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Sunday, May 20

LATEST IN GLOBAL ECONOMY



GLOOM IN GLOBAL ECONOMY CONTINUES UNABATED FOR NOW

All is not well in the global economy; in fact all may likely loom into further tumult for the rest of the year, probably spilling into 2013 without sanguine signs of reprieve in the near term, if the latest commentaries and news reports are deemed as references to be relied upon.

Rather than presenting in an intense saturated narrative format, which is the usual style deployed by most media columnists, instead I prefer to list out some key developments in point outlines so that it is easier for readers to grasp my overview of the overall economic atmosphere. I now go straight to the points.

Ø  Asian currencies at large has witnessed the sharpest drop since last November as continuing concerns regarding the Europe debt crisis rallied a demand for USD, which is still considered the safe haven in event of unfavourable global trends. Strong market forces in favour of the dollar have added more frigid sentiments.

Ø  Investors are shying away – in fact drawing their money out – from riskier assets because of lingering concerns on economic recovery prospects and on Europe’s issues.

Ø  Due to discord among political leaders in Greece about austerity measures after the recent polls, Greece has been unable to form a government, thus paving for another election to be held.

Ø  Asian shares ended lower last Friday (May 18, 2012) due to concerns about the global economy, coupled with escalating banking crisis in Spain and political uncertainty in Greece that has fueled expectations of Eurozone breakup.

Ø  European parliament chief Martin Schulz has warned that the Greek economy could be devastated if Greece really goes for exit from Eurozone, and to him that would be “the beginning of an even more negative cycle.”

Ø  The jobless rate in Greece hit a new high in February. More than one in five Greeks and more than one in two youths are out of job. At more than 21% unemployment rate, nearly 1.1 million people are without job.

Ø  Germany, the big brother of Europe and Eurozone, experienced stagnant growth as at April.

Ø  Asia Pacific nations are experiencing slower growth emanated from troubled export markets and rising commodity prices, according to a United Nations report. The greatest threat to the region is the issue of debt default in the Eurozone.

Ø  China’s residential property prices fell in 46 out of the 70 cities tracked by the government in April from a year earlier.

Ø  The Chinese monetary authority cut banks’ reserve requirement for the third time in six months to support the Chinese economy which recorded in the 1st quarter the slowest growth pace since mid-2009. Goldman Sachs lowered the country’s 2nd quarter estimate to 7.9% from the earlier projection of 8.5%. Likewise, the growth rate for 2012 has been reduced from 8.6% to 8.1%.

Ø  Although Japan’s economy expanded faster than expected in 1st quarter due to boost from reconstruction spending, it is yet facing imminent slowdown in view of Europe’s crisis that would curtail export demand. Estimated growth rate of 2.2% in 2nd and 3rd quarters could trim down to 1.7% in 4th quarter.

Ø  Hiring in the US seemed to have picked up in April but at modest level, with new 163,000 jobs added into the market compared to 120,000 in March. However, this was not sufficient to further lower the unemployment rate now still standing at around 8.2%. An average of 246,000 jobs were created a month from December 2011 to February 2012 but significantly slowed down in March, which thus sparked worries that job growth was weakening. In fact, some people have given up looking for work. The current unemployment rate portrays a superficial picture of the unemployed situation. Those out of work but not looking for jobs are not included in the unemployed computation.

A friend who is in unit trust sales just told me that the forthcoming 2012 London Olympics commencing in early July should in some ways pep up economic activities not just for the UK, but also Europe to some extent? He expects the Asian markets to rally again and prices should pick up around September. He said this was the tip he received from his company’s fund manager. Well, I can only say, “Let’s wait and see.” The UK may definitely go into a hype of economic activities, especially tourism and retails related, for a while as the spin-off from the Olympics. But will there really be a positive impact to other regions?.......I do not really perceive how. Again, let's wait and see.

The end.

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