Global News Journal

Acronym soup swamps Malaysia reform drive

Malaysia’s Prime Minister Najib Razak says he has embarked on a series of radical economic reforms. In reality it feels as if he has unleashed a barrage of incomprehensible acronyms on the unsuspecting public of this Southeast Asian nation.

The charge for economic reform is being led by the snappily named PEMANDU. As well as being the Malay word for “driver” it stands for the government’s Performance Management and Delivery Unit.

PEMANDU is in charge of formulating and implementing NKRAs (National Key Result Areas), MKRAs (Ministerial Key Result Areas) and getting “Big Results Fast”, according to its website, although it singularly failed to win political backing for a radical revamp of Malaysia’s costly subsidy regime.

It is also helping to formulate the 10th Malaysia Plan, 10MP for those in the know, a communist-era sounding 5-year plan that aims to help lift this middle income country to developed nation status by 2020.

PEMANDU is part of the GTP, the Government Transformation Programme, which also involves the SITF (Special Implementation Task Force). Throw in the NKEAs (National Key Economic Areas), another thinktank known as the EPU (Economic Planning Unit) and you haven’t reached the end of the alphabet spaghetti dreamed up by Malaysia’s civil servants…. There’s still the ETP. the NEP (sometimes good, sometimes bad) and the NEM (New Economic Model).  

To be fair to Malaysia, it is not the only country in the world that is wallowing in economic acronyms, the U.S. gave the world TARP, a $700 billion bank bailout programme, and the even more mind-numbing ABCP MMMFLF   (don’t ask), but it is fair to ask what Malaysians have got from all of this.

Searching for silver in Greece’s storm clouds

Greece and the euro zone are still very much in the midst of a debt and deficit storm, with not just Athens but possibly Portugal and Spain at risk of being swept up in the maelstrom.

But that hasn’t stopped economists and political analysts looking for a silver lining in this unprecedented meltdown.

One positive is the impact the uncertainty is having on the euro, which has weakened sharply against the dollar and the British pound this year. That may not be very good for those in the United States or Britain holding euro-denominated assets, but it’s good for European exporters, whose goods become relatively less expensive for importers.

As Jennifer McKeown, a senior economist with Capital Economics, pointed out in a research note on Thursday, euro zone export orders are sharply up (by some counts they are now the highest in 10 years), while in April, euro zone manufacturing expanded at its fastest rate since November 2006, according to Markit.

That’s clearly a positive for the euro zone. The EU is the world’s largest trading bloc by value and exports are a key component of growth, particularly for the major economies such as Germany, France and Italy. Accountancy firm Ernst & Young said in a recent report that it expected net trade to contribute 0.7 percentage points to euro zone growth in 2010 — thereby accounting for three-quarters of the rise in overall GDP.

It is therefore perhaps not so surprising that economic and business sentiment in the euro zone rose strongly in April, despite the chaos in Greece and the volatility in financial markets across the region. 

But there is also a broader positive shakeout that could ensue from this crisis. It may take several years — at best — but economists and political analysts think it will force profound structural adjustments in several EU economies, including Greece, Portugal, Spain and possibly Italy.

from Africa News blog:

African poverty falling faster than thought?

The old image of an Africa doomed to get ever poorer has certainly lost credence over the past decade even if it is a view still held by some.

Well, according to a new study, Africans are getting wealthier more quickly than previously believed and the poorest continent's riches are also spreading beyond the narrow confines of its elite.

"Africa is reducing poverty, and doing it much faster than we thought," the study by U.S.-based economists Xavier Sala-i-Martin and Maxim Pinkovskiy said.

"The growth from the period 1995-2006, far from benefiting only the elites, has been sufficiently widely spread that both total African inequality and African within-country inequality actually declined over this period."

The research, which assesses poverty levels and income distribution from 1970 to 2006, lends weight to a belief among local and foreign investors that Africa is finally getting its act together 50 years after shaking off the colonial shackles.

The study, published by the private, non-profit U.S.-based National Bureau of Economic Research, also challenges the suggestion that strong African growth over the last decade or more has done little to alleviate grassroots poverty due to the countervailing effect of equally strong population expansion.

Going by an inflation-adjusted $1 per person per day yardstick, the study, using statistical analysis pioneered by the two authors said 32 percent of Africans were in poverty in 2006, compared to 42 percent in 1995 and 40 percent in 1970.

Merkel’s 2nd term off to a bumpy start

After spending the last four years trapped in a loveless grand coalition with the centre-left Social Democrats, Germany’s conservative chancellor Angela Merkel is looking forward to happier, more productive days in a cosy new centre-right coalition with her preferred partners, the pro-business Free Democrats.

However, rather than smooth sailing with her new, more like-minded coalition partners, it’s turned out to be one turf battle after another between Merkel’s conservative Christian Democrats and their Bavarian sister party, the Christian Social Union, on the one side and the Free Democrats on the other.

Weeks of unseemly arguing over tax cuts, healthcare, conscription and other issues in coalition talks has earned the new coalition the nickname Fehlstart” (false start) in the German media.

That awkward beginning was confirmed in a most embarrassing fashion for Merkel on Wednesday when at least nine deputies in her own coalition withheld their support.

Merkel was easily re-elected chancellor with 323 votes in the 622-seat parliament, 11 more than she needed. The nine deputies who either abstained or voted against her in the secret ballot served as a tangible reminder that the CDU/CSU and FDP might not be the marriage made in heaven some had expected. It was a political kick in the shins that Merkel did not need.

Four years ago she got 397 of the 612 votes, 51 less than the CDU/CSU and SPD had together. That, however, was not surprising because the grand coalition had an enormous majority in parliament and because the two camps had long been such arch enemies. This time around it was nine deputies in her own preferred coalition who stabbed her in the back. Is that a harbinger of things to come?

“Let’s try forget about this,” said Volker Kauder, CDU parliamentary floor leader. Several conservatives are already picking holes in the coalition deal, which is only a few days old. Kauder said he was sure all the CDU/CSU deputies voted for Merkel. The FDP’s parliamentary floor leader, Birgit Homburger, said the same of her party.

Cattle Rustling, Pythons and Boogie Angola Style …. the best reads of May

Climate health costs: bug-borne ills, killer heat Tree-munching beetles, malaria-carrying mosquitoes and deer ticks that spread Lyme disease are three living signs that climate change is likely to exact a heavy toll on human health. These pests and others are expanding their ranges in a warming world, which means people who never had to worry about them will have to start.

Spain rearranges furniture as economy sinks

Moving a 17-metre high monument to Christopher Columbus 100 metres down the road is how the Spanish government is interpreting the advice of John Maynard Keynes. The economist once argued it would be preferable to pay workers to dig holes and fill them in again, rather than allowing them to stand idle and deprive the economy of the multiplier effect of their wages.

Picking up the pieces from Afghanistan’s war

U.S. gunners scanned a lush Afghan valley from their helicopter, as a  white van containing a badly burned baby inched toward another Black Hawk waiting at the army outpost. Eight soldiers had flown into the heart of hostile eastern Afghanistan, in a convoy of one air ambulance and one “chase” helicopter for protection, to collect 18-month-old Amanullah who knocked a pot of scalding water over his legs, penis and scrotum.

In Brazil, extreme weather stokes climate worries

No one could say they hadn’t seen it coming. The sand dunes had been advancing for decades before they swallowed the houses of families in Ilha Grande, an island in Brazil’s Parnaiba river delta. Standing on a dune that covers his old home, one man describes the landscape of his childhood — cashew trees as far as he could see. Not a dune in sight.

China, and the slowdown showdown

America caught a cold and now China has one too. 

IMF chief Dominique Strauss-Kahn said on Monday that the Fund could cut its forecast for China’s economic growth in 2009 to around  5 percent. To think that only last year China was galloping at a double-digit clip. It’s staggering, and it’s worrying.

Worrying, for one thing, because  - as the Heritage Foundation’s Derek Scissors puts it - ”the American economic slump is running into the Chinese economic slump, creating the conditions for a face-off between Beijing and the U.S. Congress, possibly leading to destabilization of the world’s most important bilateral economic relationship”. 

He argues that the new U.S. administration, confronted with a record-breaking bilateral deficit and soaring unemployment, could impose prohibitive tariffs or erect other barriers to Chinese goods. The EU, Japan and others would then be permitted by WTO rules to raise barriers against a diversion of Chinese goods to protect their markets, and “some form of Chinese retaliation is certain”.

“If intemperate, such retaliation will prompt further action by the U.S. and perhaps other countries, threatening the global nature of the trading system,” Scissors concludes.

Michael Pettis, a professor of finance at Peking University, blogged on the same theme last month, warning that Smoot Hawley, the notorious U.S. tariff act that contributed to the Great Depression of the 1930s, could return in a different guise.

Does the West still matter for Africa?

First on Zimbabwe, now on Darfur, Western countries have lost out at the U.N. Security Council to African states backed by China and Russia.

A Western attempt to get sanctions imposed on Zimbabwean President Robert Mugabe’s government flopped on July 11. Three weeks later, when it came to renewing the mandate of peacekeepers in Darfur, Western countries bowed to demands to include wording that made clear the council would be ready to freeze any International Criminal Court indictment of President Omar Hassan al-Bashir for genocide. The United States abstained, but that made no difference to the vote.

The question had long come up in Western countries as to how much Africa mattered to them given what often seemed intractable wars, famine, disease and poverty. From an African perspective, Western countries – often former colonial powers – have sometimes been accused of arrogance, meddling and ignorance of the continent’s realities.

But while Africa’s economies were once dependent on aid and finance from the West, it is China and other Asian countries that are now rushing to invest, helping to drive unprecedented growth. How Africa will deal with the new investment was a key topic at this week’s meeting in Mauritania with the International Monetary Fund and World Bank. G8 countries, meanwhile, appear to be falling short on their promises of aid.