#WorldBankcuts #China and #Thailands #growthforecasts - #live #Politicalprotests in Thailand are #hurtingitseconomybadly, #warns World Bank Growth in #EastAsia & #Pacificregion cut to 7.1% Thai growth #slashed from 4.5% to 3% - heres #why #Eurozonedeflationfears grow #CoopBankpostponesresults again Graeme Wearden Graeme Wearden theguardian, Monday 7 April 2014 15.30 BST Jump to comments (119) Print this A general view of the skyline and the Chao Phraya river passing through Bangkok. The Chao Phraya river passing through Bangkok, Thailand. Photograph: CHRISTOPHE ARCHAMBAULT/AFP/Getty Images 3.30pm BST Greeces Prime Minister Antonis Samaras leaves the Finance Ministrys General Accounting office after a meeting with officials in Athens, Monday, April 7, 2014. Greeces Prime Minister Antonis Samaras leaving the Finance Ministrys General Accounting office after a meeting with officials in Athens today. Photograph: Thanassis Stavrakis/AP Over in Greece, the prime minister has announced a scheme to deal with Greeces backlog of unpaid VAT bills, in a bid to get the economic wheels grinding a little faster. The eKathimerini newspaper has the details: Prime Minister Antonis Samaras announced on Monday the launch of a scheme that will companies to offset the VAT they owe the state against the returns the state owes them. The option will also be open to firms to use in the debts they owe to each other, meaning they would subtract the VAT from the total owed. Samaras said that fines imposed on businesses that are unable to pay their taxes because the state has not returned their VAT would be scrapped. “The state cannot be strict on citizens if it is not fair to citizens,” he said. Greeces Prime Minister Antonis Samaras, center, leaves the Finance Ministrys General Accounting office surrounded by his personal security after a meeting with officials in Athens, Monday, April 7, 2014 Photograph: Thanassis Stavrakis/AP 3.12pm BST After that early wobble, the Nasdaq index has clawed its way into the green, up just 0.14%. Shares in Yahoo! dived another 2.5%, but recovered some ground to around $33.8, or 1.1% lower. Pharmaceuticals firm Questcor is one of the biggest risers, up 21% following the $5.6bn takeover deal launched by Mallinckrodt (see earlier) Updated at 3.12pm BST 2.43pm BST Wall Street is open...and the main indices are falling, adding to last Fridays losses. The Dow Jones industrial average is down 35 points, or 0.22%, to 16377. And the tech-heavy Nasdaq, which shed 2% at the end of last week, is down another 0.5% in early trading. Momentum stocks Tesla, Facebook extend losses — MarketWatch (@MarketWatch) April 7, 2014 Details to follow.... 1.59pm BST Prime Minister David Cameron meets staff and shoppers including Tara Leniston and her 11 month old son Luca at Asda in Clapham, south London, where he discussed the 12,000 new jobs the supermarket chain will create over the next five years Prime Minister David Cameron meeting staff and shoppers including Tara Leniston and her 11 month old son Luca at Asda in Clapham, south London, today. Photograph: Stefan Rousseau/PA In the UK, the prime minister has hot-footed it to an Asda store to celebrate the news it is creating 12,000 new jobs across the UK over the next five years. David Cameron (criticised for gushing about Waitrose last week) said he was delighted by the news, which would give people financial security for the future. The PM also showed his softer side, posing with a customers baby for a photo, as the Press Association reports: Cameron joked that it made him broody as he held the 11-month-old, who gently tapped the PM on the head with an Easter bunny balloon. Honestly, young people have all the fun. More here: David Cameron delighted at Asda plans to create 12,000 new jobs 1.37pm BST European stock markets, lunchtime, April 7 2014 European stock markets. Photograph: Thomson Reuters The Russian stock market has taken a tumble today, as the political and military crisis in Ukraine flared up again. The MICEX index has fallen by 3% today. Dixy Group, Russias third-largest food retailer, shed 8.5%. The selloff was fuelled by news that pro-Russian activists in the eastern Ukrainian city of Donetsk has occupied a government building and declared independence from Kiev. They are now calling for a referendum on whether Donetsk Republic should break away from Ukraine. Ukraine: pro-Russia activists proclaim independent republic in Donetsk Separately, a Russian soldier repordetly shot dead a Ukrainian naval officer in eastern Crimea on Sunday. And Russias Gazprom says Ukraine has not met a deadline to pay a $2.2bn bill for gas supplies, with Kiev refusing to pay new, higher, prices. Micex -3%. Thanks, Peoples Republic Of Donetsk. (RTS -4%) t.co/2Y5MJIINUV pic.twitter/NMbspWFXwr — Katie Martin (@katie_martin_FX) April 7, 2014 Updated at 2.01pm BST 12.43pm BST The flurry of M&A activity continues, with a £3.4bn pharmaceutical deal being announced. Drugmaker Mallinckrodt is paying $5.6bn in cash and shares for its Questcor, which makes treatments for autoimmune and inflammatory diseases. Full statement here. Deals are in the air at present -- this morning, Holcim and Lafarge agrees to merge and create the worlds biggest cement maker. 12.29pm BST Clang! Bundesbank president Jens Weidmann has made some hawkish comments that undermine the notion that the European Central Bank is totally committed to taking whatever unconventional measures are needed. Germanys central bank chief told an audience in Frankfurt that monetary policy cannot solve the financial crisis. Unlike Yves Mersch today, and Mario Draghi last week, Weidmann didnt make any reference to quantitative easing (QE). Instead, he cautioned against overstretching the ECB, saying: Overburdening monetary policy is of course anathema to the Bundesbank. So long über-dovish, QE-lover Jens. — Frederik Ducrozet (@fwred) April 7, 2014 He also called for eurozone politicians to keep reforming their economies. Reuters has the details: Weidmann argued that to strengthen the stability of Europes monetary union, stiffened fiscal rules should be applied more consistently and preferential treatment accorded to sovereign debt - treated by European regulators as risk-free - should be ended. Overcoming the crisis is still an uphill struggle; if you dont go forwards, you go backwards, he added.With regard to reforms, governments therefore have to keep the pedal to the metal. In footballing terms, I would say the half-time whistle has blown. However, there is no time for a break. Leading ECB analyst Lorcan Roche Kelly of Agenda Research flashes Weidmann a yellow card: *WEIDMANN SAYS LARGE COUNTRIES INCL FRANCE SHOULD STICK TO RULES (BBG) < And Buba heads should know when to keep their mouths shut. — Lorcan Roche Kelly (@LorcanRK) April 7, 2014 12.18pm BST Heres more reaction to Yves Merschs comments about how the ECB is drawing up a QE programme, just in case... Secondary ECB members making noise today emphasizing that any QE is still a bit away from implementation - careful balancing act performed. — Christopher Vecchio (@CVecchioFX) April 7, 2014 If I were the ECB, Mersch, I would worry that the markets were starting to think of the ECB as a theoretical concept. — Mike Jackson (@bondscoop) April 7, 2014 11.51am BST A top European Central Bank policymaker has confirmed that the ECB is working on a large asset-purchase scheme to drive inflation higher, as Mario Draghi revealed last week. But Yves Mersch also argued that this QE programme isnt required yet. He said: The inflation and deflation risks are more or less level in EMU area which means that we do not see an imminent risk of deflation. However, we are ready to prepare for such a situation. #ECB’s Mersch: Calls QE A ‘Theoretical Concept,’ Long Way To Go To Execution Of QE /via @RANSquawk | Ah, fine... — Yannis Koutsomitis (@YanniKouts) April 7, 2014 #NotOnly #Also #ECBrhetoric *MERSCH SAYS ECB NOT ONLY PREPARING FOR UNCONVENTIONAL MEASURES — Frederik Ducrozet (@fwred) April 7, 2014 11.33am BST Co-op Bank delays results again The turmoil at Co-op Bank deepens - it has just announced that might not release its (already delayed) financial results for 2013 until Friday. Co-op Bank delays its results - again - to Friday at the latest. Had promised to publish by tomorrow after delay from March 26 — Jill Treanor (@jilltreanor) April 7, 2014 City editor Jill Treanor reports: The figures have already been postponed from 26 March after the bank stunned the City by admitting last month that it needed another £400m on top of a £1.5bn cash injection at the end of last year. When it first postponed the results, the bank’s new boss Niall Booker said he aimed to publish the numbers “on or before” 8 April but this rapidly approaching deadline has proved to be too challenging. Heres the full story: Co-op Bank delays issuing results again 11.26am BST This chart, from the NAOs report into Royal Mail, may be mentioned when the Business Committee quizzes Vince Cable on April 29th: Its normal for a companys share price to move on day 1 of listing. But look at the Royal Mail surge vs other IPOs. pic.twitter/cPNWRyAXj6 — Joel Hills (@ITVJoel) April 7, 2014 11.10am BST Back to the World Bank report on Asia (see opening post onwards). Tom Rafferty, China Analyst at The Economist Intelligence Unit, fears the Bank is too optimistic by forecasting growth of 7.6% in China this year. He doesnt believe Beijing will provide enough economic stimulus to even hit its own target of 7.5%: Rafferty says: The Chinese government has announced some modest pro-growth measures in recent weeks but, given challenging macro-economic conditions, it will require much more stimulus if the economy is to expand by 7.6% this year. However, a significant loosening of monetary or fiscal policy would compromise the reform agenda that the World Bank also praises in its report. The Economist Intelligence Unit expects growth of 7.3% in 2014, marginally undershooting the official target of 7.5%.” 11.04am BST Business secretary Vince Cable is being recalled before the Business Select Committee to answer more questions about the privatisation of Royal Mail. The committee will hear from Cable, and business minister Michael Fallon, on April 29th. This follows the National Audit Offices report, which found that the taxpayer missed out on £750m in potential revenue because the government was too cautious over the float. The NAO also exposed how many of the City investors who were favoured in the share allocation process broke their gentlemans agreement and sold their stakes soon after the IPO. This is the committees second chance to gnaw the government over the issue. Back in November, Cable and Fallon insisted that they had got a good price for Royal Mail (despite its share promptly soaring 70%), and denied botching the float. Cable stuck to his guns in parliament last week - so will this latest hearing shed any more light?. Some observers fear not... @graemewearden please make it stop. It was sold off cheaply. It is what it is. — Megan Murphy (@meganmurp) April 7, 2014 Cables going to be grilled about Royal Mail again - how many ways are there for MPs to say We lost money and its all YOUR fault ? — Anna H. (@drlangtry_girl) April 7, 2014 10.20am BST Sentix economic index, April 2014 Sentix economic index, April 2014 Photograph: /Sentix Eurozone investor confidence has hit a three year high, but theyve become less optimistic about Germanys future prospects, according to data firm Sentix today Sentixs monthly sentiment index rose in April to 14.1, up from 13.9 in March, to its highest level since April 2011. But its expectations measure fell for the second month running, from 23.5 to 22.8, pushed down by less bullishness about the German economy. Dr Sebastian Wanke, senior analyst at Sentix, says the driving forces in the eurozone have changed as Germany loses steam. Since the beginning of the debt crisis in 2009, Germany has been the growth engine for the euro zone. Now, the sentix economic index for Germany falls for the third time in a row while the index for the euro area manages to, once again, rise slightly to 14.1 points from 13.9. This shows that a change of economic driving forces is under way in the euro area. Sentixs composite index for Germany fell for a third time in a row in April, to 28.9 from 30.7 in March. Six-month-expectations decreased significantly, while the assessment of the current situation is no longer improving. Quite at odds with the latest German industrial production data, showing a healthy pick-up in orders in February (see previous post). Eurozone confidence index, to April 2014 Eurozone confidence index, to April 2014 Photograph: /Sentix Sentix also reported that investors remain fearful of eurozone deflation, but werent quite as alarmed as in February and November. Wanke said: Furthermore, fears of deflation persist. Mario Draghi, president of the European Central Bank, has even focused on them during his press conference last week. Inflation/deflation fears Photograph: Sentix The full report is online here. Updated at 10.32am BST 9.46am BST Industrial production in Germany and Spain rose in February, in an encouraging signal for the eurozone economy. German industrial output rose by 0.4% in February, leading its Economy Ministry to predict that growth over the first three months of 2014 will be appreciably above the fourth quarter performance. And INGs Carsten Brzeski declared that: The German economy is powering ahead. Spains data beat forecasts, with industrial output jumping by 2.8% year-on-year in February (analysts expected a 1.7% rise). Thats the fourth monthly increase in a row. Victor Echevarria, an economist at BNP Paribas, said this is hard evidence that Spains economy is clawing its way back, after the jobless total fell by 16,600 in March. Up until now for the first quarter all weve seen have been very strong confidence numbers, but the industrial output data, together with employment figures last week, show this is translating in to stronger hard data, (quote via Reuters) Industrial output across Spain +2.8% y/y in February (faster annual growth since Nov 2010). 3mma charted vs PMI below pic.twitter/B5fLQSm1ps — Markit Economics (@MarkitEconomics) April 7, 2014 #Spain Industrial Output SA (YoY) Feb: 2.80% (prev 1.10%), NSA (YoY) 3.10% (prev -0.10%) /via @RANSquawk | Oh. Real recovery now? — Yannis Koutsomitis (@YanniKouts) April 7, 2014 9.20am BST The eurozone bond party keeps rolling this morning, with Italian and Spanish sovereign debt rising in value again. This pushed down the yield on Italian 10-year bonds to a fresh eurozone-era record low of just 3.17%. Peripheral eurozone debt has benefitted from optimism that the eurozone crisis is over, and weak inflation across the region. The news that the European Central Bank discussed quantitative easing at last weeks meeting has also driven demand. 9.15am BST Smaller tech stocks are also sliding in London this morning. Semiconductor firms Imagination Technologies (down 4.1%) and CSR (down 3.6%) are leading the way, with setbox maker Pace losing 3.4%. Last Fridays Nasdaq selloff has left investors nervous that the tech sector is heading for a fall, after rallying sharply for months. Various Asian social media companies also fell sharply earlier today (fastFT has a good round-up) Chris Weston of IG summed the situation up: There seems to be some rotation out of any names which have effectively been labelled a ‘bubble’ over the last six months or so and there seems to be some money being re-positioned into names which have been returning cash to shareholders. 8.56am BST The biggest fallers in London this morning includes housebuilders (Barratt and Persimmon), retailers (Marks & Spencer and Burberry) and tech stocks (ARM and Just Eat, which provides IT for online takeaways and floated last week). Biggest fallers on the FTSE 100, April 7 morning Biggest fallers on the FTSE 100, this morning. Photograph: Thomson Reuters Updated at 10.04am BST 8.49am BST European stock markets have fallen across the board in early trading, with the main indices losing as much as 1.5%. Investors are reacting to Friday nights Wall Street selloff (which saw 2% wiped off the Nasdaq index as tech and biotech shares tumbled). All but four shares on the FTSE 100 are in the red in London -- no major fallers, just a steady decline. FTSE 100: down 47 points at 6647, -0.7% German DAX: down 141 points at 9554, -1.5% French CAC: down 40 points at 4443, -0.9% Spanish IBEX: down 108 points at 10569, -1% Italian FTSE MIB: down 308 points at 21866, - 1.4% The drop is being partly blamed on last Fridays US jobs report. Marchs non-farm payrolls showed 192,000 new jobs were created, a bit below forecast, and no increase in hourly pay. Thats not expected to stop the Federal Reserve cutting its QE programme, though: CMCs Michael Hewson comments: It would appear that a number of investors had been pricing in the prospect of a jobs number in excess of 200k as the week had progressed, ignoring the possibility that maybe the type of jobs rebound they had been hoping for might well be a bit premature. Updated at 9.16am BST 8.36am BST The report also highlights that the East Asia and Pacific region has been the fastest-growing part of the world economy for most of the last decade: Economic growth by region, 2005-2013 Photograph: World Bank 8.31am BST Todays report also shows how East Asian economies suffered slower growth rates in 2013, due to economic weakness at home and abroad. East Asia economic growth 2012-2013 Photograph: World Bank Sources of growth shifted from domestic demand during the first two quarters to net exports in the second half. Efforts to unwind domestic imbalances and tighten policies contributed to a sharp decline in economic activity in the first half of the year. Investment weakened during the adjustment process, dragging down capital goods imports. Consumption came under pressure from fiscal consolidation efforts, including the expiry of previous consumer support programs and the rationalization of fuel subsidies. Growth lost further impetus from tepid external demand from the advanced economies and a slowdown in China, which hurt manufactured and commodity exports. 8.20am BST Why the World Bank is worried about Thailand The Anti-government protestors forced the closure of polling places in Bangkok Sunday as a part of Shutdown Bangkok, on January 26. In January, anti-government protestors forced the closure of polling places in Bangkok Sunday as a part of Shutdown Bangkok. Photograph: ZUMA/REX On Thailand, the World Bank warns that the months of demonstrations by pro and anti-government supporters put the country in a precarious state. The political gridlock means that important projects that are crucial to growth prospects simply arent getting approved, amplifying the risks of a sharper slowdown in China. The World Bank said: The most immediate risks to Thailand’s future growth are the pace of recovery of the global economy and the political situation. A slower-than-expected recovery in the global economy and a faster slowdown in the Chinese economy will have a negative impact on Thai exports. The political gridlock has already led to deteriorating confidence and difficulty in routine tasks such as passport issuance. Delays in the long-awaited large public infrastructure projects will affect growth not only this year but also in the long run, since better water management and logistics improvements are crucial for Thailand’s future growth. Moreover, continued political instability have been distracting governments from focusing on long-term development issues such as improving skills and competitiveness. Red Shirt supporters cheer for the government during a rally in the Bangkok suburbs Sunday. Red Shirts and supporters of the government of Yingluck Shinawatra, the Prime Minister of Thailand, gathered in a suburb of Bangkok this weekend to show support for the government. Yesterday, pro-government Red Shirt supporters held a rally in the Bangkok suburbs to show support for prime minister Yingluck Shinawatra. Photograph: Jack Kurtz/ZUMA Press/Corbis 8.11am BST World Bank trims East Asia growth forecasts Good morning, and welcome to our rolling coverage of events across the financial markets, the global economy, the eurozone and business. The World Bank has kicked off the week by cutting its growth forecasts for the Asian economy, including a sharp downgrade to Thailand following months of political unrest. It warned that there was a bumpy start to 2014, notably in China and the United States, as it lowered its forecast for growth across the East Asia and Pacific region. It now expects GDP to rise by 7.1% in 2014 and 2015 across the area, down from the 7.2% previously forecast for both years. And it admitted that this could be too optimistic, given the wider economic risks. Bert Hofman, chief economist of the World Bank’s East Asia and Pacific Region, cited three key threats: “A slower-than-expected recovery in advanced economies, a rise in global interest rates, and increased volatility in commodity prices on account of recent geo-political tensions in Eastern Europe serve as reminders that East Asia remains vulnerable to adverse global developments. Although it still expects stable economic growth across the region, the World Bank warns that growth will ease moderately in most of Asias larger economies this year. That includes the regional powerhouse; Chinas growth rate in 2014 has been trimmed from 7.7% to 7.6%. The Bank warned that the Chinese economy had made a shaky start to the year, but should now find its footing. While Chinas growth rate of industrial production has slowed, and exports contracted in the first two months of 2014, the trend is nevertheless strengthening, and we expect quarterly growth to rise at midyear as external demand from the high-income countries solidifies. The World Bank said it was encouraged by the financial markets modest response so far to the Federal Reserve’s tapering of its bond-buying stimulus programme. But it was particularly critical of the situation in Thailand, where anti-government protestors have been demanding the resignation of prime minister Yingluck Shinawatra for several months. Anti-government protesters take part in a large march through the city centre on March 29, 2014 in Bangkok, Thailand. Anti-government protesters taking part in a large march through the city centre on March 29 in Bangkok, Thailand. Photograph: Rufus Cox/Getty Images The World Bank slashed its forecast for Thai economic growth this year, from +4.5% to just +3%, warning that the political instability was hurting its economy badly, and making it hard for the state to function. It added: Tourism receipts, public investment, and investor confidence are all also affected [by the protests]. So, a downbeat start to a busy week, which will climax with the IMF and World Banks Spring meeting in Washington on Friday. And with European stock markets expected to fall today, after Wall Streets selloff late last week, it could be a nervy day. Ill be tracking all the key events through the day.... theguardian/business/2014/apr/07/world-bank-cuts-china-and-thailands-growth-forecasts-live?guni=Network%20front:network-front%20main-3%20Main%20trailblock:Network%20front%20-%20main%20trailblock:Position8
Posted on: Mon, 07 Apr 2014 14:56:56 +0000