Tag Archives: financial
Global Trade Likely To Remain Sluggish For Years, Says UN Report
http://www.ft.com/cms/s/0/a3465b06-1bbe-11e3-94a3-00144feab7de.html#ixzz2f3WohxhE By Shawn Donnan in London Global trade is likely to remain sluggish for many years, and emerging economies that have depended on exports to fuel their transformation will have to find new sources of growth, says a UN report. The report, released on Thursday by the UN Conference on Trade and Development, makes clear that the effects of the 2007-8 financial crisis and the “great recession” that followed are still being felt in both the developed and developing world. The way the crisis has affected global trade patterns also calls into question the future value of the export-oriented growth model that fuelled the economic emergence of China and other developing world champions over the past three decades, Unctad’s economists wrote in their annual report. Unctad joins the debate at a time when many emerging economies – including Brazil, China and India – are facing slowing growth, and some, such as China, are working hard to rebalance their models towards more domestic sources of expansion. International trade has yet to return to the rapid growth rates seen before 2008, said Unctad economists, adding that growth is likely to remain subdued for years to come. Roberto Azevêdo, the World Trade Organisation’s new director-general, said this week that it would downgrade its 2013 growth forecast for global trade from 3.3 per cent to 2.5 per cent. Among rich countries, only the US had recorded a positive growth rate in its international trade in 2012, said Unctad. “Imports by all developed regions remain below their pre-crisis level,” its economists wrote, “and only the United States has managed to increase its exports to a higher level than their previous peak of August 2008.” Trade by developing economies had also “decelerated considerably” in recent years. Between 2002 and 2007, export volumes from those economies grew at an annual rate of 11.3 per cent. But that growth fell to 3.5 per cent between January 2011 and April 2013. The downward trend “highlights the vulnerabilities developing countries continue to face at a time of lacklustre growth in developed countries. It is also indicative of a probably less favourable external trade environment over the next few years,” Unctad economists wrote. While the pre-crisis rapid growth of exports from emerging economies to satisfy buoyant consumer demand in the rich world had been favourable for many developing countries, it “was built on unsustainable global demand and financing patterns”. “Reverting to pre-crisis growth strategies cannot be an option,” they wrote. “Rather, in order to adjust to what now appears to be a structural shift in the world economy many developing . . . economies are obliged to review their development strategies that have been overly dependent on exports for growth.” Encouraging greater domestic consumption and investment could come alongside the continuing development of exports. Bolstering domestic demand in emerging economies could also encourage the future development of “South-South” trade between developing countries, the report added. The share of South-South movements in international trade had increased from slightly less than 30 per cent in 1995 to slightly more than 40 per cent last year. The report also called for reform at the national and global levels to encourage more efficient financing of productive parts of the real sector such as industry, agriculture, services and infrastructure. Central and development banks needed to do more to finance productive investments, Unctad economists wrote. In the years since the financial crisis, credit had too often been directed to consumption rather than to investment. The result was that it was fuelling asset bubbles in sectors such as real estate “rather than innovation and production”. Continue reading
The First Romanian Agriculture Fund To Provide Farmers With Financial Compensation For Economic Losses
Balkans.com Business News Correspondent – 03.09.2013 The first Romanian agriculture fund to take on risks insurers do not cover will be set up by the National Federation Pro Agro, the president of the farmers’ organization, Alexandru Jurconi, told BR last week. The fund is an income stabilization tool and will provide farmers with financial compensation for economic losses caused by such events as adverse weather and environmental calamities. While the model is a first for the Romanian market, it has a strong background in Western Europe. The need to set up an agriculture mutual fund has long been debated locally and has become more pressing in the context of climatic disasters such as last year’s drought as well the more recent food safety scandals. The fund will mostly be fuelled from public sources – 65 percent of the compensation will come from the state and EU funds, and the remaining 35 percent will represent members’ contributions. “The contribution paid by the Pro Agro Agriculture Mutual Fund members will be calculated so that it won’t be a financial burden for the farmer but can still cover compensation of up to 97 percent,” said Jurconi, adding that the organization is currently working on a contribution framework to best cover the losses suffered by farmers. Pro Agro’s announcement comes after Romania finally transposed the EU legislation pertaining to agricultural mutual funds this summer. “I believe that setting up a mutual fund would be local agriculture’s biggest achievement in the last 10 years,” said agriculture minister Daniel Constantin this June. At that time he also expressed hopes that only one such fund would be set up at national level which would “make it stronger”. Under the current law, several such mutual funds can be set up as non-governmental organizations. Any local farmers’ organization can set up a fund but one of the main conditions is that its members represent at least 30 percent of the country’s farming surface. Any farmer who reports revenues can subscribe to a mutual fund both individually and through associations of which the farmer is a member. In the first phase compensation applications will be submitted to the Agency of Payments and Intervention for Agriculture (APIA) until the mutual fund develops a national network, the authorities have previously announced. “In addition to the insurance companies, farmers will have the option to contribute to a mutual fund created and supported by the European Commission. It will be an NGO whose running costs will be supported for a three-year period from EU rural development funds to which Romania will have access,” added Constantin. Members of the National Federation Pro Agro will automatically become members of the mutual fund, which will be headquartered in Bucharest and will have seven other regional branches. Business Review Romania Continue reading
Stocks Mixed As Syria Worries Weigh
http://www.ft.com/cms/s/0/78a30882-15dc-11e3-b519-00144feabdc0.html#ixzz2e0jj0PQn By Jamie Chisholm Thursday 10:35 BST. Optimism on the global economy is helping nudge many growth-focused assets higher, but the bullishness is contained by worrying over the potential geopolitical fallout of the Syria crisis and some monetary policy uncertainty. Stronger European financials but weaker energy stocks leaves the Stoxx 600 index barely changed after the FTSE Asia-Pacific index rose 0.2 per cent. US index futures point to the S&P 500 on Wall Street opening flat at 1,653. The dollar index is up 0.1 per cent to flirt with one-month highs, while gold is up $1 to $1,392 an ounce. Underpinning investor sentiment is a recent rash of fairly upbeat economic data. Well-received manufacturing and service sector surveys from China and Europe this week have joined with better US figures – such as buoyant car sales in August – to raise hopes of a broadening global recovery. That has lifted industrial commodities of late, and many are mildly firmer again on Thursday, with copper up 0.3 per cent to $3.25 a pound and Brent crude adding 48 cents to $115.39 a barrel. However, oil is also getting support from wariness about the chances of supply disruption should the US attack Syria. The potential for broader political fallout following any such action will be in focus as the G20 meets in Russia, which supports the Damascus government; and fretting over this issue is likely to be suppressing the broader market’s confident tone. China’s vice finance minister has warned that a military strike on Syria would hurt the global economy, and Turkey’s lira, which has been buffeted of late by Syria-linked and emerging market tensions, is 1.3 per cent weaker to trade at a record low of TL2.075 per dollar. Also causing some reticence is possible monetary policy “headline risk”. The session sees strategy announcements from the central banks of Japan, Sweden, the UK and the eurozone – a lot for traders to absorb. Labour market data from the US – in the form of the weekly initial unemployment claims and the ADP private sector jobs survey – will set the scene for Friday’s non-farm payrolls numbers, a report considered crucial in formulating the Federal Reserve’s decision on when to start reducing its bond buying programme. “We expect this Friday’s employment report to seal the deal on a September tapering announcement,” said analysts at Société Générale. US implied borrowing costs are consequently moving up, pulling other highly-rated sovereigns along in their wake. The 10-year Treasury yield is up 4 basis points to 2.93 per cent, flirting with two-year highs, while equivalent duration Bunds are advancing 6bp to show 2.0 per cent for the first time since March 2012. Japanese benchmark bonds are up 1bp at 0.79 per cent after the Bank of Japan concluded its two-day meeting, leaving rates and its asset purchase programme unchanged. In an upbeat statement, the BoJ lifted its assessment of Japan’s economy, which it said appeared to be “recovering moderately”. The yen briefly moved above Y100 versus the dollar, but is now changing hands at Y99.85, just 10 pips weaker on the day. After gaining 5 per cent so far this week, the Nikkei 225 has similarly decided to take time for consolidation, closing up just 0.1 per cent. In Hong Kong, the Hang Seng index was up 1.2 per cent, but on the mainland the Shanghai Composite was down 0.2 per cent, highlighting a mixed session for the region. Australia’s S&P/ASX 200 index lost 0.4 per cent after figures showing a greater than expected trade deficit for July. On the back of below-forecast mineral exports, the deficit reached A$765m after a modest surplus of A$243m in June. “There is nothing here to challenge the growing view that mining investment has already peaked, with little signs of a pick-up in other sectors so far,” said economists with TD Securities. Australia holds its federal election on Saturday, where the opposition Liberal Party candidate is expected to win. The Aussie dollar is seeing some profit taking after bouncing 3 per cent in the past three sessions on reduced expectations for easier monetary policy following stronger than forecast second-quarter GDP data. The Aussie is weaker by 33 pips to US$0.9133. The Indian rupee is moving further away from record lows as the market perceives greater credibility in the Reserve Bank of India’s new chief. Confidence in Raghuram Rajan’s measures to support the currency sees the dollar fall 1.4 per cent to Rs66.14, nudges bond yields lower and has helped boost the Sensex equity gauge by 2.3 per cent. Additional reporting by Sarah Mishkin in Hong Kong Continue reading
