World Economies

[Neo]

March 01, 2007
US GDP revised down

WASHINGTON, Feb 28: The government's estimate of US economic growth for the fourth quarter was revised down sharply to a 2.2 per cent pace from an earlier figure of 3.5 per cent, data showed on Wednesday.

The Commerce Department's downward revision, the biggest in a decade, showed a continuation of the sluggish pace of expansion from mid-2006 instead of the growth spurt suggested in the earlier figure.

The report on gross domestic product (GDP) highlighted concerns that the six-year-old US economic expansion is flagging, sparking increased talk about a slowdown or even a recession.

In the latest report, consumer spending and inventories were revised lower, and imports were revised up on new trade data.

The report maintained its earlier estimate of lower investment spending that is consistent with a broad manufacturing slow-down. Weaker motor vehicle output, for example, cut 1.24 points from growth.

Consumer spending was revised to show a 4.2 per cent increase instead of 4.4 per cent, with slower growth in spending on big-ticket durable goods such as cars and washing machines.

http://www.dawn.com/2007/03/01/ebr21.htm

 

[Janbaz]

UK growth slows to 0.5pc

LONDON: Britain’s economy probably grew at its weakest rate in 1-1/2 years in the three months to February amid a sharp slowdown in the service sector, the National Institute of Economic and Social Research (NIESR) said on Saturday.

NIESR estimated GDP rose by 0.5 per cent in the three months to February - the lowest rate of growth since summer 2005 - after a downwardly revised estimate of 0.7 per cent growth in the three months to January. Official data last month showed the economy expanded by 0.8 per cent in the final quarter of 2006, its fastest in 2-1/2 years.

The think-tank attributed the slowdown to lower output from public and private sector services and said if this persisted, there was likely to be less pressure on the Bank of England to raise interest rates again. The central bank held rates at 5.25 per cent at this month’s meeting after three hikes since August. NIESR Director Martin Weale said there were signs those past increases were starting to hurt spending.

“It’s possible that people were feeling overstretched as interest rates went up and after the Christmas surge,” he said.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=46375

 

[Janbaz]

'Philippines most corrupt Asian economy'

SINGAPORE (AFP) - The Philippines is perceived by foreign businessmen as Asia’s most corrupt economy, according to a survey Tuesday that also found other countries failing to tackle the problem decisively.
Singapore and Hong Kong were seen as the cleanest economies, while China, Indonesia and Vietnam posted improvements, the Hong Kong-based Political and Economic Risk Consultancy said in a summary made available to AFP.
Perceptions of corruption in Thailand worsened, with the junta that seized power last September seen as little better than the government it ousted.
“The Philippines has the distinction of being perceived in the worst light this year,” PERC said after polling almost 1,500 expatriate business executives in 13 countries and territories across the region in Jan and February.
In a grading system with zero as the best possible score and 10 the worst, the Philippines got 9.40, down sharply from its grade of 7.80 last year. Indonesia was deemed Asia’s most corrupt country in 2006. Philippine President Gloria Arroyo, also an economist, dismissed the survey results, saying PERC was using “old data” and noting that the country’s international credit ratings had improved on her watch. PERC, which provides advice to private firms and governments, said the figures showed a deterioration of perception rather than a change in the actual situation in Manila.
The protracted corruption trial of deposed president Joseph Estrada “is an example of the problem and probably explains why respondents to our survey were so negative in their assessment” of the country.
Thailand and Indonesia, both on a grade of 8.03, shared the spot as Asia’s second most corrupt nations.
Thailand’s image worsened slightly on last year while Indonesia’s score was better.
The junta that ousted Thaksin Shinawatra as Thailand’s prime minister last September promised to fight corruption “but there is no reason to be confident that its behaviour will be any cleaner,” PERC said.
Somchai Jitsuchon, director for macro-economics at the Thailand Development Research Institute (TDRI), said he was not surprised by the findings, adding that only a trimmer civil service with higher salaries could reduce graft.
On Indonesia, PERC said President Susilo Bambang Yudhoyono’s campaign to crack down on corruption had “produced some positive results, but he is still swimming against the current.”
Johan S.P. Budi, spokesman for Indonesia’s National Anti-Corruption Committee, said the survey “shows the seriousness of the government in its efforts to improve its image and in curbing corruption.”
The rankings put Malaysia mid-table, marginally worse than last year.
“One of the big disappointments for many Malaysians is that Prime Minister Abdullah Ahmad Badawi has not been able or willing to follow through effectively with his campaign promise to reduce corruption,” PERC said.
China and Vietnam bettered their scores, but PERC said the improved perception was because corruption was not being discussed openly in the communist-ruled countries.
“The only bad news the governments want published is news that they see fit for public consumption,” it said.
China was the seventh most corrupt nation, according to the survey table, up two places from last year. Vietnam was in 10th place out of 13, also up two.
India was in ninth place. PERC said the government must accelerate reforms, warning that corruption can limit companies’ expansion plans.
Singapore again just beat regional rival Hong Kong as the cleanest economy, although the latter posted a sharp improvement from its image in 2006.
PERC’s managing director Robert Broadfoot told AFP this may have resulted from a perception that “the differences between Hong Kong and (mainland) China are even starker now.”
Singapore is becoming increasingly vulnerable to corruption elsewhere, the PERC report said, citing the soured investment by state-linked investment firm Temasek Holdings in Thai telecom giant Shin Corp.
The tax-free sale of Shin Corp to a Temasek-led group by the Thaksin family fuelled the political crisis that led to the military taking power in Thailand.
Another problem, the report added, was that foreigners “who have profited from corruption elsewhere in Asia sometimes seek a haven for their ill-gotten gains” in Singapore, where rich Indonesian families hold massive assets.

The Nation.
http://www.nation.com.pk/daily/mar-2007/14/bnews4.php

 

[Neo]

Wednesday, March 21, 2007

Russian public debt totals 39.5b dollars: official

MOSCOW: Russian state debt totalled 39.5 billion dollars (52 billion euros) on January 1, 2007, with the amount owed to the Paris Club group of creditor nations sharply reduced, official data showed on Monday.

The amount owed to the Paris Club, an informal group of public lenders from the developed world, fell to 3.1 billion dollars, while debt to non-member countries fell to 3.3 billion dollars, data from the Russian finance ministry showed. By far the biggest share of the debt, 84 percent totalling 31.9 billion euros, was in the form of eurobonds.

Buoyed by high oil and gas prices, Russia has paid back most of the debt to the Paris Club built up by the Soviet Union and at a quicker pace than expected.

The country paid back 23.7 billion dollars to the Paris Club in 2006 and 15 billion euros in 2005.

The early debt repayments demonstrated the remarkable turnaround in Russia’s financial fortunes after the government sparked a major financial and banking crisis by defaulting on debt payments in 1998. Following the crisis, Russia’s public debt as a percentage of GDP rose to 96 percent in 1999.

http://www.dailytimes.com.pk/default.asp?page=2007\03\21\story_21-3-2007_pg5_35

 

[Neo]

April 10, 2007
S. Arabia eyeing $65.3bn in surplus
By Syed Rashid Husain

RIYADH, April 9: Saudi Arabia’s current account surplus is expected to reach SR245 billion ($65.3bn) or 19.2 per cent of the gross domestic product (GDP) this year, the Saudi bank SABB noted in its latest report on the health of Saudi economy.

Remittances leave a major impact on the kingdom’s balance of payments. “We estimate that this year SR58.1 billion will be remitted abroad compared to SR52.4 billion remitted in 2005,” SABB chief economist Dr John Sfakianakis told the local press, adding around 65pc to 70pc goes to South Asia and the Philippines.

“After the US, Saudi Arabia is the second-biggest source of workers’ remittances to developing countries,” he said.

Saudi Arabia’s current account surplus was 10 per cent of the world’s surplus in 2006 and was among the top five global surplus holders.

However, the current account surplus was projected by the bank to decline 46.1pc due to decrease in oil exports, increase in imports and service and income transfer deficits.

According to Saudi Arabian Monetary Agency (SAMA) preliminary data, Saudi Arabia’s trade balance is estimated to record a surplus of SR553.4 billion ($148 billion) in 2006, an increase of 17.5 per cent.

The current account is estimated to record the highest surplus in the country’s history, amounting to SR358 billion ($95.5 billion) in 2006 compared to SR337.7 billion ($90.05 billion) in 2005, an increase of 6 per cent.

The SABB report said that a drop in the current account would release some of the upward pressure on the currency. The US remained Saudi Arabia’s top supplier with 14.8pc of imports, followed by Japan and Germany. China, in fourth place, increased its share of the total to 7.4 per cent from 6.6 per cent in 2004. US imports grew by 60 per cent between 2003 and 2005 whereas Chinese imports rose by 104 per cent over the same period.

“The growth in Chinese products is not a surprise, however, as we estimate that around 11pc of the products exported from China into Saudi Arabia are from US-owned firms based in mainland China,” Sfakianakis added.

http://www.dawn.com/2007/04/10/ebr14.htm

 

[Neo]

April 16, 2007

World economies

Bangladesh

Formerly East Pakistan, Bangladesh came into being only in 1971. It is one of the world's most densely populated countries, with its people crammed into a delta of rivers that empties into the Bay of Bengal. Poverty is deep and widespread. However, Bangladesh has reduced population growth and improved health and education.

With economic growth rates averaging five per cent for the past decade and noteworthy progress in agriculture, health, and education, Bangladesh is considered a well-performing transitional development country. The government of Bangladesh has increased its investments in education, health, food security, and other social services to reduce poverty by roughly one per cent per year.

Despite being one of the most densely populated countries in the world, Bangladesh remains largely dependent on an agrarian economy. Nearly half of Bangladeshis live below the national poverty level of $1 per day. Natural disasters, including annual flooding, arsenic contamination, and seismic risk, compounded by substandard and unavailable public services, condemn millions of people to misery and misfortune.

The major employer is agriculture, but it is unable to meet the demand for jobs. Thus many Bangladeshis - in common with citizens from other countries in the region - seek work abroad, sometimes illegally. The country is trying to diversify its economy, with industrial development a priority.

Overseas investors have pumped money into manufacturing and the energy sector. Onshore and offshore gas reserves hold out some chance of future prosperity. There has been a debate about whether the reserves should be reserved for domestic use or exported. Some international energy companies are involved in the gas sector.

Bangladesh spent 15 years under military rule and, although democracy was restored in 1990, the political scene remains volatile. Political tensions have spilled over into violence; hundreds of people have been killed in recent years. Attacks have targeted opposition rallies and public gatherings. Senior opposition figures have also been targeted.

Regrettably, the deterioration of law and order, government ineffectiveness, and large-scale corruption reveal governance issues that could derail the country's fragile progress, thwart democratic development, and threaten stability. At the heart of the country's governance conundrum is the longstanding political impasse between the two major parties.

A combination of generous international aid since 1990, a dynamic civil society culture and sympathetic government policies has however created a generally positive environment for development indicators, none more so than gender equality in school enrolment, a rare achievement in South Asia. In some areas such as this, progress is more rapid than in neighbouring India or Pakistan.

Widespread poverty has its most visible impact in children’s health; 48 per cent of children under five are underweight and 43 per cent have stunted growth. Standards are worse in rural areas where health services are either non-existent or unaffordable to poor families. Lack of robust healthcare in Bangladesh has also contributed to concerns about HIV infection which has increased threefold in the last 6 years.

Many Bangladeshis feel that the scale of foreign aid may itself feed a culture of dishonesty – through its tendency to create a micro-economy managed by NGO staff, politicians, bureaucrats, consultants and contractors - all wrestling with the potential conflict of personal benefit in the name of development and poverty alleviation. Some NGOs have been accused of taking money from donors whilst doing little for the intended beneficiaries and not being held accountable.

The largest donors to Bangladesh in order are Japan, the World Bank, the Asian Development Bank, the United Kingdom, the United States, the European Union, and the Netherlands. USAID coordinates with multilateral finance institutions and with the United Nations Family Planning Agency, United Nations Children's Fund, International Labor Organization, World Food Programme, United Nations Development Programme, and World Health Organization.

Gross Domestic product (GDP) is projected to grow by 6.5 per cent in FY2007, down from 6.7 per cent last year. Growth in agriculture is likely to moderate from the post-flood high growth of preceding year. The industry sector, lifted by strong external demand, continues to show robust performance. Bangladesh, however, faces several downside risks including political disruption and infrastructure constraints, particularly power shortage.

Weak revenue collection poses considerable risk to fiscal sustainability. Despite tight monetary policy, high money and credit growth continues. Aided by robust growth in exports and workers’ remittances, the current account shows higher surplus even with strong growth of imports. Inflationary pressures have moderated with food prices easing.

Sri Lanka

Nestling off the southern tip of India, the tropical island of Sri Lanka has beguiled travellers for centuries with its palm-fringed beaches, diverse landscapes and historical monuments. But for nearly two decades, the island was scarred by a bitter civil war arising out of ethnic tensions. On paper, a ceasefire signed in 2002 remains in place, but it has been undermined by deadly violence

Known as "Serendip" to Arab geographers, the island fell under Portuguese and Dutch influence and finally came under British rule when it was called Ceylon. There is a long-established Tamil minority in the north and east. The British also brought in Tamil labourers to work the coffee and tea plantations in the central highlands, making the island a major tea producer.

Sri Lanka prides itself for possessing the most advanced development indicators in South Asia. The country is known for the strides it has taken in reducing levels of maternal and infant mortality through an effective network of community health workers. Literacy levels for both sexes are close to 100 per cent and life expectancy high. The net enrolment ratio in primary education is above 95 per cent and immunisation coverage is successful with 88 per cent of one-year-olds immunised against measles and polio.

Despite the strong track record, there are deep regional disparities across the MDG indicators associated with income, poverty and child nutrition. Firstly, these welfare standards are not matched by adequate livelihoods, with 23 per cent of Sri Lankans living below the poverty line and malnutrition affecting 29 per cent of children. A recent World Bank poverty assessment report states that rural areas account for 80% of the population and about 88 per cent of the poor.

Much of the country’s wealth and economic activity is concentrated in the Western province where growth is two to three times faster than the rest of the country. The Millennium Development Goals (MDGs) for poverty and hunger are assessed as “not on track”. Swathes of the country have been largely cut off to government agencies for over 20 years and reliable human development data for the conflict regions in the north and east is not yet forthcoming.

The devastation of the tsunami of December 2004 clearly represents a serious setback to development in the affected coastal regions, already home to some of the country’s poorest communities. Ironically, post-tsunami assessments of relief requirements have provided detailed costings for long-term development, a feature typically absent from MDG reports, Sri Lanka being no exception.

2006 has seen the worst violence in Sri Lanka in the last four years. Efforts to cajole both parties into a peace settlement have proved futile, with signs of a return to civil war. Although economic growth remains strong, concerns are emerging over monetary stability. Real GDP growth is forecast to average six per cent a year in 2007-08, and the current-account deficit will average 1.8 per cent of GDP over the same period.

The Central Bank of Sri Lanka raised policy interest rates by 0.5 percentage points taking the repurchase rate to 10.5 per cent. The move came after figures showed that the Colombo Consumer Price Index was up by 20.5 per cent year on year in January, although inflation eased slightly in February. The Economist Intelligence Unit has revised up its forecast for average annual inflation in 2007 from 9.3% to 13.2%. Given that real interest rates are still negative, it is likely that further interest-rate rises will be needed to bring inflation under control.

http://www.dawn.com/2007/04/16/ebr8.htm

 

[Neo]

Sharjah records 19.9pc growth in 2006

22 April 2007

DUBAI — The Emirate of Sharjah was able to achieve significant economic gains via its plans for industrial and commercial augmentation and modernisation last year, a consequence of newly implemented legislations for attracting greater foreign investment. Economic growth occurred both horizontally and vertically, indicating the success of the emirate's economic development plans in all of its sectors and segments.

Sharjah has over the past year been able to achieve a GDP growth rate of 19.9 per cent compared with that of previous years, where the figure was at Dh42.8 billion compared with Dh35.7 billion. In 2005 the GDP in the emirate was Dh25 billion — meaning an annual growth rate of 17.7 per cent per annual block., representing positive progress on a global level.

Ali bin Salem Al Mahmoud, director-general of the Sharjah Economic Development Department (SEDD), said: "We have been able to achieve this success thanks to the wise policy and the outlook of His Highness Dr Shaikh Sultan bin Mohammed Al Qasimi, Member of the Supreme Council and Ruler of Sharjah. It has been through his insight of addressing the precise areas of deficiency and his ambition to lessen the level of bureaucracy which investors in the past may have encountered, that has allowed for the emirate to become a more attractive location for investment."

The manufacturing sector witnessed a distinctive growth in its overall development, where they saw a rise from Dh4.3 billion in 2002 to Dh7 billion in 2006, achieving an annual growth rate of 15.7 per cent. Gross output of the manufacturing sector in 2006 grew by 18.6 per cent compared with the output achieved in 2005, amounting to Dh5.9 billion. The contribution of the emirate's various sectors to its overall GDP amounted to 42.2 per cent in 2006.

http://www.khaleejtimes.com/Display...l/business_April542.xml&section=business&col=

 

[Neo]

UAE is world's fastest growing economy: Lubna

22 April 2007

BEIJING — Shaikha Lubna Al Qasimi, minister of economy, has said that the UAE has turned from the pearl and fishing-based economy into the most vibrant regional economies and the world fastest growing economy.

"The UAE has been and still seeking to diversify its economic base away from oil until non-oil sector contribution to the GDP reached 62.5 per cent last year,” said shaikha Lubna in an interview with the english language chinese channel 9 (cctv 9) at the end of her visit to China.

She added that marked growth in non-oil exports stood as a concrete proof for the economic diversification as ratio of non-oil exports to total oil exports averaged 52.3 per cent in the past five years as compared to 29.5 per cent in 1980. Citing IMF figures, shaikh Lubna explained that the UAE had achieved high rates in attracting Foreign Direct Investment (FDI) to sectors like oil and gas,water and power, ITC and health.

In 2005, she added, the UAE lured us 11 billion in foreign capital. On how the UAE and China can utilise their natural resources to boost their economies, Shaikha Lubna said: "China is one of the UAE’s major trade partners but we are in a need of a fresh approach to optimally tap the huge opportunities which have not been utilised yet."

She noted that China’s fast growing economy, especially in banking and communications, has attracted the attention of global investors and here the UAE can play a vital role in turning Beijing’s economic dreams into reality by expanding the export markets for chinese products using its strategic location, ultra-modern services infrastructure and other business strengths.

Turning to environment-economy balance, Shaikha Lubna credited the founding father the late Shaikh Zayed bin Sultan Al Nahyan for striking a balance between protection of the environment and economic growth.

"Shaikh Zayed has bagged several international honours for his environmental initiatives. He didn’t allow the oil industry to harm the ecological system in the country and the current leadership is confidently pursuing his policy by launching new environment-friendly initiatives,’ she remarked. Towards end, she said that Abu Dhabi will launch a big solar power project as part of efforts for introducing renewable energy sources.

http://www.khaleejtimes.com/Display...l/business_April534.xml&section=business&col=

 

[Neo]

April 30, 2007
World commodity report

Russia

Russia's oil-fuelled recovery remains robust. The economy grew 6.8 per cent last year, its eighth year of similar growth, to pass $1,000bn - putting it among the world's top 10. Real incomes are running 12 per cent above last year; the national average wage has increased four-fold under Mr Putin to nearly $450 a month. Gold and currency reserves, and the stabilisation fund that since 2004 has hoarded windfall oil tax revenues, are together nearing $450 billion. Inflation fell to nine per cent last year, hitting single figures for the first time since the Soviet collapse.

Real GDP growth will slow somewhat in 2007-08, although high oil prices will continue to underpin buoyant expansion of domestic demand, limiting the extent of the output slowdown. Strong unsterilised foreign-exchange inflows mean that inflation will ease only moderately. The current-account surplus will narrow gradually, but is projected still to amount to about $75 billion (5.7 per cent of GDP) in 2008. Although relatively prudent macroeconomic policies will be maintained, few advances in structural reform are likely in the run-up to the 2007-08 elections.Economic policy will focus on implementing the "national priority projects", designed to raise standards of living through increased public spending on health, education and housing, and on increasing the birth rate. The government will seek to take additional measures, such as tax cuts, to bolster the popularity of the new president. It will continue with its policy of establishing state control over the so-called commanding heights of the economy--which is being extended from Russia's energy and metals resources to include other sectors.

After a buoyant 2006, a slowdown in most parts of the developed world will reduce world GDP growth in 2007-08. In the EU, Russia's largest trading partner, growth will slow from an estimated 2.7 in 2006 to 2.2 per cent in 2007, remaining at that pace in 2008. International oil prices will continue to drive Russian economic performance over the forecast period. The outlook for Russia in this respect is favourable, and the Economist Intelligence Unit's price forecast for dated Brent Blend crude oil averages $64/barrel in 2007-08.

Although falling producer price inflation indicates easing inflationary pressure, in 2007-08 foreign-exchange inflows and domestic demand growth will remain strong. Inflation is thus likely to decline only modestly. The Russian Central Bank (RCB) will continue to keep an eye on the maintenance of competitiveness and will not consistently prioritise inflation-reduction.

The exchange rates policy emphasis in 2006 has continued to vacillate, even more than usual, between trying to prevent excessive real appreciation and fighting inflation. The extent of real effective appreciation in recent years has been considerable--cumulatively by 20 per cent in 2005-06--and has by now nullified the competitiveness gains from the 1998 devaluation. Although the RCB will seek to prevent significant rouble strengthening in 2007-08, continued large-scale foreign-exchange inflows and the dearth of sterilisation instruments at the RCB's disposal mean that continued real effective appreciation, even if at a slower rate, is inevitable.

Despite some recent easing, international oil prices remained high and this meant that the US dollar value of exports of oil and gas rose by 37 per cent year on year; oil and gas sales now make up two-thirds of total export receipts. The current-account surplus peaked in 2006, and is expected to decline gradually from 2007. Large oil-driven trade surpluses will, nevertheless, continue to more than offset substantial deficits on the income and services accounts. Interest payments on corporate debt will rise, offsetting a fall in the sovereign debt-servicing burden after the August 2006 payment of Russia's Soviet-era debt to the Paris Club of sovereign creditors.

Tajikistan

The Economist Intelligence Unit estimates real GDP growth of 7% in 2006, with industrial and agricultural output both posting strong rates of expansion. Growth will remain steady in 2007-08, at an annual average of 7.1 per cent. Further new investment in the energy sector will boost construction, and the services sector will become an increasingly important source of growth, partly as a spillover effect from the development of the energy sector, and also because high levels of workers' remittances and rising wages will support private consumption.

Domestic demand will also benefit from a pick-up in investment inflows. Increases in domestic utility tariffs are contributing to inflationary pressures, as is the government's slightly looser fiscal stance. Similarly, robust inflows of workers' remittances are contributing to growth in domestic demand, pushing up the overall price level. The acceleration in consumer price inflation in recent months has been more rapid than expected, and we now estimate average annual inflation in 2006 of 9.8 per cent.

A rise in the price of gas imports from Uzbekistan will further contribute to inflationary pressures in 2007. However, the authorities can be expected to tighten monetary policy further in 2007 to contain price rises, and global oil prices will begin to fall from 2008. We forecast that average annual inflation will fall to 8.5% in 2007 and six per cent in 2008. Inflation will slow in 2007-08 as the authorities tighten monetary policy. With export growth sluggish, a widening trade deficit is set to push the current-account deficit up to an annual average of 3.7 % of GDP in 2007-08.

Price trends for Tajikistan's main goods are mixed. Prices for Tajikistan's main commodity export, aluminium, have been supported over the past three years by high demand in countries such as China, but they will fall in 2007-08. Global prices for cotton, Tajikistan's second-largest export, are forecast to continue to strengthen, in line with a projected decline in global output.

Despite Tajikistan's comparatively high inflation, the strength of the euro and the rouble--the currencies of its major trading partners--will lead to a moderate depreciation of the somoni in real effective terms in 2007-08. This will ensure that the country retains competitiveness in its European export markets, but it will worsen its terms of trade with Russia, Tajikistan's main source of imports.

On the import side, after four years of double-digit rises, world prices for industrial raw materials are expected to decrease by an average annual rate of 7% in 2007-08, thereby easing growth in Tajikistan's import costs. Oil prices are forecast to remain high in 2007 and 2008, at around $65/barrel and US$63/b, respectively, as spare capacity will still be low. Robust capital inflows in 2007-08, reflecting high levels of workers' remittances, are likely to keep the rate of nominal depreciation of the somoni against the US dollar at about 3.8 per cent per year, following estimated depreciation of 5.6 per cent in 2006.

High global energy prices pushed import costs upwards in 2006, and in 2007 a rise in price for gas from Uzbekistan will further drive up import costs. In addition, imports of capital goods are likely to rise as development of the aluminium and energy sectors intensifies. Accordingly, the trade deficit is expected to widen in 2007-08. Although levels of overseas remittances (mainly from migrant workers in Russia) are likely to continue to grow, we forecast a widening of the current-account deficit, from an estimated 2.6 per cent of GDP in 2006 to an annual average of 3.7 per cent of GDP in 2007-08.

In recent years the government has broadly followed the reform prescriptions of the international financial institutions. The authorities will continue to make moderate progress in strengthening the tax administration, with a view to increasing revenue and reducing the informal economy. However, efforts to improve financial discipline among the country's large industrial enterprises--which in the past have run up substantial tax arrears--will be only partly successful, owing to the prevalence of vested interests.

Sweden

Sweden enjoys excellent macroeconomic performance with high rates of growth, low unemployment and stable inflation expectations. Early steps in regulatory reform, taken in the 1990s, are paying off in terms of productivity and GDP growth. However, tensions are visible at the margin. Employment rates have not recovered to traditionally high levels since the crisis of the early 1990s. Joblessness is widespread among immigrants and youngsters, and disability and sickness rates are comparatively high. As well, renewed regulatory reform is needed to address the low rate of enterprise formation and enterprise growth that may weaken the economy’s ability to venture into new business fields.

The new government, which took office in October 2006, has renewed the commitment to sound macroeconomic framework conditions and it will stick to the budget surplus target of two per cent of GDP. This is necessary to keep public finances on a sustainable path in the face of future spending pressures. As concerns structural policies, the government is determined to eliminate exclusion in the labour market and reduce the administrative burden on enterprises. Some important measures are already included in the 2007 Budget.

The Swedish economy has recovered strongly in recent. This recovery has come sooner and been stronger than in most other European countries, illustrating the relative soundness of the Swedish economy. Real wage growth has averaged 3½ per cent since 1998 when a new stability-oriented wage formation framework was introduced, compared to just 2½ per cent during the inflationary 1970s and 1980s.

Inflation expectations are well anchored. Sweden responded promptly to the deep crisis in the early 1990s, when it greatly improved its macro policy framework. With a structural budget surplus of around two per cent of GDP, Sweden is preparing itself to meet future demographic challenges much better than most OECD countries. The inflation targeting framework has served well by firmly anchoring inflation expectations.

With price increases being below the inflation target over a prolonged period, partly reflecting positive supply shocks due to globalisation factors, the Riksbank has responded by allowing for a longer time horizon within which inflation can be expected to return to target in this particular environment. The Riksbank’s plan to share its assessment about the future interest rate path should further improve public understanding and better guide expectations.

Productivity growth is impressive with GDP per hour worked growing 2½ per cent a year for the economy as a whole. Falling prices for a part of manufacturing exports have caused a trend decline in the terms of trade and, taking this into account, aggregate consumption possibilities have grown less fast than GDP volume. Nevertheless, a 22 per cent gap remains vis-à-vis the United States, in terms of GDP per capita, with shortfalls in labour resource utilisation and productivity per hour each accounting for about half of the gap.

Bringing the public finances from deep deficit in the early 1990s to structural surplus was a major achievement. The new government has renewed the commitment for sound macroeconomic framework conditions and will stick to the target for general government net lending of two per cent of GDP over the cycle, which is necessary to keep public finances on a sustainable path. Underlying this target is the assumption that taxes can be sustained at current levels, which could be difficult in the future, not least due to mobile tax bases and international tax competition.

In the current juncture, where growth could well continue above trend in 2007-08, positive fiscal surprises should not be allowed to trigger permanent spending increases or under-financed tax cuts. Lowering the expenditure ceilings could help to keep spending on track, while avoiding slippage and absorption of the rather wide margin between budgeted spending and the expenditure ceilings. To create room for more fully-financed tax cuts aimed at making work and entrepreneurship pay, consideration should be given to taking steps towards a uniform value added tax.

Finally, while the current rapid reduction in public debt helps to prepare for population ageing, it is also necessary to consider strategies for how to meet the likely future increase in demand for ever-better service standards in the areas where public funding and provision is dominant. In particular, when expanding user choice, it is essential to implement it in ways that can give room for users to contribute financially, for example in higher education, rather than in ways that increase public spending pressures.

http://www.dawn.com/2007/04/30/ebr9.htm

 

[Neo]

Infrastructure projects in UAE exceed $300b
BY ISSAC JOHN (Deputy Business Editor)

9 May 2007

DUBAI — The UAE accounts for the bulk of the ongoing and planned infrastructure projects in the GCC countries, amounting to an estimated $1.3 trillion plus of investments over the 2007-2012 period.

According to Edward Morse, Lehman Brothers' Chief Energy Economist, as of early April 2007, there were over 2,000 infrastructure projects. The core of these, over $300 billion, are in the UAE, mostly in Abu Dhabi and Dubai. Projects in Saudi Arabia have doubled over the past 18 months, and are now tracked at over $280 billion. Kuwaiti projects exceed $215 billion and the development costs for projects in Qatar are estimated at some $130 billion.

Quoting Middle East Economic Digest, which tracks these projects, he said that the total value of these projects might have risen by $300 billion since the start of this year, reflecting the rapid rate at which new projects are being added as well as cost escalation.

"Although most of these expenditures are in the hydrocarbon sector, well over $100 billion is in power generation, with the GCC's annual average power consumption growing by 9 per cent per annum, more than three times the global average. More than $50 billion of the GCC's capital projects are in the industrial sector," said Morse in his report entitled "Beyond petrodollars: Globalisation and sustainable development in the Middle East," published yesterday by the global investment bank.

The report concludes that the development of the Middle East hydrocarbon exporters as a major force in the world economy, manifested in the current account surpluses of the GCC and the consequent purchase of consumer goods from the outside world, is likely to continue at least until the end of the decade. However, in an effort to avoid the stagnation from which they suffered between 1985 and 2002 recurring once the current oil boom is over, the economies of the GCC are heavily investing to develop their infrastructure and economic base.

"The six GCC countries could be on the verge of overcoming oil dependency. Having seen nominal GDP growth hovering near 20 per cent for the past four years, and given our forecast of sustained high oil prices, we expect these growth levels to continue through this decade. If the investment off the back of this is sustained, then I expect to see a new Middle East that is a critical engine of global growth," said Morse.

One note of warning is that the significant near-term threats to the scenario outlined lie in terrorist acts or regional conflict rather than factors emanating from either the oil market or from lower global economic growth.

GDP growth in the GCC countries is underpinned by large increases in oil export revenues, the report said. In 2004-06, oil export revenues grew an average of 36.5 per cent in the GCC. (Oil export revenues grew 32.7 per cent in Iran and 38.7 per cent in Venezuela.) The oil price boom has spurred 2004-06 real average annual GDP growth in Saudi Arabia of about 5.4 per cent, while Kuwait, Qatar and the UAE notched average gains of 8.9 per cent, 7.4 per cent and 8.0 per cent, respectively.

http://www.khaleejtimes.com/Display...May/business_May303.xml&section=business&col=

 

[Bushroda]

UK economy loses competitive edge to rival nations
Gary Duncan, Economics Editor

Britain is losing ground in the global race for competitiveness as the West’s developed economies and their businesses face a growing challenge from rising economic powers such as China, India and Russia, one of the world’s leading business schools reports today.

The competitiveness of the British economy when gauged on a wide range of key factors against 54 international rivals has slipped back over the past 12 months, the Lausanne-based International Institute for Management Development (IMD) finds.

For a second year in a row Britain has clung to its twentieth place in the IMD’s annual league table of the competitiveness of the 55 important economies around the world. However, the institute’s detailed analysis shows that the UK managed to hold its place in the rankings only narrowly and lost some ground against rival nations.

The finding in the IMD’s influential analysis comes as the institute highlights a big shake-up in global economic and business power, and sounds a warning to developed nations that emerging market countries are quickly catching up in competitiveness and will soon be snapping at the heels of the West.

Of the 55 economies examined in today’s report, Britain was among only 15 that failed to make headway in boosting competitiveness. The remaining 40 are maintaining or improving their performance and closing the gap with the United States, which remains the most competitive economy and No 1 in the IMD’s league table.

With China, Russia and India, the report finds that Slovakia, Estonia, Hong Kong, Austria, Australia and Denmark have shown a strong improvement in their competitiveness and are “catching up quickly” on the US.

Stéphane Garelli, director of the IMD’s World Competitiveness Centre, said that many emerging market nations were now contesting the “long-standing competitive supremacy” of industrialised nations. He said that this could foster increased protectionist pressures in America and Europe as they felt the heat from these challengers.

The IMD says that, in a symptom of the shifting power in the global economy, companies from SouthEast Asia, India, China, Russia and the Middle East are buying up industrial assets worldwide. It suggests that the West may not accept the loss of “business jewels” to newcomers without a fight.

UK struggles


–– Regulatory burden grew, making it harder to do business

–– Increased relocation abroad of research and development facilities, posing a threat to economic prospects

–– More negative attitudes towards globalisation

–– Diminished emphasis on science in schools

–– Reduced credibility of managers in society

–– More protectionist pressure

 

[ahussains]

Nice Articlas by all of you Peoples thanx ...

Did any one have list by number which country a is at the top of the list in this race .

 

[Bushroda]

Nice Articlas by all of you Peoples thanx ...

Did any one have list by number which country a is at the top of the list in this race .

Race??? China (my guess).

 

[Bushroda]

'Chindia' Eyeing Korean Firms for Takeover

Korean companies have become potential takeover targets of powerful "Chindia" capital. The coined word refers to China and India.
The Hyundai Research Institute said in a report Sunday that Korean backbone companies, which have until now mainly been eyed by financiers from advanced countries, will likely soon be exposed to threats from Chindia.

The report said that Chinese and Indian corporations armed with enormous capital are emerging as a main force in the mergers and acquisitions market for steel makers and oil refineries.

China and India have been riding an economy boom, growing at an annual rate of 8-10 percent and enjoying an influx of foreign investment.

In 2003, China's BOE Group took over Hydis, a subsidiary of then cash-strapped Hynix Semiconductor. China's biggest automaker Shanghai Automotive Industry acquired Korea's Ssangyong Motor in 2004, and India's Videocon Industries recently sought to purchase Korea's Daewoo Electronics. M&As by foreign investors can hugely affect the national economy since they mainly target solid companies in backbone industries, the report said.

Researcher Lee Joo-ryang, the author of the report, said that Chinese and Indian companies are looking overseas for takeovers after having grown fat on capital from advanced countries. Korea is being sandwiched between financial capital from developed countries and industrial capital from China and India.

The report urged the government to pass laws to protect Korean companies from hostile foreign takeover bids and ease reverse discriminations against domestic businesses, like an investment cap that prevents business groups with assets over W10 trillion (US$1=W927) from investing more than 25 percent of their net worth in affiliated and non-affiliated companies.

 

[Neo]

May 14, 2007
World economies

South Asia

The Asian Development Outlook 2007 released by the Asian Development Bank lately reveals that economic growth in Southeast Asia is projected to slow a little to 5.6 per cent in 2007, due mainly to a softening in some major export markets. Only in Indonesia and Viet Nam is growth projected to be higher this year. Despite strong growth in recent years, Southeast Asian economies face a number of challenges to sustainable growth, social development and the reduction of poverty.

In 2007, inflation is forecast to subside significantly, to an average 4.2 per cent, on expected lower world fuel prices, appreciating subregional currencies, and the effect of assumed normal weather patterns on agricultural production. Imports to Southeast Asia are likely to record robust growth as investment is expected to pick up, especially in Indonesia. Continued buoyancy of remittances from overseas workers and in tourism receipts should provide support to current accounts in several countries.

In 2006, the economies of Southeast Asia expanded by 6%, above the average growth of the previous five years. Most countries grew at a faster rate than in 2005, reflecting strong external demand, supportive monetary conditions, and for some, the beneficial impact on agriculture of favorable weather conditions for most of the year. Export growth in Southeast Asia accelerated last year to nearly 18 per cent, with exports from Cambodia, Lao People’s Democratic Republic, and Viet Nam rising at faster rates. Exports from several economies - Philippines, Singapore, Thailand and Malaysia - benefited from the upturn in global demand for electronics. Indonesia, Malaysia, Myanmar, and Viet Nam benefited from high prices for oil or natural gas exports.

Investment was weak in 2006 in Indonesia, Philippines, and Thailand, which dampened the growth of imports. Southeast Asian inflation averaged 7.1 in 2006, up from 6.3 per cent in the previous year. The average was raised by high inflation in Indonesia, the biggest economy in Southeast Asia, which saw price pressures surge from late 2005 when the government reduced subsidies on fuel.

In Cambodia, the economy expanded strongly by 10.4% in 2006, reflecting robust clothing exports, tourism receipts, and construction activity. Forecast growth averaging just over 9% in the next 2 years will be more dependent on strengthened domestic economic activity underpinned by improved rural incomes, larger inflows of foreign direct investment, and greater government capital spending.

In Indonesia, moderate economic growth of 5.5 per cent last year was based on private consumption and exports, while fixed investment growth dwindled. Inflation eased from high levels as the year progressed, enabling a cut in interest rates. Economic growth is expected to pick up by a half percentage point in 2007, supported by greater development spending and some improvement in the poor investment climate.

In Lao PDR, foreign investment in hydropower and mining, with rising exports of minerals in 2006, continued to drive double-digit growth in industry, the major contributor to gross domestic product growth of 7.3 per cent. Inflation slowed to levels not seen for 12 years. Economic growth is projected to decelerate moderately this year to 6.8%, mainly because export markets and mineral prices will not be as strong as in 2006.

In Malaysia, consumption spending produced a pickup in growth to 5.9 per cent in 2006. Private and public investment also strengthened. Growth is projected to slow by about a half percentage point in 2007 as export markets soften and household spending and private investment decelerate. In Myanmar, high prices for natural gas exports and a good harvest led to a modest pickup in economic activity. But macroeconomic stability remains elusive with monetized fiscal deficits feeding high inflation, which returned to double-digit levels and could go higher.

In the Philippines, achievements included 5.4 per cent growth, a downtrend in inflation, and stronger fiscal and external positions. This year, still-high remittances and low real interest rates, and greater fiscal expenditures, should keep expansion at around the same level. Growth has not been strong enough to lift employment sufficiently because of a declining investment-to-gross domestic product ratio.

In Singapore, growth in 2006 hit 7.9 per cent, well above the economy’s trend rate for a third year running. External demand was the main driver, although domestic demand, especially investment, also picked up. Growth is expected to decelerate in 2007 to a still-strong but more sustainable rate of six per cent. Closer links with global economic networks and structural reforms have contributed to the healthy performance, but also led to widening income gaps.

In Thailand, strong exports drove a pickup in economic growth to 5% last year, since domestic demand was damped by several factors including rising interest rates and inflation in the first half, flooding, and political uncertainties for much of the year. Inflationary pressures eased in the second half of 2006, paving the way for the central bank to start lowering rates early in 2007. Economic growth is projected to slow to 4.0% this year, and the outlook for 2008 depends heavily on elections being held and on the incoming government providing a clear and credible economic program.

In Viet Nam, a rapid growth rate of 8% was maintained in 2006, supported by robust exports, rising consumption spending, and strong investment. Inflation also stayed high, averaging 7.5 per cent. Membership in the World Trade Organization from January 2007 has added impetus to development and market-oriented reforms. If further progress is made on structural reforms, brisk economic growth of just over 8% is projected this year and next.

East Asia

East Asia’s growth is expected to slow to 8% in 2007, down from 8.7% a year earlier, largely because of measures by the People’s Republic of China (PRC) to rein in fixed asset investment. Inflation was 1.6 per cent in 2006 and is expected to remain below 2% in 2007. While all the economies in the region will slow, they will still achieve solid growth. External demand will soften as growth rates subside in industrial nations, though domestic demand will increase in Hong Kong, China; Korea; and Taipei,China. Consumption demand in the PRC is projected to rise, providing some counter to the targeted reduction in fixed asset investment.

The PRC’s economy expanded at a cracking 10.7 per cent in 2006, the fastest rate in 10 years, with manufacturing, construction and other industry the main contributor, while investment accounted for much on the demand side. The government’s efforts to restrain fixed asset investment pulled its growth down from about 30 per cent in the first half of the year to 21 per cent in the second. Foreign exchange reserves soared above $1 trillion by year end. With excess capacity in some industries and strong competition in manufactured products, inflation slowed to 1.5 per cent.

Steps taken to cool the economy included administrative measures to restrain investment and market-oriented tightening. GDP growth is expected to ease to 10% in 2007. Growth of industry is forecast to slow about one percentage point to 11%, while agriculture is expected to benefit from a new official emphasis on rural development and services from higher incomes. Over the medium term (2007–2011), GDP growth is expected to average about 9%.

The economy of Hong Kong, China grew robustly by 6.8% in 2006, a third successive year of above-trend growth. Closer links with the booming mainland benefited the economy in several ways: through re-exports of PRC goods, and through now-substantial financial services exports to the PRC. In 2007, GDP growth is projected to slow to 5.4 per cent, given the expected slowing in the PRC and United States economies. Consumer spending is expected to strengthen on the back of generous budget givebacks announced in early 2007. Inflation is seen easing from two per cent last year to 1.6 per cent this year as the budget initiatives exert downward pressure on prices.

The Republic of Korea enjoyed its fastest growth rate in four years, at five per cent in 2006. It was spurred by a recovery in domestic demand and strong exports. Private consumption posted the best rate of expansion since the credit card crisis of 2003. The recovery broadened with a pickup in capital investment as companies invested in machinery and equipment.

This year, Korea is likely to see a continued expansion of investment in manufacturing, joined by greater housing investment. Private consumption growth, weighed down by high levels of household debt, is expected to continue, although at a moderate pace. However, growth in exports will ease as a consequence of the slowdown in the US. Rapidly rising imports, driven in part by demand for overseas travel and education, will cut by half the contribution of net exports to GDP growth. The economy is forecast to grow by 4.5% this year, slowing from 2006. Inflation will inch up from 2.2 to 2.4 per cent.

With copper and gold prices high and a mild winter, growth in Mongolia’s mining and agricultural-based economy lifted to 8.4 per cent in 2006, its fourth straight year of 6%-plus expansion. Growth is forecast to decelerate in 2007 with mineral prices tipped to stabilize, tempered PRC growth, and an expected leveling out of livestock growth rates. Inflation, which often runs at relatively high levels, receded to just over five per cent last year and will be a bit above that level in 2007. Strong exports accelerated growth to 4.6 per cent in Taipei,China in 2006. This year, consumption and investment demand are expected to pick up. On balance, that will leave GDP growth at 4.3 per cent in 2007, while inflation will remain at a low 1.6 per cent, compared to just 0.6pc in 2006.

http://www.dawn.com/2007/05/14/ebr5.htm