By Juan Carlos Echeverry and Luis Fernando Mejía
Two years ago, when we started our tenure at Colombia’s finance ministry, we realised that, using IMF data, Colombia’s GDP had become larger that Venezuela’s. Having been trailing behind our neighbour for decades, such an achievement was quite satisfactory.
The obvious question back then was, Now what? So the next goal became reaching Argentina – whose GDP was nearly 30 per cent above Colombia’s.
Many analysts lament that the Argentine government’s investment-unfriendly policies – heavy subsidies, restrictions on dollar purchases, import controls, to name just three – are holding the economy back.
How much? Well, growth in the second quarter this year could have been 4 per cent instead of zero, according to Argentine think-tank, the Institute for Research into Argentine and Latin American reality at Fundación Mediterránea.
By Jennifer McCoy of Georgia State University
Most English-language commentary has attributed Hugo Chávez’s surprising 11-point victory in Venezuela’s presidential election on October 7 to oil-fueled public spending and “ventajismo” (incumbent use of state machinery to create an unlevel playing field and impressive mobilization), with some voters induced by fear of losing promised benefits to vote for the president. While all these factors contributed to the outcome, the analyses miss one additional factor explaining Chávez’ political longevity.
Hungary, in case you didn’t know, is doing ok. At least according to Viktor Orban, the prime minister who, fresh from a meeting with Angela Merkel in Berlin, told the Magyar Nation in his regular Friday radio broadcast last week that the country is “more serious and in a stronger condition than it was at the time of the previous agreement [with the International Monetary fund],” and it therefore plans to strike “a good deal with that organisation.”
With more than 400 million viewers on YouTube, South Korean rapper PSY’s “Gangnam Style” music video has become an internet hit and made Seoul’s trendy Gangnam neighbourhood a household name. The FT’s Simon Mundy examines the growth in South Korean cultural exports and talks to some of the country’s leading film and TV producers.
In a dramatic turn to the Bumi PLC saga, Nat Rothschild, the British financier, has resigned from the FTSE 250 coal miner’s board while firing a public broadside at Samin Tan, chairman.
In a letter on Monday he accuses Tan of complicity in oppressing minority shareholders and says it would be a “disgrace” to go ahead with an offer from Indonesia’s powerful Bakrie family that would unwind Bumi’s London listing (see above link). “Based on news reports and other sources,” he writes, “it appears that you shall be reimbursed for your investment at a price of £10.91 a share, whilst other investors see an estimated return of just £4.30 a share. This is a clear breach of the spirit and, I believe, the letter of the takeover code.” Full text of the letter after the break.
South Africa can’t seem to catch a break at the moment. For every strike resolved, another bit of bad news pops up.
On Friday, the settlement with truckers was a short-lived boost: that evening, S&P downgraded the country’ debt a notch, sending the rand into another downward spiral. On Monday, another union threatened a walk-out and the strike at gold miner Gold Fields worsened.
There are signs that policy makers are starting to take things very seriously.
More evidence on Monday of the slowdown in the Russian economy, with data showing industrial output rose just 2 per cent in September, down from 2.1 per cent in August and short of market forecasts of 2.2 per cent.
Despite some arguments about statistical quirks in the figures, there was no mistaking the general sluggishness. But, with inflation still high, the central bank won’t be cutting interest rates any time soon. After a surprise hike in September, economists are divided over whether the central bank will consider another one next month.
With emerging market debt markets booming, is now time for African nations to join in? If Zambia’s recent bond is anything to go by, the answer would be a firm ‘yes’ – as many analysts are fond of pointing out, Zambia’s yield on its 10-year bond is lower than that of Spain.
So what’s stopping African countries jumping in and issing international bonds?
On top of all its other challenges, Iraq has problems with its banks. While it’s understandable that banking reform may not have had top priority for a government struggling to control violence and settle the future of its oil fields, bankers say it’s high time to act. As Camilla Hall reports, banking reform could attract new finance, boost economic growth and create jobs.
Whether a genuine attempt to plug the fiscal gap or a pre-election gambit, proposals by the Bulgarian government to levy tax on interest earned from bank deposits have elicited surprise and no little criticism.
Income on bank deposits would be taxed at a flat rate of 10 per cent from January under plans announced by finance minister Simeon Djankov and backed by prime minister Boyko Borisov. The change could raise an extra BGN120m for the public coffers. Initially, it was suggested that the cash could be used to fund increases in state pensions – which looked suspiciously like a populist move before next year’s general election.
It’s not often that Bosnia appears in international headlines these days – and most Bosnians would be grateful for that. When it does attract the attention of outsiders, it’s often for a bad reason – as it was when international media reported the closure of the country’s 124-year-old National Museum this month.
The closure is yet another reminder of the instability engendered by Bosnia’s divided administration and the crisis faced by its economy.
* Most Asian stocks fall as Europe concern overshadows China data
* Thailand prepares for mobile phone auction
* Philippines to widen share ownership
Parsing China’s numbers is not for the faint hearted. The more closely one looks at China’s impressive trade data in September released over the weekend, the more complicated the picture looks.
True, exports grew by 10 per cent – but Standard Chartered economist Stephen Green has adjusted the data to account for seasonal effects and found that September exports were neither hot nor cold, but lukewarm.