The commission’s measure of the eurozone’s business cycle decreased 0.18 points to -0.93, lower than the -0.89 level expected by economists.
Many expect the ECB to cut interest rates to lower the cost of borrowing and help improve morale. A majority of economists expect a 25-basis point cut this Thursday, according to a Reuters poll last week, to take the bank’s main refinancing rate to a record low of 0.5 percent.
Germany’s economic resilience and reforms in southern Europe sowed hope early this year that the bloc could pull out of recession before the end of 2013, but a messy bailout in Greek Cyprus and Italy’s inconclusive February election, which failed to yield a government until late April, have weighed on confidence.
France’s weak economy and public accounts are also a concern.
Meanwhile, budget cuts have been at the center of the eurozone’s strategy to overcome a three-year public debt crisis but they are also blamed for a damaging cycle where governments cut back, companies lay off staff, Europeans buy less and young people have little hope of finding a job.
Crippling levels of unemployment and outbreaks of violence in southern Europe are now forcing a rethink, but there is division on just how far to soften the targets.
“If the ECB eases monetary policy and the European Commission engineers a slower pace of fiscal consolidation, the eurozone economy may still exit from recession later this year,” said Martin van Vliet, an economist at ING.
“But the fragility of confidence suggests that any economic recovery would likely be slow, and largely confined to the core countries.”
Spain’s Incredible Shrinking
Spain, the eurozone’s fourth largest economy, said last week its economy would shrink more than initially expected this year and its budget deficit would be higher than promised.
Growth should return next year and economic sentiment improved by almost 1 point, the commission said, in a sign that despite record unemployment, reforms may be helping business.
Spain fell deeper into recession between January and March, as the economy shrank for the seventh straight quarter, EuroNews wrote.
A preliminary reading showed gross domestic product contracted by 0.5 percent from the last three months of 2012 and it was 2.0 percent down from a year earlier.
The National Statistics Institute said reduced domestic demand was mostly to blame.
The Madrid government continues to put the best spin on the situation, saying the worst of the slump has passed and it expects quarterly growth before the end of this year as Spain has become more competitive and exports are growing.
Indeed, rising exports and weaker imports, which were reported separately, did provide some relief by cutting Spain’s trade deficit.
Exports have been the only pillar of support for the sagging economy since 2008 when a property bubble burst.
This further contraction will add to the Europe-wide debate about whether countries should ease off their austerity programs intended to cut debt in favor of more growth-focused policies, particularly given the concern about rising unemployment. Spain’s jobless rate is 27.2 percent.
Spain has been on the frontline of the bloc’s debt crisis because it has one of the region’s highest public deficits.
This has prompted Madrid to pass a series of unpopular austerity measures that critics say has hobbled recovery.
British Consumer Confidence
Consumer confidence in Britain unexpectedly declined in April as inflation kept running above the Bank of England’s (BoE) target, increasing households’ concern about their person finances, GfK, a London-based research group, said on Tuesday.
A sentiment index by GfK fell one point to minus 27, versus minus 26 the month before and economists forecasts. A gauge of how consumers see their finances over the next year fell to minus 7 from minus 6, according to a survey report released by GfK, Xinhua reported.
Nick Moon, managing director of social research at GfK, said, “A move up would suggest that the index had indeed paused for breath after its rise at the end of 2012 and was still heading in the right direction.
“The decline implies the recovery in confidence has stalled, and real recovery looks a long way away.
The index measuring changes in personal finances during the past 12 months fell 4 points to minus 24, and a gauge of Britons’ view of the general economic situation in the period rose 1 point to minus 53.
The British Office of National Statistics last week showed data that the $2.43 trillion economy grew 0.3 percent in the first quarter, avoiding a triple-dip recession during the past five years.
Inflation was at 2.8 percent in March, which was the 40th month above the BoE’s target, and the central bank forecasts it will accelerate in the coming months.
Additional WB Funding for Uzbekistan
The World Bank’s Board of Directors approved a $100 million credit to Uzbekistan as an additional financing to the Energy Efficiency Facility for Industrial Enterprises Project (UZEEF).
The project is aimed at helping improve energy efficiency in the industrial sector, resulting in reduction of power and fuel usage, and greenhouse gas emission. The proposed additional credit will co-finance energy efficiency sub-projects in industrial enterprises and ensure transfer of state-of-the-art technologies, World Bank.org wrote.
Uzbekistan is one of the most energy-intensive countries in Eastern Europe and Central Asia and a large carbon dioxide emitter.
Reducing energy consumption and conserving energy are top economic priorities of the government. There is a wide consensus that the potential for energy savings is huge through the implementation of energy efficiency measures in the industrial sector that uses outdated machinery and equipment.
The project’s objective is to improve energy efficiency in industrial enterprises by designing and establishing a financing mechanism for energy saving investments.
Improving energy efficiency and reducing energy consumption in industrial enterprises will improve the overall competitiveness of the Uzbek economy, free up scarce energy resources and reduce greenhouse gas emissions.
“The potential for energy savings through the implementation of energy efficiency measures in industrial enterprises in Uzbekistan is large,” said Takuya Kamata, the World Bank’s country manager for Uzbekistan.
The use of financial intermediaries to promote energy efficiency investments is an approach successfully applied by the World Bank in other countries, including the original UZEEF project. The project initiated the development of a new business line by local Uzbek banks targeting energy efficiency investments.
The original UZEEF project has been successful and it is expected that the credit will be fully disbursed by the end of 2014, about 12 months ahead of original plans. The project finances sub-projects with anestimated energy savings of more than 50,000 MWh.
The additional financing would further scale up the development impact of the project by financing more energy efficiency sub-projects with approximately an energy saving potential of 200,000 MWh and carbon dioxide emissions reduction of 400,000 tons.
Uzbekistan joined the World Bank in 1992. The World Bank’s mission in the country is to improve people’s livelihoods by supporting economic reforms, modernization of the country’s social sectors and infrastructure, and sharing the bank’s knowledge and experience with the government and people of Uzbekistan.
The World Bank’s total current active commitments as of April 2013 are $987.50 million for 11 projects.
Australia Manufacturing Plunges
A gauge of Australian manufacturing slumped to a four-year low in April, as the sustained strength of the nation’s currency weighed on exporters.
The manufacturing index plunged 7.7 points to 36.7 last month, the Australian Industry Group said in a survey, Bloomberg wrote.
The export index was the lowest since 2004, it showed.
The Australian dollar has averaged about $1.04 for the past two years, compared with around 75 cents in the prior decade, bankrupting manufacturers unable to compete with cheap imports.
The central bank reduced its overnight cash-rate target by 1.75 percentage points between November 2011 and December 2012 to 3 percent as it seeks to revive industries including construction before a peak in the nation’s resource-investment boom.
“The sharp drop in manufacturing production, employment and new orders in April, along with the continued erosion of exports, is deeply concerning,” Innes Willox, AIG’s chief executive officer, said in a statement.
The strength of the Australian dollar is a major burden on domestic producers.
A gauge of employment plunged 9.4 points to 39.3 in April, while new orders dropped 7 points to 32.4, the report showed. The production measure slumped 8.6 points to 33.1.
Qatari Economy to Slow Down
Qatar’s economic growth dived to around 6.2 percent in 2012 from 13 percent in 2011 and growth is set to slow down further in 2013 and 2014, according to a Kuwaiti bank.
Despite high oil prices, the country’s hydrocarbon sector sharply slowed down from about 15.8 percent in 2011 to only 1.7 percent in 2012 after the country completed mega gas projects and maintained a moratorium on new LNG ventures.
In contrast, non-oil GDP surged by around 10 percent in 2012, Emirates247 wrote.
Figures by National Bank of Kuwait (NBK) showed that Qatar’s economy has grown by an average 15.5 percent over the past five years.
Given the moratorium on new gas projects in the North Field until next year at the earliest and declining yields from the country’s maturing oil fields, future expansion in the hydrocarbon sector will largely be determined by increases in output resulting from the completion of the Barzan gas production facility and from the enhancements to existing oil fields, NBK said in a study.
The official estimates of the performance of the Qatari economy in 2012 support our projection of real GDP growth moderating to five percent in 2013 and 2014. The non-hydrocarbon sector will be the main driver of growth, expanding by around eight percent and 7.6 percent during 2013 and 2014 respectively.
Iran Participates In China’s Halal Expo
Translated by Farzam Vanaki
Iran has participated in China’s 7th International Halal Food and Products Fair that opened in Qinghai province on Tuesday.
Iranian companies, which export halal food, have showcased their products in the five-day exhibition, IRNA reported.
Representatives of Iran’s Chamber of Commerce, Industries, Mines and Agriculture, the Islamic Chamber Research and Information Center, and Iran’s commercial attaché in Beijing, Masoud Kamali Ardekani, participated in the inauguration ceremony of the exhibition.
Iran is taking part in the exhibition for the fifth consecutive year.
On the first day of the exhibition, a meeting was held between China and Islamic countries to discuss ways of expanding halal trade. Ardekani participated in the meeting.
Representatives from other countries, including Malaysia, Saudi Arabia, Turkey and Yemen, also took part in the exhibition.
In the meeting, Ardekani discussed avenues of expanding cooperation with China in exporting Iranian halal products and said more than 1,000 Iranian companies are involved in this field.
A training course to issue halal license will also be held on the sidelines of the exhibition.
In recent years, Chinese people have shown greater interest in consuming halal products.
Kurdestan Exports 2,000 Tractors to Iraq
Kurdestan Tractor Manufacturing Factory exported 2,776 tractors to Iraq in the last Iranian year (ended March 20), said managing director of the factory.
Jafar Maleki added that the exports grew by 34 percent against the figure for the previous year.
He put the entire production of the factory at 4,328 last year, adding that the figure has grown by 59 percent year-on-year.
Maleki also said two-thirds of the total production of Kurdestan’s tractor-manufacturing factory are exported to Iraqi Kurdistan, and the rest is sold domestically.
“We launched an office in Iraqi Kurdistan to keep our foreign customers.”
Earlier, Managing Director of Iran Tractor Manufacturing Industrial Group Abolfath Ebrahimi listed Afghanistan, Zimbabwe, Iraq, Tajikistan, Sri Lanka, Sudan as well as neighboring, African and Central Asian states as his company’s main customers, Fars News Agency reported.
Japan’s Oil Imports Rise
Japan has increased oil imports from Iran.
According to the Japanese Economy, Trade and Industry Ministry, Tokyo purchased 282,833 bpd of crude oil from Iran in March.
The Far East country boosted its crude imports by 4.5 percent from a year ago.
The US renewed exemptions for Japan from tough sanctions, imposed on countries buying Iranian oil, for six months, IRIB reported.
Japan is one of the main importers of Iranian oil, which has blasted the imposition of sanctions on Iran.
Japan’s purchases from Iran last year declined by 39 percent to 11.1 million kiloliters from 18.2 million kiloliters in 2011.
Iran has significantly developed its capacity to ship oil overseas, despite illegal US-led sanctions.
German unemployment increased slightly in April, but remained at a low level. In seasonally adjusted term, the number of people out of job rose by 4,000 in April, compared to the previous month.