Oil declined for a second day as concern Europe’s debt crisis is spreading drove speculation fuel demand will drop and an industry report showed U.S. gasoline supplies surged the most since January.
Futures extended yesterday’s 0.8 percent slide as traders secured profits from crude’s rally to $90.76 a barrel, the highest in 26 months. European ministers ruled out immediate aid for Portugal and Spain or an increase in the 750 billion-euro ($1 trillion) crisis fund. The American Petroleum Institute said gasoline stockpiles increased 4.8 million barrels last week.
“There are still concerns about the European economy,” said Ken Hasegawa, a commodity derivative sales manager at Newedge, a brokerage, in Tokyo. “This increase in products is having a larger impact on the crude oil market. Ninety dollars will be a major resistance level. It’s a good time to take profit.”
Crude for January delivery lost as much as 81 cents, or 0.9 percent, to $87.88 a barrel, in electronic trading on the New York Mercantile Exchange, and was at $87.98 at 9:52 a.m. in Singapore. Yesterday, it closed down 0.8 percent after rising to the highest since Oct. 8, 2008.
Europe’s economic situation is serious and its institutions must act more quickly to stem contagion from the sovereign debt crisis, International Monetary Fund Managing Director Dominique Strauss-Kahn told a briefing in Athens yesterday.
“The market continues to worry over Europe’s ability to prevent debt issues from spreading,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a note today. “Crude prices lost momentum, potentially as cautious long investors took profits due to uncertainty in the market.”
Brent crude for January settlement fell as much as 83 cents, or 0.9 percent, to $90.56 a barrel on the London-based ICE Futures Europe exchange. The contract dropped 6 cents to end the session at $91.39 yesterday.
Crude Supplies
Crude has risen 11 percent this year in New York, heading for its second consecutive annual increase. It soared 78 percent in 2009, the most since 1999.
U.S. crude stockpiles decreased 7.34 million barrels to 349.3 million last week, the American Petroleum Institute said. An Energy Department report today will probably show they slid 1.4 million barrels, according to the median of 16 analyst estimates in a Bloomberg News survey.
Supplies of distillates, which include heating oil and diesel, advanced 1.7 million barrels to 159.3 million, the API said. The Energy Department report will probably show they declined 900,000 barrels, according to the Bloomberg News survey, while gasoline inventories slipped 300,000 barrels.
“Investors will be closely watching U.S. oil inventory reports for evidence of improved demand,” Pervan said.
The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.
OPEC Maintains
Oil’s rally is unlikely to coax OPEC into raising production quotas at this week’s meeting in Ecuador, as member nations consider the global recovery strong enough to withstand price gains.
The Organization of Petroleum Exporting Countries, which accounts for 40 percent of global supply, will maintain the limits set in 2008 when representatives gather in Quito on Dec. 11, according to all but one of 39 analysts and traders in a Bloomberg News survey. Ministers from Angola, Venezuela and Libya say the group will probably repeat its 24.845 million- barrel-a-day target.
Tuesday, December 7, 2010
At CNN, Talk Show Tensions
In one sweeping move, the 8 p.m. political talk show “Parker Spitzer” could have turned around CNN’s flailing prime-time ratings, publicly rehabilitated the fallen New York governor Eliot Spitzer, and turned his co-host Kathleen Parker into a television star.
Instead, at the two-month mark, the ratings for CNN’s latest experiment are stagnant. The show has been troubled by backstage tensions that have spilled out in gossip columns and have given rise to speculation — and some wishful thinking among his supporters — that CNN could make Mr. Spitzer the sole host.
CNN executives and the co-hosts flatly ruled out that outcome in interviews last week. Disappointment with the ratings was evident, even as they emphasized that the show was just starting to get its footing.
“We’re creating something that I believe in. I have every confidence that it will be very successful,” said Mr. Spitzer, who resigned the governorship in 2008 after being ensnared in a prostitution scandal.
“Parker Spitzer” amounts to image rehabilitation for Mr. Spitzer, though it has not proved to be much of a platform yet. In its first seven weeks, “Parker Spitzer” averaged only 140,000 viewers ages 25 to 54, a drop of 2,000 from the seven weeks before it started, according to the Nielsen Company. “Countdown,” on at the same time on MSNBC, reaches twice as many people in that demographic, which cable news advertisers covet; “The O’Reilly Factor,” on Fox News, reaches five times as many.
But those two shows started in obscurity, with almost none of the scrutiny that “Parker Spitzer” has endured. Mr. Spitzer and Ms. Parker “launched into the most competitive time on TV, that’s just a fact,” said Bart Feder, a senior vice president at CNN. “That’s a heavy lift. They went into it knowing that. We went into it knowing that, which is why we take it one day at a time.”
In part, the show has been watched carefully because it represents Mr. Spitzer’s return to the public spotlight. But it is also because CNN is adrift, having shed a third of its audience in prime time the last five years.
Making matters even more delicate, Mr. Spitzer was paired with Ms. Parker over the summer by a CNN president, Jonathan Klein, who was dismissed weeks before the program’s Oct. 4 start date. The new executive in charge of CNN, Ken Jautz, is said to be supportive of the program. He declined an interview request.
Now, with Mr. Klein out of the picture, Mr. Spitzer and Ms. Parker, neither of whom had regularly hosted a show before, are learning how to do so in front of its viewers. Neither host was screen-tested before being hired, a fact that later raised eyebrows inside Time Warner, CNN’s parent company.
“It’s absolutely a work in progress,” said Ms. Parker, a Pulitzer Prize-winning columnist for The Washington Post, in an interview last week.
She denied any intent to leave “Parker Spitzer,” and said she recently signed a two-year lease in New York, having moved from Washington to tape the show. She has also cut back her print duties, to one column a week for the Washington Post Writers Group, from her previous output of two a week.
“Parker Spitzer” is intended to be a nightly news-based conversation about a mix of topics, with a mix of opinions. It pairs Mr. Spitzer, a liberal with a prosecutor’s bent, and Ms. Parker, who calls herself a rational conservative. “We wanted very much to bring a nonpartisan alternative to television viewers,” Ms. Parker said, a wink at the red- and blue-hued shows on Fox News and MSNBC.
The hosts and their guests have had smart, surprising debates about deficit reduction (in a recurring challenge to legislators called “Name Your Cuts”), overseas wars and airport security. But the show has been marred by tensions behind the scenes about the balance between the hosts, especially in recent weeks as the scales have tipped more in Mr. Spitzer’s favor, according to several CNN employees who spoke on condition of anonymity because they feared losing their jobs if they spoke publicly.
The tensions spilled into public view last week when the Page Six gossip column in The New York Post said Ms. Parker had stormed off the set in early November. Asked about that claim, Ms. Parker said, “I don’t storm. I saunter.”
She acknowledged that there was some “editorial and political tension,” but cast it as a normal part of television production. “That’s how human beings are made,” she added.
Mr. Spitzer put it this way: “I’ve seen tension in my life — conflict, tension, acrimony — and I haven’t seen anything here that comes close to what I’ve seen.”
There is no doubt that Mr. Spitzer dominates the current iteration of the show, which has been heavy on political and financial news, playing to his strengths. Ms. Parker, in contrast, “can appear decidedly passive, almost meek,” wrote James Rainey, a Los Angeles Times media critic last week, in a column that proposed, “If Parker’s really mad enough to walk off the set, she should turn a little of that animus on her co-host. It would make for livelier discussions, and better TV.”
In the future, Ms. Parker said she expected to have more airtime to talk about the social and cultural issues that she covers in her columns. “We’re definitely going to be mixing it up more,” she said.
In a separate interview, Mr. Spitzer said, “We’ll talk about movies sometimes, sports, we’ll have everything under the sun, but we are clearly a political show.”
To hear him tell it, “Parker Spitzer” is like a courtroom, a place where “smart people can discuss tough issues; go back and forth and challenge each other; probe each other for weaknesses in the argument; and force resolution if possible.”
Some at CNN say they believe that what appear to be problems on “Parker Spitzer” are merely a sign of CNN’s broader identity crisis. The program that precedes it at 7 p.m., a political newscast called “John King USA,” is rated even lower. Barring a shake-up, both shows will lead into “Piers Morgan Tonight,” the interview show that will replace “Larry King Live” in mid-January.
“Campbell Brown,” a traditional newscast that was on at 8 p.m. until July, averaged 152,000 viewers in the demographic on any given day this year.
Mr. Feder indicated no second-guessing about the shift from news to views at 8 p.m. “One of the things we want to do,” he said, “is get more diversity of opinion on our air, and still maintain our position as a nonpartisan news network.”
Instead, at the two-month mark, the ratings for CNN’s latest experiment are stagnant. The show has been troubled by backstage tensions that have spilled out in gossip columns and have given rise to speculation — and some wishful thinking among his supporters — that CNN could make Mr. Spitzer the sole host.
CNN executives and the co-hosts flatly ruled out that outcome in interviews last week. Disappointment with the ratings was evident, even as they emphasized that the show was just starting to get its footing.
“We’re creating something that I believe in. I have every confidence that it will be very successful,” said Mr. Spitzer, who resigned the governorship in 2008 after being ensnared in a prostitution scandal.
“Parker Spitzer” amounts to image rehabilitation for Mr. Spitzer, though it has not proved to be much of a platform yet. In its first seven weeks, “Parker Spitzer” averaged only 140,000 viewers ages 25 to 54, a drop of 2,000 from the seven weeks before it started, according to the Nielsen Company. “Countdown,” on at the same time on MSNBC, reaches twice as many people in that demographic, which cable news advertisers covet; “The O’Reilly Factor,” on Fox News, reaches five times as many.
But those two shows started in obscurity, with almost none of the scrutiny that “Parker Spitzer” has endured. Mr. Spitzer and Ms. Parker “launched into the most competitive time on TV, that’s just a fact,” said Bart Feder, a senior vice president at CNN. “That’s a heavy lift. They went into it knowing that. We went into it knowing that, which is why we take it one day at a time.”
In part, the show has been watched carefully because it represents Mr. Spitzer’s return to the public spotlight. But it is also because CNN is adrift, having shed a third of its audience in prime time the last five years.
Making matters even more delicate, Mr. Spitzer was paired with Ms. Parker over the summer by a CNN president, Jonathan Klein, who was dismissed weeks before the program’s Oct. 4 start date. The new executive in charge of CNN, Ken Jautz, is said to be supportive of the program. He declined an interview request.
Now, with Mr. Klein out of the picture, Mr. Spitzer and Ms. Parker, neither of whom had regularly hosted a show before, are learning how to do so in front of its viewers. Neither host was screen-tested before being hired, a fact that later raised eyebrows inside Time Warner, CNN’s parent company.
“It’s absolutely a work in progress,” said Ms. Parker, a Pulitzer Prize-winning columnist for The Washington Post, in an interview last week.
She denied any intent to leave “Parker Spitzer,” and said she recently signed a two-year lease in New York, having moved from Washington to tape the show. She has also cut back her print duties, to one column a week for the Washington Post Writers Group, from her previous output of two a week.
“Parker Spitzer” is intended to be a nightly news-based conversation about a mix of topics, with a mix of opinions. It pairs Mr. Spitzer, a liberal with a prosecutor’s bent, and Ms. Parker, who calls herself a rational conservative. “We wanted very much to bring a nonpartisan alternative to television viewers,” Ms. Parker said, a wink at the red- and blue-hued shows on Fox News and MSNBC.
The hosts and their guests have had smart, surprising debates about deficit reduction (in a recurring challenge to legislators called “Name Your Cuts”), overseas wars and airport security. But the show has been marred by tensions behind the scenes about the balance between the hosts, especially in recent weeks as the scales have tipped more in Mr. Spitzer’s favor, according to several CNN employees who spoke on condition of anonymity because they feared losing their jobs if they spoke publicly.
The tensions spilled into public view last week when the Page Six gossip column in The New York Post said Ms. Parker had stormed off the set in early November. Asked about that claim, Ms. Parker said, “I don’t storm. I saunter.”
She acknowledged that there was some “editorial and political tension,” but cast it as a normal part of television production. “That’s how human beings are made,” she added.
Mr. Spitzer put it this way: “I’ve seen tension in my life — conflict, tension, acrimony — and I haven’t seen anything here that comes close to what I’ve seen.”
There is no doubt that Mr. Spitzer dominates the current iteration of the show, which has been heavy on political and financial news, playing to his strengths. Ms. Parker, in contrast, “can appear decidedly passive, almost meek,” wrote James Rainey, a Los Angeles Times media critic last week, in a column that proposed, “If Parker’s really mad enough to walk off the set, she should turn a little of that animus on her co-host. It would make for livelier discussions, and better TV.”
In the future, Ms. Parker said she expected to have more airtime to talk about the social and cultural issues that she covers in her columns. “We’re definitely going to be mixing it up more,” she said.
In a separate interview, Mr. Spitzer said, “We’ll talk about movies sometimes, sports, we’ll have everything under the sun, but we are clearly a political show.”
To hear him tell it, “Parker Spitzer” is like a courtroom, a place where “smart people can discuss tough issues; go back and forth and challenge each other; probe each other for weaknesses in the argument; and force resolution if possible.”
Some at CNN say they believe that what appear to be problems on “Parker Spitzer” are merely a sign of CNN’s broader identity crisis. The program that precedes it at 7 p.m., a political newscast called “John King USA,” is rated even lower. Barring a shake-up, both shows will lead into “Piers Morgan Tonight,” the interview show that will replace “Larry King Live” in mid-January.
“Campbell Brown,” a traditional newscast that was on at 8 p.m. until July, averaged 152,000 viewers in the demographic on any given day this year.
Mr. Feder indicated no second-guessing about the shift from news to views at 8 p.m. “One of the things we want to do,” he said, “is get more diversity of opinion on our air, and still maintain our position as a nonpartisan news network.”
Diamond Fund to Turn `Talismans of Magic' Into Commodity Assets
Former Rapaport Group executives are creating a fund that’s looking to transform diamonds from the “talismans of magic” advertised by De Beers into commodity investments like copper and soybeans.
The precedents aren’t good. Diamond Circle Capital Plc, the first publicly listed fund to invest in the stones, has plunged 49 percent since selling shares in 2008, compared with a drop of 14 percent in an index of overall prices for the gems. The first diamond investment trust, set up in the 1980s, also collapsed.
Saul Singer, co-founder of Fusion Alternatives and a former research chief at Rapaport, the world’s main provider of diamond prices, says conditions are right for his firm’s new fund. He sees bottled-up demand from investors, locked out of a trade that sells diamonds through a closed network of dealers or in retailers. Prices have risen 11 percent in 2010, trailing gains in platinum, silver and gold.
“There is increased demand and increased interest from the investment community in diamonds,” Singer, 36, said in an interview. “The main goal is to put all the pieces together to create a marketable investment vehicle for the professional investment community.”
Fusion’s 10-person team also includes Adam Schulman, former head of business development and marketing at Rapaport, and Raphael Bitterman, who ran international trading and compliance at the group. New York-based Rapaport has more than 10,000 clients in 70 countries.
Riding a Wave
Underpinning Fusion’s plans is a steady decline in output of the rough diamonds that are fashioned into cut gems, and anticipation demand will outstrip supply. Diamond production slid 8.5 percent to 161.1 million carats in 2008 from 2005, RBC Capital Markets says, before slumping 30 percent last year as consumption tumbled following the world financial crisis.
Even before the collapse, output in Botswana, the biggest source, fell for three straight years through 2008, and in Australia production slid by more than half, RBC says.
Shrinking output also underscores diamonds’ potential to ride a wave of surging prices of commodities such as gold and silver as central banks print money to buoy stagnant economies.
The U.S. and European banks’ so-called quantitative easing debases their currencies and risks inflation, fueling investor demand for assets other than cash. “Savvy investors” may buy diamond funds to protect against losses on cash holdings, said Russell Mehta, chief operating officer of Rosy Blue (India) Pvt. Ltd., a unit of the world’s biggest manufacturer of cut stones.
‘Crazy Prices’
“Whether it’s the guy on the street, an investment banker or a client of a bank, they’re all asking us, ‘How do we get into diamonds?,’” said Heno Kruger, head trader at Namakwa Diamonds Ltd., which owns mines in South Africa, Namibia and the Democratic Republic of Congo. “There’s a lot of talk about diamonds. They’re fetching crazy prices.”
Fusion faces skepticism from a trading community that Singer recognizes is “very closed, self-centric and complex,” and where reputation is paramount.
Antwerp’s diamond district covers about a square mile of real estate containing more than 1,800 trading businesses that handle 80 percent of the world’s rough stones sold each year and half of the polished gems. The Antwerp Diamond Bourse has been in operation since 1904, according to the exchange’s website.
“We do not want to undermine the emotional and symbolic value of the diamond,” said Caroline Germain, a spokeswoman for the Antwerp World Diamond Centre, representing the industry in Belgium. “Diamonds should remain something magical, mystical, something that you buy and has value for eternity.”
‘Magic, Passion, Success’
Others in the industry are concerned the allure of the stones as luxury items, from the crown jewels worn by Queen Elizabeth II to the gems owned by Hollywood’s Elizabeth Taylor, will be undermined if they trade like any other commodity.
“Diamonds are purchased for emotions,” said Varda Shine, chief executive officer of Diamond Trading Co. International, the rough-diamond distribution arm of De Beers, the second- biggest producer. “We don’t think that diamonds being treated as an investment in the same way as gold is, is the answer.”
De Beers, in its bridal brochure, describes diamonds as “talismans of magic, passion and success,” citing the precious stones given by actor Richard Burton to Taylor and by Archduke Maximilian of Austria to Marie de Bourgogne in the 15th century.
Overall cut-diamond prices have climbed 14 percent since polishedprices.com supplied data from the start of 2002, compared with a threefold gain in platinum, fivefold in gold and almost sixfold in silver.
Jewelers’ Loop
Part of the challenge of investing in diamonds is their worth varies depending on color, quality, cut and size, and the expert with jewelers’ loupe in hand defines that value. Prices for a 3-carat internally flawless and colorless diamond are up 78 percent in 2010, while those for similar 1-carat gems rose 10 percent, according to polishedprices.com figures.
“I don’t want to call a diamond a commodity, because it’s not,” Namakwa’s Kruger said. “As much as the investment community discusses the issue of commoditizing diamonds, those discussions are nowhere close to being solved. Things are done on a handshake and my word is my honor.”
The first diamond investment trust, set up by Thomson McKinnon Securities Inc. in the 1980s, was wound up after a slump in the market, according to reports by the New York Times and Reuters.
Fusion anticipates by investing in sufficient quantities of 1-to-4 carat diamonds of near-uniform quality, more easily valued than larger stones, it can avoid the pitfalls of erratic pricing.
Small Carat, Big Stick
A round polished 4-carat stone may fetch about $120,000, compared with the minimum $1 million gems bought by Diamond Circle when it sought to lure investors to the first publicly listed diamond fund. Diamond Circle Chairman Rupert Cottrell declined to comment when contacted by Bloomberg News.
“If there was a diamond fund that I trusted, I personally would be very happy putting some money in it,” said Charles Wyndham, founder of WWW International Diamond Consultants Ltd. and former director of De Beers’ sales operation. “There aren’t two cocoa beans that are the same. Diamonds like everything else create problems, and problems are there to be solved.”
The precedents aren’t good. Diamond Circle Capital Plc, the first publicly listed fund to invest in the stones, has plunged 49 percent since selling shares in 2008, compared with a drop of 14 percent in an index of overall prices for the gems. The first diamond investment trust, set up in the 1980s, also collapsed.
Saul Singer, co-founder of Fusion Alternatives and a former research chief at Rapaport, the world’s main provider of diamond prices, says conditions are right for his firm’s new fund. He sees bottled-up demand from investors, locked out of a trade that sells diamonds through a closed network of dealers or in retailers. Prices have risen 11 percent in 2010, trailing gains in platinum, silver and gold.
“There is increased demand and increased interest from the investment community in diamonds,” Singer, 36, said in an interview. “The main goal is to put all the pieces together to create a marketable investment vehicle for the professional investment community.”
Fusion’s 10-person team also includes Adam Schulman, former head of business development and marketing at Rapaport, and Raphael Bitterman, who ran international trading and compliance at the group. New York-based Rapaport has more than 10,000 clients in 70 countries.
Riding a Wave
Underpinning Fusion’s plans is a steady decline in output of the rough diamonds that are fashioned into cut gems, and anticipation demand will outstrip supply. Diamond production slid 8.5 percent to 161.1 million carats in 2008 from 2005, RBC Capital Markets says, before slumping 30 percent last year as consumption tumbled following the world financial crisis.
Even before the collapse, output in Botswana, the biggest source, fell for three straight years through 2008, and in Australia production slid by more than half, RBC says.
Shrinking output also underscores diamonds’ potential to ride a wave of surging prices of commodities such as gold and silver as central banks print money to buoy stagnant economies.
The U.S. and European banks’ so-called quantitative easing debases their currencies and risks inflation, fueling investor demand for assets other than cash. “Savvy investors” may buy diamond funds to protect against losses on cash holdings, said Russell Mehta, chief operating officer of Rosy Blue (India) Pvt. Ltd., a unit of the world’s biggest manufacturer of cut stones.
‘Crazy Prices’
“Whether it’s the guy on the street, an investment banker or a client of a bank, they’re all asking us, ‘How do we get into diamonds?,’” said Heno Kruger, head trader at Namakwa Diamonds Ltd., which owns mines in South Africa, Namibia and the Democratic Republic of Congo. “There’s a lot of talk about diamonds. They’re fetching crazy prices.”
Fusion faces skepticism from a trading community that Singer recognizes is “very closed, self-centric and complex,” and where reputation is paramount.
Antwerp’s diamond district covers about a square mile of real estate containing more than 1,800 trading businesses that handle 80 percent of the world’s rough stones sold each year and half of the polished gems. The Antwerp Diamond Bourse has been in operation since 1904, according to the exchange’s website.
“We do not want to undermine the emotional and symbolic value of the diamond,” said Caroline Germain, a spokeswoman for the Antwerp World Diamond Centre, representing the industry in Belgium. “Diamonds should remain something magical, mystical, something that you buy and has value for eternity.”
‘Magic, Passion, Success’
Others in the industry are concerned the allure of the stones as luxury items, from the crown jewels worn by Queen Elizabeth II to the gems owned by Hollywood’s Elizabeth Taylor, will be undermined if they trade like any other commodity.
“Diamonds are purchased for emotions,” said Varda Shine, chief executive officer of Diamond Trading Co. International, the rough-diamond distribution arm of De Beers, the second- biggest producer. “We don’t think that diamonds being treated as an investment in the same way as gold is, is the answer.”
De Beers, in its bridal brochure, describes diamonds as “talismans of magic, passion and success,” citing the precious stones given by actor Richard Burton to Taylor and by Archduke Maximilian of Austria to Marie de Bourgogne in the 15th century.
Overall cut-diamond prices have climbed 14 percent since polishedprices.com supplied data from the start of 2002, compared with a threefold gain in platinum, fivefold in gold and almost sixfold in silver.
Jewelers’ Loop
Part of the challenge of investing in diamonds is their worth varies depending on color, quality, cut and size, and the expert with jewelers’ loupe in hand defines that value. Prices for a 3-carat internally flawless and colorless diamond are up 78 percent in 2010, while those for similar 1-carat gems rose 10 percent, according to polishedprices.com figures.
“I don’t want to call a diamond a commodity, because it’s not,” Namakwa’s Kruger said. “As much as the investment community discusses the issue of commoditizing diamonds, those discussions are nowhere close to being solved. Things are done on a handshake and my word is my honor.”
The first diamond investment trust, set up by Thomson McKinnon Securities Inc. in the 1980s, was wound up after a slump in the market, according to reports by the New York Times and Reuters.
Fusion anticipates by investing in sufficient quantities of 1-to-4 carat diamonds of near-uniform quality, more easily valued than larger stones, it can avoid the pitfalls of erratic pricing.
Small Carat, Big Stick
A round polished 4-carat stone may fetch about $120,000, compared with the minimum $1 million gems bought by Diamond Circle when it sought to lure investors to the first publicly listed diamond fund. Diamond Circle Chairman Rupert Cottrell declined to comment when contacted by Bloomberg News.
“If there was a diamond fund that I trusted, I personally would be very happy putting some money in it,” said Charles Wyndham, founder of WWW International Diamond Consultants Ltd. and former director of De Beers’ sales operation. “There aren’t two cocoa beans that are the same. Diamonds like everything else create problems, and problems are there to be solved.”
Monday, December 6, 2010
Poland’s Currency Lifts Economy, Despite the Frailties of the Euro Zone
WARSAW — With its drab, Soviet-era boulevards and standard-issue glass-and-steel office buildings, Warsaw does not look much like green, elegant Dublin. But there are some striking similarities between Poland today and Ireland in the 1990s.
Like the Irish a couple of decades ago, the Poles are a hardy people battered by history but on the verge of prosperity. Foreign capital is pouring in and investment banks are opening offices, lured by resilient growth and 38.5 million people who are close to shedding the “emerging market” label.
And Poland now, like Ireland then, has its own currency. Being outside the euro zone is working to Poland’s economic advantage.
That is not the only reason Poland is currently that rare species: a financially vibrant member of the European Union. But it is to Poland’s benefit not to be bound by a common currency, at a time when euro zone countries like Ireland will have trouble using cheap exports to grow their way out of trouble.
While Poland remains determined to eventually adopt the common currency, Prime Minister Donald Tusk said Monday in Berlin, the country does not plan to “force the pace,” Bloomberg News reported.
One of the big lessons of the European debt crisis, Polish leaders say, is that countries should not adopt the euro until their economies and labor markets are flexible enough to compensate for the loss of control over exchange rates.
The country will not meet the technical requirements for euro membership until 2015 at the earliest, and policy makers do not sound as though they are in a big hurry to join.
“If you analyze the advantages and disadvantages of euro membership, there are more advantages,” Aleksander Grad, the Polish treasury minister, said in a recent interview here. Advantages include eliminating the foreign-exchange risk with nearby trading partners.
But during the global economic crisis, Mr. Grad acknowledged, “Certainly the fact that the zloty could be adjusted helped us.”
The floating zloty, which has fallen about 18 percent against the euro since early 2009, acted as a pressure release valve, helping to keep Polish products competitive on world markets and insulating Poland from the effects of the sovereign debt crisis.
Poland has proved itself to be Europe’s most dogged economy during the last two years. It was the only member of the European Union to avoid recession, soldiering on even after a plane crash in April killed much of the political elite, including the president and the central bank governor. No banks needed to be rescued.
“I wouldn’t say the crisis helped us,” said Ludwik Sobolewski, president of the Warsaw Stock Exchange. “But the fact we proved relatively resistant to pressure enhanced the reputation of our markets.”
There are important differences, of course. For one, Poland is far larger than Ireland, which has over four million people. And Poland’s nearly miraculous economic performance during the global financial crisis was because of a combination of skill and luck. The government pumped stimulus money into the economy during 2009, and took advantage of an International Monetary Fund credit line that reassured investors.
But Poland was also lucky that, in contrast to Ireland, its banking industry was still small compared with the total size of the economy, with less potential to do damage. Household debt is relatively modest. Poland also benefited from the strong economy in neighboring Germany, which accounts for a quarter of exports.
Output is expected to rise 4 percent or more in 2011, after an estimated 3.6 percent this year. Commercial real estate prices in Warsaw are rising at a 10 percent annual clip. Foreign direct investment is expected to be up 28 percent this year, drawn by the country’s status as one of the few growth stories in Europe. And hardly anybody is complaining about the influx of foreign money.
“That’s the least of our worries,” Mr. Grad said, laughing. “We are really happy to have this foreign investment.”
Still, government borrowing is higher than would seem healthy. The deficit is expected to hit 7.6 percent of gross domestic product this year, pushing total debt uncomfortably close to limits under Polish law that would require the government to make drastic spending cuts.
And the economy still has some underlying problems. Poland ranks 70th out of 183 countries for ease of doing business, according to the World Bank. Executives blame the poor rating on an excessive government bureaucracy that hinders the creation of new business, holds back job creation and ultimately hurts Polish competitiveness.
“Everybody is very happy and very proud that Poland was a green island during the crisis,” said Lucyna Stanczak, the Warsaw-based director for Poland at the European Bank for Reconstruction and Development. But “the big issue is structural reforms and fiscal stability. It doesn’t seem that there is very consistent action.”
Jaroslaw Kochaniak, the deputy mayor of Warsaw, put it more bluntly. “We have to do everything we can to avoid the P.I.G.S. virus,” he said, referring to Portugal, Ireland, Greece and Spain and their failure to use years of cheap credit and fast growth to create durable economies. Mr. Kochaniak was speaking at a conference in Warsaw last week sponsored in part by The International Herald Tribune.
One risk for Poland is that some of its growth is based on an influx of European Union aid and other one-time factors, like the construction of new stadiums and other projects related to the European soccer championship, which Poland and Ukraine will co-host in 2012. The country is practically one big construction site, with numerous road and bridge projects and public works, including a new subway line in Warsaw.
If those projects are done well and make the economy more productive, they will contribute to growth. If not, there could be a slowdown when the flow of money ebbs.
Nor can Poland completely isolate itself from problems in the euro zone. It would be vulnerable to an unexpected slowdown in Germany.
“Poland is not able to fully decouple from the European cycle,” said Gyorgy Kovacs, an economist at UBS in London who focuses on Eastern Europe. “If we see European countries going to another significant slowdown, Poland would be affected.”
Polish leaders insist that they have learned from Ireland’s experience, and will not repeat it, vowing to keep economic exuberance in check to avoid the hangover that Ireland is now suffering. “In good times we don’t have to take the punch bowl away,” Jacek Rostowski, the Polish finance minister, told an audience in Warsaw last week. “Because it will never come out of the pantry.”
Like the Irish a couple of decades ago, the Poles are a hardy people battered by history but on the verge of prosperity. Foreign capital is pouring in and investment banks are opening offices, lured by resilient growth and 38.5 million people who are close to shedding the “emerging market” label.
And Poland now, like Ireland then, has its own currency. Being outside the euro zone is working to Poland’s economic advantage.
That is not the only reason Poland is currently that rare species: a financially vibrant member of the European Union. But it is to Poland’s benefit not to be bound by a common currency, at a time when euro zone countries like Ireland will have trouble using cheap exports to grow their way out of trouble.
While Poland remains determined to eventually adopt the common currency, Prime Minister Donald Tusk said Monday in Berlin, the country does not plan to “force the pace,” Bloomberg News reported.
One of the big lessons of the European debt crisis, Polish leaders say, is that countries should not adopt the euro until their economies and labor markets are flexible enough to compensate for the loss of control over exchange rates.
The country will not meet the technical requirements for euro membership until 2015 at the earliest, and policy makers do not sound as though they are in a big hurry to join.
“If you analyze the advantages and disadvantages of euro membership, there are more advantages,” Aleksander Grad, the Polish treasury minister, said in a recent interview here. Advantages include eliminating the foreign-exchange risk with nearby trading partners.
But during the global economic crisis, Mr. Grad acknowledged, “Certainly the fact that the zloty could be adjusted helped us.”
The floating zloty, which has fallen about 18 percent against the euro since early 2009, acted as a pressure release valve, helping to keep Polish products competitive on world markets and insulating Poland from the effects of the sovereign debt crisis.
Poland has proved itself to be Europe’s most dogged economy during the last two years. It was the only member of the European Union to avoid recession, soldiering on even after a plane crash in April killed much of the political elite, including the president and the central bank governor. No banks needed to be rescued.
“I wouldn’t say the crisis helped us,” said Ludwik Sobolewski, president of the Warsaw Stock Exchange. “But the fact we proved relatively resistant to pressure enhanced the reputation of our markets.”
There are important differences, of course. For one, Poland is far larger than Ireland, which has over four million people. And Poland’s nearly miraculous economic performance during the global financial crisis was because of a combination of skill and luck. The government pumped stimulus money into the economy during 2009, and took advantage of an International Monetary Fund credit line that reassured investors.
But Poland was also lucky that, in contrast to Ireland, its banking industry was still small compared with the total size of the economy, with less potential to do damage. Household debt is relatively modest. Poland also benefited from the strong economy in neighboring Germany, which accounts for a quarter of exports.
Output is expected to rise 4 percent or more in 2011, after an estimated 3.6 percent this year. Commercial real estate prices in Warsaw are rising at a 10 percent annual clip. Foreign direct investment is expected to be up 28 percent this year, drawn by the country’s status as one of the few growth stories in Europe. And hardly anybody is complaining about the influx of foreign money.
“That’s the least of our worries,” Mr. Grad said, laughing. “We are really happy to have this foreign investment.”
Still, government borrowing is higher than would seem healthy. The deficit is expected to hit 7.6 percent of gross domestic product this year, pushing total debt uncomfortably close to limits under Polish law that would require the government to make drastic spending cuts.
And the economy still has some underlying problems. Poland ranks 70th out of 183 countries for ease of doing business, according to the World Bank. Executives blame the poor rating on an excessive government bureaucracy that hinders the creation of new business, holds back job creation and ultimately hurts Polish competitiveness.
“Everybody is very happy and very proud that Poland was a green island during the crisis,” said Lucyna Stanczak, the Warsaw-based director for Poland at the European Bank for Reconstruction and Development. But “the big issue is structural reforms and fiscal stability. It doesn’t seem that there is very consistent action.”
Jaroslaw Kochaniak, the deputy mayor of Warsaw, put it more bluntly. “We have to do everything we can to avoid the P.I.G.S. virus,” he said, referring to Portugal, Ireland, Greece and Spain and their failure to use years of cheap credit and fast growth to create durable economies. Mr. Kochaniak was speaking at a conference in Warsaw last week sponsored in part by The International Herald Tribune.
One risk for Poland is that some of its growth is based on an influx of European Union aid and other one-time factors, like the construction of new stadiums and other projects related to the European soccer championship, which Poland and Ukraine will co-host in 2012. The country is practically one big construction site, with numerous road and bridge projects and public works, including a new subway line in Warsaw.
If those projects are done well and make the economy more productive, they will contribute to growth. If not, there could be a slowdown when the flow of money ebbs.
Nor can Poland completely isolate itself from problems in the euro zone. It would be vulnerable to an unexpected slowdown in Germany.
“Poland is not able to fully decouple from the European cycle,” said Gyorgy Kovacs, an economist at UBS in London who focuses on Eastern Europe. “If we see European countries going to another significant slowdown, Poland would be affected.”
Polish leaders insist that they have learned from Ireland’s experience, and will not repeat it, vowing to keep economic exuberance in check to avoid the hangover that Ireland is now suffering. “In good times we don’t have to take the punch bowl away,” Jacek Rostowski, the Polish finance minister, told an audience in Warsaw last week. “Because it will never come out of the pantry.”
Rupee Rally Threatened as Crude Oil Climbs to Two-Year High: India Credit
A surge in crude-oil prices to the highest level in two years is prompting Barclays Plc and Royal Bank of Scotland Group Plc to predict India’s widening current- account deficit will threaten this year’s rally in the rupee.
Oil for January delivery rose to $89.76 a barrel yesterday on the New York Mercantile Exchange, a level not seen since October 2008. Crude oil imports by Asia’s second fastest-growing major economy surged 41 percent in the first 10 months of this year to $82.1 billion, according to data compiled by Bloomberg.
“Whenever oil prices go up, the risk of the current- account deficit widening increases quite significantly,” Rahul Bajoria, a Singapore-based economist at Barclays, said in an interview on Dec. 3. “We expect the rupee to continue underperforming as the shortfall is pretty much the main point and oil prices are definitely a risk.”
The rupee tumbled 8 percent in the third quarter of 2008 after crude-oil prices rose to a record $147.27 a barrel on July 11 of that year. The currency is little changed this quarter, underperforming the 3.6 percent gain in Taiwan’s dollar, the 1.1 percent advance in Thailand’s baht and the 0.7 percent appreciation in China’s yuan. Barclays predicts the rupee, which rose 0.4 percent yesterday to 44.94 per dollar, will drop 4.6 percent in the coming three months.
Official data show the gap in India’s current account widened to a record $13.7 billion in the three months ended June. The government plans to cap the shortfall at 3.5 percent of gross domestic product in the current financial year, compared with 2.9 percent last year, Finance Minister Pranab Mukherjee said at a conference on Oct. 26.
IMF Trade View
The International Monetary Fund forecasts the deficit will be 3.1 percent of GDP in 2010, wider than Brazil’s 2.6 percent and compared with surpluses in Russia and China.
India, the world’s fourth-largest consumer of oil, imported about 70 percent of its crude last year, according to the U.S. Energy Department. Of the 10 forecasts updated on Bloomberg since Nov. 1, six estimate that crude oil traded on Nymex will cost $90 a barrel or more by the end of 2011. Prices will increase to $120 a barrel before the end of 2012 as consumption grows in emerging economies, JPMorgan Chase & Co. said in a report on Dec. 3.
“Oil prices are something to worry about,” Sanjay Mathur, the Singapore-based chief Asia emerging-markets economist at Royal Bank of Scotland, said in an interview yesterday. “And the current account obviously matters now as it is not at a level where it can be wished away.” The gap is “perilously close” to widening to 4 percent of GDP, he said.
Yields Climb
The yield on India’s bonds increased this quarter as official data show the nation imported $8.4 billion worth of oil in October, the most since May. The rate on the 7.8 percent notes maturing in May 2020 has climbed 36 basis points, headed for the worst quarter this year, to 8.21 percent. A basis point is 0.01 percent.
India’s three-year bond yield rose four basis points this month to 7.40 percent, while the rate on similar-maturity notes in Brazil were little changed at 12.35 percent. The yield on comparable Chinese notes fell four basis points to 3.08 percent and that in Russia slid 15 basis points to 6.96 percent. The difference in yields between India’s debt due in a decade and similar-maturity U.S. Treasuries was 521 basis points. The measure has averaged 317 basis points during the past decade.
India’s bonds have returned 3.8 percent this year, the fourth-worst performance among 10 local-currency debt markets tracked by HSBC Holdings Plc, as average inflation in the first 10 months was almost twice the central bank’s targeted rate of 5.5 percent. By contrast, investors in Indonesia’s debt assets earned 22 percent, the most in the region, according to Europe’s largest bank.
State Bank Debt
The cost of protecting the debt of government-owned State Bank of India, which some investors perceive as a proxy for the nation, has increased 57 basis points this year to 174.68, according to the data provider CMA.
Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should the bank fail to adhere to its debt agreements. A basis point equals $1,000 annually on a contract protecting $10 million of debt.
“Oil prices are a very important variable in a number of different respects for the Indian economy, none of which are favorable,” Robert Prior-Wandesforde, Singapore-based head of India and Southeast Asia economics at Credit Suisse Group AG, said in an interview on Dec. 3. “With high prices comes a deteriorating trade position and also some negative implications for inflation and growth.”
He forecasts the benchmark wholesale-price index will average 8.5 percent this fiscal year.
Indian Shares
The rupee has appreciated 3.5 percent this year as overseas investors poured a record $29.7 billion into Indian shares to benefit from the nation’s economic growth, according to data published by the Securities & Exchange Board of India.
Shipping Corp. of India Ltd., the country’s biggest sea carrier, drew 55.2 billion rupees ($1.2 billion) of bids in a share sale that closed on Dec. 3. A sale by MOIL Ltd., India’s largest producer of manganese ore, closed on Dec. 1, with bids for 56 times the 33.6 million shares offered, according to the National Stock Exchange.
“We expect the rupee to soften at some point next year, because of the impact of oil prices,” Sebastien Barbe, Paris- based head of emerging-market research at Credit Agricole SA, said in an interview yesterday. “But we are bullish on the rupee in the short term as global liquidity may remain supportive of inflows.”
Barbe forecasts the rupee will depreciate to 45.50 per dollar by the end of 2011.
Oil for January delivery rose to $89.76 a barrel yesterday on the New York Mercantile Exchange, a level not seen since October 2008. Crude oil imports by Asia’s second fastest-growing major economy surged 41 percent in the first 10 months of this year to $82.1 billion, according to data compiled by Bloomberg.
“Whenever oil prices go up, the risk of the current- account deficit widening increases quite significantly,” Rahul Bajoria, a Singapore-based economist at Barclays, said in an interview on Dec. 3. “We expect the rupee to continue underperforming as the shortfall is pretty much the main point and oil prices are definitely a risk.”
The rupee tumbled 8 percent in the third quarter of 2008 after crude-oil prices rose to a record $147.27 a barrel on July 11 of that year. The currency is little changed this quarter, underperforming the 3.6 percent gain in Taiwan’s dollar, the 1.1 percent advance in Thailand’s baht and the 0.7 percent appreciation in China’s yuan. Barclays predicts the rupee, which rose 0.4 percent yesterday to 44.94 per dollar, will drop 4.6 percent in the coming three months.
Official data show the gap in India’s current account widened to a record $13.7 billion in the three months ended June. The government plans to cap the shortfall at 3.5 percent of gross domestic product in the current financial year, compared with 2.9 percent last year, Finance Minister Pranab Mukherjee said at a conference on Oct. 26.
IMF Trade View
The International Monetary Fund forecasts the deficit will be 3.1 percent of GDP in 2010, wider than Brazil’s 2.6 percent and compared with surpluses in Russia and China.
India, the world’s fourth-largest consumer of oil, imported about 70 percent of its crude last year, according to the U.S. Energy Department. Of the 10 forecasts updated on Bloomberg since Nov. 1, six estimate that crude oil traded on Nymex will cost $90 a barrel or more by the end of 2011. Prices will increase to $120 a barrel before the end of 2012 as consumption grows in emerging economies, JPMorgan Chase & Co. said in a report on Dec. 3.
“Oil prices are something to worry about,” Sanjay Mathur, the Singapore-based chief Asia emerging-markets economist at Royal Bank of Scotland, said in an interview yesterday. “And the current account obviously matters now as it is not at a level where it can be wished away.” The gap is “perilously close” to widening to 4 percent of GDP, he said.
Yields Climb
The yield on India’s bonds increased this quarter as official data show the nation imported $8.4 billion worth of oil in October, the most since May. The rate on the 7.8 percent notes maturing in May 2020 has climbed 36 basis points, headed for the worst quarter this year, to 8.21 percent. A basis point is 0.01 percent.
India’s three-year bond yield rose four basis points this month to 7.40 percent, while the rate on similar-maturity notes in Brazil were little changed at 12.35 percent. The yield on comparable Chinese notes fell four basis points to 3.08 percent and that in Russia slid 15 basis points to 6.96 percent. The difference in yields between India’s debt due in a decade and similar-maturity U.S. Treasuries was 521 basis points. The measure has averaged 317 basis points during the past decade.
India’s bonds have returned 3.8 percent this year, the fourth-worst performance among 10 local-currency debt markets tracked by HSBC Holdings Plc, as average inflation in the first 10 months was almost twice the central bank’s targeted rate of 5.5 percent. By contrast, investors in Indonesia’s debt assets earned 22 percent, the most in the region, according to Europe’s largest bank.
State Bank Debt
The cost of protecting the debt of government-owned State Bank of India, which some investors perceive as a proxy for the nation, has increased 57 basis points this year to 174.68, according to the data provider CMA.
Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should the bank fail to adhere to its debt agreements. A basis point equals $1,000 annually on a contract protecting $10 million of debt.
“Oil prices are a very important variable in a number of different respects for the Indian economy, none of which are favorable,” Robert Prior-Wandesforde, Singapore-based head of India and Southeast Asia economics at Credit Suisse Group AG, said in an interview on Dec. 3. “With high prices comes a deteriorating trade position and also some negative implications for inflation and growth.”
He forecasts the benchmark wholesale-price index will average 8.5 percent this fiscal year.
Indian Shares
The rupee has appreciated 3.5 percent this year as overseas investors poured a record $29.7 billion into Indian shares to benefit from the nation’s economic growth, according to data published by the Securities & Exchange Board of India.
Shipping Corp. of India Ltd., the country’s biggest sea carrier, drew 55.2 billion rupees ($1.2 billion) of bids in a share sale that closed on Dec. 3. A sale by MOIL Ltd., India’s largest producer of manganese ore, closed on Dec. 1, with bids for 56 times the 33.6 million shares offered, according to the National Stock Exchange.
“We expect the rupee to soften at some point next year, because of the impact of oil prices,” Sebastien Barbe, Paris- based head of emerging-market research at Credit Agricole SA, said in an interview yesterday. “But we are bullish on the rupee in the short term as global liquidity may remain supportive of inflows.”
Barbe forecasts the rupee will depreciate to 45.50 per dollar by the end of 2011.
France close to $9bn Indian nuclear deal
France has taken a lead over rivals including the US and Russia for a €7bn ($9.3bn) deal to build two nuclear power plants in India.
This comes amid concerns that new nuclear liability legislation heightens the risks of doing business in India and as France supplies similar reactors to neighbouring China.
Anne Lauvergeon, chief executive of Areva, said on Monday the French energy company had signed a preliminary agreement with India’s Nuclear Power Corp to build the reactors and supply fuel for 25 years. The reactors are expected to be in operation within eight years.
Work on the advanced pressurised water reactors – the first in a series of six that, once built, will generate 10,000MW – could begin within six months once financing is agreed.
Ms Lauvergeon also said Areva was negotiating with its Indian partner over access to the group’s uranium mines, collaboration in other parts of the fuel cycle and making India an export hub for nuclear technology and expertise.
Power companies from Russia, France, the UK, the US and Canada are eager to help India meet its energy demands. The contribution of nuclear energy in India is forecast to increase from 4,000MW to 470,000MW in the next 40 years.
France’s nuclear ambitions in India were the centrepiece of a four-day visit to India by Nicolas Sarkozy, the president.
Ms Lauvergeon said the laws requiring greater compensation payments in the event of a nuclear accident were not a “dealbreaker” but regulators needed to consider where liability should lie for a reactor near the end of its life and under the control of a local utility.
“We would like to develop a strong base in India and [nuclear] exports from India,” she said. However, the legal framework was a concern. “The stability of the system needs to last for decades and decades. You can’t change the rules every 10 years. Stability is mandatory for us,” she said.
The French deal follows a civil nuclear agreement with the US at the end of 2008 that helped clear the way for India to buy plants, technology and fuel from the nuclear club of nations.
India, officially a nuclear weapons power since 1998, had been denied access to civilian nuclear technology since it tested a nuclear device in 1974 and its refusal to sign the 1968 non-proliferation treaty.
During his visit, Mr Sarkozy said France would support Indian membership of multilateral nuclear groups. A similar message was delivered by Barack Obama on his visit last month. However, the US president placed greater emphasis on drawing India into multilateral non-proliferation initiatives.
India operates 17 nuclear plants, and Russia is building two in Tamil Nadu.
This comes amid concerns that new nuclear liability legislation heightens the risks of doing business in India and as France supplies similar reactors to neighbouring China.
Anne Lauvergeon, chief executive of Areva, said on Monday the French energy company had signed a preliminary agreement with India’s Nuclear Power Corp to build the reactors and supply fuel for 25 years. The reactors are expected to be in operation within eight years.
Work on the advanced pressurised water reactors – the first in a series of six that, once built, will generate 10,000MW – could begin within six months once financing is agreed.
Ms Lauvergeon also said Areva was negotiating with its Indian partner over access to the group’s uranium mines, collaboration in other parts of the fuel cycle and making India an export hub for nuclear technology and expertise.
Power companies from Russia, France, the UK, the US and Canada are eager to help India meet its energy demands. The contribution of nuclear energy in India is forecast to increase from 4,000MW to 470,000MW in the next 40 years.
France’s nuclear ambitions in India were the centrepiece of a four-day visit to India by Nicolas Sarkozy, the president.
Ms Lauvergeon said the laws requiring greater compensation payments in the event of a nuclear accident were not a “dealbreaker” but regulators needed to consider where liability should lie for a reactor near the end of its life and under the control of a local utility.
“We would like to develop a strong base in India and [nuclear] exports from India,” she said. However, the legal framework was a concern. “The stability of the system needs to last for decades and decades. You can’t change the rules every 10 years. Stability is mandatory for us,” she said.
The French deal follows a civil nuclear agreement with the US at the end of 2008 that helped clear the way for India to buy plants, technology and fuel from the nuclear club of nations.
India, officially a nuclear weapons power since 1998, had been denied access to civilian nuclear technology since it tested a nuclear device in 1974 and its refusal to sign the 1968 non-proliferation treaty.
During his visit, Mr Sarkozy said France would support Indian membership of multilateral nuclear groups. A similar message was delivered by Barack Obama on his visit last month. However, the US president placed greater emphasis on drawing India into multilateral non-proliferation initiatives.
India operates 17 nuclear plants, and Russia is building two in Tamil Nadu.
Sunday, December 5, 2010
Roubini Says India's Economic Growth May Surpass China's in Next 10 Years
India’s economy may expand more than China’s in the next 10 years if the world’s second- most populous nation lifts curbs on foreign investment in retail and boosts spending on roads and bridges, Nouriel Roubini said.
“I’m very optimistic about India’s future growth” because the economy is driven by domestic demand while China relies more on exports, the New York University professor and chairman of Roubini Global Economics who predicted the global financial crisis said in New Delhi yesterday. “The challenge for India will be to sustain 9 percent growth and at the same time keep inflation under control.”
Roubini joins Morgan Stanley in predicting India will grow faster than China. Prime Minister Manmohan Singh’s government plans to double spending on roads, ports and power plants to $1 trillion in the five years to 2017 to improve the quality of India’s infrastructure, which is ranked below Sri Lanka and war-ravaged Ivory Coast.
The South Asian country’s gross domestic product climbed 8.9 percent for a second straight quarter in July to September, the government said this week. O.P. Bhatt, chairman at the State Bank of India, the country’s biggest, said today 10 percent growth for the nation “is inevitable.”
Small Stores
Indian laws, aimed at protecting small store owners, limit overseas investment to single-brand retail or wholesale operations. Wal-Mart Stores Inc., the world’s largest retailer, and rivals including Carrefour SA and Tesco Plc are pushing the government to allow foreign investment after the trade ministry invited views from the industry on removing the restriction.
Wal-Mart Chief Executive Officer Michael Duke said in October he is “optimistic” that non-Indian companies will be allowed to invest in the country. Organized retail may create as many as 3 million jobs in the next five years in India, according to Duke.
India’s economy bucked a growth slowdown in Asian neighbors from Thailand to Malaysia, where currency appreciation and risks to exports from Europe’s debt crisis and U.S. unemployment have clouded the outlook.
India’s factory output last month grew at the fastest pace in six months, according to the Purchasing Managers’ Index compiled by HSBC Holdings Plc and Markit Economics. The nation’s service industry expanded at the quickest pace in four months in November, the companies said in a statement today. Exports in October grew 21.3 percent, a separate report showed.
Young Population
“China is likely to slow in the coming years gradually and India’s growth is likely to accelerate,” boosted by a young population and higher consumption, Roubini said.
India will add 136 million workers, more than the population of Japan, by 2020 compared with 23 million for China, Morgan Stanley economist Chetan Ahya said in August. That will help the nation tap into a rising pool of savings and help finance infrastructure projects, he said.
Morgan Stanley expects India to overtake China as the world’s fastest-growing major economy by 2015. India’s growth may accelerate to 9.5 percent between 2011 and 2015, Ahya said.
India can sustain a growth rate of 9 percent by raising productivity and addressing supply-side issues, Roubini said yesterday.
“I’m very optimistic about India’s future growth” because the economy is driven by domestic demand while China relies more on exports, the New York University professor and chairman of Roubini Global Economics who predicted the global financial crisis said in New Delhi yesterday. “The challenge for India will be to sustain 9 percent growth and at the same time keep inflation under control.”
Roubini joins Morgan Stanley in predicting India will grow faster than China. Prime Minister Manmohan Singh’s government plans to double spending on roads, ports and power plants to $1 trillion in the five years to 2017 to improve the quality of India’s infrastructure, which is ranked below Sri Lanka and war-ravaged Ivory Coast.
The South Asian country’s gross domestic product climbed 8.9 percent for a second straight quarter in July to September, the government said this week. O.P. Bhatt, chairman at the State Bank of India, the country’s biggest, said today 10 percent growth for the nation “is inevitable.”
Small Stores
Indian laws, aimed at protecting small store owners, limit overseas investment to single-brand retail or wholesale operations. Wal-Mart Stores Inc., the world’s largest retailer, and rivals including Carrefour SA and Tesco Plc are pushing the government to allow foreign investment after the trade ministry invited views from the industry on removing the restriction.
Wal-Mart Chief Executive Officer Michael Duke said in October he is “optimistic” that non-Indian companies will be allowed to invest in the country. Organized retail may create as many as 3 million jobs in the next five years in India, according to Duke.
India’s economy bucked a growth slowdown in Asian neighbors from Thailand to Malaysia, where currency appreciation and risks to exports from Europe’s debt crisis and U.S. unemployment have clouded the outlook.
India’s factory output last month grew at the fastest pace in six months, according to the Purchasing Managers’ Index compiled by HSBC Holdings Plc and Markit Economics. The nation’s service industry expanded at the quickest pace in four months in November, the companies said in a statement today. Exports in October grew 21.3 percent, a separate report showed.
Young Population
“China is likely to slow in the coming years gradually and India’s growth is likely to accelerate,” boosted by a young population and higher consumption, Roubini said.
India will add 136 million workers, more than the population of Japan, by 2020 compared with 23 million for China, Morgan Stanley economist Chetan Ahya said in August. That will help the nation tap into a rising pool of savings and help finance infrastructure projects, he said.
Morgan Stanley expects India to overtake China as the world’s fastest-growing major economy by 2015. India’s growth may accelerate to 9.5 percent between 2011 and 2015, Ahya said.
India can sustain a growth rate of 9 percent by raising productivity and addressing supply-side issues, Roubini said yesterday.
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