4 MARCH 9, 2015 ECONOMIC NEWS D-8 Calls on World Nations to Grow More United against Economic Inequality TEHRAN (FNA) - SecretaryGeneral of the D-8 Organization for Economic Cooperation Ali Mohammad Moussavi voiced regret over worldwide economic inequality, and called for international coordination and cooperation to eradicate global economic injustice. Addressing the sixth meeting of the think-tanks of Muslim countries in Islamabad on Sunday, Moussavi said injustice and extremism would increase the spread of poverty across the world. The official stressed the need for entire world nations to expand their cooperation to achieve sustainable economic equality. He noted that the organization spent the first decade of its life on developing policies and enhancing coordination. Moussavi stressed that eliminating deprivation and inequality called for expanding free markets and further deepening of economic relations. The secretary-general said the D-8 organization has been consistently working to exchange the economies of its member states into dynamic ones. The D-8 is a group of developing countries with large Muslim populations that have formed an economic development alliance. It consists of Bangladesh, Egypt, Indonesia, Iran, Malaysia, Nigeria, Pakistan and Turkey. The objectives of D-8 Organization for Economic Cooperation are to improve member states’ position in the global economy, diversify and create new opportunities in trade relations, enhance participation in decision-making at international level, and improve standards of living. D-8 is a global arrangement rather than a regional one, as the composition of its members reflects. China February Exports Climbed Sharply as Imports Extend Slump BEIJING (Financial Times)— China’s exports posted a strong rebound in February after a weak showing in January, as a steep upturn in shipments to major markets suggested a lift for Chinese factories. Still, the data painted a mixed picture for the world’s No. 2 economy, as imports extended a slide amid slack Chinese demand and slowing economic growth. Economists also cautioned that the data were likely affected by the Lunar New Year holiday. “These were good export numbers but we can’t say this is a huge help to the economy,” said Andrew Polk, economist at The Conference Board. Referring to China’s leaders, he said, “It’s just one less fire they have to fight.” Outbound shipments in U.S. dollar terms surged 48.3% in February from a year earlier, data from the General Administration of Customs showed Sunday. This reversed January’s decline of 3.3% and far outpaced market expectations for a 13.3% rise. That helped China chalk up another record trade surplus of $60.6 billion in February, outstripping market expectations and topping the previous $60 billion record posted in January. A growing trade surplus generally puts pressure on China’s currency, the yuan, to appreciate—though the currency is also facing downward pressure, such as capital leaving the country as of the end of last year. China’s economy grew 7.4% last year, its weakest performance in 24 years. On Thursday, the government set an even lower growth target of about 7% for this year. Policy makers have used an array of measures to boost growth, offering tax breaks to businesses, cutting red tape on project approvals and stepping up spending on rail, subway and water projects. The central bank last week cut interest rates for the second time in less than four months to give the economy another shot in the arm. The trade figures did contain some bright spots. In February alone, exports to the European Union were up 44%, a particularly welcome tally as the currency bloc has been recovering at a relatively slow pace. Meanwhile, exports to the U.S. surged 48%, defying a labor dispute that had disrupted shipments to West Coast ports. China’s Commerce Minister Gao Hucheng told reporters Sat- ahead of last year’s holiday, when workers usually return home and factories close for the most important holiday on the Chinese calendar. Other analysts said that it was too soon to say the country’s exporters were out of the woods. “We still see strong headwinds facing China’s exports this year,” wrote ANZ economists Li-Gang Liu and Hao Zhou in a note to clients. Meanwhile, imports slumped 20.5% from a year earlier in February, surpassing the 19.9% fall in January and exceeding market US Firms Signing Deals With Iran TEHRAN (Press TV) - Reports emerged on Saturday that said American enterprises have already started taking initial steps to enter the Iranian market in case the current nuclear talks with the country succeed and sanctions against it are lifted. The Economist has quoted unnamed foreign businessmen as saying that American companies are using local front men to seal deals in Iran. Even in one instance, the Economist has quoted an unnamed middleman acting on behalf of an American firm in the oil and banking business as saying that some “prime contracts have already been snapped up.” “If there is a nuclear deal, you will find overnight that the Ameri- cans have signed one-year options on the best projects,” he has been quoted as saying. “The Europeans will be queuing up, but they will end up negotiating with Exxon Mobil and Chevron, just as happened in Libya.” Such talk is particularly galling to companies from Western countries that were reluctantly pulled into applying sanctions, the Economist added. “We can’t help but think we have been played by the Americans,” it quoted an unnamed European business leader as complaining. Iran is currently negotiating with the P5+1 group of countries – the five permanent members of the Security Council plus Germany – over a final agreement on its nuclear energy program. The agreement - that has a deadline of July 1 – could lead to the lifting of sanctions that have been imposed on Iran over its nuclear energy activities. The sanctions – that Tehran has repeatedly criticized as illegal and called for their immediate removal – are believed to be the harshest in modern history that have been put into effect by the United States, the European Union and the United Nations. They comprise a series of punitive measures against Iran that include asset freezes, investment bans, trade embargoes, and individual/companies blacklisting among other measures. to buy the debt that countries issue to pay their bills. That pushes down interest rates on bonds and other financial assets, making it cheaper for companies to borrow and invest, increasing spending and employment. To bring that about, the ECB will snap up bonds issued by euro member states on secondary markets used by private banks, investment and pension funds, insurance companies and other major investors of sovereign debt. However, the bond purchasing and risk exposure under the ECB’s controversial plan has involved a large dose of political massaging. In an attempt to address stiff opposition to QE from Germany and several other northern European nations, the bulk of the debt security purchases under the scheme will be made by national central banks. And in another blow to the formerly-touted notion of debt mutualisation across the eurozone, national central banks will almost exclusively be buying bonds issued by their own governments -- placating Germany, Europe’s paymaster, who then will be off the hook to bail out another country. As the 18-month-long ECB program is poised to begin, some observers warn that US and British successes with QE do not guarantee it will be a sure-fire remedy for Europe. “(We) doubt very much that the new policy will prompt a meaningful economic recovery or counter the threat of deflation as the ECB hopes,” said a recent weekly report by Capital Economics. “There is still a large degree of slack in the labour market despite recent falls in the number of unemployed and the business surveys remain consistent with only weak growth, raising the chances of a sustained bout of deflation.” On the positive side, Neil MacKinnon of VTB Capital said that “the credit cycle is turning up, admittedly from a low base, and the QE programme might have some effect in promoting money supply growth.” He added however that “the ECB faces a number of economic challenges and monetary policy might only be able to fix some of them.” Draghi has dismissed those kinds of doubts, and noted in his announcement on Thursday that markets have already reacted with some optimism to the approach of QE in Europe. “We have already seen a significant number of positive effects from these monetary policy decisions,” he said. Draghi has similarly waved off concerns that private banks facing increasingly stiff post-crisis capital requirements may not want to part with bonds the ECB will need in huge quantities come Monday. In reply, Draghi noted that those same banks did not hesitate to sell bonds on their books when the Fed and BoE rolled out QE policies whose success the ECB and entire eurozone now desperately need to replicate. ECB to Launch Long-Awaited QE Gambit BERLIN (AFP) - In what may be its best and last chance to stimulate growth and ward off deflation across the eurozone, the European Central Bank on Monday will launch its longawaited 1.1 trillion euro ($1.2 trillion) quantitative easing program. The kickoff was announced Thursday by ECB President Mario Draghi, who confirmed the eurozone central bank will begin its program of buying around 60 billion euros of public and private bonds each month starting March 9 -- a policy it will apply until at least September 2016. The move comes as traditional efforts to boost sluggish economic activity in the 19-nation eurozone have been exhausted through rate cuts that have brought borrowing costs to nearly zero. The policy known as quantitative easing or QE is also being adopted as the eurozone faces growing threats of deflation, in which falling prices lead consumers to put off purchases in expectation they will drop further, sparking a damaging cycle of falling production, job creation and prices. The strategy behind the ECB’s QE program is similar to that of earlier schemes introduced by the US Federal Reserve and the Bank of England to pump money into the economy with massive purchases of government bonds, aiming to foster easier credit and rising economic activity. Under QE, a central bank creates money electronically and uses it China and Russia Set to Finalize gas Deal LONDON (Financial Times) - China’s trade surplus hit a fresh record high last month, as strong demand from the US lifted exports while sharp drops in commodity prices shrunk the value of imports. urday he was confident the nation could reach its target of 6% growth in combined exports and imports this year. He also said that based on preliminary indications, March figures should show improvement over February. Analysts cautioned, however, that the February trade figures were distorted by a number of factors, including comparisons with a weak tally a year ago as authorities cracked down on export fraud, as well as the timing of the Lunar New Year holiday. The holiday began at the end of January last year but in the middle of February this year. They said that there might have been front-loading of shipments expectations of a 10% decrease. The February slide was the fourth consecutive month of lower yearover-year imports. The import decline was partly due to the sharp fall in prices for key commodities such as oil and metals. Crude-oil imports fell 46% in value but were up 11% in volume. Iron-ore imports showed a similar trend, losing 39% in value but gaining 11% in volume. Analysts said that low commodities prices coupled with generally weak domestic demand should ensure further trade surpluses for China in the coming months. The nation had a trade surplus of $382.46 billion in 2014, up from $259.75 billion in 2013. China and Russia will seal an agreement later this year on piped gas from Western Siberia, China’s foreign minister said on Sunday, a deal that will continue Russia’s economic shift towards Asia and away from Western Europe. Russia’s split with the west over Ukraine has pushed it closer to China, which is eager to develop overland energy supply lines that reduce its dependence on vulnerable sea lanes. China has taken a carefully neutral stance on the Ukraine conflict, while more broadly expressing its support for Russia. The relationship between the two on-again, off-again Cold War allies is “mature and stable,” Chinese foreign minister Wang Yi told a press conference on Sunday. “There is enormous internal impetus and room for expansion.” Much of that expansion will be in oil, gas and nuclear energy co- operation, he added. “We will fully begin construction of the eastern gas line and sign a co-operation agreement for the western line,” he said. During a visit to Beijing in November, Russian president Vladimir Putin reached a preliminary agreement for Gazprom, the Kremlin-controlled energy group, to supply China’s state oil company CNPC with 30bn cubic meters of gas per year from the Altai region of western Siberia. However, most of the details — including the price of the gas — are still to be worked out. Beijing expects the deal to be finalized later this year, leading to a pipeline that will, for the first time, allow Russia to choose between exporting gas to Asia or to Europe. Russia has also committed to sell gas from its far east to China, but gas from that area of Siberia can only be sold economically to Asia. In a $400bn agreement signed dur- ing Mr Putin’s visit to Shanghai in May, Russia agreed to sell up to 38bn cubic meters a year to China. Chinese and Russian leaders officially inaugurated construction of the Power of Siberia pipeline in September last year, but little work can be done during the harsh Siberian winter. The two sides have also disagreed over financing for the massive projects, with Russia strapped for cash amid sanctions imposed by the West. To sweeten the deal for China, Russia has offered Chinese oil firms the chance to invest directly in its upstream operations. Russia’s deputy premier Arkardy Dvorkovich said at an investment forum last month that there are no longer political barriers to China controlling strategic assets. Increased economic ties with Russia, particularly the Russian Far East, fall under the broader One Belt, One Road strategy of increasing exports and investment in Central Asia, Mr Wang said.
© Copyright 2024