Tag Archives: U.S.
China sees exports and imports slow
Beijing, China (AHN) – China saw growth in its exports slow to 4.9 percent in April, compared with 8.9 percent last year because of the slowing of economies around the world.
The slowdown in global demand has also hit Chinese consumers and businesses. Growth in imports to China also slowed, dropping to just 0.3 percent in April, down from 5.3 percent growth in March.
Chinese government officials were reportedly expecting an 11 percent growth in imports. The decrease in imports was nearly across the board affecting everything from consumer items to raw materials.
China is the world’s second-largest economy behind the United States.
Although both nations have a capitalistic business system, the model that the Communist government of China uses is vastly different from the model the U.S. uses.
In the U.S., the model is democratic, secular and free-market where businesses pay taxes to the federal government. In China, the model is state capitalism where the government owns a portion of most businesses and takes part of the profits to fund government operations.
 
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Rare glimpse into Mideast middle class angst
Cairo, Egypt David Rosenberg (The Medi – In the Middle East, the middle class is grumpy.
And if the mass protests in Cairo’s Tahrir Square and Tunisia’s Habib Bourguiba Avenue over the past year haven’t made that clear, a survey of the people who make up the region’s soccer moms and middle managers articulates their angst in ways rallies often fail.
Less than a third of the people surveyed in the three Middle East and North African (MENA) countries of Egypt, Saudi Arabia and Morocco said they are “extremely satisfied” or “very satisfied” with their current economic situation, according to the poll conducted by consulting firm Booz & Co. Respondents who said they were “not at all satisfied” and only “slightly satisfied” reached 48 percent.
The survey comes at a time when the region’s leaders – both those who have come to power on the back of Arab Spring protests and those who are trying to head them off – are grappling with how to steer their countries to greater prosperity and freedom. So far, they are stumbling, with most of the region’s economies reeling from political upheaval and the transition to democracy proceeding slowly, if at all.
“There has never been a more critical time for policymakers in the Middle East to focus on empowering the region’s sizable—and politically significant—middle class,” Richard Shediac, Samer Bohsali and Hatem Samman, the authors of the report said. “There is a dire need for change, via a set of economic, social, and political policies aimed at developing a large, dynamic, and sustainable middle class.”
Compared to the West, MENA’s middle class is both undersized and understudied. Indeed, Booz had to develop its own parameters for defining its parameters, which it settled on as families with incomes between 75 percent and 150 percent of each country’s median. Turning that into dollar terms, that works out to an annual household income of as little as $23 a day in Morocco to $149 at the upper end for wealthy Saudi Arabia.
Middle class views on their economic situation vary widely from country to country, according to the poll.
To Moroccans, economic conditions have not changed markedly over the past five years, while Egyptians are the most dissatisfied with the present situation. Saudis, whose economy is booming on the back of high oil prices, overwhelmingly rate their current economic status favorably.
MENA’s middle class is different than its peers in Europe and North America. Booz said it produces fewer entrepreneurs and therefore is less a source of economic growth. That is because the public sector is the main employer of the middle class rather than the private sector.
In Saudi Arabia and Egypt, for example, small and medium-sized businesses account for between 25 percent and 38 percent of employment, respectively, compared with 55 percent in the U.S., and 60 percent in Germany.
The survey gives some insight into why: 44 percent rated “having a secure job” as their most important factor in choosing an occupation while only 3 percent ranked “participating in new business venture” as so important.
Despite relying on it, employer trust in government is low. Less than a third of the middle class gives it a passing grade for disclosing adequate and accurate information, fighting corruption or having a fair and open court system. This figure is below 10 percent in Morocco. Less than a fifth of the MENA middle class trust their country’s court system
The poll also found that the middle class feels the educational system is performing poorly. More than half said it fails to provide opportunities for them or for their children, in terms of work. Nevertheless, more than 80 percent claim to save money for their children’s education, up to a 10th of their monthly income in some cases.
An average of 57 percent for all three countries said that their salary covers basic expenses, with a little for extras. Between 27 percent and 30 percent are barely able to make ends meet, while 3 percent said they could not even do that.
When they have free time, MENA’s middle class prefer shopping malls, restaurants, and amusement parks to nightclubs, pubs or museums. Saudis preferences are, of course, limited since movie theaters and nightclubs are banned in the country, but in Morocco where they are permitted, only 19 percent go to them. Egyptians are heavy cinema goers, with 60 percent saying they buy tickets. Nearly 100 percent of the middle class claims to watch television every day
“To many Westerners, these forms of entertainment may seem superficial and limiting. Yet surprisingly, middle class respondents report overall contentment with their entertainment options.” the report said.
Nevertheless, half of MENA’s middle class claims to be satisfied with their entertainment and cultural offerings, and in Saudi Arabia that number rises to 70 percent, with the highest rating among women. “One explanation for this disparity is that people cannot miss something they have never experienced,” the report suggests, noting that foreign travel among the region’s middle class is not that common.
In spite of the current pessimism, a surprising number of middle class people remain bullish about the future, Booz found. About 70 percent have a positive outlook for the economy over the next five years, especially in Saudi Arabia and Egypt. If only 5 percent said they are “extremely satisfied” with the economic conditions today, 29 percent said they expected it to be “much better” five years from now.
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Job growth weaker in March than prior three months
Washington, DC, United States (AHN) – The U.S. economy created 120,000 new jobs in March, causing the unemployment rate to drop slightly to 8.2 percent, down from 8.3 percent in February, the U.S. Bureau of Labor Statistics reported Friday.
Nonfarm employment rose in manufacturing, food services and drinking; however, it was down in retail trade.
Although the report was good news, it was not great news. The economy needs to create from 120,000 to 200,000 jobs monthly to keep up with growth in the labor force. Many economists had expected job growth closer to the top of that range.
March growth was less than that of the previous three months, and not sufficient to fuel a recovery in the jobs sector of the economy.
The official number of unemployed persons remained virtually unchanged at 12.7 million, compared to 12.8 in February. However, the percentage of working-age Americans who had a job also dropped slightly to 63.8 percent in March, compared to 63.9 percent in February. Before the recession, 89 percent or more of working-age Americans had a job.
The gap between the percentage of working-age people who have jobs and the official unemployment rate is because people are only counted as unemployed if they actively look for jobs. Many discouraged workers eventually stop looking for jobs.
Long-term unemployment is defined as individuals who are jobless for 27 weeks or more and who continue actively to look for work. That number was essentially unchanged in March at 5.3 million, with those people accounting for 42.5 percent of the unemployed. That number has fallen by 1.4 million since April 2010.
The number of people who were working part-time because their employers cut their hours or because they were unable to find full-time work also fell. That number dropped from 8.1 to 7.7 million people.
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U.S. Senate okays penalty duties to prevent Chinese unfair trade practices
Washington, DC, United States (AHN) – The United States Senate has passed legislation to apply penalty duties to products from China when its communist government subsidizes production of those items.
Sen. Max Baucus (D-MT) said the bill protects U.S. companies and workers from China’s unfair trade practices.
The application of countervailing duties allows the U.S. to stop China from undercutting American manufacturers and dumping products at less than cost here.
Supporters say the legislation protects thousands of American jobs by leveling the playing field for U.S. companies and workers.
The imposition of penalty duties helps to offset the subsidies that China’s government often provides for products manufactured in that country that allow Chinese companies to sell products below their true cost to the U.S.
Senators approved the legislation for the nonmarket economy nations of China and Vietnam.
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Report: Needed water supply infrastructure will cost over $1 trillion
Denver, CO, United States (AHN) – A new report has found that the cost of repairing and expanding drinking water infrastructure in the United States will exceed $1 trillion in the next 25 years.
In addition, the groundbreaking study by the American Water Works Association found that expense will likely be met primarily through higher water bills and local fees. The cost of needs will double from around $13 billion a year now to roughly $30 billion (in 2010 dollars) per year by the 2040s.
AWWA is an international nonprofit scientific and educational society that focuses on the improvement of drinking water quality and supply.
The organization analyzed many factors for its new report, titled “Buried No Longer: Confronting America’s Water Infrastructure Challenge.” Those factors included the timing of water main installation and life expectancy, materials used, replacement costs and shifting demographics. AA
AWWA found that needs in the U.S. are nearly evenly divided between replacement and expansion requirements.
“Because pipe assets last a long time, water systems that were built in the latter part of the 19th century and throughout much of the 20th century have, for the most part, never experienced the need for pipe replacement on a large scale,” the report states. “The dawn of an era in which the assets will need to be replaced puts a growing stress on communities that will continue to increase for decades to come.”
“The needs uncovered in ‘Buried No Longer’ are large, but they are not insurmountable,” said AWWA Executive Director David LaFrance. “When you consider everything that tap water delivers-public health protection, fire protection, support for the economy, the quality of life we enjoy-we owe it to future generations to confront the infrastructure challenge today.”
Although the world has as much water now as it did thousands of years ago, only about 1 percent of the world’s water is available for human needs, including personal, agricultural and manufacturing. Almost 97 percent of the world’s water is saltwater or brackish and another 2 percent is locked away in glaciers and ice caps.
Key findings from the report include:
- The needs are large. The cost of replacing pipes at the end of their useful lives will total more than $1 trillion nationwide between 2011 and 2035 and exceed $1.7 trillion by 2050.
- Household water bills will go up. Although water bills will vary by community size and geographic region, for some communities the infrastructure costs alone could triple the size of a typical family’s bill.
- There are important regional differences. The growing national needs affect different regions in different ways, with growth concerns greater in the South and West and replacement concerns greater in the Northeast and Midwest.
- There are important differences based on system size. As with many other costs, small communities with fewer people to share in the costs face the biggest challenge.
- The costs keep coming. Infrastructure renewal investments are likely to be incurred each year over several decades. For that reason, many utilities may choose to finance infrastructure replacement on a “pay-as-you-go” basis rather than through debt financing.
- Postponing investment only makes the problem worse. Postponing infrastructure investment in the near-term would raise the overall cost and increase the likelihood of water main breaks and other infrastructure failures.
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Clock ticking for Egypt’s finances
Cairo, Egypt (The Media Line) – Egypt faces a risk-laden game of Beat the Clock as it tries to get its political house in order before its foreign currency reserves sink much more.
Reserves fell to $16.4 billion in January from about $36 million a year earlier, a drop that economists all agree imperils the economy and requires Egypt to seek support from external sources and make difficult decisions to cut back government spending and subsidies. But that will be difficult given the political situation.
Presidential elections are now scheduled for late May, preceded by a six-week election season. Meanwhile, a parliament dominated by Islamists is tussling over who will control the government with the interim military council. A dispute with the United States over foreign human rights activists detained in Egypt is threatening vital American aid to the country. In the meantime, no U.S. assistance is being transferred to the country.
The timetable looks even more challenging when the role of the International Monetary Fund (IMF) is factored in. Egypt’s Ministry of Finance is reportedly counting on the IMF’s executive board to approve a $3.2 billion facility towards mid-March, which will then go to parliament for approval about the time the presidential campaign is getting under way.
“Time is not on Egypt’s side and politics could be the prime suspect to derail or delay an IMF program or exacerbate dollarization and [foreign currency] outflows,” Bank of America Merrill Lynch analyst Jean-Michel Saliba said in a note to investors last week.
Concerns that Egypt’s political trajectory looks to be on a collision course with its financial needs came in the form a downgrade in its bond rating by Standard & Poor’s (S&P) on Feb. 10. S&P lowered its ratings to B from B+ on Friday, five notches into junk territory, and said further downgrades could be on the way.
“The negative outlook reflects our view that a further downgrade is possible if the government fails to stem the decline in reserves, or an uncertain policy environment and weak institutions emerge from the ongoing political transition,” S&P said. Moody’s and Fitch, two other bond-rating agencies, cut their ratings on Egypt earlier.
Diminishing foreign reserves may be the most immediate threat to Egypt’s economy, but it is not the only one. More than a year after the revolution that brought down Hosni Mubarak, economic growth has stalled, the number of visiting tourists has plummeted and foreign investment has evaporated, all of which is exerting huge economic pressure on the government at a time of political flux.
Bank of America Merrill Lynch estimated that Egypt’s drawdown of its foreign currency would slow to what it called a “more manageable” $500 million a month because the foreign capital that has been responsible for much of the decline has been nearly drained out of the country.
On the other hand, Egypt could also get a boost from a rare instance of foreign investment if France Telecom goes ahead with the purchase of a $2 billion stake in the Egyptian Company for Mobile Service, popularly known as Mobinil, which it agreed to buy from Egyptian entrepreneur Naguib Sawiris last week. If the transaction goes through, that money might be transferred to Egypt in March.
But Merrill also noted that Egypt’s finances look more precarious than the headline foreign reserves figures show. Taking out Egypt’s holdings of gold, reserves fall to $13.6 billion, which are equal to just 2.8 months of imports, Saliba wrote in the Feb. 16 note. Meanwhile, Egypt’s external financing needs could reach some $11 billion through June 2013, Finance Minister Momtaz el-Saieed said Feb. 10.
But accepting aid is politically problematic because the public looks askance at foreign assistance, especially from the U.S. Only 26 percent favor accepting American aid, according to a Gallup poll taken in December. The proportion willing to accept international aid rises to 50 percent (with 42 percent opposing) and those willing to accept it from fellow Arabs reaches 68 percent (28 percent opposing), Gallup found.
Egyptians don’t like aid because it usual comes with strings attached, such as unpopular economic reforms in the case of the IMF and maintaining the 1979 peace treaty with Israel, in the case of American assistance. Political opposition to foreign assistance caused the interim military government to reject the original offer of an IMF credit last spring, a decision many economists say has exacerbated the financial troubles in which Egypt now finds itself.
Parliament must approve an IMF loan, but Essam el-Erian, a leader of the Muslim Brotherhood’s Freedom and Justice Party, which dominates parliament, said his group may vote against it because it might impinge on Egyptian sovereignty. “Look at Greece,” el-Erian said in an interview with Bloomberg News this week. “Everybody is telling it what to do.”
Above and beyond accepting foreign financial assistance, the other remedies for Egypt’s foreign reserves ailment are all painful for politicians and the public alike.
One is bringing down the budget deficit. As the economy has shrunk and the government boosted handouts in the early days of the revolution to try and palliate the population, Egypt’s fiscal deficit has ballooned. Officials recently revised upward their forecast for the budget deficit for the fiscal year ending June 30 to 9.4 percent of gross domestic product.
The solution would be to cut spending, particularly costly and wasteful subsidies on food and energy. Indeed, the military government recently announced plans for $4 billion in spending cuts and the IMF and others providing aid will have their own list of fiscal measures. But political analysts suggest that will inevitably mean cuts to popular energy and food subsidies of the kind that have set off riots in the past.
Another remedy is devaluing the Egyptian pound. In spite of Egypt’s mountain of economic woes, the pound had shed only about 1 percent of its value over the past year as the central bank acted to shore up its value by raising interest rates and drawing down on reserves. But the bank’s options are narrowing as it is forced to devalue the pound, which will almost certainly lead to higher inflation.
Analysts see some positive elements in the Egyptian political scene. Saliba notes that the decision to move up the presidential vote to May reduces the length of the campaign season and the opportunity for grandstanding by candidates. Ahmed Galal, managing director of the Economic Research Forum in Cairo, maintains that the Muslim Brotherhood has taken a pragmatic line on subsidiary reform and supports free markets.
©2012. The Media Line. All Rights Reserved.
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China sees its exports and imports fall
Beijing, China (AHN) – China’s exports fell in January by 0.5 percent compared to a year earlier marking the first decline in two years, data showed Friday
Exports dropped to $149.94 billion while imports dived by 15.3 percent to $122.66 billion.
Despite the declines China’s trade surplus grew to $27.28 billion in January up from $16.52 billion the prior month.
Part of the decline was because many factories cut back production or close their doors for the Chinese Lunar New Year holiday, also known as the Spring Festival, which fell in January this year. Workers generally want to travel home to celebrate the holiday with family.
However, analysts say the slowdown is further evidence that China’s economy is taking a hit from continued weakness of demand from the struggling U.S. and eurozone economies.
 
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U.S. stocks fall as GDP trails forecast
New York, NY, United States (AHN) – Wall Street opened lower Friday after a report showed that the U.S. economy expanded less than forecast..
Just after the opening bell, the Dow Jones Industrial Average was lower by 33 points, the Standard and Poor’s 500 Index was flat and the NASDAQ was up by about 6 points.
Weighing on stocks was a report that showed the U.S. economy expanded at 2.8 percent in the fourth quarter, less than the 3 percent that had been projected.
In Europe the Stoxx Europe 600 Index slipped 0.7 percent as investors await word on developments on the region’s sovereign debt crisis. European Union Economic and Monetary Affairs Commissioner Olli Rehn said authorities are “very close” to reaching an agreement on private-sector involvement in a Greek debt swap.
Despite those words of optimism, the dismal growth of GDP in the U.S. was keeping investors cautious. The health and growth of the U.S. economy is a very important and leading indicator of economic growth worldwide. As analysts like to say, “when the U.S. sneezes, the world catches a cold.”
In corporate news, Ford fell after reporting numbers that missed estimates. Starbucks shares slipped despite reporting better than expected numbers, and Juniper Networks plunged after the second biggest maker of computer networking equipment forecast sales and profits that missed estimates.
In commodities, oil was unchanged at $$99.60 a barrel, gold rose $4.70 to $1,725 a troy ounce and silver was up a few pennies at $33.63.
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Euro recession fears spike on hint of German GDP drop
Berlin, Germany (AHN) – Signs of an economic contraction in Germany’s economy raised fears of a recession in Europe.
The news escalated concern that demand for oil might fall, causing oil futures prices to drop by as much as 1.1 percent. In addition, the euro weakened against the dollar.
Germany has long served as the engine for economic growth for the entire European Union. Therefore, news that the German economy likely shrank by 0.25 percent during the last three months of 2011 caused alarm and has observers worrying the European Union might slide back into a recession.
Official figures from the Federal Statistics Office show that the German economy only grew by 3 percent during 2011 and that was only achieved because of strong growth during the first half of the year.
Moreover, the Statistics Office said that most of the growth during the first six months was driven by domestic demand. The Statistics Office based the annual figure on an estimate of fourth quarter growth. However, the government won’t post the official data for the last quarter until Feb. 15.
In the meantime, Norbert Raeth from the Statistics Office announced at a press conference Wednesday that the economy likely shrank by “around a quarter of a percentage point” in the fourth quarter.
Although the 3 percent growth rate was down from the 3.7 percent in 2010, Germany still had a stronger figure than the United States or the EU.
According to the Organization for Economic Co-operation and Development (OECD), among its member nations Germany showed better growth than the expected growth rate of the following nations:
- U.S. 1.7 percent
- France 1.6 percent
- United Kingdom 0.9 percent
- Italy and Spain 0.7 percent
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Obama applauded for new treatment pledge
Washington, DC, United States (IRIN) – AIDS activists have welcomed a pledge by U.S. President Barack Obama to provide antiretroviral treatment to some six million people globally by 2013, an increase of two million on the previous target.
“Obama has shown political will and leadership in doubling the pace of treatment initiation… he has made a down-payment on ending the AIDS crisis globally,” said Asia Russell, director of international policy at the health advocacy NGO, Health Global Access Project (Health GAP), which has been urging the US to take the lead in the global fight against HIV/AIDS.
In 2010, some 3.2 million people were accessing ARVs through the US President’s Emergency Plan for AIDS Relief (PEPFAR); globally, some 6.6 million people have access to HIV treatment out of an estimated 15 million who need it.
The pledge, however, does not come with an increase in PEPFAR funding from the US$48 billion pledged in 2008 for five years.
“We are looking at smarter programming and greater efficiencies, and costs are also coming down,” said Michael Strong, country coordinator for PEPFAR in Uganda. “We will continue existing programs and increase the number of people on ARVs to six million.”
Strong noted that the U.S. was also working to persuade other countries to take greater responsibility in the fight against HIV. “China, for instance, should not be a recipient of donor funds for HIV – it is the world’s second-largest economy,” he said. “We are urging rich countries like Germany and Sweden to commit fully to efforts to fight AIDS.”
Obama said the U.S. would also provide ARVs to prevent mother-to-child HIV transmission to 1.5 million women, support 4.7 million male circumcisions in eastern and southern Africa, and fund the distribution of at least one billion male condoms.
“HPTN 052 [a large randomized controlled study that showed the effectiveness of ARVs as prevention] showed that treatment not only saves lives, but slashes rates of infection; Obama has shown that he is willing to take action on the basis of that science,” Russell added.
The news comes as a relief for those involved in the fight against HIV, which is severely underfunded and recently suffered an additional blow when the Global Fund to fight AIDS, Tuberculosis and Malaria was forced to cancel its 11th round of funding due to insufficient resources. Activists have called on donor countries to follow Obama’s lead in ensuring treatment is made available for all those in need.
“We are calling for an emergency donor conference within the next 200 days as an opportunity for donors to raise at least US$2 billion towards meeting the costs of treatment,” said Tido von Schoen-Angerer, executive director of the Médecins Sans Frontières (MSF) Access Campaign. “It is very frustrating that we have had such a year of scientific achievement in terms of understanding how to have real impact and possibly end the epidemic, but at the same time funding is running out and we risk going backwards in the fight against HIV.”
Cautious optimism
Obama’s announcement on 1 December, World AIDS Day, was welcomed with cautious optimism in developing countries. “If the pledge is kept, it will be an important step in the global goal of getting 15 million people on treatment by 2015, but it is important to realize that we are not out of the woods yet, unless the rich countries of the north keep their pledges to the Global Fund… because this is the biggest source of funding for many poor countries,” said Nelson Otuoma, national coordinator of the Network of People Living with HIV/AIDS in Kenya (NEPHAK).
Health GAP’s Russell cautioned that high-burden countries would need to play their part in ensuring donor funds were used in the most effective way; in particular, countries such as Uganda – the only PEPFAR-funded country where new HIV infections are on the rise – would need to become more aggressive in using effective prevention technologies and scaled-up treatment programs to show results.
“It will be vital for high-burden countries to step up and match Obama’s commitment with money, leadership and accountability,” she said.
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– Provided by Integrated Regional Information Networks.
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