World Bank Sees Oil at US$63 a Barrel Next Year
I read theSun today (October 5, 2009) and found the above tittle.
Oil prices are expected to average US$63 next year, after US$55.5 this year, the World Bank said in a report on the Middle East and North Africa released in Instanbul on Saturday.
Those prices are sufficient to avoid a major crisis in oil-producing countries, but much lower than the boom of 2008, said the Economic Development and Prospect report.
The World Bank said that oil prices in 2009 were unlikely to be significant affected by the factors that had contributed to high prices before mid-2008. Global demand is likely to remain low said the report.
My Comments
Oil prices are one of the best and important leading indicators. Cost of fuel is one of the major components to the cost of the production. The lower the cost of production, the lower will be the cost of final products and it will create more demand. It is a good sign that world economy is getting better for the next year specifically. I hope it gives a good news to the Malaysian economy under the new prime minister, Datuk Najib Razak.
Source: theSun, October 5, 2009.
Wednesday, October 7, 2009
Thursday, September 17, 2009
Global Economic Recovery
On the Right Path to Global Economic Recovery
By: Hardev Kaur
Almost a year after Lehman Brothers declared bankruptcy in September last year on the back of the housing mortgage crisis in the United States and sent the world economy spiralling into the worst post-World-War crisis, there are signs of recovery in a number of countries in Europe and particularly Asia.
As the effects of stimulus efforts around the globe take effect, key economic data are showing positive signs. The International Monetary Fund (IMF) said on Tuesday that “economic recovery has started”. Reports of new hiring, improved corporate results, improvement in the external trade environment, increased container movements and gains in stock markets - although some of those gains were lost in recent days.
But the mood is decidedly more positive and upbeat.
The Asia-Pacific region has surprised many analysts with the speed of its recovery. Others say they are not surprised as the region was in a much stronger position going into the current crisis than it was for the 1997-1998 financial crisis. The financial position of Asian governments was stronger, the companies were relatively sound and Asian banks steered clear of complex financial systems unlike their Western counterparts.
The Economist suggests that emerging Asia's growth could top five per cent this year, against the G7's possible contraction by 3.5 per cent, and asks how Asia could have made such an astonishing rebound: "Out of smoke and mirrors, say some sceptics".
These sceptics claim that China's economy which grew at an annual rate of 7.9 per cent between April and June, up from 6.1 per cent in the first quarter, "is yet another fake... (and) the numbers are certainly dodgy".
Others, however, say that a number of indicators point to a bounce-back and recovery - car sales, industrial and electricity production, and domestic consumption, among others.
Asia's trade-dependent economies were badly hit, but their second-quarter performance is more encouraging.
Indonesia recorded a growth of five per cent in the second quarter of this year; Singapore's gross domestic product (GDP) rose by 21 per cent, and South Korea grew by an annualised 10 per cent in the April to June period.
Japan, which experienced one of its deepest recessions in decades, recorded positive growth in the second quarter, after four consecutive quarters of negative growth, including an 11.7 per cent fall in annualised terms, in the previous quarter.
Tokyo's GDP rose at an annualised rate of 3.7 per cent from April to June and by 0.9 per cent from January to March. Exports rose 6.3 per cent from three months earlier, the first increase since the start of last year and the biggest gain since the second quarter of 2002.
The emergence of the world's second-largest economy from recession follows last week's news that Germany and France - the two biggest economies in the eurozone - returned to growth in the second quarter. European consumers and house-buyers are venturing into the market and there is a slower pace of employees being laid off.
Labelled "Old Europe" by former US defence secretary Donald Rumsfeld, both economies expanded 0.3 per cent in the second quarter of the year, compared with a contraction of 0.8 per cent in Britain. The US economy, according to the Federal Reserve, appeared to be "levelling out".
In Malaysia, too, "the early numbers show clear signs of improvement", according to Bank Negara Governor Tan Sri Zeti Akhtar Aziz. "We think that by the fourth quarter we will see positive growth."
With recovery in neighbouring countries, regional demand will have a positive impact on Malaysia's export-dependent economy.
David Cohen, an economist with Action Economics in Singapore, is reported as saying that "just like the other regional economies, the economic outlook (for Malaysia) has been improving with the turnaround in exports, improving global backdrop".
There are also improvements in the manufacturing sector, labour market, container movements at the major ports and in lower inflation rates.
The government had forecast a contraction of four to five per cent for the economy this year before registering positive growth next year. Its two stimulus packages totalling RM67 billion are beginning to have an impact on the domestic economy.
Efforts are also under way to identify new areas of growth, restructure the economy and increase contribution of the services sector to economic growth. The adoption of a new economic growth model centred on innovation, creativity and high value-added, and one that is more relevant to today's changed environment, will help move Malaysia from the current high-middle-income level to a high-income economy.
More analysts and economists are positive about the region's future. Mike Buchanan, an economist at Goldman Sachs, raised his forecast for GDP growth in emerging Asia to 5.6 per cent for this year as a whole and 8.6 per cent next year.
The IMF and the Asian Development Bank are also more upbeat about the global economy, but they warn that while the world economy is beginning to pull out of the recession, "stabilisation is uneven and the recovery is expected to be sluggish".
Even as there are positive signs with improved statistics or "green shoots" beginning to emerge, along with key ingredients of growth in Asia - rapid productivity growth, relatively open markets and a high saving rate to finance investment - there are still dark clouds in the sky.
There is no room for complacency. Olivier Blanchard, the IMF's chief economist, warns: "The crisis has left deep scars, which will affect both supply and demand for many years to come."
Source:New Straits Times, August 21, 2009.
Why Blog? The Purpose of Blogging
Tuesday, February 10, 2009
Global Economic Crisis
Two Years of Belt-Tightening A wait All
By: Professor Datuk Dr Mohamed Ariff
Executive Director
Malaysian Institute of Economic Research
All indications are that the current global economic crisis is the worst since the Great Depression of the 1930s, in terms of geographical spread, intensity and duration. No country is spared, although some countries will feel the heat more than some others. Open economies with small domestic markets, in particular, seem most vulnerable.
Growth forecasts for the world economy this year range between 0.5% and 0.9%. Many individual country GDP (gross domestic product) forecasts are negative. Economies already slipping into recession include the United States, Britain, Euro-zone members, Russia, Japan, South Korea, Taiwan, New Zealand and Singapore.
One cannot rule out the possibility of these dismal numbers being revised further down before long, as the crisis is still unfolding. The worst is yet to come. Worse still, there are no quick fixes for the global slump, which means that this crisis will stick around stubbornly longer than most.
One explanation for this frightening prognosis is that this crisis does not represent a purely cyclical phenomenon of the usual boom-bust roller coaster variety, where ups and downs are dramatically swift. This crisis has been brewing for a long time unnoticed by analysts who were focused on short-term fluctuations.
Serious fault lines have developed in the world economy over the years, with severe imbalances of sorts between savings and investment, production and consumption, revenue and expenditure, as manifested in widening current account imbalances and growing budget deficits, not to mention unstable exchange rates, interest rates, and asset prices.
This crisis is a combination of both cyclical and structural problems. The latter require painful microsurgery, including major institutional reforms, which take time, quite unlike macroeconomic countercyclical interventions. What’s more, studies have shown that economic crises preceded by financial crises tend to drag on and on. The task for policymakers in such tough circumstances is daunting. Even the relatively easier macroeconomic policy interventions are not going to be that easy, as policymakers have fewer options.
The three tools used during economic meltdowns are monetary, fiscal and exchange rate instruments to stimulate a faltering economy. For the monetary policy, the central bank reduces interest rates and relaxes statutory reserve requirements so that banks can lend more, resulting in increased consumer spending and investment expenditure, augmenting economic growth.
Fiscally, the treasury reduces taxes and increases public expenditure at the risk of budget deficits, not only to increase the disposable income of the people so that they will spend more, but also to pump-prime the economy through increased government expenditure that will take up the private sector slack.
An appropriate foreign exchange rate policy in such circumstances will be to opt for a weaker currency, as this renders exports competitive and divert domestic demand away from imports to local substitutes.
Unfortunately, the reality on the ground now in most countries, especially the US, is that all three instruments are somewhat blunt. Interest rates are already close to zero in Japan and the US, while in many other countries, they hover at historically low levels.
Interest-rate cuts will work only if rates are high to begin with and the cuts are substantial. Given near-zero interest rates, further rate cuts can only be marginal, with little impact, for nominal interest rates cannot fall below zero.
In the US, real interest rates are negative, given the higher rate of inflation relative to the nominal interest rate. In a recession, inflation tends to give way to deflation, with falling prices, in which case the interest rate will rise in real terms by becoming less negative than previously, thereby raising the cost of borrowing. In other words, the result will be the opposite of what monetary easing is supposed to accomplish.
The picture is quite similar for fiscal instruments as well. Many countries, including Japan, India, Malaysia and the US, have been running large budget deficits even in good times year after year. Increased budget deficit through tax reductions and/or expenditure hikes, in such cases, may only have limited impact due to fiscal fatigue. A budget deficit of, say, 5% of GDP will have significant impact in an economy with a balanced budget, but not for an economy with a deficit of four per cent of GDP.
Where monetary and fiscal measures do not work well, the foreign exchange rate mechanism can help if there are no constraints on exchange rate changes. Thus, an exchange rate devaluation or depreciation will increase demand for a country’s products at home and abroad by making exports cheaper and imports dearer.
In theory, a country’s currency will depreciate in the wake of an economic slump, but this is not the case with the US dollar, which has been strengthening in recent times. The dollar is able to stay strong, despite US economic woes, thanks mainly to massive capital inflows into the country, as the US continues to borrow, with others wanting to keep the dollar strong so that they can continue to export to the US and at the same time protect their reserves from a possible collapse of the greenback.
No way can the US economy recover rapidly so long as its currency remains unrealistically strong. The dollar will have to depreciate significantly for the US to produce more for exports and to divert its insatiable demand towards American products.
Thus, exchange-rate corrections are needed, not only to reduce the US current account deficits but also to stimulate domestic production for both external and internal consumption. This is unlikely to happen anytime soon, however, given the global addiction to the greenback, and hence the failure of the exchange rate instrument.
With all three major policy tools- monetary, fiscal and exchange rates-under heavy sedation, the chances of a quick recovery are quite slim. The writing on the wall suggests the crisis will stick around for at least two years, if not longer.
Source: The New Straits Times, Tuesday, February 10, 2009
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By: Professor Datuk Dr Mohamed Ariff
Executive Director
Malaysian Institute of Economic Research
All indications are that the current global economic crisis is the worst since the Great Depression of the 1930s, in terms of geographical spread, intensity and duration. No country is spared, although some countries will feel the heat more than some others. Open economies with small domestic markets, in particular, seem most vulnerable.
Growth forecasts for the world economy this year range between 0.5% and 0.9%. Many individual country GDP (gross domestic product) forecasts are negative. Economies already slipping into recession include the United States, Britain, Euro-zone members, Russia, Japan, South Korea, Taiwan, New Zealand and Singapore.
One cannot rule out the possibility of these dismal numbers being revised further down before long, as the crisis is still unfolding. The worst is yet to come. Worse still, there are no quick fixes for the global slump, which means that this crisis will stick around stubbornly longer than most.
One explanation for this frightening prognosis is that this crisis does not represent a purely cyclical phenomenon of the usual boom-bust roller coaster variety, where ups and downs are dramatically swift. This crisis has been brewing for a long time unnoticed by analysts who were focused on short-term fluctuations.
Serious fault lines have developed in the world economy over the years, with severe imbalances of sorts between savings and investment, production and consumption, revenue and expenditure, as manifested in widening current account imbalances and growing budget deficits, not to mention unstable exchange rates, interest rates, and asset prices.
This crisis is a combination of both cyclical and structural problems. The latter require painful microsurgery, including major institutional reforms, which take time, quite unlike macroeconomic countercyclical interventions. What’s more, studies have shown that economic crises preceded by financial crises tend to drag on and on. The task for policymakers in such tough circumstances is daunting. Even the relatively easier macroeconomic policy interventions are not going to be that easy, as policymakers have fewer options.
The three tools used during economic meltdowns are monetary, fiscal and exchange rate instruments to stimulate a faltering economy. For the monetary policy, the central bank reduces interest rates and relaxes statutory reserve requirements so that banks can lend more, resulting in increased consumer spending and investment expenditure, augmenting economic growth.
Fiscally, the treasury reduces taxes and increases public expenditure at the risk of budget deficits, not only to increase the disposable income of the people so that they will spend more, but also to pump-prime the economy through increased government expenditure that will take up the private sector slack.
An appropriate foreign exchange rate policy in such circumstances will be to opt for a weaker currency, as this renders exports competitive and divert domestic demand away from imports to local substitutes.
Unfortunately, the reality on the ground now in most countries, especially the US, is that all three instruments are somewhat blunt. Interest rates are already close to zero in Japan and the US, while in many other countries, they hover at historically low levels.
Interest-rate cuts will work only if rates are high to begin with and the cuts are substantial. Given near-zero interest rates, further rate cuts can only be marginal, with little impact, for nominal interest rates cannot fall below zero.
In the US, real interest rates are negative, given the higher rate of inflation relative to the nominal interest rate. In a recession, inflation tends to give way to deflation, with falling prices, in which case the interest rate will rise in real terms by becoming less negative than previously, thereby raising the cost of borrowing. In other words, the result will be the opposite of what monetary easing is supposed to accomplish.
The picture is quite similar for fiscal instruments as well. Many countries, including Japan, India, Malaysia and the US, have been running large budget deficits even in good times year after year. Increased budget deficit through tax reductions and/or expenditure hikes, in such cases, may only have limited impact due to fiscal fatigue. A budget deficit of, say, 5% of GDP will have significant impact in an economy with a balanced budget, but not for an economy with a deficit of four per cent of GDP.
Where monetary and fiscal measures do not work well, the foreign exchange rate mechanism can help if there are no constraints on exchange rate changes. Thus, an exchange rate devaluation or depreciation will increase demand for a country’s products at home and abroad by making exports cheaper and imports dearer.
In theory, a country’s currency will depreciate in the wake of an economic slump, but this is not the case with the US dollar, which has been strengthening in recent times. The dollar is able to stay strong, despite US economic woes, thanks mainly to massive capital inflows into the country, as the US continues to borrow, with others wanting to keep the dollar strong so that they can continue to export to the US and at the same time protect their reserves from a possible collapse of the greenback.
No way can the US economy recover rapidly so long as its currency remains unrealistically strong. The dollar will have to depreciate significantly for the US to produce more for exports and to divert its insatiable demand towards American products.
Thus, exchange-rate corrections are needed, not only to reduce the US current account deficits but also to stimulate domestic production for both external and internal consumption. This is unlikely to happen anytime soon, however, given the global addiction to the greenback, and hence the failure of the exchange rate instrument.
With all three major policy tools- monetary, fiscal and exchange rates-under heavy sedation, the chances of a quick recovery are quite slim. The writing on the wall suggests the crisis will stick around for at least two years, if not longer.
Source: The New Straits Times, Tuesday, February 10, 2009
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Saturday, February 7, 2009
Is China Immune to the Crisis
Addressing the annual World Economic Forum in Davos, Switzerland, Chinese Premier Wen Jiabao explained his government's plan to counter the global economic melt-down with public spending and loans.
He all but guaranteed that China's annual growth remain above 8% this year. Wen's words were like warm milk to the recession-numbered audience of global political and business leaders.
But does the Chinese government really have the tools needed to keep its economy so resilient? Perhaps, but it is far from obvious.
America's deepening recession is slamming China's export sector, just as it has everywhere else in Asia.
The immediate problem is a credit crunch, not so much in China as in the United States and Europe, where many small and medium-size importers cannot get the trade credits they need to buy inventory from abroad.
As a result, some once-booming Chinese coastal areas now look like ghost towns, as tens of thousands of laid-off workers have packed their bags and returned to the country side. Similarly, in Beijings's Korean section, perhaps half of the 200,000 to 300,000 inhabitants - mainly workers (and their families) who are paid by Korean companies which produce goods in China for export - reportedly have gone home.
With roughly US$2 trillion in foreign-exchange reserves, the Chinese do have deep pockets to fund massive increases in government spending and to help guarantee bank loans.
Many leading Chinese researchers are convinced that the government will do whatever it takes to keep growth above 8%.
But there is a catch. Even if successful in the short run, the huge shift toward government spending will almost certainly lead to significantly slower growth rates a few years down the road.
Simply put, it is far from clear that marginal infrastructure projects are worth building, given that China is already investing more than 45% of its income, much of it infrastructure.
True, some of China's fiscal stimulus effectively consists of loans to the private sector via the highly controlled banking sector. But is there any reason to believe that new loans will go to Worthy projects rather than to politically connected borrowers?
In fact, China's success so far has come from maintaining a balance between government and private sector expansion. Sharply rising the government's already outsized profile in the economy will upset this delicate balance, leading to slower growth in the future.
It would be preferable for China to find a way to substitute Chinese for US private consumption demand, but the system seems unable to move quickly in this direction.
If government investment has to be the main vehicle, then it would be far better to build desperately-needed schools and hospitals than "bridges to nowhere", as Japan famously did when it down a similar path in the 1990s.
Unfortunately, China's officials need to excel in the country's "growth tournament" to get promoted. Schools and hospitals simply do not generate the kind of fast tax revenue and GDP growth needed to outperform political rivals.
Even prior to the onset of the global recession, there were strong reasons to doubt the sustainability of China's growth paradigm. The environmental degradation is obvious even to casual observers.
And economists have started to calculate that if China were to continue its prodigious growth rate, it would soon occupy far too large a share of the global economy to maintain its recent export trajectory.
So a shift to greater domestic consumption was inevitable anyway. The global recession has simply brought that problem forward a few years.
Interestingly, the US faces a number of similar challenges.
For years, the US achieved fast growth by deferring attention to a variety of issues, ranging from the environment to infrastructure to health care. Even without the financial crisis, addressing the shortcomings in these areas would likely have slowed down US growth.
This is not to say that the US and China are the same. One of the great challenges ahead is to find a way to being these two countries's savings in line, given that many believe planted the seeds of financial crisis.
I was reminded of the challenge recently when a Chinese researcher explained that men in China today feel compelled to save in order to find a bride. The same week, a former student of mine who lost his lucrative financial sector job explained that he had no savings because it was so expensive to date in New York! These social differences have little to do with the yuan-dollar exchange rate, although that matters, too.
One way or the other, the financial crisis is likely to slow medium-term Chinese growth significantly. But will its leaders succeed in stabilising the situation in the near term? I hope so, but I would be more convinced by a plan tilted more toward domestic private consumption, health, and education than to one based on the same growth strategy of the past 30 years.
Kenneth Rogolf is professor of economics and public policy at Harvard University and was formerly chief economist at the IMF.
Source: The New Straits Times (Malaysia), Saturday, February 7, 2009
He all but guaranteed that China's annual growth remain above 8% this year. Wen's words were like warm milk to the recession-numbered audience of global political and business leaders.
But does the Chinese government really have the tools needed to keep its economy so resilient? Perhaps, but it is far from obvious.
America's deepening recession is slamming China's export sector, just as it has everywhere else in Asia.
The immediate problem is a credit crunch, not so much in China as in the United States and Europe, where many small and medium-size importers cannot get the trade credits they need to buy inventory from abroad.
As a result, some once-booming Chinese coastal areas now look like ghost towns, as tens of thousands of laid-off workers have packed their bags and returned to the country side. Similarly, in Beijings's Korean section, perhaps half of the 200,000 to 300,000 inhabitants - mainly workers (and their families) who are paid by Korean companies which produce goods in China for export - reportedly have gone home.
With roughly US$2 trillion in foreign-exchange reserves, the Chinese do have deep pockets to fund massive increases in government spending and to help guarantee bank loans.
Many leading Chinese researchers are convinced that the government will do whatever it takes to keep growth above 8%.
But there is a catch. Even if successful in the short run, the huge shift toward government spending will almost certainly lead to significantly slower growth rates a few years down the road.
Simply put, it is far from clear that marginal infrastructure projects are worth building, given that China is already investing more than 45% of its income, much of it infrastructure.
True, some of China's fiscal stimulus effectively consists of loans to the private sector via the highly controlled banking sector. But is there any reason to believe that new loans will go to Worthy projects rather than to politically connected borrowers?
In fact, China's success so far has come from maintaining a balance between government and private sector expansion. Sharply rising the government's already outsized profile in the economy will upset this delicate balance, leading to slower growth in the future.
It would be preferable for China to find a way to substitute Chinese for US private consumption demand, but the system seems unable to move quickly in this direction.
If government investment has to be the main vehicle, then it would be far better to build desperately-needed schools and hospitals than "bridges to nowhere", as Japan famously did when it down a similar path in the 1990s.
Unfortunately, China's officials need to excel in the country's "growth tournament" to get promoted. Schools and hospitals simply do not generate the kind of fast tax revenue and GDP growth needed to outperform political rivals.
Even prior to the onset of the global recession, there were strong reasons to doubt the sustainability of China's growth paradigm. The environmental degradation is obvious even to casual observers.
And economists have started to calculate that if China were to continue its prodigious growth rate, it would soon occupy far too large a share of the global economy to maintain its recent export trajectory.
So a shift to greater domestic consumption was inevitable anyway. The global recession has simply brought that problem forward a few years.
Interestingly, the US faces a number of similar challenges.
For years, the US achieved fast growth by deferring attention to a variety of issues, ranging from the environment to infrastructure to health care. Even without the financial crisis, addressing the shortcomings in these areas would likely have slowed down US growth.
This is not to say that the US and China are the same. One of the great challenges ahead is to find a way to being these two countries's savings in line, given that many believe planted the seeds of financial crisis.
I was reminded of the challenge recently when a Chinese researcher explained that men in China today feel compelled to save in order to find a bride. The same week, a former student of mine who lost his lucrative financial sector job explained that he had no savings because it was so expensive to date in New York! These social differences have little to do with the yuan-dollar exchange rate, although that matters, too.
One way or the other, the financial crisis is likely to slow medium-term Chinese growth significantly. But will its leaders succeed in stabilising the situation in the near term? I hope so, but I would be more convinced by a plan tilted more toward domestic private consumption, health, and education than to one based on the same growth strategy of the past 30 years.
Kenneth Rogolf is professor of economics and public policy at Harvard University and was formerly chief economist at the IMF.
Source: The New Straits Times (Malaysia), Saturday, February 7, 2009
Wednesday, February 4, 2009
Bank of Japan (BOJ) To Buy Shares Worth US$11 billion
In theSun today (4 February 2009), the Bank of Japan pledged to spend US$11 billion to buy shares held by Japanese banks to ease the pain from the global financial crisis, reviving a scheme launched earlier this decade to head off a domestic banking crisis.
The move came after a report said Mitsubishi UFJ Financial Group, Japan's biggest bank, would post a loss for April-December 2008 and slash its annual forecasts.
Under the scheme, the BOJ will buy up to Yen 1 trillion worth of listed shares held by Japanese banks up until April 2010 to reduce their exposure to the stock market
But some analysts questioned if the central bank stock buying would do much to help an economy already slipping deep into recession.
To protect the central bank balance sheet (BOJ), BOJ will buy shares in companies that have credit ratings of at least BBB-minus, the lowest rank in investment grade debt.
The BOJ's measure follows a government plan to buy up to Yen 20 trillion in shares from banks and would revive a similar scheme it ran earlier this decade when authorities were trying to stave off a domestic banking crisis.
The move came after a report said Mitsubishi UFJ Financial Group, Japan's biggest bank, would post a loss for April-December 2008 and slash its annual forecasts.
Under the scheme, the BOJ will buy up to Yen 1 trillion worth of listed shares held by Japanese banks up until April 2010 to reduce their exposure to the stock market
But some analysts questioned if the central bank stock buying would do much to help an economy already slipping deep into recession.
To protect the central bank balance sheet (BOJ), BOJ will buy shares in companies that have credit ratings of at least BBB-minus, the lowest rank in investment grade debt.
The BOJ's measure follows a government plan to buy up to Yen 20 trillion in shares from banks and would revive a similar scheme it ran earlier this decade when authorities were trying to stave off a domestic banking crisis.
Australia Slashes Interest Rates To 45-Year Low
When I was taking my breakfast today (4 February 2009), I read the above tittle in theSun.
Australia's central bank slashed interest rates by 1% to a 45-year low in the latest in a series of aggressive cuts sparked by the global financial crisis. The move by the Reserve Bank of Australia (RBA) took the official cash rate to 3.25%.
It was the 5th consecutive cut by the RBA, which has sliced a total of 400 basis points off the official rate since September 2008 as inflation fears gave way to concern about the impact of slower world economic growth.
Meanwhile (from theSun, 4 February 09), Australia's government unveiled a A$42 billion second stimulus in a bid to buttress the rapidly cooling economy from the global slowdown, and halved its 2008/09 growth forecast to 1%.
The plan included A$28.8 billion for infrastructure, schools and housing, as well as A$12.7 billion cash payments for low and mid-income earners to be paid in Mac 2009.
Australia's stimulus spending announced since September 2008 now totals A$78 billion and adds to a raft of packages developed in major economies, including US$819 billion in the United States and US$586 billion by China.
Australia's central bank slashed interest rates by 1% to a 45-year low in the latest in a series of aggressive cuts sparked by the global financial crisis. The move by the Reserve Bank of Australia (RBA) took the official cash rate to 3.25%.
It was the 5th consecutive cut by the RBA, which has sliced a total of 400 basis points off the official rate since September 2008 as inflation fears gave way to concern about the impact of slower world economic growth.
Meanwhile (from theSun, 4 February 09), Australia's government unveiled a A$42 billion second stimulus in a bid to buttress the rapidly cooling economy from the global slowdown, and halved its 2008/09 growth forecast to 1%.
The plan included A$28.8 billion for infrastructure, schools and housing, as well as A$12.7 billion cash payments for low and mid-income earners to be paid in Mac 2009.
Australia's stimulus spending announced since September 2008 now totals A$78 billion and adds to a raft of packages developed in major economies, including US$819 billion in the United States and US$586 billion by China.
Thursday, January 22, 2009
Singapore Faces its Worst Recession
Singapore Faces its Worst Recession
Singapore faces its worst ever recession and cut 2009 economic outlook. The government forecast shrinkage of between 2 and 5% for 2009, which follows a previous estimate of a contraction of 2% to growth of 1%. (theSun, January 22, 09)
For 2008, the Singapore economy grew an estimated 1.2% compared with 7.7% in 2007. The Singapore economy is going through its sharpest, deepest and most protracted recession.
Singapore's worst recession since independence in 1965 occured in 2001 when the economy contracted by 2.4%.
In today theSun(January 23, 2009), Singapore will for the first time tap government reserves to pay for part of a S$20.5 billion package to help companies and save jobs as the country grappes with its worst-ever recession. The package includes S$5.1 billion for training and other measures to save jobs and S5.8 billion to stimulate bank lending.
The budget also offered a 1 percentage point corporate tax cut.
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