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Eurozone inflation slows to lowest level in five years

Inflation in the eurozone slowed again in March, dipping to 0.5 per cent ahead of the European Central Bank’s policy vote on Thursday. The latest flash estimate from Eurostat , the commission’s statistics bureau, showed inflation slowing from 0.7 per cent in February to its lowest level since 2009. Though economists believe last year’s early Easter – a time when businesses tend to raise their prices – weighed on cost pressures, the low number puts pressure on the ECB to do more to stave off the threat of a prolonged period of falling prices. The March figure was below economists’ expectations of 0.6 per cent. The ECB targets inflation of just below 2 per cent, but expects inflation to remain below this level at least until the end of 2016. Copyright The Financial Times Limited 2014. You may share using our article tools. Please don’t cut articles from FT.com […]

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Data deepen eurozone deflation fears

The cost of borrowing for crisis hit countries in the eurozone is tumbling amid expectations that the European Central Bank will be forced to start buying government bonds to fend off the spectre of a damaging period of deflation. Yields on 10-year Portuguese government bonds, which move inversely with prices, dropped below 4 per cent for the first time since early 2010 on Friday while Spanish 10-year yields tumbled to a near decade-low. Fears that the eurozone is drifting towards a Japanese-style bout of deflation were stoked further on Friday after prices fell in Spain this month and inflation edged down in Germany. The unexpected dip in Spanish prices capped a week that saw yields on peripheral countries’ debt tumble and the euro edge lower after Germany’s powerful central bank radically scaled back its opposition to the possibility of the ECB embarking on a government bond buying programme. […]

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China may opt for ‘two children’ policy in future, says senior official

After decades of enforcing a one-child policy, China may in the future allow every couple to have two children, a senior family planning official has said. China’s national health and family planning commission will study the impact of a universal two-child rule, its head of research, Ma Xu, told state news agency Xinhua, adding that there was no specific timetable for the decision. Experts said it was inevitable that China would make the shift, but probably not for several years. While most couples face large fines if they have more than one child, there are several exemptions, notably for ethnic minorities and rural residents. China recently relaxed its tight birth control rules slightly , allowing couples to qualify for a second birth if one of the partners was an only child; previously, both had to be without siblings. The move affects a relatively small proportion of families, but experts […]

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China may opt for 'two children' policy in future, says senior official

After decades of enforcing a one-child policy, China may in the future allow every couple to have two children, a senior family planning official has said. China’s national health and family planning commission will study the impact of a universal two-child rule, its head of research, Ma Xu, told state news agency Xinhua, adding that there was no specific timetable for the decision. Experts said it was inevitable that China would make the shift, but probably not for several years. While most couples face large fines if they have more than one child, there are several exemptions, notably for ethnic minorities and rural residents. China recently relaxed its tight birth control rules slightly , allowing couples to qualify for a second birth if one of the partners was an only child; previously, both had to be without siblings. The move affects a relatively small proportion of families, but experts […]

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Funds cut Russian holdings after sanctions

Days after Washington imposed sanctions against an additional 20 Russian individuals and a top-20 Russian bank , investors are still reeling from the news and beginning to wonder what the long-term consequences of the heightened geopolitical conflict will be for Russia Inc. Unlike the US’s first group of sanction targets, who were Russian officials with little to no business holdings, the second group includes businessmen who own shares in some of the biggest Russian stocks, many of which are traded in London and New York and sold to US and UK institutional investors. While the sanctions are only meant to target assets which the individuals have control over, many funds are now pondering whether they can justify holding on to stocks, which count such individuals as their minority shareholders. A portfolio manager at a UK asset management group says his fund is “staying clear of any company involved with […]

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New worries on China growth as flash PMI shows contraction

China’s manufacturing engine contracted in the first quarter of 2014, a preliminary private survey showed on Monday, raising market expectations of government stimulus to arrest a loss of momentum in the world’s second-largest economy this year. The weaker-than-expected survey knocked the country’s main share index and other Asian markets off early highs, and lopped around a quarter of a U.S. cent from the Australian dollar, which is often used as a proxy for Chinese risk. The flash Markit/HSBC Purchasing Managers’ Index (PMI) fell to an eight-month low of 48.1 in March from February’s final reading of 48.5. The index has been below the 50 level since January, indicating a contraction in the sector this year. Output and new orders both weakened but new export orders grew for the first time in four months, the survey showed, suggesting the slowdown has been driven primarily by weak domestic […]

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Oil Limits and the Economy: One Story, Not Two

The two big stories of our day are (1) Our economic problems: The inability of economies to grow as rapidly as they would like, add as many jobs as they would like, and raise the standards of living of citizens as much as they would like. Associated with this slow economic growth is a continued need for ultra-low interest rates to keep economies of the developed world from slipping back into recession. (2) Our oil related-problems: One part of the story relates to too little, so-called “peak oil,” and the need for substitutes for oil. Another part of the story relates to too much carbon released by burning fossil fuels, including oil, leading to climate change. While the press treats these issues as separate stories, they are in fact very closely connected, related to the fact that we are reaching limits in many different directions simultaneously. The economy is […]

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In Iran, Hopes Fade for Surge in the Economy

Suffering in an economy dragged down by years of mismanagement and the effects of international sanctions, Iran’s increasingly impoverished middle class voted in huge numbers last summer for President Hassan Rouhani , who promised to reignite growth by restoring ties with the rest of the world. But more than six months after Mr. Rouhani took office, hopes of a quick economic recovery are fading among ordinary Iranians, business owners and investors, while economists say the government is running out of cash . Although Mr. Rouhani has managed to stabilize the national currency, halt inflation and forge a temporary nuclear deal that provides some relief from sanctions, delivering on his promises of economic growth has proved far more difficult. On taking office, he discovered that the government’s finances were in far worse condition than his predecessor, Mahmoud Ahmadinejad, had ever let on. Now, with a lack of petrodollars […]

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U.S. current account gap hits 14-year low in fourth quarter

WASHINGTON (Reuters) – The U.S. current account deficit tumbled to a 14-year low in the fourth quarter as exports touched a record high, a government report showed on Wednesday. The Commerce Department said the current account gap, which measures the flow of goods, services and investments into and out of the country, narrowed to $81.1 billion. That was the smallest since the third quarter of 1999 and followed a revised $96.4 billion gap in the third quarter. It represented 1.9 percent of gross domestic product, the smallest share since the third quarter of 1997. That was down from 2.3 percent in the July-September period. Economists polled by Reuters had forecast the current account deficit narrowing to $88 billion in the final three months of 2013 from a previously reported $94.84 billion in the prior period. For all of 2013, the current account deficit averaged 2.3 percent of GDP, the […]

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Report: Climate change stunting fish

Climate change may be stunting fish growth, a new study  said. Fish sizes in the North Sea have shrunk dramatically, and scientists believe warmer ocean temperatures and less oxygenated water could be the causes.  The body sizes of several North Sea species have decreased by as much as 29 percent over a period of four decades, according to the report published in the April issue of Global Change Biology. The report presents evidence gathered as researchers followed six commercial fish species in the North Sea over 40 years. Their evidence showed that as water temperatures increased by 1 to 2 degrees Celsius, an accompanying reduction in fish size was observed. It is generally accepted among scientists that decreased body size is a universal response to increasing temperatures, known as the ‘temperature size rule,’ the report said. But before this report, led by scientists at Scotland’s University of Aberdeen, there […]

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