The sense of uncertainty in the global economy is palpable, and rightly so. China is slowing – no one is sure by how much; Europe’s sovereign debt crisis is going from bad to worse – but no one knows how much worse it will get; and the US is still just muddling through.
So what’s a central banker in Latin America to do? Judging by the raft of rates decisions and minutes out this week – many of the region’s policy makers are happy taking the wait-and-see approach. Read more
Chile got a nice surprise on Friday, in the shape of unexpectedly low inflation numbers. But there was a rather nastier surprise for one its flagship companies, Cencosud: market uncertainty has forced it to slash the size of its upcoming IPO in the US.
Central banks tend spend a lot of time and energy combating inflation, so it must have been an especially pleasant start to the weekend for Chile’s monetary authority to find that inflation was a non-event in May. Read more
Still pining for those China-like growth rates in Brazil? Not satisfied with 0.2 per cent GDP expansion? Well perhaps it’s time you tried Brazilian e-commerce.
The industry is expected to be worth R$23.4bn ($11.6bn) by the end of this year – 25 per cent more than 2011, according to e-bit, a local consultancy service. In 2011 e-commerce grew 26 per cent and in 2010, a whopping 40 per cent. Read more
As the Euro 2012 European football championship kicks off this weekend, it’s anyone’s guess which team will walk away with the cup.
But the two nations which are co-hosting the tournament hope to win out economically. Despite a recent beating of bad press in the run up to the games over racism and other domestic issues – not least being the alleged political persecution of Ukrainian opposition leader Yulia Tymoshenko – Ukraine and Poland are already counting how much their economies will gain from massive infrastructure overhauls and tourists dollars. Read more
Last week a delegation from Luka Koper, operators of Slovenia’s Adriatic port, were charming folks in Tokyo and Osaka; this week it’s they’ve been talking the talk in Shanghai (albeit as part of the North Adriatic Ports Association) at Transport Logistics China 2012.
Given that Slovenia’s economy is performing badly (0.2 per cent GDP contraction in the first quarter) and that the country is in the grip of a government austerity programme, can such expensive trips abroad – and from a majority state-controlled company at that – be justified? Read more
David Hauner of BofA Merrill Lynch Global Research
The renewed eurozone crisis is raising questions about the fundamental resilience of emerging markets. The advocates of decoupling point to strong EM balance sheets, while the pessimists underscore the dependence of emerging markets on global demand and capital flows.
We believe that the close trade and financial links make decoupling unlikely, and that fundamentally weak emerging markets may even harbour crisis risks of their own. Read more
How to choose between bad news from the Brics and worse news from Europe? Bond and equity investors opted for neither of the two this week, seeking instead shelter in the good old dollar, according to data from EPFR, the Boston-based fund flow watcher.
Still worried about a hard Chinese landing, EM investors this week kept on pulling money out of EM markets, especially those in Asia. Read more
For the second time in just over a month, India has been hit with a toilet scandal – but instead of a vast network of bureaucrats and middlemen filching over a billion dollars across the country, this one involves an elite economic policy arm of the government.
India’s Planning Commission is no stranger to controversy – last year, it came up with a novel approach to reducing the number of poor people in India: it lowered the poverty line to Rs26 (47 cents) a day.
This week it emerged that the folks determining who is poor enough to qualify for government subsidies are enjoying their own sort of government largesse, not with fancy cars or large mansions, but with toilets – $54,000 worth to be exact. Read more
There has long been talk that Japan’s collapse in the late 1990s can help us interpret what the west is going through today, particularly from the likes of Richard Koo of Nomura. There has even been talk that Japan’s performance since should be reinterpreted as a model of what Europe should aim for.
But CLSA, the Hong Kong based brokerage, reckons that the South-East Asian crisis of 1997-98 is a better guide to what Europe faces. Eric Fishwick, its head of economics research, has come up with ten Asian lessons for Europe’s crisis. Read more
Top news: China’s rate cut divides investors, analysts:
* FT: China faces stimulus dilemma
* Reuters: China rate cut sparks fears of grim May data
* Bloomberg: Morgan Stanley Puts More Cash Into Emerging Stocks On China Cut Read more
Further evidence of the PR savvy of the city of Chengdu.
Having courted western journalists in Beijing with fondue and foie gras, the city is now making a tourism push in London during the Olympics. How? With the iconic black cab, a panda motif, and a QR code. Of course. Read more
Friday’s picks from the BB team: the FT, The Diplomat and The Moscow Times debate the Putin enigma; As the China and India say a farewell to growth, is trade the answer? And Europe turns to China, while China turns to bonds; Plus: what South Africa can learn from the Windsors. Read more
Young Indonesians’ enthusiasm for smartphones and social networking has helped boost economic development and has been good news for the likes of RIM, which sells millions of its Blackberry phones in the country each year, and Facebook.
But, unless the government frees up more spectrum to meet surging demand for mobile data services, the mobile phone network could end up resembling the Jakarta traffic system – clogged up, unable to function properly and stymieing economic growth. Read more
By Gwen Robinson and Nguyen Phuong Linh
Lost in the excitement over China’s move to cut rates was Vietnam’s very own cut – of sorts. The central bank announced on Thursday it would cut its dong deposit rate cap by two percentage points to 9 per cent from 11 per cent, effective from June 11. It’s a move that emphasises the drive by policy makers to boost the economy and encourage more bank lending to businesses. Read more
It is all well and good to cut interest rates, but Beijing mandarins know better than anyone else that what China needs is not a stimulated economy, it needs a more innovative one.
Now there is some surprisingly good news on that front from Booz & Co, the management consulting firm in Beijing. They asked multinational and leading Chinese companies with mainland operations whether China was catching up with the world in terms of ability to create rather than fake – and found that 45 per cent of multinationals said some of their mainland competitors were just as innovative – or more so – than the multinationals themselves. Read more
* UN fired on at site of Syria killings
* Sberbank to buy Turkey’s DenizBank for $3.6bn
* Gazprom to revamp Arctic Gas project Read more