April 10, 2021

Recovering UK Economy Shows Broader, Faster Growth

Gross domestic product expanded 0.7 percent from the previous quarter, data from the Office for National Statistics showed on Friday, beating its initial estimate and economists’ forecasts and putting Britain’s growth rate on a par with European powerhouse Germany.

“It does look like the recovery is becoming more self-sustaining,” said Philip Shaw, economist at Investec.

Stocks gained after the data, which also showed output rose by a surprisingly strong 1.5 percent from a year ago.

The pound and government bond yields rose, highlighting expectations that the revival could force Britain’s central bank to raise interest rates earlier than it has indicated.

British exports rose at the fastest pace since late 2011 and business investment grew faster than household spending, suggesting a shift towards more balanced growth in an economy that has been driven mainly by domestic consumption and imports.


In an effort to encourage spending and investment, the Bank of England said earlier this month it would not raise borrowing costs while unemployment remained above 7 percent, a level it did not expect to be breached for at least three years.

But the threshold may be crossed sooner if Britain’s recovery maintains momentum, and since the bank gave its forward guidance, the news on the economy has been predominantly upbeat.

Factories’ order books looked in their best shape for two years in August, consumer confidence and retail sales soared in July, and surveys found robust growth across manufacturing, construction and services at the start of the third quarter.

“The Bank of England is therefore facing a growing challenge of how to convince the markets and households that interest rates will not need to rise over the next three years,” said Chris Williamson, economist at financial data company Markit.

In a speech next week, BoE governor Mark Carney is tipped to try to talk down expectations of an earlier rise in the base rate, which have caused conditions to tighten on money markets.

Friday’s data showed that most key output components of GDP expanded more than originally thought.

Britain’s service sector – which makes up more than three quarters of GDP – grew 0.6 percent compared with the first quarter, as estimated earlier.

But manufacturing output growth was heavily revised up to 0.7 percent and the volatile construction sector posted a 1.4 percent rise, also much better than found a month ago.

The increase in building activity is running in parallel with an upturn in the property market, fuelled in part by a state-backed mortgage scheme that critics fear could lead to a new price bubble.

Britain’s economy is still 3.2 percent smaller than at its peak in the first quarter of 2008.

(Editing by John Stonestreet)

Article source: http://www.nytimes.com/reuters/2013/08/23/business/23reuters-britain-gdp.html?partner=rss&emc=rss

Emerging Asian Economies on Track for Solid Growth, Development Bank Says

HONG KONG — The economies of developing Asia appear to have settled into a new growth path that will allow the region to expand by between 6 percent and 7 percent a year — a pace that is significantly slower than that seen before the global financial crisis, yet represents a firm trajectory that could last over the next decade.

“It looks like we’re in a new trend,” said Changyong Rhee, the chief economist of the Asian Development Bank, which on Tuesday released its new forecasts for emerging Asia. The region spans developing countries like China, India, Indonesia and Thailand, but not Japan.

After relatively muted growth last year, when the region expanded by 6.1 percent, developing Asia is expected to pick up speed again with growth of 6.6 percent this year and 6.7 percent next year, according to the bank’s projections.

“The era of double-digit growth is over,” Mr. Rhee said. But, he added in an interview in Hong Kong, the United States is showing signs of recovery, and the euro zone likely to “muddle through” its debt crisis for the foreseeable future. That backdrop leaves developing Asia enjoying a relatively stable growth that was not yet visible just six months ago, when the development bank made its last projections for the region.

Faster growth in China — by far the region’s largest economy — and what Mr. Rhee called the “remarkable” resilience of southeast Asian economies have been the main drivers of growth there growth, lifting domestic consumption and intraregional trade, and in the process also reducing the region’s reliance on the world’s advanced, and slower-growing, economies.

Growth, however, will be very uneven, with China likely to grow at between 7 percent and 8 percent; the Asean region, comprising countries like Thailand and Malaysia, growing around 5 percent; and more developed economies like Hong Kong, Singapore or Taiwan expanding at little more than 3 percent.

Moreover, events in other parts of the world continue to pose major potential risks to Asia.

Among them, the development bank said, are the wrangling over the U.S. debt ceiling and the struggles to implement austerity measures in Europe. Border disputes within Asia, potential asset bubbles inflated by the monetary stimulus efforts of the world’s developed economies, and the possible reversal of capital inflows once that monetary stimulus ends also represent risks to Asia.

The Asian Development Bank also issued a stark warning on Asia’s rapidly growing energy needs. The region, the bank said, is moving along a “dangerously unsustainable energy path” that “could result in environmental disaster” and increase the region’s reliance on the oil-exporting nations of the Middle East.

“Asia could be consuming more than half the world’s energy supply by 2035, and without radical changes carbon dioxide emissions will double,” Mr. Rhee said. “Asia must both contain rising demand and explore cleaner energy options, which will require creativity and resolve, with policymakers having to grapple with politically difficult issues like fuel subsidies and regional energy market integration.”

Article source: http://www.nytimes.com/2013/04/10/business/global/emerging-asian-economies-on-track-for-solid-growth-development-bank-says.html?partner=rss&emc=rss

North Africa’s Prospects as Energy Goliath Are Fading

LONDON — A deadly attack by militants on an Algerian natural gas plant last month has dealt a major setback to a group of North African countries whose prospects as oil and gas producers were already cloudy.

A few years ago, Algeria, Libya and Egypt looked like they would provide much of the solution to Europe’s declining natural gas production and its uneasy reliance on Russia for supplies of a fuel widely used in industry, power generation and home heating.

But well before the early morning assault by dozens of raiders on the In Amenas gas facility, deep in the Sahara, the difficult political realities of the region were creating doubts about how big a role North Africa could play in the world energy equation.

Both oil and natural gas production have been in decline in Algeria, the region’s biggest gas producer, since the mid-2000s. In Libya, the rebellion that ousted Col. Muammar el-Qaddafi and its chaotic aftermath have disrupted oil and gas exploration. In Egypt, rising domestic consumption, encouraged by government policies, has cut into exports.

“For the rest of this decade there has to be a big question of how far Europe can rely on North African gas,” said Jonathan P. Stern, chairman of the gas program at the Oxford Institute for Energy Studies, a research concern. “It certainly can’t rely on an expansion of North African gas supplies. Most likely there will be a contraction.”

During the militants’ attack on In Amenas, and the Algerian military’s action to retake the facility, 40 workers and 29 insurgents were killed. The plant — jointly owned by BP, Statoil of Norway and Sonatrach, the Algerian national energy company — has yet to reopen. Its gas field and processing center accounted for about 10 percent of Algerian production, but so far the shutdown has had little impact on exports.

“Algeria still has the ability to swing production for short periods,” said Femi Oso, an analyst at Wood Mackenzie, an energy consulting firm in Edinburgh.

Algeria reinjects a substantial portion of its gas back into its oil and gas fields to maintain pressure. Mr. Oso said that Sonatrach is now diverting some of this gas into exports, but this is only a short-term fix.

Sonatrach is pressing to repair and reopen the plant, which suffered blast damage.

But if much of the plant remains closed for long, or if there is another attack on Algeria’s energy production infrastructure, exports will suffer, analysts say, forcing up prices in Europe. Most of the Algerian and Libyan gas exported to Europe flows under the Mediterranean through a handful of giant pipelines. While the undersea portion of these arteries seems secure, the pipelines cover long stretches of desert before they reach the sea. Some pass through troubled countries like Tunisia, where they could be hit.

“What we find in troubled geopolitical hot spots is that gas infrastructure and pipelines are the most vulnerable targets,” said Rob West, an analyst at Bernstein Research in London. “Pipelines are very hard to protect.”

He noted that in Yemen, Iraq and other countries, anti-government forces had succeeded in cutting pipelines on numerous occasions, disrupting oil and gas supplies.

The worry for Algeria and other North African countries is that the attack on In Amenas, coming after two years of political instability, will further discourage the foreign investment the countries need to maintain their positions as oil and gas exporters.

Western energy companies were already turning up their noses at Algeria’s tough contract terms, which give the government more than 90 percent of the proceeds from oil and natural gas production and require that Sonatrach get a majority stake in all projects. The country also has high costs and lengthy regulatory procedures.

In Algeria’s most recent auction of oil and gas leases, in 2011, only two of 10 exploration blocks found takers — and one of those went to Sonatrach.

“The fiscal terms are so tough that international oil companies don’t think they will be able to make any money,” said Mr. Oso, the Wood Mackenzie analyst.

Article source: http://www.nytimes.com/2013/02/23/business/global/23iht-natgas23.html?partner=rss&emc=rss

Changing of the Guard: Signals in China of a More Open Economy

The trip was Mr. Xi’s first outside Beijing since becoming party chief on Nov. 15. Mr. Xi visited a private Internet company on Friday and went to Lotus Hill Park on Saturday to lay a wreath at a bronze statue of Deng Xiaoping, the leader who opened the era of economic reforms in 1979, when Shenzhen was designated a special economic zone. Mr. Deng famously later visited the city in 1992 to encourage reviving those economic policies after they had stalled following the violent crackdown on pro-democracy protests in 1989.

“Reform and opening up is a guiding policy that the Communist Party must stick to,” Mr. Xi said, according to Phoenix Television, one of several Hong Kong news organizations that covered the trip. “We must keep to this correct path. We must stay unwavering on the road to a prosperous country and people, and there must be new pioneering.”

In the months before the transition, there were widespread calls, including from people close to Mr. Xi, to adopt more liberal economic policies and even to experiment with greater political openness as a way for the party to maintain its rule. Without much success so far, reformers have long been encouraging the leadership to move toward a more sustainable growth model for China, one that relies more on domestic consumption rather than infrastructure investment and exports, and where state enterprises play less of a role.

Mr. Xi, known as a skillful consensus builder, has kept his ideas carefully veiled throughout his career, but his trip to Shenzhen is the strongest sign yet that he may favor more open policies. In a speech in Beijing on Nov. 29, Mr. Xi spoke of the “Chinese dream” of realizing the nation’s “revival,” which, besides being a call for renewal, also signaled strong nationalist leanings.

Mr. Xi’s father, Xi Zhongxun, was a revered senior official handpicked by Mr. Deng to help shape the new economic policies and oversee the creation of the Shenzhen zone. Mr. Xi’s mother lives in Shenzhen, and he visited her on his trip, according to Hong Kong news reports.

“If he indeed went to Shenzhen, that means he intends to make reform a subject of priority,” said Li Weidong, a liberal political analyst. “That would really be a phenomenon.”

Mr. Li cautioned, though, that the so-called reform policies that followed Mr. Deng’s 1992 southern tour, in his view, “ended up being fake” because China’s boom resulted in widespread corruption and the expansion of state enterprises at the expense of private entrepreneurship.

When Mr. Xi’s predecessor, Hu Jintao, became party chief in 2002, he was seen by many as a potential reformer, but his tenure was marked by conservative policies. For his first trip outside Beijing as party chief, Mr. Hu went in December 2002 to Xibaipo, a hallowed site for the revolution, where he reiterated a speech given by Mao Zedong.

Over the weekend, video footage from Phoenix Television showed a line of minibuses and police cars winding its way through Shenzhen. Mr. Xi and other officials walked outdoors in dark suits. The party’s official news organizations did not immediately report on the trip, but some prominent mainland Chinese news Web sites cited the Hong Kong reports.

Mr. Xi’s early moves as party leader seem aimed at emphasizing national “revival,” a theme he highlighted when he appeared on Nov. 29 with the party’s new seven-man Politburo Standing Committee in a history museum at Tiananmen Square. According to People’s Daily, the party mouthpiece, Mr. Xi stood in front of an exhibition called “The Road to Rejuvenation” and said, “After the 170 or more years of constant struggle since the Opium Wars, the great revival of the Chinese nation enjoys glorious prospects.”

He added: “Now everyone is discussing the Chinese dream, and I believe that realizing the great revival of the Chinese nation is the greatest dream of the Chinese nation in modern times.”

The emphasis on a “Chinese dream” is particular to Mr. Xi, and could prove to be a recurring motif throughout his tenure. The notion of a grand revival — “fu xing” in Mandarin — has been popular with Chinese leaders for at least a century, but Mr. Xi appears to be tapping more deeply into that nationalist vein than his recent predecessors, perhaps recognizing that traditional Communist ideology no longer has popular appeal.

Patrick Zuo contributed research.

Article source: http://www.nytimes.com/2012/12/10/world/asia/chinese-leaders-visit-to-shenzhen-hints-at-reform.html?partner=rss&emc=rss

Dilma Rousseff and Brazil Face Stiff Economic Test

Coming off a year in which it recorded its highest growth in a quarter century, Brazil is faced with rising inflation, an overvalued currency and an industrial sector losing competitiveness to cheap Chinese imports.

But Ms. Rousseff’s promising efforts to fix those problems could be undermined in the coming months as the government embarks on one of its biggest spending sprees in decades.

The leaders of the United States and Europe, struggling to right their listing economies, would count themselves lucky to have problems like Brazil’s. Its economy — driven by soaring prices for commodities, robust Chinese demand for raw materials and a domestic consumption boom spurred on by expanding credit — grew 7.5 percent last year, its highest rate since 1986.

“Like other emerging countries, Brazil has thus far been less affected by the global crisis,” Ms. Rousseff, an economist, said at the United Nations last month. “But we know that our capacity to resist is not unlimited.”

Her strategy so far has been bold. Predicting that the global economy will not improve this year, Brazil’s Central Bank has slashed interest rates, making a risky bet that already high inflation would not soar further. That move, aimed at encouraging growth and reducing the value of the currency, was paired with measures to protect Brazil’s industries from a flood of Asian imports.

That approach has shown early signs of success. The stubbornly high Brazilian real began losing value to the dollar last month, reaching its lowest point since 2008 two weeks ago before recovering somewhat last week.

The shift has been front-page news in Brazil, dampening a buoyancy among Brazilians who felt richer than ever. Even as the overvalued currency slowed industrial production, it fueled consumer spending at home and abroad at a blistering pace.

The average per capita purchases by Brazilians in the United States grew 250 percent between 2003 and 2010. Only the Japanese and the British spend more in the United States than Brazilians, figures from the United States Commerce Department show. The foreign spending, which diverts money that could support Brazilian industry, has alarmed government officials here, who have tried to slow the pace of consumption by imposing restrictions on credit card purchases.

But government spending represents the bigger threat.

Next year, the government will be obligated to meet tens of billions of dollars in promised payments for social welfare programs, minimum wage increases and infrastructure projects for its twin billing on the global stage, the 2014 World Cup and 2016 Olympic Games in Rio de Janeiro.

A 14.7 percent increase in the minimum wage is scheduled to take effect in 2012 at a cost of $13 billion, new low-income housing subsidies will cost $6 billion, and investments for the sporting events are expected to cost at least $4.5 billion, said Luiz Schymura, director of the Brazilian Economic Institute at the Getulio Vargas Foundation in Rio de Janeiro.

Since her inauguration in January, Ms. Rousseff has shown a willingness to take a red pen to fiscal spending. Her government approved $28 billion in budget cuts, privatized airports — a move considered long overdue by economists and many policy makers — and stood up to unions demanding even higher wage increases.

But standing up to the minimum wage or the World Cup may be politically impossible.

“For all her good intentions, the political pressures on her will be enormous,” Dr. Schymura said.

The surge in spending, accompanied by lower interest rates, could produce a cycle of higher inflation, economists fear. Whether the new policies will be enough to revitalize Brazil’s industrial sector remains to be seen. The economy’s growth has slowed this year to about 3.5 percent, economists say, about half that of last year. And the consumption boom is slowing. Housing, grocery and retail stores are all reporting reduced sales, said Alfredo Coutiño, director for Latin America at Moody’s Analytics.

Article source: http://www.nytimes.com/2011/10/09/world/americas/dilma-rousseff-and-brazil-face-stiff-economic-test.html?partner=rss&emc=rss

Sony Swings to Big Loss After Natural Disasters

TOKYO — The March 11 earthquake and tsunami probably pushed Sony to a $3.2 billion loss in the just-ended fiscal year, the electronics and entertainment giant warned Monday, the latest Japanese manufacturer to report a huge economic hit from the disaster.

The annual loss would be Sony’s biggest in 16 years, a major setback to chief executive Howard Stringer’s drive to turn around the once-legendary maker of PlayStation video game consoles, Bravia flat-panel TVs and Vaio laptops.

Sony suffered damage at nine plants in northeastern Japan in the quake and tsunami, which also disrupted supply chains and put a damper on domestic consumption. A series of hacker attacks on Sony’s online services, which forced the company to shut down its PlayStation Network, has also clouded the outlook for the Japanese manufacturer.

After assessing the damage, Sony said Monday in a preliminary earnings statement that it expected to report a net loss of 260 billion yen ($3.2 billion) for the year ended March 31, 2011, from a previous forecast for a profit of 70 billion yen. The company reports full earnings on Thursday.

Much of the net loss came from a 360 billion yen provision for deferred tax assets the company is making in light of the uncertain outlook for future earnings. It left its forecast for annual operating profit unchanged at 200 billion yen ($2.4 billion).

For the current fiscal year ending March 2012, Sony said it expected operating profit to stay around 200 billion yen. This took into account the lingering effects of the quake, which will likely shave 150 billion yen off operating profit, Sony said.

Known costs related to the hacker attacks have so far reached about 14 billion yen, Sony estimated. Sony has said it hopes to get all affected networks up and running by the end of May.

Sales for the current year would likely come to about 7.18 trillion yen, down slightly from 7.20 trillion yen, it said. Sony said it expected net profit to turn positive this year, though it did not give an estimate.

Sony’s earthquake woes have come at a time the company is struggling to reinvent itself after being usurped in TVs and digital music players. Even its stronghold in the video gaming business is succumbing to cheaper and nimbler rivals. Sony has now lost money three years in a row.

Just as damaging have been the hacker attacks that forced Sony to shut down its PlayStation Network for almost a month. Sony has acknowledged that personal information from over 100 million accounts were compromised in the attacks.

In an interview last month, Mr. Stringer defended Sony’s response to the attacks, which some critics have said was too slow.

Sony is the latest Japanese manufacturer to report substantially lower earnings following the magnitude 9 earthquake in March, which devastated much of Japan’s northeastern coast.

Earlier this month, Toyota, whose operations have been severely disrupted since the disaster, said that profit fell 77 percent for the quarter ended March 31. Toyota, which is likely to lose its crown as the world’s biggest automaker this year, said it could not forecast earnings or production for the year ahead because of uncertainty about its ability to resume normal output levels.

Article source: http://feeds.nytimes.com/click.phdo?i=ae0ac071bea115c55684b6c3e7ea3028