economy

Blog：Business: The Economy

Posted by admin on October 21st, 2009 | 0 comments

The US Federal Reserve Open Market Committee (FOMC) has voted to increase interest rates by 0.25% to 5.5%, adding to the likelihood that interest rates will continue to rise around the world. US shares soared, ending the day at or near all-time highs, as the Fed added that it would adopt a neutral bias, with no more interest rises in the pipeline for the time being.
But the move means that interest rates on mortgages and company loans are likely to go up.
“I think raising rates should take a little bit of wind away from the back of the stock market, and may make things a little sloppier over next few weeks,” said Harvey Hirschhorn of Stein Roe & Farnham.
The FOMC has already raised rates twice this year - in June and August - and clearly believed that these were not enough to cool the still booming US economy.
The Fed said it took the action because the economic growth was still too strong, risking inflation.
“Although cost pressures appear generally contained, risks to sustainable growth persist.
Despite tentative evidence of a slowing in certain interest-sensitive sectors of the economy and of accelerating productivity, the expansion of activity continues in excess of the economy’s growth potential,” it said in a statement accompanying the decision.
Managing to slow down the US economy without inducing a recession could be crucial for the future of the world economy.
Earlier, the Organisation for Economic Cooperation and Development said it expected US interest rates to reach 6.5% and for US growth to slow substantially over the next two years.
Last year the Fed cut rates three times to help prevent a global financial meltdown. Its latest move means that it has now reversed all those reductions.
Many analysts are convinced that this will be the last interest rate hike for some time.
“My feeling is that the Fed perhaps is finished hiking rates into the foreseeable future” said John Lonski of Moody’s Investors Services.

blog： South Asia hit by sugar shortages

Posted by admin on September 13th, 2009 | 8 comments

A massive shortage in sugar stocks in India and Pakistan has led to soaring prices and consumer unrest.

The Indian government has introduced strict limits on companies that stockpile sugar to check rising prices.

Shortages led Pakistan’s government to nearly double sugar prices causing public outrage ahead of the fasting month of Ramadan, which has now begun.

The price of raw sugar worldwide has increased to its highest level since 1981, as supply concerns grow.

India is the largest consumer of sugar in the world and the second largest producer, but poor monsoon rains have slashed output, forcing it to rely on imports.

One newspaper report says India’s sugar stocks have decline to 4.5 million tonnes - just enough to meet two months of domestic demand.

blog： Salaries falling

Posted by admin on September 13th, 2009 | 9 comments

The Ministry of Finance figures showed that exports to the US fell 39.5% in July from the same month last year, which was worse than the 37.6% fall in June.

Exports to China were down 26.5%, while those going to the European Union fell 45.8%.

Gross domestic product grew 3.7% in the three months from April to June, fuelled by an improvement in exports in the period, but there have been concerns that those figures were boosted by stimulus spending and scrappage schemes.

There are also concerns that domestic demand remains weak, with average salaries falling and the unemployment rate at a six-year high of 5.4%.

Japan’s trade surplus still rose, because imports fell 40.8%, largely due to lower energy costs.