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China inflation slows on lower food prices

Chinese shoppers Inflation in China slowed in November, giving the government more room to push ahead with its slate of financial reforms. The consumer price index rose 3 per cent year-on-year, down from its 3.2 per cent pace in October and comfortably below the official 3.5 per cent target for 2013. A drop in food prices from a month earlier was the main source of downward pressure on inflation in November. Producer prices remained in deflationary territory, dropping 1.4 per cent year-on-year, though that was up slightly from October’s 1.5 per cent decline. Weak commodity prices have suppressed factory-gate inflation this year. When Chinese financial institutions unleashed a flood of credit earlier this year, there were concerns that the country would eventually face higher inflation. But the central bank began to act in June to withdraw excess cash from the financial system, and the subdued inflation readings are testament […]

Posted On : Published By : Tom Whipple
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BP wins battle to limit Gulf payouts

BP won a big victory in its battle to limit the cost of compensation for its 2010 oil spill in the Gulf of Mexico after an appeals court called for an injunction to suspend payments to businesses that had not suffered losses as a result of the disaster. BP has argued that the compensation settlement over the spill that it agreed last year is being misinterpreted to allow businesses that have not suffered any harm to claim for apparent losses. A majority on a three-judge panel of the Fifth Circuit appeals court ruled that a lower district court should draw up an injunction “tailored so that those who experienced actual injury traceable to loss from the Deepwater Horizon accident continue to receive recovery, but those who did not do not receive their payments until this case is fully heard and decided”. The decision gave BP the suspension of payments […]

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Beijing must pull off a mix of Mao and markets

The plenum sets out a bold agenda and makes clear who is in charge, writes Robert Zoellick The plenum in Beijing may be a landmark . Most early commentary has focused on its economic reforms. But it has been little noted that the political signal is a mix of Mao and markets. The good news is that China ’s leaders recognise that the country needs to make a structural shift in its growth model – from export and investment-led growth to increased consumption and a stronger service sector. No one should underestimate the plenum’s boldness. After 30 years of almost 10 per cent annual growth, it is no small matter to change plans. Most countries dither until crisis or slowdowns compel change. Of the 101 economies that the World Bank considered middle-income in 1960, only 13 were high-income by 2008. The not so good news is that the previous […]

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Insight: No quick exit from West’s economic malaise

Ending the Great Stagnation that is taxing Western policy makers may depend as much on the Chinese Communist Party as it does on the world’s leading central banks. Six years after the global financial crisis erupted, there is any number of explanations why Europe cannot shake off a Japan-style balance-sheet recession and why the United States is experiencing sub-par growth and high unemployment. Governments and households racked up too much debt to sustain living standards. Demographic tailwinds have turned into headwinds as baby boomers retire and the surge of women entering the workforce has run its course. Many banks are still ailing and are building up capital instead of lending freely. But two other factors cannot be overlooked. Firstly, there is an excess of global savings, which has lowered the natural real rate of interest that equalizes savings and investment. The result is a liquidity trap. […]

Posted On : Published By : Tom Whipple
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Insight: No quick exit from West's economic malaise

Ending the Great Stagnation that is taxing Western policy makers may depend as much on the Chinese Communist Party as it does on the world’s leading central banks. Six years after the global financial crisis erupted, there is any number of explanations why Europe cannot shake off a Japan-style balance-sheet recession and why the United States is experiencing sub-par growth and high unemployment. Governments and households racked up too much debt to sustain living standards. Demographic tailwinds have turned into headwinds as baby boomers retire and the surge of women entering the workforce has run its course. Many banks are still ailing and are building up capital instead of lending freely. But two other factors cannot be overlooked. Firstly, there is an excess of global savings, which has lowered the natural real rate of interest that equalizes savings and investment. The result is a liquidity trap. […]

Posted On : Published By : Tom Whipple
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Iran sanctions eased, but pinch still felt

The sanctions relief offered to Iran by the U.S. and five world powers has begun to get the gears of commerce slowly turning again in an economy that remains in shambles. The Obama administration estimates relief from some sanctions in exchange for a temporary pause in Iran’s nuclear enrichment program will amount to just $7 billion. That’s a meager amount for the economy of a nation of nearly 80 million people – it’s less than one month’s worth of Iran’s oil production and just 7 percent of Iran’s overseas cash that remains frozen under the sanctions. Still, Iranians see the move as a much needed step toward a more normal economy after years of crippling inflation and job losses. “Markets operate on a psychological basis,” says Ray Takeyh, an Iran expert at the Council on Foreign Relations and former […]

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Iraq Signs $690M Barrier Contract With S.Korea’s Daewoo

raq said on Tuesday it had signed a 511 million euro ($690 million) contract with South Korea’s Daewoo to build a sea barrier at its planned Grand Faw port in the south of the country. Under the contract, Daewoo will build the barrier, known as a “breakwater” within 30 months, Iraq’s Transport Ministry said in a statement on its website. It said Daewoo was one of four companies which had bid for the contract to build the barrier at Grand Faw, which is located in Basra, Iraq’s southern oil hub. Grand Faw is one of several projects which Iraqi authorities hope will create a transportation corridor between the Middle East and Europe that will bypass the Suez Canal. ($1 = 0.7404 euros) (Reporting by Raheem Salman; Editing by Louise Heavens)

Posted On : Published By : Tom Whipple
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Iraq Signs $690M Barrier Contract With S.Korea's Daewoo

raq said on Tuesday it had signed a 511 million euro ($690 million) contract with South Korea’s Daewoo to build a sea barrier at its planned Grand Faw port in the south of the country. Under the contract, Daewoo will build the barrier, known as a “breakwater” within 30 months, Iraq’s Transport Ministry said in a statement on its website. It said Daewoo was one of four companies which had bid for the contract to build the barrier at Grand Faw, which is located in Basra, Iraq’s southern oil hub. Grand Faw is one of several projects which Iraqi authorities hope will create a transportation corridor between the Middle East and Europe that will bypass the Suez Canal. ($1 = 0.7404 euros) (Reporting by Raheem Salman; Editing by Louise Heavens)

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Auto sales boom spawns a used car market in China

As car enthusiasts converge on the annual Guangzhou auto show, few have anything except a shiny new set of wheels in mind. But explosive growth that transformed China into the world’s largest auto market is also giving life to a new industry here: used cars. Chinese started buying new cars in huge numbers about four years ago, about the average length of time analysts say drivers will stick with a vehicle before trading it in for a fresh model. The secondhand market is already taking off, with sales growth last year outpacing that for new vehicles. By volume it is still dwarfed by new cars, which outsold used vehicles three to one. In countries such as the U.S., that ratio is reversed, highlighting the secondhand market’s vast potential to make car ownership affordable for millions more Chinese. The challenge in China is to […]

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World agricultural output continues to rise, despite predictions of decline

Many say agricultural output is headed for decline, but 2013 continues a 50-year rise. The year 2013 has been a great year for global agriculture. Record world production of rice and healthy production of wheat and corn produced strong harvests across the world. These gains were achieved despite continuing predictions that world agricultural output is headed for a decline. The US Department of Agriculture (USDA) reports that world rice harvests for 2012/2013 were a record 469 million metric tons. Corn and wheat harvests were also strong, following record harvests for both grains during the 2011/2012 season. The USDA is now projecting world record harvests for corn, wheat, and rice for 2013/2014. These numbers cap a 50-year trend of remarkable growth in world grain production. Since 1960, global wheat and rice production has tripled, and corn production is almost five times higher. For decades, […]

Posted On : Published By : Tom Whipple