favour of taxing the banks.”


Economies such as the US that are largely financed by markets want banks to be required to hold more assets on their balance sheets to protect against any future crises.


But policymakers in continental Europe, where banks provide more financing, worry that higher reserve requirements may hit growth.


Stricter capital rules being devised by Basel regulators are supposed to be ready by the end of 2010 and the G20 says it aims to implement them by the end of 2012 if the global economy has emerged from the downturn.


Sakong also said the group must work to narrow the development gap between rich and poor nations to ensure sustained growth in efforts to rebalance the global economy.


“It is just not possible for the world to achieve sustainable and balanced growth as long as there’s a persistent gap in development,” he said.


The meeting Friday and Saturday will prepare for a G20 summit in Toronto on June 26-27 of the top developed and developing nations.

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Source: SGGP

WTO says Doha conclusion key to global recovery

In Uncategorized on May 16, 2010 at 12:58 pm

World Trade Organisation chief Pascal Lamy seen in March 2010 (AFP file)

MANAMA (AFP) – The conclusion of the stalled Doha Round of free trade talks is crucial to the recovery from the global financial crisis, World Trade Organization chief Pascal Lamy said on Sunday.


“The Doha Round, at this moment of the crisis exiting, is a vitally needed and, to be frank, a very low cost global economic stimulus package,” Lamy told participants at an economic forum in Bahrain.


“Estimates suggest that the implementation of this round… would inject to the tune of 300-400 billion dollars a year into the global economy,” he told participants at the Bahrain Global Forum.


The Doha Round of talks launched in 2001 were due to be wrapped up in March, according to a target set by the G20 group of leading and emerging economies, but previous deadlines have been repeatedly missed.


The negotiations have focused on dismantling obstacles to trade for poor nations by striking an accord that would cut agriculture subsidies and tariffs on industrial goods.


Discussions have been dogged by disagreements over issues including how much the United States and the European Union should reduce aid to their farmers and the extent to which developing countries such as India, China and South Africa should lower tariffs.


“When we look at the agricultural subsidies of members such as the EU, the US, Japan or Switzerland that have crowded developing world exports out of international markets, you discover the need for the Doha Round,” Lamy said.


“These subsidies would be slashed by about 80 percent,” if the talks were to reach a conclusion.


The WTO director-general highlighted US resistance to the Doha Round resulting from different congressional interests, saying that Washington was trying to get more concessions.


“The US are seriously attempting to conclude these negotiations on more US terms than what’s already on the table,” he said, adding such a position might “trigger counter requests”.


But he said negotiations were at a stage where political intervention was needed from US President Barack Obama to “take the risk” of sending a bill to Congress.


Last month, members of the Cairns Group of agricultural exporters urged resistance to protectionism and the revival of the Doha Round.


The Cairns Group comprises Argentina, Australia, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Pakistan, Paraguay, Peru, Philippines, South Africa, Thailand and Uruguay.


In his address, Lamy noted however that WTO members have adhered to commitments made through the organisation by not returning to protectionist policies despite the global crisis.


“Trade is as open today as it was at the beginning of the crisis,” he said, adding this showed the WTO members’ “refusal to turn their backs on policies that helped integrate them into the world economy.”


Lamy also said that world trade was recovering after dropping due to the crisis.


“Today, we are seeing a V-shaped recovery of world trade. After a fall of 12 percent terms in 2009, we now forecast a rebound of world trade of about 9.5 percent this year,” he said.

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Source: SGGP

ADB forecasts ‘robust recovery’ for developing Asia

In Uncategorized on April 13, 2010 at 9:35 am

Developing Asia’s economies were on track for a “robust recovery”, the Asian Development Bank (ADB) said Tuesday, with India and China working as the engines of growth.


However, it warned that the region could still be at risk if stimulus measures introduced to counter the global downturn were removed too soon or if the world economy suffered any further jolts.


The bank said developing Asia would grow 7.5 percent this year — outpacing the 5.2 percent seen in 2009 — although this would slow slightly to 7.3 percent in 2011.


The forecast is still below the region’s record 9.6 percent expansion seen in 2007.


“Developing Asia’s recovery has taken firm hold and a return to stronger and sustainable growth is now in sight if the region can meet the challenge of strengthening domestic demand,” said ADB Chief Economist Jong-Wha Lee.


The region’s prospects improved after better-than-expected growth in the second half of 2009, a boost driven by the “strong performances” of the Chinese and Indian economies, the bank said.


“(The region) can look ahead to a robust recovery in the next two years,” the bank said.


Fiscal stimulus measures designed to counter the global financial meltdown will likely continue to lure foreign investment, while rising incomes and lower unemployment should get consumers spending more, it added.


That spending will likely boost inflation to about four percent this year and again in 2011, up from 1.5 percent in 2009, the bank said.


However it said: “There is concern that as stimulus measures are unwound, particularly in the major economies, the strength of private demand is not healthy enough to take over.”


Lee told a press conference in Hong Kong that appreciation of the Chinese yuan could support the stability of the region’s economy and curb inflationary pressure.


“Maybe this is the right time to increase the exchange rate (of the yuan). Increasing the exchange rate flexibility will not only help China, but also the region as a whole,” he said.


The bank is also concerned that the region’s early recovery is “already attracting potentially volatile capital flows, complicating macroeconomic management.”


“We are concerned that the increase in asset prices in Hong Kong and China will spread to other countries in the region. That will be very risky,” Lee said.


Rising food prices, which disproportionately affect the poor, also pose a risk, the ADB said.


The report warned that government policy makers must steer their countries through an uncertain environment with a “timely return to sound and responsible fiscal and monetary policies“.


“These served the region well when the crisis broke, and authorities need to adapt them appropriately as recovery takes hold and the crisis recedes,” it said.


East Asia — including Hong Kong, China, Korea, and Taiwan — is forecast to lead the region with an 8.3 percent rise in gross domestic product in 2010, up from 5.9 percent in 2009, the report said.

Southeast Asian economies will grow 5.1 percent this year, from 1.2 percent in 2009, as countries including Thailand, Cambodia, and Malaysia see an upswing in exports, the bank said.

India will lead South Asia‘s 7.4 percent GDP increase this year, the bank said, up from a 6.5 percent rise in 2009.

Central Asia, including Kazakhstan and Georgia, will see 4.7 percent economic growth compared with 2.7 percent last year, the bank said.

Pacific island nations, including Fiji and Papua New Guinea, are expected to see their economies expand 3.7 percent in 2010, outpacing a 2.3 percent rise last year, the report said.

The Manila-based lender’s annual report looks at 44 jurisdictions stretching from the former Soviet states of Central Asia to some Pacific islands, but excludes developed countries such as Japan, Australia and New Zealand.

Source: SGGP

Profit-taking, recovery fears weigh on Asian markets

In Uncategorized on April 8, 2010 at 11:56 am

HONG KONG, April 8, 2010 (AFP) – Investors cashed in on recent gains in Asian stock markets Thursday with optimism over the global economic recovery tempered by worse-than-expected credit data out of the United States.


The fears also pushed the dollar down against the yen, while the euro was hit by further problems for Greece over its debt.


Japanese exporters were big losers on the strengthening Japanese currency, sending the Nikkei index 1.10 percent or 124.63 points lower to close at 11,168.20.


The dollar stood at 93.23 yen, down from 93.37 yen in New York Wednesday.


The market was also weighed by data showing Japanese core private-sector machinery orders, a leading indicator of corporate capital spending, fell 5.4 percent in February. Expectations were for a 3.9 percent rise, according to a Dow Jones Newswires poll.


The figure marks the second consecutive monthly fall, following a 3.7 percent decline in January, highlighting the economy’s fragility.


Hong Kong ended 0.28 percent lower, dropping 61.73 points to 21,867.04, while Shanghai closed down 0.94 percent, or 29.51 points at 3,118.71.


Investors were following a lead set by Wall Street, which gave up 0.66 percent after a central bank report showed demand for consumer credit was much weaker than expected in February.


The Federal Reserve said credit balances fell 11.5 billion dollars from January, to 2.448 trillion dollars, down 5.6 percent from a year ago. Forecasts had been for a drop of 0.7 billion dollars.


“This was a disappointing report, showing that households are continuing to pare back credit,” Barclays Capital analysts told clients.


Eyes will be on fresh figures out of the US next week, including retail data, consumer prices and corporate inventories as well as the Federal Reserve’s Beige Book report.


Investors also digested a speech by Fed chairman Ben Bernanke, who warned that the US, facing enormous budget deficits, would have to choose between higher taxes or lower social spending.


Asian shares were also subject to profit-taking after most regional bourses had risen five percent in March.


“There are positive signs emerging from the global economy with upbeat US jobs data released last week supporting this view. However, I think it’s still too early to say that the global recovery is strong,” Daewoo Securities’ fixed income analyst Yoon Yeo-Sam told Dow Jones Newswires in Seoul.


“There are still many people without work and exports in Asia are not picking up as much as we had hoped.”


Fresh concerns over the eurozone debt crisis emerged after Greece’s borrowing costs jumped, with investors losing faith in an EU-IMF deal to help Athens.


For the second time this week, the return on Greek 10-year bonds — a key sovereign debt instrument — jumped above seven percent, beyond what the country can sustain in its efforts to raise billions of euros by next month.


The euro fetched 1.3332 dollars in Tokyo afternoon trade, down from 1.3342 in New York trade late Wednesday. It also fell against the yen at 124.29 in Tokyo from 124.43.


Australian unemployment remained at 5.3 percent in March, official figures showed, giving a strong indication of a recovery in full swing.


The figure of 5.3 percent contrasts with 9.7 percent in the United States and a record 10 percent in the 16-nation eurozone, which were both hit hard by the economic crisis.


Despite the news, Sydney stocks closed 0.46 percent, or 23 points, lower at 4,937.9, with weak commodities prices hitting resources chips.


US Treasury Secretary Timothy Geithner was due in Beijing Thursday to hold talks expected to focus on the yuan, with hopes that Beijing may allow its currency to appreciate.


The United States and China’s other key trading partners have been pressing for a stronger yuan, saying it is undervalued and gives exporters an unfair advantage.


The Chinese currency has been effectively pegged at 6.8 to the dollar since mid-2008, and US lawmakers have been pushing the US Treasury to label China a “currency manipulator” — which would open the door to sanctions.


Oil was lower, with New York’s main contract, light sweet crude for delivery in May, down 12 cents to 85.76 dollars a barrel.


Brent North Sea crude for May shed 32 cents to 85.27 dollars per barrel.


Gold ended in Hong Kong at 1,144.00-1,145.00 US dollars an ounce, up from Wednesday’s close of 1,135.50-1,136.50 dollars.



In other markets:


— Singapore closed 0.83 percent, or 24.91 points, down at 2,963.19.


DBS Group Holdings tumbled 0.41 percent to 14.66 Singapore dollars, ST Engineering lost 1.80 percent to 3.28 and Singapore Airlines was off 1.02 percent to 15.46 Singapore dollars.


— Seoul rose 0.42 percent, or 7.18 points, to close at 1,733.78.


— Taipei closed down 0.79 percent or 64.18 points at 8,057,60.


Taiwan Semiconductor Manufacturing Co fell 1.89 percent to 62.3 Taiwan dollars and United Microelectronics Corp was 0.88 percent lower at 17.05.


— Jakarta fell 1.65 percent, or 47.75 points, to 2,850.83.


— Kuala Lumpur shed 0.90 percent, or 12.16 points, to close at 1,332.93.


Construction giant Gamuda slipped 4.30 percent to 2.86 ringgit while insurers Affin rose 1.60 percent to 3.25 ringgit.


— Manila closed 0.44 percent, or 14.25 points, lower at 3,256.12.


Philippine Long Distance Telephone Co. shed 0.4 percent to 2,490 pesos.


— Wellington fell 0.52 percent, or 17.31 points, to 3,307.77.


Contact Energy shed 1.1 percent at 6.43 New Zealand dollars and Fletcher Building lost 1.5 percent to 8.37.


Telecom fell 0.9 percent to 2.22.

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Source: SGGP

Negative US job report prompts recovery fears

In Uncategorized on April 1, 2010 at 5:08 am

An unexpected rise in company job losses fueled concerns about the strength of the US economic recovery, ahead of a key government labor report later this week.


US firms shed 23,000 jobs in March, payrolls firm ADP said in a report that was dramatically worse than market expectations.


Sensing a slow improvement in the health of the world’s largest economy, investors had expected around 40,000 private-sector jobs to be created this month.


The private sector accounts for more than two-thirds of US employment and its payrolls are a widely watched barometer of the US recovery.


“Today’s report is quite disappointing,” said Thomas Julien of Natixis, echoing the letdown among many on Wall Street.

Job seekers talk to a recruiter at a career fair in Ontario, California

Investors are now waiting for official unemployment figures for March to be published on Friday, asking if they had been overly optimistic in suggesting the jobs market was about to turn a corner.


“This was a shocker that should raise some questions about Friday’s employment report,” said Joel Naroff of Naroff Economic Advisors.


Over eight million Americans have lost their jobs since the recession began in December 2007 and joblessness continues to drag on the fragile recovery, hitting everything from consumer spending to investor confidence.


Nearly one in 10 Americans in the job market is unemployed.


Facing voters’ anger over high unemployment, the administration of President Barack Obama has insisted that inroads are being made, but that businesses will try to get the most out of current employees before expanding payrolls.


ADP also saw some underlying positives, saying its own figures may distort the true state of the labor market.


It pointed out that March’s job losses eased slightly from February, when 24,000 jobs were shed according to a revised figure also published on Wednesday.


“The March employment decline was the smallest since employment began falling in February of 2008,” it said, adding that severe winter weather may have also weighed on hiring levels.


Optimists still see the full March unemployment figures showing a dramatic uptick in employment, bolstered by the government’s hiring of tens of thousands of workers to carry out the 2010 census.


“We continue to look for… payrolls to increase 250,000 in March, of which about half should be census hires,” said Michelle Meyer of Barclays Capital, who also predicted a weather-related bounce-back would add 75,000 workers to the payrolls.


But Naroff warned even a positive report could prove misleading.


“Census hiring will turn into job losses later in the year,” he said.


State and local governments and school districts across the country are in desperate shape because the federal bailout is disappearing. They will likely be cutting jobs during the second half of the year,” he added.

“You may not want to jump to any conclusions about the state of the labor market using the March numbers.”

The stock market also showed pessimism. The Dow Jones Industrial Average ended Wednesday down nearly half a percentage point.

Source: SGGP

Railroads signal a tepid US economic recovery

In World on January 22, 2010 at 10:46 am

The nation’s railroad operators expect a tepid recovery for the U.S. economy in 2010, as both businesses and consumers continue to wrestle with the effects of the recession.


The severe economic slump cut shipping demand for the railroads because American consumers and industries have been buying fewer of the cars, chemicals, crops, lumber and containers of imported goods the railroads carry.


Union Pacific Corp., Burlington Northern Santa Fe Corp. and CSX Corp. — the nation’s top three railroad companies — all say demand for coal, once a lucrative segment, is slumping as U.S. factories and homeowners use less electricity. And as people continue to spend sparingly, shipments of consumer goods will show a slight increase at best.








FILE – In this April 22, 2008 file photo, a Union Pacific train travels through Council Bluffs, Iowa.

The companies reported lower fourth-quarter profits this week and said results won’t improve until they see a firm turnaround in the economy.


“Until employment shows some signs of improvement, you’re going to have consumers stay on the sideline, and I think it’s going to be pretty tough to see any kind of a strong recovery,” Union Pacific Chairman and CEO Jim Young said in an interview with The Associated Press on Thursday.


Economists are forecasting U.S. gross domestic product to rise a little over 3 percent, modest growth for an economy coming out of recession.


Many economists are hoping the U.S. manufacturing sector is beginning to rebound as the economy struggles to emerge from the worst recession since the 1930s. Manufacturing activity has expanded for five straight months, according to the Institute for Supply Management, a trade group. But construction activity remains weak, reflected in the steep drop reported by Union Pacific and Burlington Northern in shipments of industrial products, a category that includes lumber.


Burlington Northern says on its Web site that it transports enough lumber each year to build more than 500,000 homes and enough newsprint each year to print 1 billion Sunday newspapers.


Union Pacific reported a 17-percent drop in fourth-quarter net income Thursday to $551 million, or $1.08 per share. The Omaha-based company handled 5 percent fewer carloads during the quarter.


CSX on Tuesday said fourth-quarter net earnings rose 23 percent compared to a year ago. Burlington Northern’s quarterly earnings fell to $536 million, or $1.55 per share, compared with $615 million, or $1.78 per share. Revenue fell 16 percent. The company expects any economic turnaround to be gradual.


CSX CEO Michael Ward said the railroad expects better results in all of its business segments in 2010, except coal. But CSX, like all the major railroads, will be comparing this year’s results with 2009’s weak performance.


Coal shipments have been hit hard. As industrial production slowed and jobs vanished, plants closed and consumers reduced their electricity consumption. That, combined with mild weather last summer, resulted in large coal stockpiles at many power plants.


CSX is pessimistic about its coal business partly because more utilities in the eastern United States have switched to cheaper natural gas to run power plants. The switch to natural gas isn’t as common in the western U.S. where Union Pacific and Burlington Northern deliver coal.


Automotive shipments should be a bright spot in railroad earnings reports during the first half of 2010. U.S. auto sales were solid in December and should improve from last year’s total of 10.4 million, a 27-year low.


Agriculture shipments offer another opportunity for growth. Already, Union Pacific said its ethanol shipments are up because ethanol plants that used to be owned by bankrupt VeraSun Energy have reopened under new owners.


Citi Investment Research analyst Matthew Troy said railroads will carry more crops later this year if the USDA’s forecasts are correct. Troy said in a research note that sustained improvement in grain traffic could be a bright spot in early 2010.


When consumers start buying more goods and retailers have to replace them, railroads will benefit. That’s because many imported shipping containers are carried inland from ports on trains before being delivered to their final destinations by truck. Union Pacific actually hauled 5 percent more of those intermodal containers in the fourth quarter although revenue for that sector was still down 3 percent.


And Union Pacific officials said they’re watching to see if construction activity picks up this spring as more projects funded by stimulus money get going. That could lead to an increased demand for industrial shipments.

Besides the economy, fuel prices will be another factor in the railroads’ 2010 prospects. When diesel gets expensive, the cost of shipping on railroads becomes more attractive compared to shipping by truck.

“If the economy starts to pick up, you’ll see fuel prices move up. That makes us much more competitive versus moving products on the highway,” Young said.


Source: SGGP Bookmark & Share

OPEC warns of weak recovery for oil market

In World on December 23, 2009 at 11:33 am

The OPEC oil producers’ cartel warned of lingering weakness in the world economy and held its emergency crude output quotas unchanged at its meeting in Angola on Tuesday.


Delegates at the meeting also said that growing output from Iraq’s recovering oilfields, which observers say will become a major concern for its fellow producers, was unlikely to have an impact for several years.


Tuesday’s meeting capped a year of recovery for oil prices, which have more than doubled since quotas were cut a year ago to stabilise the market during the economic crisis that crippled demand for petroleum products.


Saudi Oil Minister Ali al-Naimi, representing the cartel’s most influential member, said crude price levels, which have been hovering around 75 dollars, were “perfect.”








Jose Maria Botelho de Vasconcelos, President of the OPEC Conference and Angolan Minister of Petroleum

But the powerful grouping of Middle Eastern, African and Latin American oil countries in a statement expressed “great concern” for the world economic outlook, which threatens to weaken demand for their key exports.


“Although asset market prices have rebounded and economic growth has resumed in some parts of the world, it is not yet clear how strong or durable the recovery might be,” they said in a joint communique.


“With the world still faced by shrinking industrial production, low private consumption and high unemployment, the conference once again decided to maintain current oil production levels unchanged for the time being.”


Observers had said ministers at the meeting would have one eye on Iraq’s recovering oil industry and its ambitious plans to ramp up its production to levels that could rival Saudi Arabia, the world’s biggest oil producer.


But Iraqi Oil Minister Hussein al-Shahristani and others played down the prospect of a surge from Iraq’s oilfields, saying the question of quotas for Iraq was unlikely to be tackled in the immediate future.


The cartel’s Secretary General Abdullah El-Badri told reporters after the meeting: “I don’t expect any production increase (by Iraq) before five or six years,” but added that one day, “I am sure we will accommodate Iraq.”


Iraq is currently exempt from the cartel’s system of quotas, but recently signed contracts with several foreign companies to start pumping crude oil, aiming to expand the industry as it recovers from war.


A consortium led by top Chinese oil company CNPC initialled another deal with Iraq on Tuesday, to develop the Halfaya oil field in southern Iraq, oil ministry spokesman Assem Jihad said.


OPEC members called for higher compliance with the quotas. The group’s current president, Angolan Oil Minister Jose Botelho de Vasconcelos, said even non-OPEC countries should play their part to “balance the market.”


Tuesday’s OPEC meeting was the first to be hosted by Angola. The country joined OPEC in 2007 and has overtaken Nigeria as Africa’s biggest crude producer, according to the International Energy Agency, but it still suffers from three decades of civil war that ended seven years ago.


The 12-member group is next due to meet on March 17, when the presidency will have been taken over by Ecuador.


Oil prices fell slightly on Tuesday after the OPEC members’ decision. New York’s main futures contract, light sweet crude for delivery in February, fell 32 cents to 73.40 dollars a barrel.


Source: SGGP Bookmark & Share

Japan worries yen surge will hurt budding recovery

In World on November 27, 2009 at 6:11 am

 A fall in Japan‘s jobless rate pointed at recovery in the world’s number two economy Friday, but the government fretted that the surging yen could again derail the export-reliant economy.


Finance Minister Hirohisa Fujii did not signal imminent plans to intervene in currency markets but stressed that Tokyo was watching closely and could take steps for the first time in five years if the situation worsens.


Fujii was speaking as the dollar traded around 85 yen, its lowest level since the mid-1990s, raising fears that Japanese exporters such as Toyota, Honda and Sony will lose competitiveness in overseas markets.


Using more strident language than usual, the minister said the yen’s rapid rise was “harmful”, a day after Prime Minister Yukio Hatoyama said the government must take measures to avoid a double-dip recession.


“If this kind of situation is sustained, I think that it would be something abnormal … it would be possible for us to take” steps under such conditions, Fujii said, according to Dow Jones Newswires.


“We should take appropriate action against disorderly movements in order to stabilise international financial markets,” Fujii said, adding however that he needed time to “look at the situation a bit more”.


Japanese shares fell 1.81 percent in the morning as traders worried the strong yen would hurt Japanese exporters.


Commenting on the Japanese currency’s rise against the dollar, Fujio Mitarai, the head of main business lobby Keidanren, warned that amid the gradual recovery “this could throw cold water on the economy”.


Japan, Asia’s biggest economy, sank into its worst post-war recession in the second quarter of 2008 as the global downturn devastated demand for its cars, electronics and other exports.


It gradually recovered this year, boosted by rebounding exports and stimulus measures, expanding in the July-September quarter by 4.8 percent on an annualised basis, the best growth in more than two years.


New jobs data Friday showed that the unemployment rate fell to 5.1 percent in October from 5.3 percent in September, improving for a third consecutive month and beating market expectations of a 5.4 percent rate.


Another survey, by the labour ministry, showed there were 44 job offers for every 100 jobseekers in October, slightly up from 43 in the previous month. Related article: Japan‘s jobless rate falls to 5.1pct


In other data suggesting a gradual rebound, average monthly household spending rose by a price-adjusted 1.6 percent in October from a year earlier, well above a rise of 0.6 percent the market had expected.


Renewed deflation, however, is still seen as a threat to the recovery, because falling prices hurt corporate earnings and dampen consumption as people delay spending in hopes of further price drops.








Shoppers pass through Tokyo’s Ginza district.

Japan’s core consumer prices fell 2.2 percent in October from a year earlier, marking the eighth straight month of drops, government data showed.


The drop in core prices, which exclude volatile fresh food, was slightly less than September’s 2.3 percent drop and in line with market expectations.


“Deflationary pressure remains,” even if the speed of price drops has slowed, said Hiroshi Watanabe, an economist at Daiwa Institute of Research.


“The economy has picked up since February thanks to an upturn in exports and production. The effect is now belatedly felt on prices and employment.”

But hhe warned: “If the yen rises further, it would dampen exports, which are the main driving force of the Japanese economy. It would weigh down the Japanese economy as its recovery is feeble.”


Source: SGGP Bookmark & Share

APEC warns of pitfalls on path to global recovery

In World on November 13, 2009 at 9:42 am

SINGAPORE, Nov 13, 2009 (AFP) – The global recovery faces serious pitfalls including mass unemployment in rich nations, asset bubbles, and a lurch towards protectionism, the World Bank chief and Asia-Pacific leaders warned Friday.


World Bank head Robert Zoellick said the spectre of inflation, and doubts over when massive government stimulus packages can be safely unwound, were other real threats.








World Bank President Robert Zoellick (R) gestures as he speaks about the global financial crisis as Victor Fung, Chairman International Chamber of Commerce and Group Chairman, Li and Fung, looks at his notes at the CEO summit at the APEC summit in Singapore on November 13, 2009. (AFP photo)

“The reason I am flagging this issue is that we are in the stage of recovery where confidence is very important,” he said at a business forum ahead of a weekend summit of the Asia-Pacific Economic Cooperation (APEC) group.


“If you have asset bubbles that are not properly dealt with, you could again undermine confidence in 2010, which is the year I am more concerned about.”


Ministers from the 21-member APEC grouping, meeting in Singapore this week ahead of the summit, issued calls to resist protectionism for fear that new trade barriers could trigger a return to recession.


Russian President Dmitry Medvedev, who will attend the Singapore summit along with US President Barack Obama and China’s Hu Jintao, urged APEC nations to limit state help for struggling firms.


“Excessive protectionist barriers that create hothouse conditions for unprofitable businesses run counter to the principles of free competition and ultimately do more harm than good to a country’s development,” he said in an article published by the Singapore Straits Times.


Malaysian premier Najib Razak said the summit was “a wonderful opportunity for us to make a very strong political statement that we will fight protectionism… that we want the Doha round to be completed”.


“That, I think, is imperative for us to recover,” he said at the business forum, referring to the World Trade Organization’s stalled drive to tear down barriers to commerce.


Hong Kong chief executive Donald Tsang said that in light of the downturn, “now at least, everyone has a better experience of how much prosperity suffers when trade suffers”.


In a sobering assessment of the fragile status of the recovery, Zoellick said that persistently high unemployment, particularly in developed nations, would create “second-wave” effects for banks just as they return to profit.


The US consumer, who has been the saviour in previous downturns, can no longer be relied upon to drag the global economy out of the doldrums by returning to enthusiastic spending, he said.


So the onus was shifting to developing countries such as Indonesia, the Philippines and Thailand, which he said were now able to “actually borrow more if they have access to financing” rather than to save and rely only on exports.


Zoellick also warned of signs that crisis-hit countries were attempting to shore up their economies by reverting to protectionism.


“By and large it’s a low-grade fever, it’s not a full influenza,” he said.


“But if you’ve got large-scale unemployment one has to be careful, because political leaders are going to be under pressure to do something and unfortunately one of the things they often are tempted to do is to raise barriers.”


APEC ministers have this week also called for massive government stimulus packages to be scaled back carefully, and not withdrawn before private-sector demand is strong enough to drive economic engines.


“If you look at the US stimulus programme and many of the stimulus packages, a lot of the money actually comes late in 2009, the start of 2010,” Zoellick said.


“The question mark for everybody is whether the private sector will kick in by the middle of 2010 and that’s part of an issue of confidence.”


The World Bank chief said that a little-mentioned risk was the spectre of inflation, after Asia-Pacific central banks moved to “open the tap of liquidity” in the face of the crisis.


“This will be a challenge for the central banks in this region because traditionally their monetary policy has followed the Federal Reserve,” he said.


The Fed has kept US interest rates ultra-low to foster recovery, but many Asia-Pacific countries are now rebounding fast and Australia has already hiked borrowing costs to forestall inflation.


Source: SGGP Bookmark & Share

RoK seeks foreign investment to bolster recovery

In World on September 16, 2009 at 6:40 am

Republic of Korea (RoK) plans to ease regulations to attract more overseas investment and stimulate weak domestic demand, the Ministry of Strategy and Finance said Wednesday.


The economy is recovering from th








RoK’s trucks heading to the inter-Korean industrial complex in Kaesong, DPRK, at the Customs, Immigration and Quarantine office, just south of the demilitarized zone separating the two Koreas, in Paju, about 45 km (28 miles) north of Seoul, September 1, 2009.

e global downturn thanks largely to government stimulus measures, but the ministry said these were unsustainable in the long term.


It said the export-dominated economy could also be hit by a delayed recovery in overseas markets, rising oil prices and a strengthening local currency.


“As an economy that depends much on external factors, we need to strengthen our domestic demand base in order to accelerate economic recovery and keep the rebound sustainable,” the ministry said in a statement.


Among proposals to spur foreign investment, the ministry said overseas investors planning to set up a theme park would be able to lease land cheaply from government-invested firms and local state enterprises.


It plans to ease rules on foreign education institutes in Korea, in an attempt to reduce a deficit caused by a growing number of students seeking education abroad.


In a bid to encourage people to spend more, the government is considering relaxing regulations on building golf courses nationwide. It plans to invest more in tourism infrastructure, especially in farming and fishing villages.


“Currently, the economy is entering an overall recovery phase but the private sector still lacks self-sustaining capacity,” Finance Minister Yoon Jeung-Hyun told a policy meeting Wednesday.


“Our policy efforts will be focused on resuscitating investment during the second half,” Yonhap news agency quoted him as saying.


Yoon said the government will “aggressively” ease regulations, especially in the services sector, to try to lure corporate investment. 


Source: SGGP