Archive

Reuters blog archive

from Expert Zone:

Slow pick-up in India’s GDP growth

Photo

(Any opinions expressed here are those of the author and not of Thomson Reuters)

GDP estimates by the Central Statistics Office for the 2013-14 fiscal year show an improvement over the previous year. But the extent of improvement is too small for comfort. Possibly, in the final revision, that small margin may disappear or even turn negative.

This year, India’s GDP is expected to be up 4.9 percent from 4.5 percent the previous year. This additional growth has come mainly from agriculture, due to a favourable monsoon. Agricultural growth was three times the previous year. Production of non-food grains (like vegetables and fruits), and animal products (like meat and eggs), did not increase adequately in spite of the inflated demand and will continue to be the main source of inflation.

It cannot be said for certain that the monsoon will be normal in 2014 and, even if it is, growth will be lower because of a higher base this year. We cannot rely on agriculture for GDP growth. It has to come from industry and services.

Both performed badly this fiscal year and there are no indications of significant change in the coming year unless major reforms come through. The Congress-led government failed in this respect. Even the opening up of retail to foreign investment did not come through because the reform was hedged with too many conditions, which foreign investors were unwilling to comply with.

from MacroScope:

Another false start for the U.S. economy?

Photo

Since the global financial crisis ripped the floor out from underneath developed world economies, the world's biggest one has had several false starts nailing the floorboards back in.

Stock markets have moved in almost one direction since their trough in March 2009 - up - but economic growth and job creation have bounced around.

from Breakingviews:

Chinese M&A rings in new year with Auld Lang Syne

Photo

By Jeffrey Goldfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Old friends are kicking off Chinese New Year with a rousing rendition of Auld Lang Syne. Last year’s $2.5 billion sale of Cooper Tire & Rubber was undermined by its joint venture partner in Rongsheng. The two sides have now agreed a deal that helps them part ways. Given what transpired, Cooper may not be the only outsider singing “should old acquaintance be forgot” in the Year of the Horse.

from Global Investing:

Perfect storm brewing for the rouble

A perfect storm seems to be brewing for the Russian rouble. It has tumbled to four-year lows against a euro-dollar basket. Against the dollar, it has lost around 7 percent so far this year, faring better than many other emerging currencies. But signs are that next year will bring more turmoil.

While oil prices, the mainstay of Russia's economy, are holding up, Russian growth is not. It is running at 1.3 percent so far this year and capital outflows continue unabated -- $48 billion is estimated to have fled the country in the first nine months of 2013 compared with $55 billion in 2012. Russia's mighty current account surplus has shrunk to barely nothing and could fall into deficit by the middle of next year, reckons Alfa Bank economist Natalia Orlova. Finally, the rouble can no longer count on the central bank for wholehearted day-to-day support. FX market interventions cost the bank $3.5 billion last month  but it also shifted the exchange-rate corridor upwards six times, indicating it is keen to move to a fully flexible currency.

from Breakingviews:

Review: Dissecting America’s manufacturing retreat

By Kevin Allison

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Those who believe that making physical things is a superior vocation will find themselves nodding through much of Vaclav Smil’s “Made in the USA”. Smil, a prolific Canadian academic, challenges the widespread view that in mature economies a shrinking factory footprint is inevitable - or even desirable. He blames short-termism and bad policy choices, not just changing economic tides, for the retreat of U.S. manufacturing. The book’s call for smarter industrial policy is appealing, but Smil comes too close to advocating protectionism.

from MacroScope:

Too early to call revival in Latin America manufacturing

It may be too early to herald a revival of Latin America's manufacturing following a recent currency decline, according to a report by London-based research firm Capital Economics.

Increased competitiveness of local factories has been seen as a good side effect of the currency shock triggered by prospects of reduced economic stimulus in the United States. However, the data compiled by Capital Economics suggests there is still a long way to go before investors see any fireworks.

from Breakingviews:

“Made in Italy, Owned Elsewhere” will have to do

Photo

By Rob Cox

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Italian manufacturers have forever been proud to stamp a “Made in Italy” badge on their products. As much as a sign of quality, the boast stood as a mark of cultural and economic independence. But with Italy in the direst shape since World War II, “Made in Italy, Owned Elsewhere” will have to do for many of the nation’s industrialists.

from MuniLand:

America should focus on rebuilding manufacturing

President Obama shut down his infamous “jobs council” at the end of January after very desultory efforts and no substantive outcomes. Reuters reports on what comes next:

In place of the jobs council, the administration said it will begin an expanded effort to work with the business community and other groups to boost economic growth, cut debt and fix a broken immigration system.

from Global Investing:

Korean exporters’ yen nightmare (corrected)

Photo

(corrects name of hedge fund in para 3 to Symphony Financial Partners)

Any doubt about the importance of a weaker yen in thawing the frozen Japanese economy will have been dispelled by the Nikkei's surge to 32-month highs this week. Since early December, when it became clear an incoming Shinzo Abe administration would do its best to weaken the yen, the equity index has surged as the yen has fallen.

Those moves are giving sleepless nights to Japan's neighbours who are watching their own currencies appreciate versus the yen. South Korean companies, in particular, from auto to electronics manufacturers, must be especially worried. They had a fine time in recent years  as the yen's strength since 2008 allowed them to gain market share overseas. But since mid-2012, the won has appreciated 22 percent versus the yen.  In this period, MSCI Korea has lagged the performance of MSCI Japan by 20 percent. Check out the following graphic from my colleague Vincent Flasseur (@ReutersFlasseur)

from The Great Debate:

Creating an upscale service economy

The American economy is irrevocably shifting from manufacturing to services. Our workforce has gone from 28 percent factory workers and 72 percent service workers in 1978 to 14 percent factory workers and 86 percent service workers today.

But the service sector encompasses tens of millions of “bad” jobs that are unstable and offer low pay with few benefits – routine clerical work, for example, or retail sales, fast food or low-end human services such as nurse’s aides – alongside a relatively small number of well-compensated professional positions, including doctors, lawyers and scientists, as well as astronomically rich investors and plutocrats in the financial sector.

  •