WTO negotiations collapse
Talk to the hand: WTO head Pascal Lamy gestures after the informal session during talks at the WTO headquarters, in Geneva, Switzerland, on Tuesday. Picture: EPAGENEVA
Thursday, July 31, 2008
MARATHON talks on a new global trade pact collapsed on Tuesday (early morning yesterday in Brunei) as the US and India refused to compromise over a proposal to help poor farmers deal with floods of imports.
Ministers from other countries expressed incredulity that the trade liberalisation talks could have foundered in their ninth day over a technical measure to restrict imports.
"Someone coming from another planet would not believe that after the progress made, we would not be able to conclude," Brazil's Foreign Minister Celso Amorim said.
"This is a very painful failure and a real setback for the global economy at a time when we really needed some good news," EU Trade Commissioner Peter Mandelson said, adding that developing countries would suffer most.
The collapse could hurt business sentiment even if it will have no immediate impact on trade and could fuel protectionist sentiment, encourage more bilateral trade deals and call into question how the world will deal with complex issues like climate change and the food crisis.
The failure to reach a breakthrough at the World Trade Organisation after nearly seven years of talks means the prospects for resuming the Doha talks to free up world trade if they can be resuscitated after the setback could be put back several years.
But WTO chief Pascal Lamy said ministers wanted him to revive the talks quickly and he would not "throw in the towel".
Lamy said the deal would eventually have saved the world economy US$130 billion a year just in lower tariffs.
He called ministers from about 35 key WTO players to Geneva last week to seek a breakthrough in the Doha round, launched in late 2001 to boost the world economy and help developing countries export their way out of poverty.
Ministers reached about 80-85 per cent of an outline deal on the core areas of farm and industrial goods, he said.
But differences in these areas between rich and poor countries and importers and exporters proved too much to bridge.
The final stumbling block concerned the "special safeguard mechanism" a proposal to let developing countries raise farm tariffs in the face of a surge in imports or collapse in prices.
India and Indonesia said they needed the measure to protect millions of subsistence farmers from unexpected shocks arising from opening up their borders.
But the US feared its agribusinesses would lose new markets just as it made painful cuts in its farm subsidies.
Developing country food exporters like Costa Rica and Uruguay said the measure as framed would cut them off from key markets and even reduce existing trade.
"It's unfortunate in a development round, the last mile we couldn't run because of an issue concerning livelihood security," Indian Commerce Minister Kamal Nath said.
The US and EU had also clashed with big emerging countries like India and China over flexible treatment for developing nations in cutting industrial tariffs.
US Trade Representative Susan Schwab said US offers for the talks remained on the table. "To ensure that the advances we made this week are not lost, the United States will continue to stand by our current offers, but we maintain that they are still contingent on others coming forward with ambitious offers that will create new market access. So far, that ambition is not evident," she said. Reuters
Thursday, July 31, 2008
Saturday, July 26, 2008
220,000 homes in US reclaimed by banks in last three months
220,000 homes in US reclaimed by banks in last three months
No shelter from the storm: Foreclosures have spiked in the worst housing slump in the United States in decades. Picture: AFP
WASHINGTON
Saturday, July 26, 2008
14% leap in 2nd quarter foreclosures with another 739,714 cases filed
US HOME foreclosures leapt nearly 14 per cent in the second quarter from the previous quarter, research group RealtyTrac said yesterday in a sign of deepening housing woes. About 220,000 homes have already been repossessed by banks in the second quarter.
On an annual basis, home foreclosure filings soared 121 per cent from the same period in 2007, RealtyTrac said in releasing a survey of the country's 100 largest metropolitan areas.
Foreclosures have spiked in the worst housing slump in decades and a related credit crisis that have brought the economy to a crawl.
With home prices falling and unemployment and inflation rising, homeowners are increasingly hard-pressed to make their home loan payments.
RealtyTrac said that foreclosure filings were reported on 739,714 US properties during the second quarter.
The California-based company said that one in every 171 US households had received a foreclosure filing and the distress was nationwide.
According to the survey, 48 of the 50 states and 95 of the 100 major city regions had experienced year-over-year increases in foreclosure activity.
"Although much of the fallout from foreclosures is being driven by rampant activity in a few states, such as Nevada, California, Florida, Ohio, Arizona and Michigan, most areas of the country are seeing at least some increase in foreclosure activity," said RealtyTrac chief executive James Saccacio said in a statement.
Nevada, California, Arizona and Florida, where home prices had boomed for several years before the collapse of the US housing market in 2006, led the country in foreclosures.
Nevada was the hardest hit, with one in 43 households in foreclosure action, nearly four times the national average rate. California had the most filings — a total of 202,599 — and had the second-highest rate at one in 65 households.
AFP
No shelter from the storm: Foreclosures have spiked in the worst housing slump in the United States in decades. Picture: AFP
WASHINGTON
Saturday, July 26, 2008
14% leap in 2nd quarter foreclosures with another 739,714 cases filed
US HOME foreclosures leapt nearly 14 per cent in the second quarter from the previous quarter, research group RealtyTrac said yesterday in a sign of deepening housing woes. About 220,000 homes have already been repossessed by banks in the second quarter.
On an annual basis, home foreclosure filings soared 121 per cent from the same period in 2007, RealtyTrac said in releasing a survey of the country's 100 largest metropolitan areas.
Foreclosures have spiked in the worst housing slump in decades and a related credit crisis that have brought the economy to a crawl.
With home prices falling and unemployment and inflation rising, homeowners are increasingly hard-pressed to make their home loan payments.
RealtyTrac said that foreclosure filings were reported on 739,714 US properties during the second quarter.
The California-based company said that one in every 171 US households had received a foreclosure filing and the distress was nationwide.
According to the survey, 48 of the 50 states and 95 of the 100 major city regions had experienced year-over-year increases in foreclosure activity.
"Although much of the fallout from foreclosures is being driven by rampant activity in a few states, such as Nevada, California, Florida, Ohio, Arizona and Michigan, most areas of the country are seeing at least some increase in foreclosure activity," said RealtyTrac chief executive James Saccacio said in a statement.
Nevada, California, Arizona and Florida, where home prices had boomed for several years before the collapse of the US housing market in 2006, led the country in foreclosures.
Nevada was the hardest hit, with one in 43 households in foreclosure action, nearly four times the national average rate. California had the most filings — a total of 202,599 — and had the second-highest rate at one in 65 households.
AFP
Sarawak soon to become Malaysia's top producer of rice
Sarawak soon to become Malaysia's top producer of rice
Regional industry: Top, rice drying outside a traditional long house. Bottom, paddy fields in Bario in the Kelabit Highlands of Sarawak. Pictures: flickr.com, picasaweb.google.com
JULIA YEOW
KUALA LUMPUR
Saturday, July 26, 2008
ONCE known for its untamed forests, rich cultural diversity and some of Asia's most exotic beasts, Malaysia's state of Sarawak on Borneo island might soon add another feather to its cap of attributes — the country's major producer of rice. The government is looking to the country's largest state, which covers five million hectares and makes up 35 per cent of Malaysia's land, as a potential key to resolving the increasingly worrying problem of low rice yields.
Rice, a staple food in Malaysian homes, has traditionally been planted in the northern states of eastern Malaysia, namely in Kedah, which is also known as the "Rice Bowl of Malaysia".
Kedah, and to a lesser extent the neighbouring state of Perlis, used to account for more than half the total 700,000 hectares of rice fields in the country, but over the past five years, an increasing number of paddy fields have been abandoned, largely because of a labour shortage, higher energy and fertiliser costs, and declining soil quality.
In 2000, the country produced 2.36 million tons of rice, or slightly less than 75 per cent of what the country consumed, leading the government to import more than 500,000 tons of rice from neighbouring Thailand and other countries, such as Myanmar and India.
Six years later, Malaysia's rice production covered barely 70 per cent of the needs of its 26 million people. Government agencies have said that unless the trend is reversed, the country would have to import close to 40 per cent of its rice by 2010.
Prime Minister Abdullah Ahmad Badawi recently shelved several large developmental projects to pledge an additional US$9 billion ($12 billion) to raise rice production and ease poverty in the country as food prices escalate.
The government has also now turned to Sarawak and the smaller neighbouring state of Sabah in its hopes to raise the nation's rice self-sufficiency to at least 80 per cent by 2010.
Agriculture Minister Mustapa Mohamed told Parliament recently that aid would be given to rice-production ventures in the state, adding that several large areas of land in Sarawak had already been identified as possible cultivation sites.
"We want to strive so that Sabah and Sarawak can produce up to 86 per cent of the country's production," Mustapa said.
Abdullah's government has also urged private corporations to take up large-scale food-production ventures.
The first to take up the challenge was palm oil giant Sime Darby, which recently announced it has identified 7,000 hectares of land in Sarawak suitable for rice cultivation.
Sime Darby, the world's largest producer of palm oil, plans to use advanced technology rather than existing production methods to produce higher rice yields, chairman Musa Hitam said.
"God willing, it will be more than the average produced now," he said. "The Sarawak state government is positive about this, and they will make available more land."
Musa, who said details of the project have yet to be released, promised other similar ventures were to come.
Aside from opening up new land for cultivation, state Deputy Chief Minister George Chan has urged the government to introduce more financial incentives to farmers to improve planting methods.
"Our people have been planting paddy on the best spot for years, so it's best to improve existing farms," he said.
Chan also hailed new research efforts to come up with hybrid rice stocks.
"We have to think ahead and start producing rice with a certain value," he said.
While hopes are riding high that new technology and ample land in Sarawak would be the answer to the country's food shortage, others are concerned about the inevitable environmental impact that widespread clearance of land for paddy cultivation would have on the state's ecosystem.
"The effects go beyond the sheer disappearance of trees," said Shailendra Yashwant, campaign director of Greenpeace South-East Asia. "We are talking about biodiversity loss, environmental degradation, social upheaval and yet another spike in greenhouse gas emissions, all of which Malaysia can ill afford."
But with increasing prices of fuel and no immediate end to surges in the global prices of food, environmental losses could become an occupational hazard if more corporations look to Sarawak as they hop onto the rice-producing bandwagon.
DPA
Regional industry: Top, rice drying outside a traditional long house. Bottom, paddy fields in Bario in the Kelabit Highlands of Sarawak. Pictures: flickr.com, picasaweb.google.com
JULIA YEOW
KUALA LUMPUR
Saturday, July 26, 2008
ONCE known for its untamed forests, rich cultural diversity and some of Asia's most exotic beasts, Malaysia's state of Sarawak on Borneo island might soon add another feather to its cap of attributes — the country's major producer of rice. The government is looking to the country's largest state, which covers five million hectares and makes up 35 per cent of Malaysia's land, as a potential key to resolving the increasingly worrying problem of low rice yields.
Rice, a staple food in Malaysian homes, has traditionally been planted in the northern states of eastern Malaysia, namely in Kedah, which is also known as the "Rice Bowl of Malaysia".
Kedah, and to a lesser extent the neighbouring state of Perlis, used to account for more than half the total 700,000 hectares of rice fields in the country, but over the past five years, an increasing number of paddy fields have been abandoned, largely because of a labour shortage, higher energy and fertiliser costs, and declining soil quality.
In 2000, the country produced 2.36 million tons of rice, or slightly less than 75 per cent of what the country consumed, leading the government to import more than 500,000 tons of rice from neighbouring Thailand and other countries, such as Myanmar and India.
Six years later, Malaysia's rice production covered barely 70 per cent of the needs of its 26 million people. Government agencies have said that unless the trend is reversed, the country would have to import close to 40 per cent of its rice by 2010.
Prime Minister Abdullah Ahmad Badawi recently shelved several large developmental projects to pledge an additional US$9 billion ($12 billion) to raise rice production and ease poverty in the country as food prices escalate.
The government has also now turned to Sarawak and the smaller neighbouring state of Sabah in its hopes to raise the nation's rice self-sufficiency to at least 80 per cent by 2010.
Agriculture Minister Mustapa Mohamed told Parliament recently that aid would be given to rice-production ventures in the state, adding that several large areas of land in Sarawak had already been identified as possible cultivation sites.
"We want to strive so that Sabah and Sarawak can produce up to 86 per cent of the country's production," Mustapa said.
Abdullah's government has also urged private corporations to take up large-scale food-production ventures.
The first to take up the challenge was palm oil giant Sime Darby, which recently announced it has identified 7,000 hectares of land in Sarawak suitable for rice cultivation.
Sime Darby, the world's largest producer of palm oil, plans to use advanced technology rather than existing production methods to produce higher rice yields, chairman Musa Hitam said.
"God willing, it will be more than the average produced now," he said. "The Sarawak state government is positive about this, and they will make available more land."
Musa, who said details of the project have yet to be released, promised other similar ventures were to come.
Aside from opening up new land for cultivation, state Deputy Chief Minister George Chan has urged the government to introduce more financial incentives to farmers to improve planting methods.
"Our people have been planting paddy on the best spot for years, so it's best to improve existing farms," he said.
Chan also hailed new research efforts to come up with hybrid rice stocks.
"We have to think ahead and start producing rice with a certain value," he said.
While hopes are riding high that new technology and ample land in Sarawak would be the answer to the country's food shortage, others are concerned about the inevitable environmental impact that widespread clearance of land for paddy cultivation would have on the state's ecosystem.
"The effects go beyond the sheer disappearance of trees," said Shailendra Yashwant, campaign director of Greenpeace South-East Asia. "We are talking about biodiversity loss, environmental degradation, social upheaval and yet another spike in greenhouse gas emissions, all of which Malaysia can ill afford."
But with increasing prices of fuel and no immediate end to surges in the global prices of food, environmental losses could become an occupational hazard if more corporations look to Sarawak as they hop onto the rice-producing bandwagon.
DPA
Utilise technology to boost rice production
Utilise technology to boost rice production
Rice planting: If Brunei wants to be self-sufficient in rice production, it should utilise high-yielding seeds and machineries to boost production. Picture: BT file
Hadi DP Mahmud
BANDAR SERI BEGAWAN
Saturday, July 26, 2008
LOCAL rice farmers should be making use of high-yielding seeds and mechanised farming to fast-track Brunei's scant production levels of the staple food towards self-sufficiency, the country's biggest rice distributor said.
The high-yielding seeds cost more than the pusu seeds traditionally used by most local rice farmers, but the resulting crops can be harvested two to three times a year, said Chai Yum Fatt, the general manager of Asia Enterprise.
A shift in the use of seeds by the majority of Brunei's rice farmers could increase Brunei's self-sufficiency in rice which stood at a paltry 3.2 per cent last year in a shorter span of time, said Chai.
"With five acres of land you can produce eight to 10 tonnes of crops using the high-quality seeds," he said. Pusu seeds, according to Chai, can only produce 2.5 tonnes of harvest from five acres of land.
Asia Enterprise, the sole commercial venture in the country's agricultural sector, acquires the seeds from China and Taiwan, which cost about US$2.80 per kilo. Chai said the company is currently testing out six to seven different types of high-yielding seeds since last year to determine which would grow best in Brunei soil and produce the best results for Brunei consumers.
"The seeds that we have tested tend to produce shorter crops, which in our opinion is easier to harvest. The pusu seeds produce taller crops, which are prone to damage from strong winds," he said.
Only a minority of the local farmers are testing out new types of seeds to boost production, he added.
Datin Hjh Hazizah Hj Adam, who has been running a rice farm in Labi, Belait District since 1995, said she took a risk by planting hybrid seeds provided by the Department of Agriculture three years ago.
"I think not many people are planting these seeds because they are unsure of the results that it will bring, whether the consumers would actually like the finished product," said Datin Hjh Hazizah, who now has a 30-acre field and grows both types of seeds.
"People have been buying both my products from my stall at the Sumbangsih Mulia Complex, and they seem to like it. Both types don't taste the same but are not too different. You just have to know how to promote your products, and always refer to the Agricultural Department for advice and support," she said.
When she first started out, no machinery was used to plough the fields, cut the grass or spray pesticides over the crops. Once she realised that her business was about to get serious, she applied for a grant for subsidies from the agricultural department for farming machinery to boost production. Fertilisers and pesticides are also subsidised by the government, said Datin Hjh Hazizah.
According to Chai, mechanised farming is uncommon amongst local farmers, where the use of technology is limited to some family businesses run by retirees and ex-army officers.
"There are some who don't believe in technology, since most of those involved in the sector are of the older generation. Since long ago they haven't been using fertilisers and such, let alone technology," explained Datin Hj Hazizah. "There are quite a few who are planting rice just to pass the time during their retirement years."
Brunei's agricultural sector recently received a wake-up call when His Majesty the Sultan and Yang Di-Pertuan of Brunei Darussalam warned in his 62nd birthday titah that the Sultanate must step up agricultural production and make food security a priority.
The monarch's warning comes as global food prices rise, which earlier this year sparked riots and protests in some countries, and restrictions on food exports by others. According to the World Trade Organisation (WTO), agriculture accounted for less than one per cent of Brunei's nominal gross domestic product in 2006. The country also imports more than 80 per cent of its food, the WTO said.
The Brunei Times
Rice planting: If Brunei wants to be self-sufficient in rice production, it should utilise high-yielding seeds and machineries to boost production. Picture: BT file
Hadi DP Mahmud
BANDAR SERI BEGAWAN
Saturday, July 26, 2008
LOCAL rice farmers should be making use of high-yielding seeds and mechanised farming to fast-track Brunei's scant production levels of the staple food towards self-sufficiency, the country's biggest rice distributor said.
The high-yielding seeds cost more than the pusu seeds traditionally used by most local rice farmers, but the resulting crops can be harvested two to three times a year, said Chai Yum Fatt, the general manager of Asia Enterprise.
A shift in the use of seeds by the majority of Brunei's rice farmers could increase Brunei's self-sufficiency in rice which stood at a paltry 3.2 per cent last year in a shorter span of time, said Chai.
"With five acres of land you can produce eight to 10 tonnes of crops using the high-quality seeds," he said. Pusu seeds, according to Chai, can only produce 2.5 tonnes of harvest from five acres of land.
Asia Enterprise, the sole commercial venture in the country's agricultural sector, acquires the seeds from China and Taiwan, which cost about US$2.80 per kilo. Chai said the company is currently testing out six to seven different types of high-yielding seeds since last year to determine which would grow best in Brunei soil and produce the best results for Brunei consumers.
"The seeds that we have tested tend to produce shorter crops, which in our opinion is easier to harvest. The pusu seeds produce taller crops, which are prone to damage from strong winds," he said.
Only a minority of the local farmers are testing out new types of seeds to boost production, he added.
Datin Hjh Hazizah Hj Adam, who has been running a rice farm in Labi, Belait District since 1995, said she took a risk by planting hybrid seeds provided by the Department of Agriculture three years ago.
"I think not many people are planting these seeds because they are unsure of the results that it will bring, whether the consumers would actually like the finished product," said Datin Hjh Hazizah, who now has a 30-acre field and grows both types of seeds.
"People have been buying both my products from my stall at the Sumbangsih Mulia Complex, and they seem to like it. Both types don't taste the same but are not too different. You just have to know how to promote your products, and always refer to the Agricultural Department for advice and support," she said.
When she first started out, no machinery was used to plough the fields, cut the grass or spray pesticides over the crops. Once she realised that her business was about to get serious, she applied for a grant for subsidies from the agricultural department for farming machinery to boost production. Fertilisers and pesticides are also subsidised by the government, said Datin Hjh Hazizah.
According to Chai, mechanised farming is uncommon amongst local farmers, where the use of technology is limited to some family businesses run by retirees and ex-army officers.
"There are some who don't believe in technology, since most of those involved in the sector are of the older generation. Since long ago they haven't been using fertilisers and such, let alone technology," explained Datin Hj Hazizah. "There are quite a few who are planting rice just to pass the time during their retirement years."
Brunei's agricultural sector recently received a wake-up call when His Majesty the Sultan and Yang Di-Pertuan of Brunei Darussalam warned in his 62nd birthday titah that the Sultanate must step up agricultural production and make food security a priority.
The monarch's warning comes as global food prices rise, which earlier this year sparked riots and protests in some countries, and restrictions on food exports by others. According to the World Trade Organisation (WTO), agriculture accounted for less than one per cent of Brunei's nominal gross domestic product in 2006. The country also imports more than 80 per cent of its food, the WTO said.
The Brunei Times
Friday, July 25, 2008
New tensions spoil struggling WTO talks
New tensions spoil struggling WTO talks
GENEVA
Friday, July 25, 2008
STRAINS between big and small countries worsened tension between rich and poor at WTO trade talks here yesterday as countries struggled to thresh out a new global free-trade pact.
Negotiators continued meetings after a gruelling session overnight, but despite efforts by some to stress progress was being made, it was clear stark differences remained over critical sticking-points.
"On some of the key issues, positions still remain too far apart," WTO director-general Pascal Lamy conceded at a meeting of the organisation's 153 members yesterday, his spokesman told reporters.
The World Trade Organisation has convened a meeting here of 35 leading trade negotiators with the aim of mapping out a deal to conclude the long-delayed Doha round of global trade talks.
The Doha round began seven years ago with the aim of helping poor countries, but it has been delayed by disputes between the rich developed world and poorer developing nations over cutting subsidies and tariffs.
After talks between all 35 invited delegations failed to deliver progress, Lamy has concentrated his efforts on trying to get a group of seven leading trade powers to find common ground.
Only the United States, the European Union, Japan, India, Brazil, Australia and China were involved in talks until the early hours yesterday morning, which drew complaints from smaller nations.
Eight delegations complained about the approach at a morning meeting, Rockwell said, with host nation Switzerland leading the criticism.
The European Trade Commissioner Mandelson admitted that the overnight trade talks had been counted among the "most difficult and confrontational negotiation" of his term.
In a blog, Mandelson, commissioner for the last four years, described the 12 hours of negotiation between the EU, United States, Australia, China, India, Brazil and Japan as "tense".
Leaving the meeting yesterday morning, India's Trade Minister Kamal Nath said there had been progress "but there is still some heavy lifting to be done".
The negotiations were meant to be finished today, but Rockwell said yesterday that they were likely to continue past this day.
"Clearly the timetable has slipped. Given our track record in this respect one should not be terribly surprised," he told reporters.Both the US and EU have made opening gambits by offering to reduce trade-distorting assistance to their farmers and they are now waiting for steps by developing nations to open their markets for industrial goods. On Tuesday, Washington offered to cut its official aid ceiling for its farmers.AFP
GENEVA
Friday, July 25, 2008
STRAINS between big and small countries worsened tension between rich and poor at WTO trade talks here yesterday as countries struggled to thresh out a new global free-trade pact.
Negotiators continued meetings after a gruelling session overnight, but despite efforts by some to stress progress was being made, it was clear stark differences remained over critical sticking-points.
"On some of the key issues, positions still remain too far apart," WTO director-general Pascal Lamy conceded at a meeting of the organisation's 153 members yesterday, his spokesman told reporters.
The World Trade Organisation has convened a meeting here of 35 leading trade negotiators with the aim of mapping out a deal to conclude the long-delayed Doha round of global trade talks.
The Doha round began seven years ago with the aim of helping poor countries, but it has been delayed by disputes between the rich developed world and poorer developing nations over cutting subsidies and tariffs.
After talks between all 35 invited delegations failed to deliver progress, Lamy has concentrated his efforts on trying to get a group of seven leading trade powers to find common ground.
Only the United States, the European Union, Japan, India, Brazil, Australia and China were involved in talks until the early hours yesterday morning, which drew complaints from smaller nations.
Eight delegations complained about the approach at a morning meeting, Rockwell said, with host nation Switzerland leading the criticism.
The European Trade Commissioner Mandelson admitted that the overnight trade talks had been counted among the "most difficult and confrontational negotiation" of his term.
In a blog, Mandelson, commissioner for the last four years, described the 12 hours of negotiation between the EU, United States, Australia, China, India, Brazil and Japan as "tense".
Leaving the meeting yesterday morning, India's Trade Minister Kamal Nath said there had been progress "but there is still some heavy lifting to be done".
The negotiations were meant to be finished today, but Rockwell said yesterday that they were likely to continue past this day.
"Clearly the timetable has slipped. Given our track record in this respect one should not be terribly surprised," he told reporters.Both the US and EU have made opening gambits by offering to reduce trade-distorting assistance to their farmers and they are now waiting for steps by developing nations to open their markets for industrial goods. On Tuesday, Washington offered to cut its official aid ceiling for its farmers.AFP
Gloom in European business
Gloom in European business
LONDON
Friday, July 25, 2008
EUROPE'S economy is taking a bigger hit than expected as the global credit crunch and rising costs erode corporate and consumer confidence, data showed yesterday.
Surveys of German, French and Italian businesses all came in below consensus expectations, British retail sales took a record fall and optimism among euro zone service providers hit its lowest point in at least 10 years.
German business sentiment suffered its biggest drop since the Sept 11, 2001 attacks on the World Trade Centre, according to the closely-watched Ifo index.
"It's a horrible number," Michael Klawitter, a currency strategist at Dresdner Kleinwort in Frankfurt, said of the main Ifo index at 97.5. It sent the euro down more than half a cent to a two-week low.
The RBS/Markit survey of around 5,000 companies across Europe showed euro zone services and manufacturing activity shrank at a faster pace than expected in July.
Official data showed French business confidence fell more sharply than expected in July to its lowest level in three years and Italian business morale fell to a near seven-year low.
"It's not good at all. I think there's a real risk of finding ourselves in a technical recession in France and the euro zone," said Olivier Gasnier at Societe Generale in Paris. A recession is usually defined as two successive quarters of economic contraction.
Evidence of weakness was widespread outside the euro zone too.
Denmark, which became the first European Union country to enter technical recession earlier this year, said its consumer confidence reading had fallen to a 16-year low.
Sweden added to signs of Nordic region's souring economic conditions when it said earlier yesterday unemployment had surged more than expected while wholesale inflation had picked up slightly.
And across the water retail sales in Britain slumped in June at the fastest rate since the series began in 1986.
"We think that a sharp consumer downturn is on the cards that will leave the economy flirting with recession over the coming quarters," said Nick Kounis at Fortis Bank.
The euro zone reports will make uncomfortable reading for the European Central Bank, which raised interest rates to 4.25 per cent this month to battle inflation at a record high of 4.0 per cent, way above its 2.0 per cent target ceiling.
"With growth slowing abruptly and inflation expectations off the peak, risks of a near-term ECB hike have diminished substantially," said Marco Valli and economist at UniCredit MIB.
The outlook in the 15-nation bloc is bleak as companies are pessimistic about their future with business expectations in the dominant service sector at 50.2, its lowest since the RBS/Markit survey began in 1998.
At the same time, inflation remains high. For months, commodity, fuel and food prices continued to breach new highs and have only recently begun to fall away.
Economies around the world have been undermined by a credit crisis that started with mortgage problems in the United States and falling house prices and led to blockage in money markets and several prominent bank failures.
Spain's economy is taking a particularly dramatic dive after the end of long-running housing boom, and yesterday's data included Spanish jobless numbers showing unemployment jumped to a higher-than-expected 10.4 per cent in the second quarter, its highest in three years.Reuters
LONDON
Friday, July 25, 2008
EUROPE'S economy is taking a bigger hit than expected as the global credit crunch and rising costs erode corporate and consumer confidence, data showed yesterday.
Surveys of German, French and Italian businesses all came in below consensus expectations, British retail sales took a record fall and optimism among euro zone service providers hit its lowest point in at least 10 years.
German business sentiment suffered its biggest drop since the Sept 11, 2001 attacks on the World Trade Centre, according to the closely-watched Ifo index.
"It's a horrible number," Michael Klawitter, a currency strategist at Dresdner Kleinwort in Frankfurt, said of the main Ifo index at 97.5. It sent the euro down more than half a cent to a two-week low.
The RBS/Markit survey of around 5,000 companies across Europe showed euro zone services and manufacturing activity shrank at a faster pace than expected in July.
Official data showed French business confidence fell more sharply than expected in July to its lowest level in three years and Italian business morale fell to a near seven-year low.
"It's not good at all. I think there's a real risk of finding ourselves in a technical recession in France and the euro zone," said Olivier Gasnier at Societe Generale in Paris. A recession is usually defined as two successive quarters of economic contraction.
Evidence of weakness was widespread outside the euro zone too.
Denmark, which became the first European Union country to enter technical recession earlier this year, said its consumer confidence reading had fallen to a 16-year low.
Sweden added to signs of Nordic region's souring economic conditions when it said earlier yesterday unemployment had surged more than expected while wholesale inflation had picked up slightly.
And across the water retail sales in Britain slumped in June at the fastest rate since the series began in 1986.
"We think that a sharp consumer downturn is on the cards that will leave the economy flirting with recession over the coming quarters," said Nick Kounis at Fortis Bank.
The euro zone reports will make uncomfortable reading for the European Central Bank, which raised interest rates to 4.25 per cent this month to battle inflation at a record high of 4.0 per cent, way above its 2.0 per cent target ceiling.
"With growth slowing abruptly and inflation expectations off the peak, risks of a near-term ECB hike have diminished substantially," said Marco Valli and economist at UniCredit MIB.
The outlook in the 15-nation bloc is bleak as companies are pessimistic about their future with business expectations in the dominant service sector at 50.2, its lowest since the RBS/Markit survey began in 1998.
At the same time, inflation remains high. For months, commodity, fuel and food prices continued to breach new highs and have only recently begun to fall away.
Economies around the world have been undermined by a credit crisis that started with mortgage problems in the United States and falling house prices and led to blockage in money markets and several prominent bank failures.
Spain's economy is taking a particularly dramatic dive after the end of long-running housing boom, and yesterday's data included Spanish jobless numbers showing unemployment jumped to a higher-than-expected 10.4 per cent in the second quarter, its highest in three years.Reuters
Japan exports shrink as global crisis grips Asia
Japan exports shrink as global crisis grips Asia
TOKYO
Friday, July 25, 2008
JAPAN'S exports unexpectedly fell in June for the first time in nearly five years as shipments to emerging markets sputtered after sustaining growth through the first year of the global credit crisis.
Exports to Asia grew at their weakest pace in three years with demand from China, Japan's biggest customer, growing at less than half the pace of May.
China and other emerging markets have largely escaped the initial impact of the global credit crisis triggered by US mortgage defaults. But with the world's main export markets in Europe and North America reeling from bank failures and a lending squeeze, a global slump looks increasingly likely.
"Exports to many Asian countries fell from the previous year, which suggests intra-regional trade in Asia may be losing momentum," said Maiko Noguchi, senior economist at Daiwa Securities SBMC.
"If the slowdown in the United States and Europe continues, that will affect Asian economies. Demand from emerging economies alone will not be enough to lead export growth," she said.
Japan's exports fell 1.7 per cent in June from a year earlier, marking the first fall in 55 months and surprising economists who had forecast a 3.8 per cent rise.
The decline was largely due to weak US and European demand for Japanese cars, as well as slowing exports to Asia, which make up about half of total exports of the world's second biggest economy.
Shipments to Asia rose 1.5 per cent from a year earlier, the smallest gain since May 2005, although a sharp drop in ship exports which tend to be volatile may have skewed the data. China-bound shipments rose 5.1 per cent, compared with a 12.2 per cent rise in May.
Exports to India, Asia's third-largest economy, which rose more than a third in the first half of this year, slowed to a 19.3 per cent rise in June. Sales to another fast-growing emerging economy, Brazil, also slowed, rising 20.7 per cent in June compared with an annual increase of 29.9 per cent in January-June.
That meant Japan may no longer count on Asia to make up for weak demand from industrialised nations. Exports to the United States fell 15.4 per cent, the biggest drop since November 2003. Those to the European Union were also down 11.2 per cent, the largest fall since March 2002.
Some companies are already feeling the pinch. Japanese auto giant Toyota Motor Corp is expected to revise down its global sales forecast for 2008 this month to factor in a sharp downturn in US demand for light trucks.
The decline in exports, combined with a rise in imports, slashed Japan's June trade surplus to ¥138.6 billion (US$1.28 billion), down 88.9 per cent from a year earlier.
The fall in exports supports the view that the Japanese economy contracted in April-June and raises the prospect that the economic expansion that started in 2002, Japan's longest in the post-war period, could be coming to an end.
The government has already conceded that the economy may be approaching a turning point.
"The data suggests that the contribution of net exports to GDP in April-June will probably turn out as zero or negative," said Junko Nishioka, an economist at the Royal Bank of Scotland.
Reuters
TOKYO
Friday, July 25, 2008
JAPAN'S exports unexpectedly fell in June for the first time in nearly five years as shipments to emerging markets sputtered after sustaining growth through the first year of the global credit crisis.
Exports to Asia grew at their weakest pace in three years with demand from China, Japan's biggest customer, growing at less than half the pace of May.
China and other emerging markets have largely escaped the initial impact of the global credit crisis triggered by US mortgage defaults. But with the world's main export markets in Europe and North America reeling from bank failures and a lending squeeze, a global slump looks increasingly likely.
"Exports to many Asian countries fell from the previous year, which suggests intra-regional trade in Asia may be losing momentum," said Maiko Noguchi, senior economist at Daiwa Securities SBMC.
"If the slowdown in the United States and Europe continues, that will affect Asian economies. Demand from emerging economies alone will not be enough to lead export growth," she said.
Japan's exports fell 1.7 per cent in June from a year earlier, marking the first fall in 55 months and surprising economists who had forecast a 3.8 per cent rise.
The decline was largely due to weak US and European demand for Japanese cars, as well as slowing exports to Asia, which make up about half of total exports of the world's second biggest economy.
Shipments to Asia rose 1.5 per cent from a year earlier, the smallest gain since May 2005, although a sharp drop in ship exports which tend to be volatile may have skewed the data. China-bound shipments rose 5.1 per cent, compared with a 12.2 per cent rise in May.
Exports to India, Asia's third-largest economy, which rose more than a third in the first half of this year, slowed to a 19.3 per cent rise in June. Sales to another fast-growing emerging economy, Brazil, also slowed, rising 20.7 per cent in June compared with an annual increase of 29.9 per cent in January-June.
That meant Japan may no longer count on Asia to make up for weak demand from industrialised nations. Exports to the United States fell 15.4 per cent, the biggest drop since November 2003. Those to the European Union were also down 11.2 per cent, the largest fall since March 2002.
Some companies are already feeling the pinch. Japanese auto giant Toyota Motor Corp is expected to revise down its global sales forecast for 2008 this month to factor in a sharp downturn in US demand for light trucks.
The decline in exports, combined with a rise in imports, slashed Japan's June trade surplus to ¥138.6 billion (US$1.28 billion), down 88.9 per cent from a year earlier.
The fall in exports supports the view that the Japanese economy contracted in April-June and raises the prospect that the economic expansion that started in 2002, Japan's longest in the post-war period, could be coming to an end.
The government has already conceded that the economy may be approaching a turning point.
"The data suggests that the contribution of net exports to GDP in April-June will probably turn out as zero or negative," said Junko Nishioka, an economist at the Royal Bank of Scotland.
Reuters
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