The recovery in developed economies is on track although slowing activity in big emerging markets means global growth will be only moderate at best in the near term, the OECD said on Tuesday.Exceptionally bad winter weather in North America and a sales tax hike in Japan are also disrupting the pace of recovery, the Paris-based Organisation for Economic Cooperation and Development said.Against that backdrop, the OECD urged the European Central Bank and the Bank of Japan to keep up their monetary stimulus, if not increase it, while it said the US Federal Reserve was right to begin winding down its bond-buying programme."The gradual recovery in the advanced economies is encouraging, even if temporary factors have pushed down growth rates in the early months of this year, while the slowdown in emerging economies is likely to be a drag on global growth," OECD acting chief economist Rintaro Tamaki said in a statement.Growth for major advanced economies in the first half of 2014 will be slower than in the second half of 2013, but much improved from the sluggish rates of late 2012 and early 2013, the OECD said in an update of its views on the global economy."Given that emerging economies now account for over half the world economy, continued sub-par economic performance for several of the major EMEs (emerging market economies) is likely to mean that global growth remains only moderate in the near term," the OECD said.It estimated growth in the United States would slow to 1.7 percent in the first quarter from the previous three months on an annualised basis, down from 2.4 per cent in the fourth quarter when exceptionally bad weather weighed on activity.Japanese growth would surge 4.8 percent in the first quarter from the previous quarter as consumers brought forward purchases ahead of a sales tax increase on April 1.The OECD gave its updated forecasts as part of an interim health-check for the global economy before its much more detailed Economic Outlook due in May. It did not update its estimates for U.S. and Japanese growth in the second quarter because one-off factors made it too problematic, it said.Turning to Europe, the OECD saw Germany's quarter-on-quarter annualised growth rate reaching 3.7 percent in the first quarter before slowing to 2.5 percent.France, the euro zone's second biggest economy after Germany, was seen growing only 0.7 per cent in the first three months of the year, rising to 1 percent in the second quarter.Outside the euro zone, the British economy was seen growing 3.3 per cent in both the first and second quarters.Turning to emerging market economies, the OECD said some were seeing a marked loss of momentum as capital outflows exposed vulnerabilities in some countries.It noted that Brazil, India, South Africa and Turkey among others have been forced to raise interest rates to keep capital outflows in check.Meanwhile, weak balance sheets in China raised the risk of a sharp slowdown there, the OECD said.(Reuters)
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The rupee is trading lower at 60.19/20 from Wednesday's close of 60.07/08, as dollar demand from banks for oil and defence related payments counters gains in the local share market.The BSE Sensex is up 0.04 per cent on caution ahead of earnings of key blue-chip companies later in the day.Asian currencies trading mixed against the dollar, with most stronger.Traders expect the market to remain range-bound, between 60.00-60.30 for the session.(Reuters)
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Moderating food prices are likely to have slowed inflation in India during February, giving the RBI some relief after it raised interest rates three times since September to dampen price pressures, a Reuters poll showed. Industrial ouput, however, was seen falling 0.6 per cent in January, according to the poll's consensus forecast, due to weak consumer demand and investment. The government will release the data on Wednesday. Output fell by 0.6 per cent in December also, and if the forecast for January is correct, it would mark four months of falls and the longest phase of contraction that Indian factories have suffered in more than five years. Last year's economic growth of 4.79 per cent was India's worst performance in a decade, and opinion polls show voters are likely to abandon the ruling Congress Party at a general election next month. Whereas Indian voters are very sensitive to price rises, the likely slower inflation last month is probably too little, too late for the Congress-led coalition. The poll forecast annual retail price inflation likely eased to 8.35 per cent in February, the slowest in two years, after standing at 8.79 per cent in January. Core retail price inflation in January had remained sticky at around 8 per cent, a level deemed uncomfortably high by Reserve Bank of India Governor Raghuram Rajan. Retail price index data is also due to be released on Wednesday. The poll also forecast the wholesale price index likely eased to 4.99 per cent last month, the lowest since May 2013, and down from 5.05 per cent in January. The WPI data is due to be be released on Friday. "Food inflation took longer to dissipate. Initially it was on the higher side, but now those price affects have actually come off," said Vishnu Varathan, an economist at Mizuho Corporate Bank in Singapore. The reduced inflation will remove some pressure from the Reserve Bank of India for further action on monetary policy. The International Monetary Fund has warned that the RBI might have to resort to more rate hikes if inflation remains stubborn. "For now inflation is going to be quite co-operative," said Varathan. The factory ouptut data likely will make less pleasant reading for a central bank that has struggled to support weakening economic growth, while trying to dampen price pressures. Analysts say both export and domestic demand remain weak, and industrialists have delayed making fresh investment before the election. Capital goods production - a barometer for investment - shrank 3 percent in December and has contracted in seven of the previous nine months. (Reuters)
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Billionaire Infosys co-founder and face of "Aadhar" programme Nandan Nilekani formally joined the Congress today, a day after it made him party candidate for Bangalore Lok Sabha constituency where he is up for a tough fight.Amid drumbeats, Nilekani, Chairman of the Unique Identification Authority of India, was welcomed into Congress by KPCC President G Parameshwara who handed over the party flag to him before he filled in the membership form at a function at party office here."Bangalore needs a strong champion in Delhi and I'm set to provide that," said 58-year old Nilekani, known for being part of building Infosys, started in 1981 with an initial capital of $250 by N R Narayana Murthy and others, into a behemoth that is seen as showpiece of Indian IT industry.On his political baptism, Nilekani will take on BJP's Ananth Kumar, who has remained unchallenged in Bangalore South, winning the seat five times.Middle-class dominated Bangalore South has been electorally hostile to Congress since the late 1970s, the sole exception being its victory in 1989 when former Chief Minister R Gundu Rao had won.On facing a strong candidate like Kumar, Nilekani said "In every profession, politics or business there comes a time when somebody has to go, and that time has arrived."Weeks before his formal entry into Congress, Nilekani had begun his campaign, coming to grips with ground realities as he faces a daunting task to reach out to 20 lakh plus voters with the polls in Karnataka slated for April 17."I think the constituency needs a clean, capable local person, somebody who has worked selflessly; ....everywhere I go there is a strong desire for change. I have got tremendous support," he added.Asked if allegations of corruption against Congress-led UPA government would affect his prospects, he said "....it is not that the other party (BJP) has a great clean image either, we know the problems we had for the last five years in the state.""I look forward to working with the party because party is going through change; I have been invited to be part of the change, I would like to do that," Nilekani said. "....I'm confident that I will be an ambassador for Bangalore. I will work with all the MLA's, Chief Minister and Congress President to make sure that Bangalore gets the best deal," Nilekani said.Stating that he is experienced in public sector, private sector and in urban governance, Nilekani said he has gained some political experience too while working for Aadhar, as he had a task of convincing Chief Ministers from various political parties to implement the scheme.He said: "I think I bring some unique experience to the people, three major things I was part of. First from scratch I was co-founder of one of India's largest companies so I know how to create jobs and I have created lakhs of them. Number two from scratch from an idea I was part of a ID programme which gave 60 crore people identity. Third, 1999 to 2004 I was chairman of BATF (Bangalore Agenda Task Force) where I got an opportunity to go into nitty-gritty of local governance....""I know every detail of how a city functions, so the fact that I have diverse experience.. I'm a clean and local candidate. Therefore people should vote for me," he added.Asked about getting the ticket for elections soon after joining Congress, whereas loyal long-time party workers are still waiting for their chance, he said, "I was going to join the party was a well known fact for long time, for the last five years I have worked with this government- they gave the political backing to me to go ahead with the Aadhar project; ....they have chosen me as the candidate to bring change into the system."I'm very greatful to them (Congress), it is a matter of great pride they have given me the ticket. I will serve the party as a loyal party member and will make sure that this party does well," he added.Rules stipulate that ticket seekers should serve in the party for three years but it has apparently been relaxed in the case of Nilekani.After demitting office as Infosys CEO in 2007, Nilekani had taken charge as head of the Unique Identification Authority of India, mandated to give a billion Indians an identity card.(PTI)
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Leaders of the BRICS emerging market nations launched a $100 billion development bank and a currency reserve pool on Tuesday (15 July) in their first concrete step toward reshaping the Western-dominated international financial system.The bank aimed at funding infrastructure projects in developing nations will be based in Shanghai, and India will preside over its operations for the first five years, followed by Brazil and then Russia, leaders of the five-country group announced at a summit.They also set up a $100 billion currency reserves pool to help countries forestall short-term liquidity pressures.The long-awaited bank will be called the New Development Bank.It is the first major achievement of the BRICS countries - Brazil, Russia, India, China and South Africa - since they got together in 2009 to press for a bigger say in the global financial order created by Western powers after World War Two and centered on the International Monetary Fund and the World Bank.The BRICS were prompted to seek coordinated action following an exodus of capital from emerging markets last year, triggered by the scaling back of US monetary stimulus.The new bank reflects the growing influence of the BRICS, which account for almost half the world's population and about one-fifth of global economic output.The bank will begin with a subscribed capital of $50 billion divided equally between its five founders, with an initial total of $10 billion in cash put in over seven years and $40 billion in guarantees. It is scheduled to start lending in 2016 and be open to membership by other countries, but the capital share of the BRICS cannot drop below 55 per cent.The contingency currency pool will be held in the reserves of each BRICS country and can be shifted to another member to cushion balance-of-payments difficulties. This initiative gathered momentum after the reverse in the flows of cheap dollars that fueled a boom in emerging markets for a decade.Bid To Contain Volatility"It will help contain the volatility faced by diverse economies as a result of the tapering of the United States' policy of monetary expansion," Brazilian President Dilma Rousseff said."It is a sign of the times, which demand reform of the IMF," she told reporters at the close of the summit.China, holder of the world's largest foreign exchange reserves, will contribute the bulk of the contingency currency pool, or $41 billion. Brazil, India and Russia will chip in $18 billion each and South Africa $5 billion.If a need arises, China will be eligible to ask for half of its contribution, South Africa for double and the remaining countries for the amount they put in.China's official Xinhua news agency, citing unidentified sources at the Chinese Finance Ministry, said the new bank would give developing countries a greater say in the international financial order, a theme President Xi Jinping struck ahead of the summit.The new bank "will promote the global system of economic governance to develop in a just and fair direction," the agency said.Impasse BrokenNegotiations over the headquarters and first presidency lasted until the eleventh hour due to differences between India and China. The impasse reflected the trouble Brazil, Russia, India, China and South Africa have had in reconciling stark economic and political differences that made it hard for the group to turn rhetoric into concrete action."We pulled it off 10 minutes before the end of the game. We reached a balanced package that is satisfactory to all," a Brazilian diplomat told Reuters.Negotiations to create the bank dragged on for more than two years as Brazil and India fought China's attempts to get a bigger share in the lender than the others.In the end, Brazil and India prevailed in keeping equal equity at its launch, but fears linger that China, the world's No. 2 economy, could try to assert greater influence over the bank to expand its political clout abroad. China, however, will not preside over the bank for two decades.Facing efforts by leading Western nations to isolate Russia for annexing Crimea and stirring revolt in eastern Ukraine, the BRICS summit provided President Vladimir Putin with a welcome geopolitical platform to show he has friends elsewhere, economic powers seen as shaping the future of the world.The BRICS abstained from criticizing Russia over the crisis in Ukraine and called instead for restraint by all actors so the conflict can be resolved peacefully.(Reuters)
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Asian bullion consumers were cautious about this week's rally in prices, buying only on dips and selling at higher prices to make a profit. Premiums across Asia were either stable or lower from last week's levels as gold prices rallied almost 2 per cent for the week. Gold was trading near a four-month high of $1,354.80 on Friday and looked poised to log its fifth straight week of gains as a weaker dollar and geopolitical tensions in Ukraine boosted its safe-haven status. "It has been a mixed week," said one Singapore-based bullion dealer. "People are selling at $1,350 and above but came back to buy at around $1,330." A retailer in Singapore said buying has dropped off since prices broke through $1,320 and that consumers were selling scrap. In China, the world's biggest gold consumer, domestic prices were at a discount to spot prices on soft demand. Physical demand has fallen off sharply in China since the Lunar New Year holiday in late January. "Consumers had bought more than necessary last year when prices fell sharply so now when prices are higher, they are holding back," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong. "There is a small amount of selling in China as well." Gold prices fell 28 percent last year as funds moved money to higher-yielding stocks and the U.S. Federal Reserve began unwinding its massive stimulus measures. IndiaGold premiums in India, the second biggest consumer, fell further on Friday (7 March) to their lowest level in five months on lack of demand ahead of national elections set to begin next month. Premiums to London prices fell to $60 an ounce, a level last seen in early October, compared with $80 on Thursday. They hit a record of $160 in December because of government efforts to discourage gold demand, including a record high import duty of 10 percent. Dealers said demand was quiet due to fewer weddings ahead of the Holi festival, considered to be an inauspicious period for new beginnings. Also having an impact is the election code of conduct, according to which people are not allowed to carry more than Rs 50,000 in cash without proper documentation. "Cash movement will be less till May due to the election code of conduct, so people will hold on to cash and no unnecessary jewellery purchases will happen," said Bachhraj Bamalwa, director with All India Gems and Jewellery Trade Federation. (AGencies)
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The United States would welcome Bharatiya Janata Party's (BJP) prime ministerial candidate Narendra Modi if he wins the upcoming election, a U.S. official said, in the clearest sign Washington will drop a travel ban on Modi imposed after anti-Muslim riots in 2002. US Assistant Secretary of State Nisha Biswal told a television interviewer that Washington was ready to do business with Modi, the front runner ahead of the April-May general election who is best placed to form a coalition government. "I would just say that the United States has welcomed every leader of this vibrant democracy, and that a democratically elected leader of India will be a welcome partner," Biswal told Headlines Today when asked if Modi, as prime minister, would be granted a U.S. visa. Biswal made her comments in New Delhi on a visit to rebuild trade and political ties shaken by a row over the arrest in New York last December of an Indian diplomat suspected of visa fraud. US Ambassador to India Nancy Powell visited Modi at his home in Gandhinagar in Gujarat last month, ending a long estrangement over riots that erupted in the state governed by the Hindu nationalist leader. At least 1,000 people, most of them Muslims, were killed in 2002 when mobs went on a rampage across Gujarat after a train carrying Hindu pilgrims was torched, killing 59 people. Powell's visit was the highest-profile encounter between US officials and Modi since the State Department revoked his visa in 2005 over the bloodshed to which rights activists say he turned a blind eye. He denies the allegation. Biswal said the United States hoped India would continue to build a tolerant, moderate and secular society when asked if Washington had put its human rights concerns on the back burner because of Modi's political rise. "Visa issues are handled on a case by case basis. And determinations are made based on the facts of the day and are reviewed at the time that a request is made," she said according to a transcript released by the US embassy. The U.S. administration, which does not want to be seen as taking sides in the Indian election campaign, has stopped short of stating publicly that Modi would be able to travel to the United States should he win the lower house election, leading to speculation that he would not be welcome in Washington. But diplomats say the until the election results are known, the question of whether Modi would be given a visa is hypothetical. Should he become the country's next leader, he would automatically receive a US visa, they say. Modi himself has not commented on the travel ban, but for his supporters in the Bharatiya Janata Party and outside the US decision has been a sore point. Senior party leader Arun Jaitley said last month that the US boycott had not been based on any evidence or court verdict but on "excessive propaganda". Britain was the first European country to end its boycott on meeting Modi followed by other European countries last year.(Reuters)
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In two years of tough negotiations to create the new BRICS development bank, the main stumbling block was not a lack of resources or commitment, but fellow partner China.The Chinese initially wanted a bigger share of the bank that was formally launched on Tuesday by the leaders of the five BRICS countries in a direct challenge to the West's tightly-held grip over global finances, officials involved in talks said.In the end, Brazil and India prevailed in keeping capital participation equal among members, but fears linger that China, the world's No. 2 economy, could try to assert greater influence over the $100 billion bank to expand its political clout abroad."It is inevitable that the Chinese will dominate the new bank," said Riordan Roett, a political scientist at Johns Hopkins University. "The Chinese don't get involved in these ventures unless they are going to have, not total control, but a significant amount of influence."Known for their striking differences in economics and politics, the BRICS face the challenge of containing China's drive to control institutions that were supposed to give each partner an equal voice.Internal discord became evident on Tuesday when the group struggled to overcome a last-minute stalemate in negotiations as China and India vied for the headquarters of the bank. To overcome the snag, Brazil withdrew its request for the bank's first presidency in favor of India, a senior official involved in the discussions said.The bank will be based in Shanghai, China's business hub.The objective of the bank is to break away from a model that gives little voting rights to emerging economies and perpetuates the dominance of the United States and Europe over the International Monetary Fund and World Bank."This is a big challenge for the BRICS. Sometimes when you get down to the actual negotiations and countries want more say, they forget about some of their lofty aspirations when they were criticizing the IMF and World Bank," said Kevin Gallagher, professor of international relations at Boston University.China already has the largest share of the new reserve fund, also launched on Tuesday and known as the Contingent Reserves Arrangement. It pledged $41 billion while Brazil, Russia and India promised $18 billion each and South Africa $5 billion.Chinese CloutAlthough China's economy has slowed in recent years, it remains the world's main engine of growth. Brazil, India and Russia have slowed even more sharply since the group's first adopted the BRIC acronym in the past decade. Much-smaller South Africa joined the group in 2010.China's economy is bigger than that of all the other BRICS combined and represents the bulk of the group's foreign trade."It is only natural for China to have more influence at the bank because of the importance of its economy," said Paulo Wrobel, professor at the Pontifical Catholic University of Rio de Janeiro's BRICS Policy Center.China's economic might has at times put it at odds with some of its own BRICS partners.An avalanche of Chinese manufactured imports into Brazil over the last three years prompted the South American country to raise trade barriers to keep its manufacturers from going under.In private, other members have frowned at China's slow-moving liberalization of its currency, the yuan, which makes its exports much cheaper.So officials from the other smaller economies have tried to prevent China from growing too powerful in the new institutions. The bank's internal rules seek to prevent any single member from holding too much sway."The idea is to have a professional institution ruled by the best banking practices and shared governance that will keep that risk at bay," Luciano Coutinho, head of Brazil's own development bank BNDES, told Reuters on the sidelines of the summit.The BRICS will hold a minimum stake of 55 percent at the lender, but some analysts say China could increase its hold by bringing in new member countries from its sphere of influence.However, others argue that is in China's best interest to be a team player - at least for now."For China there is interest in making it look like this is not a Chinese dominated bank because that will allow it to finance projects that otherwise it couldn't," said Oliver Stuenkel, a professor at the Getulio Vargas Foundation in Sao Paulo. "The bank is a way to depoliticize Chinese credit."(Reuters)
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