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

BRUSSELS: The eurozone's unadjusted external trade surplus rose in April as exports showed signs of stabilising on a monthly basis and fell less than imports, though shipments sank more than a quarter from a year earlier. The surplus in the 16 countries using the euro came to 2.7 billion euros ($3.75 billion), compared with an upwardly revised 1.8 billion euro surplus in March and a 2.2 billion surplus in April 2008, European Union statistics office Eurostat said.

Unadjusted exports fell 27 percent year-on-year to 102.1 billion euros and imports dropped 28 percent to 99.4 billion. Seasonally adjusted, the trade balance continued a trend of narrowing deficits since January. The gap shrank to 300 million euros from March's 1.8 billion as exports fell only 1.3 percent month-on-month and imports declined 2.7 percent.

"Taken together, the last three months suggest that exports are starting to stabilise after they fell off a cliff between October of last year and January of this year," said Nick Kounis, economist at Fortis. The eurozone economy contracted 2.5 percent quarter-on-quarter in the January-March period - its deepest fall on record - in what economists said was likely the low point of the recession.

Negative trade on the back of exports plunging faster than imports lowered the quarterly result by 0.3 percentage point. "A poor net trade performance has contributed to the eurozone's deep economic contraction," said Howard Archer, economist at IHS Global Insight.

"Plunging domestic demand in Britain and the United States, as well as substantially deteriorating activity in emerging Europe, has been a particular concern for eurozone exporters," Archer said. Detailed data for April was not yet available but a country breakdown for January-March showed the eurozone's trade surplus with its biggest trading partner, Britain, fell to 12.2 billion euros from 15.0 billion a year earlier.

The surplus more than halved with the United States, the single-currency area's second-biggest trade partner, to 4.9 billion. The trade deficit with energy exporter Russia more than halved to 5.4 billion euros from a year before as oil and gas prices plunged.

The eurozone's trade gap with China contracted to 26.4 billion euros in the first quarter from 27.5 billion a year before. Separately, Eurostat said construction output in the eurozone rose 0.6 percent month-on-month in April for the second month running, limiting the year-on-year drop to 4.7 percent versus 8.3 percent in March and 12.5 percent in February.


(Reuters)

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Thursday, June 18, 2009

DUSHANBE: The global economy should begin showing signs of recovery by next year, IMF managing director Dominique Strauss-Kahn said on Wednesday during a visit to the Central Asian state of Tajikistan. The fund chief said that although 2009 was likely to continue to bring difficulties, negative global financial trends should begin to retreat by 2010.

"We.... expect that the rate of growth in the global economy will begin to recover in 2010, and with the rate of growth recovering in the world economy, so too will it grow in your country," he told reporters through a translator. Strauss-Kahn made the comments to reporters after meeting with Tajik president Emomali Rakhmon as part of a tour of Central Asian states, many of which have been badly affected by the global financial downturn.

Despite data that the plunge in remittances from Tajik labourers working in Russia and China is straining the economy, Strauss-Kahn said Dushanbe had pursued largely sound anti-crisis measures.

"I think what has been done by the government was correct given the situation in the economy, especially on the monetary side and by letting the currency depreciate," he said. Tajikistan - a mountainous former Soviet republic which borders China and Afghanistan - has struggled to provide even basic services for its citizens in recent years, with blackouts the norm across much of the country last winter. The IMF boss began his regional tour on Monday in Central Asia's economic powerhouse, Kazakhstan, whose resource-driven economy has been battered as the global economic downturn has forced down commodities prices.

The trip comes as China and Russia are both seeking to increase their influence in this strategically vital region, as evidenced by billions in loans, aid and investment from Moscow and Beijing in recent months. Strauss-Kahn is due to arrive in Bishkek later today, where he will meet with Kyrgyz President Kurmanbek Bakiyev before wrapping up his trip in reclusive Uzbekistan on Thursday.

(BRecorder)

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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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Thursday, June 18, 2009

WASHINGTON: US consumer prices edged up in May on higher gasoline prices, but fell over the past 12 months by the most since 1950, in a sign that inflation was no threat for now as the country fights a brutal recession. The Labour Department said on Wednesday its Consumer Price Index edged up 0.1 percent month on month, after being flat in April, below market expectations for a 0.3 percent increase.

-- Consumer prices post largest 12-month drop since 1950

-- Current account deficit smallest since Q4 2001

Compared to the same period last year, however, consumer prices fell 1.3 percent, the largest decline since April 1950. Concerns have grown in recent weeks that inflation could resurface this year, given massive efforts by the US government and the Federal Reserve to pull the economy out of the longest recession since the Great Depression of the 1930s.

"These numbers today and yesterday clearly show that at least for now the immediate concerns over inflation are not justified," said Marc Pado, market strategist at Cantor Fitzgerald & Co in San Francisco. US stock index futures were barely higher, while Treasury debt prices trimmed losses on the data.

A separate report from the Commerce Department showed the US current account deficit shrank in the first quarter to $101.5 billion, the lowest since the fourth quarter of 2001. The CPI data showed that core prices, excluding food and energy, also rose only 0.1 percent, slower than April's 0.3 percent monthly increase, as prices for tobacco and smoking products fell after surging the last two months on the back of a federal excise tax increase.

The rise in the monthly core CPI was the smallest advance since December 2008. The increase came as new vehicle prices rose for a fifth straight month. Shelter and medical costs also contributed to the gain in the core index. Core prices increased 1.8 percent year-over-year after a 1.9 percent 12-month rise in April.

Gasoline prices rose 3.1 percent from April versus a 2.8 percent drop a month earlier. The food index fell 0.2 percent in the month, declining by the same margin for two straight months. Data released on Tuesday showed producer inflation was muted in May, despite higher gasoline prices. Compared to the same period last year, prices paid at the farm and factory gate experienced their steepest fall since 1949.

Investors have been pricing in rising inflation risks in the bond market. Benchmark Treasury debt yields spiked to an eight-month high last week. The yield difference between Treasury Inflation-Protected Securities and Treasuries has grown since the beginning of the year.

But analysts reckon the bond market is getting ahead of itself and argue the economy is more at risk of deflation than inflation, citing excessive slack in productive capacity and huge stocks of unsold goods. According to Fed data on Tuesday, US capacity utilisation dropped to a record low 68.3 percent in May. "The worries that everyone has about inflation, it's something that may occur, and it's certainly not an imminent threat to the economy," said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York.

The first-quarter current account deficit equalled 2.9 percent of US gross domestic product, a sharp drop from 4.4 percent in the fourth quarter and the lowest since 2.8 percent in the first quarter of 1999, a Commerce Department official said. The current account is the broadest measure of total US trade with the rest of the world, covering goods, services and income transfers.

US exports and imports both fell in the first quarter as severe world recession hit consumer demand and crimped trade. Exports dropped to $509.6 billion, from $591.7 billion in the previous three months, while imports shrank more steeply, to $581.5 billion from $715.1 billion.

(BRecorder)

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Thursday, June 18, 2009

BEIJING: The Chinese Vice-Minister for Industries and Information Technology assured that his country will help Pakistan in developing agriculture and telcom sectors. He held out the assurance during his meeting with visiting Minister for Investment Senator Waqar Ahmed Khan.

The two sides also reached an agreement to strengthen their interaction to bring together the relevant private sectors of the two countries to achieve the results. On the occasion, Senator Waqar briefed the Chinese Minister who had visited Pakistan in 1993, about the investment opportunities his country offered for foreign investment particularly for Chinese.

Meanwhile, Commerce and Sourcing House (CASH), a Pakistani company based in Shenzen China organised an 'Agriculture Investment' conference in collaboration with the Ministry of Investment and Pakistan Embassy in Beijing. CASH plans to bring a group of Chinese investors in agriculture sector to Pakistan in near future for which discussion was also held with the Board of Investment (BOI).

The Chinese companies participated in the conference include manufactures of agriculture machinery, agro-based industry, poultry and husbandry equipment, horticulture and other related agriculture fields.Addressing the conference, Waqar Ahmed said Pakistan attached great importance to its socio-economic partnership with China.

The two sides geared up their co-operation for developing KK highway and digging a tunnel along this land link. Through this tunnel, "not only we lay gas pipeline to fetch gas from Turkmenistan but also lay a railway track and optical fibre. These utilities could also be used by our Chinese brethren," he pointed out.

(BRecorder)

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Thursday, June 18, 2009

KARACHI: The country has registered a deficit of some three billion dollars in services sector trade during the first 11 months (July-May) of the current fiscal year mainly due to high payments on account of transportation, travel and government services. However, the deficit is about 51 percent lower than the same period of last fiscal year ie 2008, in which services sector posted over six billion dollars deficit.

Month on month basis, services sector trade has posted a surplus of 253 million dollars in May 2009, as services sector exports are higher than the imports. Services sector exports stood at 740 million dollars in May 2009 against imports of 487 million dollars. The country posted a deficit of 269 million dollars in April 2009 with 559 million dollars imports and 290 million dollars exports.

The State Bank on Wednesday said the country's services sector trade performance is gradually improving as overall imports and deficit have declined by 5.73 percent and 26 percent respectively during July-May period. Services sector exports in first 11 months stood at 3.656 billion dollars against the imports of 6.638 billion dollars, depicting a deficit of 2.982 billion dollars during July-May.

Services sector deficit is 3.071 billion dollars lower than the deficit witnessed in corresponding period of last fiscal year ie 2008. Services sector deficit in July-May of 2008 stood at 6.053 billion dollars. "Heavy payments on account of transportation, travel services, insurance, technical fee, royalties and government sector are major contributors in the services trade deficit," economists said.

They said that declining imports of services sector and increasing trend in exports is a positive sign, which would definitely help reduce services sector deficit. Export of services sector surged by 26 percent to 3.656 billion dollars during the first 11 months of FY09 over the exports of 2.909 billion dollars in same period of last fiscal year. Services sector imports reduced by 25 percent to 6.638 billion dollars in July-November of FY09 as compared to imports of 8.962 billion dollars in corresponding period of FY08.

The country earned 1.107 billion dollars on account of transportation against payments of 3.211 billion dollars, depicting a deficit of 2.104 billion dollars in first 11 months of FY09. Transportation deficit has contributed some over 70 percent share in overall services sectors deficit, as the country has only one shipping carrier - Pakistan National Shipping Corporation.


(BRecorder)

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Thursday, June 18, 2009

LAHORE: The Advisor to Prime Minister on Finance, Shaukat Tarin, has said that the government will spend Rs 40 billion during 2009-10 financial year for providing incentives to value-added textile sector, the details of which would be given in the trade policy.

Addressing a post-budget seminar here on Wednesday, he said that the government had accepted most of the demands of textile exporters in the budget. He said the government has allocated substantial amount of Rs 60 billion in the federal budget to assist the industries involved in value-addition, small and medium enterprises, and revival of industrial activity in the country.

"The manufacturing sector should show some patience, as the government has declared next fiscal as 'year of industrial revival'," he added. The Advisor said that the government would provide much support to the value-adding sector, which would also be available to other sectors.

The export refinance has been increased from last year's Rs 140 billion to Rs 250 billion in the 2009-10 budget. The SMEs would have access to credit through Rs 10 billion credit guarantee fund, while the new entrepreneurs would get venture capital, without collateral, from a separate Rs 10 billion fund established for this purpose, he said. He said that the government was fully aware of the fact with regard to declining industrial production and would take all possible measures to remove all irritants that pushed up the cost of business.

He assured the manufacturers that the government has intention to increase the incentive package by another Rs 10 billion, if required. The issues like research and development grant and other facilitation have already been addressed in the textile package.

He assured the business community of removal of irritants in the tax laws relating to powers of income tax officials, for which the trade bodies, associations, other stakeholders and the public sector departments would be taken into confidence.

He held inflation responsible for seven percent banking spread and said that some larger banks have a larger spread of up to 10 percent, which is unjustified. The State Bank has been asked to negotiate with such banks for reduction in their spread. He said the economic consolidation has been achieved in first year while the next year would be more comfortable.

He said that interest rate would further come down by 100 basis points (bps) which would help reduce inflation in the country. The government will take along the representatives of trade and industry and a business council comprising 50 businessmen from different regions and trades would be constituted which would meet the President, the Prime Minister and the Finance Minister once in a month.

The cross subsidy on gas would be removed from next fiscal year that would reduce the energy cost of the industry. The government is also considering to levy carbon tax on CNG, he added. "The agriculture sector must be brought under the tax net in 2010-11, and I will quit my office if I could not do this" he added.

The CVT imposed on property is a regressive tax that would be changed to capital gain tax in 90 days after finalisation of National Finance Award, in consultation with the provinces, he added. Former federal finance minister Dr Salman Shah criticised the present government for its economic policies and said that the budget was based only on presumptions.

About further loans from IMF, in case of failure of Friends of Pakistan to fulfil their donation pledges, would be very costly even if the loan was immediately returned, as full IMF charges would have to be paid. There would be a shortfall of about Rs 300 billion in the resources calculated in the budget. Revenue target, he said, would not be met. He said that circular debt in October 2008 was Rs 50 billion, and increased to Rs 190 billion in 10 months.

(BRecorder)

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