World Economy

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WHAT WENT WRONG – The Economy ; What’s next? ; and related posts on The Economy; Global Monitoring Report and World Hunger

US blights Asia outlook

Emerging Markets – 5th May 2008
By Steve Garton
The credit crunch has not yet played itself out, and Asian economies are not immune from the effects of falling export revenues, leading financiers insisted this weekend. Their remarks struck a contrast with other officials and businessmen who have pronounced that the world economy has now turned the corner. Stephen Roach, chairman of Morgan Stanley Asia and the bank’s former chief economist, told Emerging Markets it was “premature” to say the worst of the credit crisis had passed.
ADB to launch new finance facility
By Anthony Rowley
The ADB is planning a “dedicated infrastructure financing facility” to mobilise public and private sector funds to finance $300 billion a year of infrastructure spending, its president Haruhiko Kuroda announced yesterday. South Korea’s ADB governor Man-Soo Kang immediately. For background A road less traveled
25 April
China’s inflation worries

High prices for food, fuel and other goods are troubling
Despite a slight dip in China’s year-on-year consumer price inflation rate to 8.3% in March, from 8.7% in February, inflation remains at the top of the government’s short-term policy concerns. According to a regular survey by the People’s Bank of China (PBC, the central bank), a new high of 49% of respondents complained that prices were too high in the first quarter of 2008. These sentiments were echoed in a study by a market research firm, ACNielsen, which showed that consumers were cutting back on discretionary spending. (See also Asian inflation)
24 April
Gulf economies
How to spend it

(Economist) A region awash with oil money has one or two clouds on the horizon
The region’s economies are struggling to absorb petrodollars, accumulating like glucose in the bloodstream. The risk they face is the economic equivalent of renal failure: inflation, a hollowing-out of the non-oil sector, and a young, growing workforce in chronic need of outside labour to supplement it. The six nations of the GCC, which also includes Qatar and Oman, earned $381 billion from their exports of oil in 2007 and another $26 billion from gas, according to the Institute of International Finance (IIF). If the oil price remains at about $100 a barrel, they will reap a cumulative windfall of almost $9 trillion by 2020.
Dollar May Fall Versus Euro on Reduced G-7 Intervention Outlook
April 15 (Bloomberg) — The dollar may fall against the euro on reduced speculation that finance officials of the Group of Seven nations will intervene to support the U.S. currency.
Foreign Affairs March-April 2008
The Recession Felt Around the World
By Nouriel Roubini
In an era of globalization, no country is immune when the United States falls onto hard times. Here’s a look at how economies elsewhere will fare.
The Losers:
Mexico and Canada: Living next door to world’s biggest economy has its advantages, but it has big drawbacks, too. Exports to the United States represent about a quarter of each country’s GDP, so direct trade links will bear the brunt of a slowdown. Expect the manufacturing sectors of both countries to feel the pinch.
China: The world’s fastest-growing economy can’t help but be affected when the world’s largest economy slows down, since China relies on exports to the United States as one of its main sources of growth. In recent years, China has boasted double-digit growth. Officially, Chinese economists expect growth to slow down to 9 percent in the wake of a U.S. recession, but only if such a recession is mild, lasting two quarters. If the U.S. recession is severe—four quarters or more—and is centered on a faltering U.S. consumer who buys fewer Chinese goods, then China’s growth is likely to slow to 6 or 7 percent, a hard landing, indeed.

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