Friday July 03, 2009

BEIJING: Pakistan and China would intensify their efforts to increase bilateral trade through land route, Ambassador Masood Khan said on Thursday. Ambassador Khan who led a delegation to the fifth Central and South Asian Commodity Fair organised by Kashgar prefecture told APP after three day visit to Kashgar.

He said that two more delegations from Pakistan participated in the fair. Syed Ahmed Hussain Shah, NWFP Industries Minister, and Babar Yaqoub Fateh Muhammad, Chief Secretary Northern Areas, led these delegations in the trade fair, which was largely attended by diplomats and delegations of several Central Asian and South Asian countries.

Besides, official delegations, hundreds of Pakistani businessmen participated in the seminar. There were about more than 80 Pakistani exhibitors who established their stalls in the international fair. During his visit, Ambassador Masood Khan said he held in-depth talks with Commissioner of Kashgar Akbar Gopur to explore ways and means to strengthen economic and trade ties between Xinjiang and Northern Areas of Pakistan.

"Border trade right now constitutes merely 5 per cent of the overall trade. Both sides are keen to enhance overall trade and increase the volume of bilateral trade which has immense potential", Ambassador Khan observed.

The border trade takes place through Karakoram Highway (KKH) also known as Pakistan-China friendship highway. Extensive work is being done to repair and upgrade the KKH of the Pakistani side. The repair and upgradation is likely to be completed by 2011-2012, Khan said. "With upgradation of KKH, the volume of trade would increase, the speed of transportation would pick up", the Pakistani Ambassador said.

Ambassador Masood Khan visited Pakistani stalls, mingled with Pakistani businessmen and talked about trade potential between Pakistan and China and how it can further be enhanced.

He also visited Pakistan trade house in Kashgar and addressed a large gathering of Pakistanis. The gathering was hosted by Zahid Traders, a leading Pakistani enterprise doing business in Pakistan, Xinjiang, and Central Asia. Kashgar government also organised a culture evening during, which a popular Xinjiang Singer Muhammad Amin sang Pakistan's national song "Ye mera Pakistan he; ye tera Pakistan he", this made all Pakistanis proud and several of them rushed to the stage to sing and dance with Chinese singer.


(APP)

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Thursday, June 18, 2009

Asian stocks declined, dragging the MSCI Asia Pacific Index to a three-week low, as concerns about the strength of the U.S. economy dented prospects for export earnings.

Honda Motor Co., which gets more than half its sales in North America, dropped 3.6 percent as the dollar traded near a two-week low against the yen. Mitsubishi UFJ Financial Group Inc. sank 3.3 percent, pacing declines among banks, after Standard & Poor’s cut credit ratings on 18 U.S. lenders. Rio Tinto Group, the world’s third-largest mining company, slumped 8.9 percent as it began a $15.2 billion share sale.

The MSCI Asia Pacific Index lost 1.4 percent to 100.62 as of 2:43 p.m. in Tokyo, set to close at its lowest since May 28. A 43 percent rally from a five-year low on March 9 has taken valuations of the gauge’s stocks to the highest since September.

“Investors are using the weaker dollar as an excuse to take profit as valuations look stretched following the recent rally,” said Michiya Tomita, who helps manage $51 billion at Mitsubishi UFS Asset Management Co. in Hong Kong. “Any correction will be short-lived as long-term fund managers are still sitting on the sidelines with their cash.”

Japan’s Nikkei 225 Stock Average fell 1.7 percent to 9,671.62 paced by Sekisui House Ltd. after the homebuilder was downgraded at Credit Suisse Group AG. Hong Kong’s Hang Seng Index sank 2 percent.

The Shanghai Composite Index gained 1.4 percent, led by China Shenhua Energy Co., which climbed 4.1 percent as the World Bank raised its growth forecast for the country’s economy.

Sweeping Overhaul

Futures on the Standard & Poor’s 500 Index gained 0.3 percent. The gauge dropped 0.1 percent yesterday as President Barack Obama proposed the most sweeping overhaul of the U.S. financial regulatory system in 75 years. The plan includes an agency for monitoring consumer financial products and bringing hedge and private equity funds under federal scrutiny.

The dollar weakened against currencies in Japan, Australia, Singapore and Malaysia before a U.S. report that economists predict will show the Philadelphia region’s manufacturing industry shrank for a ninth month. Mortgage applications dropped 16 percent last week to the lowest level since November, the Mortgage Bankers Association said yesterday.

Honda declined 3.6 percent to 2,580 yen while Sony Corp., maker of the PlayStation 3 game machine, sank 3.7 percent to 2,460 yen as the yen strengthened to as much as 95.52 per dollar, a level not seen since June 3. Makers of electronics and cars accounted for 34 percent of the Topix Index’s 1.6 percent drop today, Bloomberg data show.


(Bloomberg)

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Thursday, June 18, 2009

The World Bank raised its growth forecast for China this year and advised policy makers to delay until 2010 any additional stimulus plan to boost the world’s third-largest economy.

China’s economy will expand 7.2 percent in 2009 from a year earlier, up from a 6.5 percent forecast in March, the Washington-based lender said in a quarterly report released today in Beijing. Stocks gained after the announcement.

The World Bank joins Goldman Sachs Group Inc., Morgan Stanley and UBS AG. in raising growth forecasts this year after a 4 trillion yuan ($585 billion) stimulus package triggered record loans and surging investment. The lender said it’s “too early” to say there is a sustained recovery, citing the economy’s dependence on government spending and echoing a State Council caution yesterday against excessive optimism.

It’s “not necessary, and probably not appropriate” for China to add fiscal stimulus this year, the World Bank said. Consumption is likely to slow, pushing down wages and employment, and the nation should retain room for stimulus in 2010, in case the global economy takes a turn for the worse, the bank said.

The Shanghai Composite Index rose 0.9 percent as of the 11:30 a.m. local time break in trading. Industrial & Commercial Bank of China Ltd. climbed 2 percent.

‘Critical’ Phase

Gross domestic product grew 6.1 percent in the first quarter this year from a year earlier, the least since 1999, as exports slid because of the global recession. The economy is in a “critical” phase, the State Council said yesterday, warning that a recovery is not yet on solid foundations.

“Overall growth prospects have improved somewhat, compared to three months ago, but with little carry-over into 2010,” the World Bank said. “The massive monetary impulse of the first five months will support economic growth in the coming quarters.”

Goldman Sachs forecasts an 8.3 percent expansion this year, Morgan Stanley estimates 7 percent and UBS predicts growth of 7.5 percent.

“I don’t think China will see a V-shaped recovery back to high single-digit growth rates,” said Louis Kuijs, the World Bank’s senior economist for China in Beijing. “The impact of the policy stimulus next year can realistically not be as large as it has been this year.”


(Bloomberg)

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Thursday, June 18, 2009

TOKYO: The euro rose on Wednesday as investors bought it back after steep falls against the dollar and yen this week, but the market struggled for clear direction as it tried to decide if a dollar recovery had run its course. The dollar has fallen against major currencies such as the euro and Australian dollar this year, with investors unwinding safe-haven dollar positions.

The worst of the economic crisis faded and as questions arose over its suitability as the world's reserve currency. Both it and the yen have clawed back some lost ground this month as investors have paused to assess whether rallies in riskier assets including shares have got ahead of themselves. But with a question over its reserve currency status resurfacing on Tuesday, analysts said the market was not sure which direction to head.

"The market seems to be bewildered, facing lots of different factors," said Kazuyuki Kato, treasury department manager at Mizuho Trust and Banking. "And investors are shying away from taking risks after stocks entered a correction phase as optimism for the economy had gone too far," he said.

The euro edged up 0.2 percent from late US levels to $1.3860 after earlier veering towards a one-month low of $1.3747 set on Tuesday. It has gained 11 percent on the dollar since March but is below its 2009 high of $1.4339 set this month.

The greenback fell on Tuesday after Russia suggested ahead of a meeting with leaders of Brazil, India and China there was a need for a reserve currency other than the dollar. In the event, the four leaders avoided the reserve status issue in their statement after the summit, causing the dollar selling to peter out.

"The global financial markets are in correction mode," Yamamoto said. Traders and analysts said currency flows seemed to be driven by short-term players, making the market choppy, but some saw the dollar and the yen as having room to strengthen a bit more.

"The dollar can continue a bit higher but overall the medium-term trend lower is still intact," a senior trader at a European bank in Hong Kong said. The yen reversed early gains after driving the dollar to a two-week low below 96.00 yen and the Australian dollar to a three-week low below 76.00 yen. The dollar rose 0.2 percent to 96.60 and the Aussie dollar climbed 0.5 percent to 76.80 yen.

Traders said talk that Japanese investors may repatriate funds from euro zone bond redemptions had helped push the euro down versus the yen this week, with 15.6 billion euros ($21.6 billion) of redemptions and 2.1 billion euros of coupon payments falling due. The euro has fallen 2.5 percent against the yen since Friday but short-covering pushed it up 0.6 percent to 134.16 yen.

(Reuters)

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Thursday, June 18, 2009

NEW YORK: The dollar fell across the board on Tuesday, pressured by comments from Russia suggesting a need for a global reserve currency other than the greenback. Safe-haven demand for the dollar also fell after data showed a rebound in US housing starts and an unexpectedly small rise in producer prices.

Investors snapped up higher-yielding currencies such as the Australian dollar. But Russia's dollar-negative comments dominated the market, a day after the country's finance minister backed the greenback's role as the world's reserve currency.

Russian President Dmitry Medvedev said on Tuesday that existing reserve currencies, including the dollar, have not performed their function, and a new supranational currency was in the making. "Clearly the largest holders of US Treasuries are increasingly nervous about the fiscal stability of the US going forward," said Omer Esiner, senior currency analyst at Travelex Global Business Payments in Washington. "That said, I don't think it's to anybody's interest to see a run on the dollar."

In late New York trading, the euro was 0.3 percent higher at $1.3839 on electronic trading platform EBS. The euro had gained after German think-tank ZEW said its economic sentiment index surged to 44.8 in June from 31.1 in May, exceeding expectations for a reading of 35.0 and suggesting market optimism for a recovery this year.

The dollar fell more than 1 percent against the yen to 96.43, its largest one-day fall in more than two weeks. The ICE Futures' dollar index, which tracks the value of the greenback against a basket of currencies, dropped 0.5 percent to 80.737.

The summit of Brazil, Russia, India and China, known as the BRIC group, steered clear of any direct assault on the US dollar's dominance. However, in a joint communique the leaders of the world's biggest emerging economies called for "a stable, predictable and more diversified international monetary system."

A Russian delegation source also told Reuters that BRIC finance ministries and central banks were tasked to work on reserve currencies proposals. Ronald Simpson, managing director of global currency analysis at Action Economics in Tampa, Florida, said the communique appears to "have taken some wind out of the dollar's sails for now."

Despite the lack of direct reference to the dollar's future role as a global reserve currency, Simpson said BRIC's demand for a more diversified currency system is "not exactly a subtle hint about the dollar" and suggests that over time, countries like BRIC may "start to undermine the importance of the dollar's global standing." "It's not in anybody's best interest to bail out of the dollar right now ... but the kind of shift in global thinking has weighed the dollar down," he said.

(Reuters)

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Thursday, June 18, 2009

BERLIN: The head of the World Trade Organisation is hopeful long-running trade talks can be wrapped up next year. Trade ministers came close to reaching a deal on the Doha round of talks in July 2008, but they collapsed because of a dispute between Washington and emerging economies, spearheaded by India, over proposals to help farmers in poor nations.

The Cairns Group, 19 nations accounting for more than 25 percent of the world's agricultural exports, said last week that trade officials from the United States, Europe and India had shown fresh resolve to conclude the Doha talks launched in 2001.

"I am optimistic that Doha will be concluded in 2010," Pascal Lamy, the WTO's director general, told Germany's Sueddeutsche Zeitung. "The developing countries are pressing for that. But so far there have only been political declarations of intent. Whether the negotiations really progress depends largely on the US Congress," he added. The Doha deal is estimated to be worth $150 billion for the world economy and considered even more important now that the world faces its worst economic crisis in decades.


(Reuters)

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Thursday, June 18, 2009

TOKYO: Japan's economy hit bottom in the January-March quarter, Finance Minister Kaoru Yosano said Wednesday, as the central bank also slightly upgraded its views on the economy. "We can firmly presume that the economy hit the bottom," Yosano told reporters, after the government upgraded its monthly economic assessment saying there were signs of recovery.

"But there are things that Japan alone cannot control. Naturally downside risks exist, depending on the trend of the world economy," Yosano said, adding that the first quarter was "clearly the bottom." His comment came as the Cabinet Office lifted its assessment for the second straight month in June, saying the economy was expected to pick up soon as exports and industrial production improve. "While the economy is in a difficult situation, signs of a pickup are seen in some areas," the report said in its Japanese-language edition.

Many private economists have already said the world's number two economy had probably hit the bottom and was slowly climbing out of its worst recession since World War II. The government report also said Tokyo hoped that its stimulus packages as well as improvement overseas would help put Japan on a firmer path to recovery. However, the report also cited risk factors including worsening housing starts, falling capital expenditure and deteriorating employment.

It also said that weak employment and private spending posed difficulties going ahead. The government's view was largely echoed by the Bank of Japan, which also upgraded its evaluation, saying in its June report that the economy had "begun to stop worsening." Bank of Japan governor Masaaki Shirakawa said Tuesday that the Japanese economy was in the process of hitting the bottom thanks to improving exports and production as well as increased public spending. Looking forward, Shirakawa said uncertainty remained but the economy was likely to pick up.

(BRecorder)

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Tuesday June 16, 2009

KARACHI: The currency market on Monday welcomed the new budget as the rupee depicted firm trend against both the dollar and the euro, dealers said. The rupee gained 10 paisa in relation to dollar on the interbank market for buying and selling at 80.95 and 81.00, they said.

Explaining the impact of new measures of the 2009-10 budget on money circulation, they said that withholding tax on commercial imports has been raised to 4 percent from 2 percent. This factor may be a hurdle in achieving the government's claim of bringing down inflation rate and the interest rate to single digit.

It was announced in the budget speech that inflation decreased from 25 percent to 14 percent and present interest rate is 14 percent. The State Bank of Pakistan (SBP) cut its discount rate on 20 April, 2009, the key policy rate by 100 basis points to 14 percent for the rest of the fiscal year ending on June 30, On that occasion, the State Bank of Pakistan Governor Salim Raza had said that inflation was expected to come down to 8 percent by next year.

In the first Asian trade, the dollar rose broadly as investors took profits on other major currencies, which had climbed to multi-month highs on hopes for a recovery in the global economy.

Some traders said a cautious tone from policy makers who gathered at a Group of Eight finance ministers meeting on the weekend helped temper recent optimism about the economy, encouraging bets in riskier assets to be cut further. Commodity currencies, including the Canadian and Australian dollars, also fell after sharp gains this week in tandem with a drop in oil prices, and as G8 finance ministers prepared to meet in Italy.


(BRecorder)

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Tuesday, June 16, 2009

TOKYO: The dollar and yen rose against the euro in Asia on Tuesday on renewed risk aversion after weak US and European data raised fresh doubts over the pace of global economic recovery, dealers said.

The euro dropped to 1.3769 dollars in Tokyo morning trade from 1.3793 in New York late Monday, and to 133.93 yen from 134.92. The dollar fell to 97.30 yen from 97.83. The greenback and yen gained ground following the release of data from Western economies which raised "doubts over the speed and timing of the global recovery," NAB Capital strategists wrote in a note.

The dollar and yen have been the preferred safe-haven currencies since last year's market meltdown, although the greenback has recently gained more on hopes America will make a quick exit from its recession.

The euro has meanwhile taken a beating due to weak employment data in the eurozone and worries that the region's crisis-hit banks will suffer bigger-than-expected write-downs, dealers said.

"Risk appetite is retreating. Eurozone risks remain high," Societe Generale forex chief Yuji Saito told Dow Jones Newswires.

The European Central Bank "spooked investors with its estimates of credit crisis related write-downs," wrote NAB Capital analysts.

The ECB estimates lenders' potential write-downs related to toxic assets and soured loans to total 649 billion dollars from the 2007-2010 period, much more than the 366 billion dollars forecast previously.

The International Monetary Fund has forecast the full amount could come to 900 billion euros.

The 16-nation eurozone is in the midst of a recession which is the worst for some members since World War II. Employment in the region fell 1.2 percent in the first quarter of 2009 from a year earlier, data released Monday showed.

Investors will keep a close eye on the release later Tuesday of Germany's ZEW business sentiment survey, which measures the confidence of financial market players.

Meanwhile US data for June undermined recent optimism for "green shoots" of recovery in the world's biggest economy.

The NAHB housing index was below market expectations while factory activity in the New York area fell at a faster pace than in May, according to the Federal Reserve Bank of New York's Empire Manufacturing Survey.


(AFP)

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Tuesday, June 16, 2009

SINGAPORE: Oil prices fell below 70 dollars in Asian trade Tuesday, mirroring a dive on Wall Street amid a strengthening US dollar, but traders were closely watching developments in Iran, analysts said.

New York's main futures contract, light sweet crude for delivery in July, shed 69 cents to 69.93 dollars a barrel.

Brent North Sea crude for August delivery eased 66 cents to 69.58 dollars. The July contract expired on Monday.

A strengthening greenback as well as losses on Wall Street sparked the pullback in oil, analysts said.

"The firmer tone of the US dollar and declines on US equity markets were negatives for the oil price," the Commonwealth Bank of Australia said in its daily commodities report.

A stronger dollar makes crude more expensive for buyers holding weaker currencies and that in turn tends to dampen demand and push the market lower.

The US currency particularly rose against the euro Monday following a spike in eurozone job losses and fresh concerns the credit crunch could stifle tentative signs of recovery there.

Traders are also "likely monitoring political developments in Iran," which is a member of the Organization of Petroleum Exporting Countries (Opec), the report added, referring to violent post-election protests in Tehran.

Iran is traditionally a price hawk among Opec members and is usually the leading advocate of a cut in production.

"The unrest if it continues will attract the attention of oil traders," said Phil Flynn of Alaron Trading.


(AFP)

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Monday, June 15, 2009

KARACHI: The Indian Tea Board plans to open an Indian tea promotion centre in Pakistan and Egypt with a view to increasing its market share in both the countries.

Sources said on Friday that India is striving hard to boost its tea exports in both prominent CTC tea consuming countries since the disintegration of the Soviet Union.

In the past, India’s largest chunk of tea production was imported by the Soviet Union. However, after losing this biggest market, Indian tea producers are looking for alternate markets such as Egypt, Pakistan and Iran besides UK.

The Pakistani consumers had declined the Indian CTC tea in the first place due to its poor quality. In order to cope with the situation, the delegations of Indian tea board and the Indian tea producers association have visited Pakistan twice lobbying among the tea packers, blenders and local importers.

The Pakistan tea association has however suggested to the Indian exporters to influence the tea packers as they could increase Indian tea component in their blended tea.

Courtesy: Finance.Kalpoint.Com

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Monday, June 15, 2009

VIENNA: The OPEC oil producers’ cartel said the worst of the impact from the economic crisis had passed for the oil markets, as it fractionally reduced its demand estimate for 2009 on Friday.

“In light of the considerable challenges the world economy and commodity markets, particularly the oil market faces, have undergone, the worst appears to be behind us,” the Organization of Petroleum Exporting Countries wrote in its latest monthly report.

“As the world economy stabilises, the world oil demand appears to be settling down,” it said. “Industrial production activities are steadying and in some parts of the world and have even improved slightly. This should stop the bleeding in oil demand. There are no significant downward revisions to our previous oil demand forecasts.”

OPEC estimated that demand would contract by 1.62 million barrels per day (bpd) or 1.89 per cent in 2009, only a marginal downward revision in demand from its earlier forecast.

In its previous monthly bulletin released in May, OPEC had been penciling in a contraction of 1.57 million bpd or 1.83 per cent for 2009. Nevertheless, uncertainties remained, OPEC cautioned.

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Monday, June 15, 2009

CAPE TOWN: Companies from the United States and the United Arab Emirates are interested in establishing large farms in Zambia to grow sugar and grains, the southern African country’s agriculture minister said on Friday.

Although a growing number of such land investments elsewhere have proved controversial, Agriculture Minister Brian Chituwo told Reuters Zambia had so much land available there would not be opposition.

He said a US company had offered to invest as much as $200 million in sugar cane production to make ethanol, involving small-scale farmers, but was waiting for proper policies to be put in place.

Chituwo added Zambia had 115,000 hectares of prime land suitable for sugar cane production.

He said a Dubai company was keen to grow rice or wheat.

“They are looking at 200,000 hectares, but we have 900,000 hectares of prime land available so the issue of land really should not be a problem. It is just a question of the mechanics of implementing this,” he told Reuters on the sidelines of the World Economic Forum on Africa in Cape Town. He said Zambia’s lack of exchange controls and the fact that it had lots of land available made it an ideal place for agricultural investment.

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Friday, June 12, 2009

European stocks drifted between gains and losses as a rally in health-care shares offset concern the three-month surge by the Dow Jones Stoxx 600 Index has outpaced prospects for earnings. Asian shares climbed for a third straight day.

GlaxoSmithKline Plc led pharmaceutical stocks higher as the World Health Organization declared the first influenza pandemic since 1968. BT Group Plc increased 5.2 percent after Bank of America Corp. advised buying the shares. Total SA led a decline by commodity producers as oil and base metals slid. Li & Fung Ltd., the biggest supplier of clothes and toys to Wal-Mart Stores Inc., rose 6.2 percent on higher retail sales in China.

Europe’s Stoxx 600 slid 0.1 percent to 214.6 at 11:26 a.m. in London, trimming its fourth straight weekly gain to 1.9 percent. The gauge has surged 36 percent since March 9 on speculation the $12.8 trillion pledged by the U.S. government and Federal Reserve will end the first global recession since World War II.

“There are lots of people who have missed the upturn in equities and there is the end of the quarter looming so I think we’ll see some buying there,” Christian Gattiker, head of research and strategy at Bank Julius Baer & Co. in Zurich, said in a Bloomberg Television interview. We are likely to see “some more difficult markets during the summer lull in July.”

(Bloomberg)

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Friday, June 12, 2009

The International Monetary Fund has revised its 2010 growth forecast sharply upwards, a source said on Thursday, and surging Chinese investment in May fuelled hopes of a global recovery. But underscoring the unclear outlook, World Bank President Robert Zoellick said the global economy is set to contract by close to 3 percent this year, worse than the previous estimate of a decline of 1.75 percent.

-- China investment surges, adding to recovery hopes

-- Japan Q1 GDP record low, slow rebound seen

"Although growth is expected to revive during the course of 2010, the pace of the recovery is uncertain and the poor in many developing countries will continue to be buffeted by the aftershocks," Zoellick said ahead of the Group of Eight finance ministers meeting in Italy. The IMF has raised global growth estimates for 2010 to 2.4 percent from 1.9 percent in April, a G8 source who has seen the latest figures said.

"The estimate has improved thanks to the impact of stimulus measures taken in recent months," said the source, who had access to an IMF briefing note, containing the figures, prepared for the G8 meeting this weekend. Global data has given increasing signals of a rebound from the deepest recession in six decades, driving stock markets sharply higher from a March trough.

However, financial markets remain concerned that huge government spending and central bank cash injections, led by the United States but mirrored in Europe and Japan, will spark inflation and undercut any budding rebound. Analysts also expect job losses to remain high even as the economy begins to recover, as companies remain wary of hiring.

A record slump in Japan's first quarter GDP also highlighted expectations that any rebound would be slow, and European officials said jobs would lag any return to growth. "The (global) economy should start to turn into positive territory somewhere between the end of this year and the middle of next year," European Central Bank policymaker Christian Noyer told Hong Kong businessmen on Thursday.

China has sought to cushion the blow from falling exports with a 4 trillion yuan ($585 billion) economic stimulus plan. Data showed annual growth of fixed asset investment in Chinese urban areas accelerated to 32.9 percent in the January-May period from 30.5 percent in the first four months of the year, suggesting the stimulus is working.

Underpinned by this optimism, commodity-related stocks in Asia rose for a third straight day while oil prices extended gains to seven-month highs. The International Energy Agency upgraded its 2009 world oil demand forecast for the first time in almost a year, saying 2009 demand would fall to 83.3 million barrels per day, a less steep decline than previously forecast.

China's need for government pump-priming was underlined by May customs data that showed exports fell 26.4 percent on the year, while imports fell 25.2 percent, resulting in a trade surplus of $13.4 billion, compared with $13.1 billion in April and $18.6 billion in March.

Meanwhile, Japan's economy contracted a revised 3.8 percent in the first three months of the year, less than the initial 4.0 percent estimate, but still the fastest pace since World War Two. Weak capital spending and personal consumption are expected to remain a drag.



Courtesy: BRecorder

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Friday, June 12, 2009

KARACHI : All-round gains were seen on the currency market on Thursday amid easy supply of dollars in process of trading, dealers said. The rupee on the interbank market, managed to gain 25 paisa against dollar for buying and selling at 80.80 and 80.85, they said.

Marketmen said that fluctuations in the rupee versus dollar is totally depending on the demand and supply factor. They also said that the rupee may not face sharp fluctuations till the end of the final session of the out-going fiscal year 2008-09. In the fourth session of the Asian trade dollar fell against a basket of currencies, paring some gains made after the benchmark US Treasury yield hit its highest point in eight months the previous day.


Courtesy: BRecorder

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Friday, June 12, 2009

LAHORE: The Lahore Chamber of Commerce and Industry (LCCI) while expressing grave concern over sharp decline in manufacturing sector growth, has urged the government to take immediate and urgent measures to stabilise the economy.

The decline in manufacturing sector, particularly in the large scale manufacturing sector that has shown a negative 7.7 per cent growth was an eye opener and there was a dire need to identify the root cause of this meltdown, said LCCI President Mian Muzaffar Ali in a statement issued here on Thursday.

He said that the most worrying factor in the overall scenario is that the growth rate of 2 per cent was the lowest in the region: Bangladesh had a growth rate of 5 percent, India 4.5 percent and even Sri Lanka experienced a growth rate of 2.2 per cent.

The LCCI chief said that the Lahore Chamber of Commerce and Industry had repeatedly pointed out that acute shortage of electricity, deteriorating law and order situation, and high mark-up rates were heavily denting the overall economic activity in the country and there was a dire need to take corrective measures. But the situation turned bad to worse for the want of any well-directed steps, he added.

He said that there was nothing wrong with the policies but the poor level of implementation deteriorated the industrial production. "Had a little attention been given towards the proper implementation of policies the situation would have not been so bad", he said adding that the performance of agriculture sector was, however, appreciable and needs to be maintained to wear off the negative impact of the industrial degradation.

Mian Muzaffar said that no one could challenge the multiplicity of factors that have negatively impacted on the manufacturing sector during the year. Major contributors to this decline were: automobile group (negative 39 per cent) followed by electrical (negative 31.3 percent), petroleum (negative 9.2 percent), food, beverage and tobacco (negative 10.5 percent), steel products (negative 5.62 percent), tyres and tubes (negative 4.0 percent) and textile (negative 0.73 percent).

The textile sector most affected by the global recession witnessed a decline of 7.6 percent in its export performance with cotton yarn's export performance declining by 15.5 percent, bed wear declining by 11.7 percent and readymade garments by 13.1 percent, he added.

Courtesy: BRecorder

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Friday, June 12, 2009

ISLAMABAD: Advisor to Prime Minister on Finance Shaukat Tarin said on Thursday that finance and insurance sector registered a negative growth of 1.2 percent in ongoing fiscal year ie 2008-09 whereas real GDP growth stood at 2 percent against 4.1 percent last year.

While launching Economic Survey 2008-09, Tarin stated that the performance of finance and insurance sector shows that Pakistan's financial sector is integrated in the world economy and is feeling the heat of the crisis plaguing international financial markets.

He said that total investment declined from 22.5 percent of GDP in 2006-07 to 19.7 percent of GDP in 2008-09. Fixed investment fell to 18.1 percent of GDP from 20.4 percent last year. Private sector investment was decelerating persistently since 2004-05 and its ratio to GDP has declined from 15.7 percent in 2004-05 to 13.2 percent in 2008-09.

Public sector investment to GDP ratio, which has been depicting a consistent increase from 4 percent in 2002-03 to 5.6 percent in 2006-07, declined to 4.9 percent in 2008-09. The overall foreign investment during the first 10 months (July-April) of the current fiscal year declined by 42.7 percent and stood at $2.2 billion against $3.9 billion in the comparable period of last year, the advisor said.

He said that foreign direct investment (private) showed some resilience and stood at $3205.4 million during the first 10 months of the current fiscal year against $3719.1 million in the same period last year thereby showing a decline of 13.8 percent. Private portfolio investment on the other hand showed a net outflow of $451.5 million against a net inflow of $98.9 million during the comparable period of last year.

Agriculture sector depicted a stellar growth of 4.7 percent as compared to 1.1 percent witnessed last year. Major crops registered an impressive growth of 7.7 percent against a negative growth of 6.4 percent last year and the livestock sector grew by 3.7 percent against 4.2 percent last year.

The advisor said that the output in the manufacturing sector contracted by 3.3 percent in 2008-09 as compared to expansion of 4.8 percent last year. Small and medium manufacturing sector maintained its healthy growth of last year at 7.5 percent. Large-scale manufacturing depicted contraction of 7.7 percent against expansion of 4 percent during last year.

The massive contraction is because of acute energy outages, a weak security environment and political disruption in March 2009. He said that the services sector grew by 3.6 percent against the target of 6.1 percent and value added in the wholesale and retail trade sector grew at 3.1 percent as compared to 5.3 percent last year. Finance and insurance sector registered negative growth of 1.2 percent in 2008-09.

He noted that the performance of this sector shows that Pakistan's financial sector is integrated in the world economy and is feeling the heat of the crisis plaguing international financial markets. The transport, storage and communication sub-sector depicted a sharp deceleration in growth to 2.9 percent in 2008-09 as compared to 5.7 percent last year.

He said that Pakistan's per capita real income has risen by 2.5 percent in 2008-09 as against 3.4 percent last year. The per capita income in dollar term rose from $1042 last year to $1046 in 2008-09, thereby showing marginal increase of 0.3 percent.

Real private consumption rose by 5.2 percent against negative growth of 1.3 percent attained last year. However, gross fixed capital formation could not maintain its strong growth momentum and real fixed investment growth contracted by 6.9 percent against the expansion of 3.8 percent in the last fiscal year. Large-scale manufacturing witnessed an across-the-board decline of 7.7 percent during ongoing fiscal year against the growth rate of 5.2 percent last year.

Severe energy shortages, deterioration in domestic law and order situation, sharp depreciation in rupee vis-à-vis US dollar and most importantly, weak external demand on the back of global recession coupled with slowdown in domestic demand are responsible factors for sluggish performance of manufacturing sector.

Interest payments surpassed their budgeted level by a significant margin. A sum of Rs 557 billion was budgeted for interest payments in 2008-09. The year is likely to end with interest payments of Rs 618 billion which are higher by Rs 61 billion over budgeted amount.

He said that government borrowing from the central bank has been dampened since December 2008 in line with the target set under the macroeconomic stabilisation programme as part of the IMF Stand-By Arrangement. The government budgetary borrowing from the banking system decreased by Rs 339.9 billion during July-May FY 09 against an increase of Rs 360.4 billion in the corresponding period of FY08.

Credit to private sector grew by Rs 21.8 billion during July-May in ongoing fiscal year as compared to Rs 369.8 billion during the corresponding period last year. Foreign portfolio investment stood at a negative $418.4 million during first nine months of 2008-09.Dismal performance owing to a confluence of factors was exhibited by different sectors of the economy and the dull indicators left a weighty impact on the stock market activity during 2008-09.

He said that the inflation rate as measured by the changes in Consumer Price Index (CPI) stood at 22.3 percent during the first 10 months (July-April) of the current fiscal year ie 2008-09, against 10.3 percent in the comparable period of last year. The food inflation is estimated at 26.6 percent and non-food 19.0 percent, against 15.0 percent and 6.8 percent in the corresponding period of last year.

The increase in inflation rate during the current 2008-09 is attributable to the increase in food price inflation which has been due to increase in prices of wheat, wheat flour, sugar, milk, poultry, meat, fresh vegetables and fruits. Services account deficit shrank by 41.3 percent during July-April 2008-09 to reach $3. billion and financial account contracts from $6,224 million to $3,476 million during July-April against corresponding period last year.

Workers remittances amounted to $6355.6 million in July-April against $5319.1 in corresponding period last year, thereby showing an increase of 19.5 percent. Pakistan's total liquid foreign exchange reserves amounted to $11.6 billion by the end of May 2009.Of which, reserves held by State Bank of Pakistan stood at $8.28 billion and banks at 3.32 billion, the advisor said.

Courtesy: BRecorder

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Thursday, June 11, 2009


Japan’s economy shrank less than the government initially estimated as business investment and inventories fell at a slower pace.

Gross domestic product shrank at a record 14.2 percent annual pace in the three months ended March 31, less than the 15.2 percent reported last month, the Cabinet Office said today in Tokyo. The median forecast of 23 economists surveyed by Bloomberg News was for a 15 percent contraction.

The decline may represent the low point for an economy forecast to expand this quarter as demand from China helps stabilize exports and leaner inventories allow manufacturers to increase output. Still, with factories sitting idle and profits falling, companies are slashing investment and jobs, casting doubt on whether the revival will last.

“Today’s revised report confirms that the first quarter was disastrous, but the worst for the economy has already passed,” said Junko Nishioka, a senior economist at RBS Securities Japan Ltd. in Tokyo. “But a rebound doesn’t guarantee that Japan’s economy will regain momentum.”

The yen traded at 98.03 per dollar at 10:50 a.m. in Tokyo from 98.20 before the report was published. The Nikkei 225 Stock Average fell 0.3 percent to 9,958.98 after touching 10,000 for the first time in eight months. The gauge has climbed 42 percent since tumbling to a 26-year low on March 10.

Worst Contraction

Fourth-quarter GDP was revised to a 13.5 percent decline from 14.4 percent, today’s report showed. That’s still the worst contraction since the government began keeping records in 1955.

Capital spending fell 8.9 percent compared with a preliminary 10.4 percent, while inventories shaved 0.2 percentage point from GDP, compared with an earlier estimate of 0.3 point. Exports fell 26 percent, unchanged from the initial reading.

The recession has shown signs of easing since then. Japan’s manufacturers have benefited from revived demand in China, where the government is spending $586 billion on roads, hospitals and housing. Exports and factory production increased in March and April on a month-on-month basis.

Japanese Prime Minister Taro Aso’s record stimulus spending that includes loan guarantees for smaller businesses, cash handouts to households and incentives for buying cars and appliances are starting to work.


Courtesy: Bloomberg

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Thursday, June 11, 2009


The fall in Chinese exports and imports accelerated in May, dashing hopes that a collapse in the country’s external trade flows had bottomed out and pointing to the continued weakness in global demand.

Exports dropped 26.4 per cent from a year earlier, compared with a 22.6 per cent fall in April. This marked the seventh consecutive month of decline. Imports fell 25.2 per cent, following a 23 per cent decline a month earlier. China’s trade surplus rose slightly from Rmb13.1bn in April to Rmb13.4bn in May.

“The global economic situation has hit a bottom but it will still take time to recover. I expect it to take one to three years,” said Hu Yifan, chief economist (global) at CITIC Securities in Hong Kong.

“A technical rebound [in exports] may happen in November but a demand-driven rebound will not come in the short term.”

Beijing has announced a Rmb4,000 ($586bn) stimulus plan after its exports-powered economy was hit hard by weak global demand.

The stimulus packages have spurred investment in government-supported sectors such as transport infrastructure, the power grid and housing, as reflected in a 38.7 per cent rise in fixed asset investment in May from a year earlier.

This marked a larger increase than in April, when FAI rose 33.9 per cent. For the first five months of this year, investments increased 32.9 per cent from the same period in 2008, compared with 30.5 per cent in the first four months of the year and against an estimate of 31 per cent.

“Fixed asset investment in China continues to increase on the back of state-directed projects ... This will help keep the economy growing but there are increasing concerns about the amount of lending that has been required to fund the projects,” said Alaistair Chan, economist at Moody’s Economy.com.


Courtesy: Financial Times

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