Three snapshots for Thursday
OECD growth forecasts released today show the euro zone countries lagging behind other G7 countries:
Reuters latest asset allocation polls showed global investors cut government debt from portfolios in March:
Germany’s unemployment rate fell to a record low of 6.7% in March, bucking the trend in other euro zone countries:
Greece’s interest burden, post-PSI, will remain huge
It seems Greece has finally reached a deal on austerity measures needed for a bailout. But what about PSI?
(ECB President Mario Draghi just said he heard it was close to a deal. It’s been close for a few weeks though…)
JP Morgan says Greek PSI is hardly going to change the heavy interest burden on the country and the issue of default will inevitably come up.
First of all, Greece’s interest payments are huge.
Greece paid 15.5 bln euros in net interest payments in 2011, 17% of total general revenues. This is the highest among all OECD countries and more than 3 times the OECD average of 5%. It is also more than double the 8% average for other peripheral countries in the euro zone.
The U.S. bank estimates the Greek PSI is going to capture 205bln euros of private bond holders (and perhaps a further 55bln euros if the ECB participated).
Of this 260 bln euros, around 85 bln or a third are held domestically, by Greek social security funds, domestic banks to be largely nationalised post PSI, and the Greek central bank.
Greek ars great but if they dont implement the reforms specially their own pensions funds that are tied to their own greek bonds, their not helping themselves in an already unsustainable situation. they should show some cooperation. If not It may be painful to extract a teeht but if necessary it may be better than keep constant pain within the E¸U and perhaps teh world. Does an economi as large as Argentina can hurt the world if isolated ?
What worries the BRICs
Some fascinating data about the growing power of emerging markets, particularly the BRICs, was on display at the OECD‘s annual investment conference in Paris this week. Not the least of it came from MIGA, the World Bank’s Multilateral Investment Guarantee Agency, which tries to help protect foreign direct investors from various forms of political risk.
MIGA has mainly focused on encouraging investment into developing countries, but a lot of its latest work is about investment from emerging economies.
This has been exploding over the past decade. Net outward investment from developing countries reached $198 billion in 2008 from around $20 billion in 2000. The 2008 figure was only 10.8 percent of global FDI, but it was just 1.4 percent in 2000.
Not surprisingly, the lion’s share comes from the BRICS — Brazil, Russia, India and China — which together made up 73 percent of outflows last year. BRIC outward investment jumped to $144.3 billion in 2008 from $29.6 billion three years earlier.
Perhaps the most interesting data, however, concerned political risk insurance. MIGA studied the kind of insurance BRICs outward investors were taking to see what kind of things worried them.
Brazil had a mixed of concerns, but Indians were most worried about transfer and convertibility restrictions, the Chinese concerned themseves with war and civil disturbance and Russians were extremely worried about breaches of contract.
Sceptics might be tempted to see this as a reflection of national concerns. But MIGA said it was more micro than that. Russian investment, for example, is dominated by commodity exploration, an area said to be more subject to contract problems than others.
Very thought chewing, stimulating article from your editor on this subject.
I have already written on Brazil,Russia, China, And South Africa!s tremendous survival from the latest worst world recession, and their upcoming markets, economic advantages on many core sectors, increasing trend in trade and commerce, labor productivity and involvement, and adjusted social and economic atmosphere and etc.etc. to this website.
All my writings were published.
After reading of this article, As an economist graduate, voracious reading, keep on writing to major news channels , i have not noticed any set back or any adverse comments from world bank and from any development nations problems in regard to exports, imports, reserved cashes and foreign exchanges from any world quarters.
What have you mentioned on some worries are not any serious concerns for day today positive, encouraging trends are not making any serious threatens by any way.
Hereafter, all many major producing countries will have second thoughts are sidelining of these upcoming countries.
Some examples can be shown here-
Indian economy is growing, profits are showing, production and demand are increasing on road development, ports expansions, steel, gold,silver, and information technology structure are showing very positive, and very encouraging results on day today basis.
The above same good trends are in cards for worlds calendar and for quick introspection for difficult economic conditions to follow or at least to accept a final, real results for their future planning, jobs retaining, jobs creations, awareness towards less expenditure, cost cutting measures, creating more infra structure to their already slow down business.
Still, i can write pages and pages for our users,team and for our world watchers.
If time permits, i will highlight more on these subjects.
To sum up, Nothing to worry from the above developing economies.
