South Korea’s industrial output hit a nine-month high, adding to investor confidence in the country’s recovery. But not everything is rosy about Asia’s fourth-largest economy amid growing concerns over corporate financing problems.
The weaker yen is slowly hampering South Korea’s growth momentum, with the country’s industrial output falling 2.6 per cent in March from February.
The latest data marked a fall for a third straight month, clouding the country’s economic outlook. Industrial production fell 3.0 per cent last month from a year earlier, severely undershooting market estimates, as labour unions at Hyundai Motor, the country’s largest automaker, refused to work on weekends.
By Kandeh K Yumkella of UNIDO
When I look at the future of my continent, three words come to mind: hope, opportunity and responsibility.
Hope, because there is positive change happening throughout Africa. Opportunity, because of the commodity boom. Responsibility, because we – the African people and our leaders – still need to create 10m jobs a year for our young people, and lift out of poverty the over 50 per cent of Africans who still live below $2 per day.
Poland doesn’t have many storied companies dating back to the country’s early industrialisation but one of the few is Hipolit Cegielski, a Poznan company focussed on building ship engines, which is now being sold by the treasury ministry.
Does Chinese industry need more inflation?
The question might seem absurd for a fast-growing developing economy but with consumer prices increasing at just two per cent, Gavekal Dragonomics, the China economic research consultancy, is arguing that inflation is “more a friend than a foe.”
If any further evidence were needed that the Indian economy is struggling mightily, the Reserve Bank of India’s September bulletin provided it. On Wednesday, the RBI said Indian companies had dramatically curtailed their plans to raise funds, and are more wary to invest now than they have been in the recent past.
The RBI found 668 projects amounting to Rs2.1tn ($38bn) in the fiscal year ended in March. That’s nearly half as much as the the Rs3.9tn spent on 710 projects the previous year. The projects are sanctioned by foreign institutional investors or banks.
Mondi, the South African paper and packaging manufacturer, has changed a lot over the past half century. “In the 1960s, we were a newsprint company – that was all we made,” says David Hathorn, chief executive at the group. “Newsprint now represents 2 per cent of our revenue.”
Today, the Johannesburg-based company (which is listed in London) makes everything from paper and corrugated cardboard boxes, to the lids on tubes of Pringles and parts of nappies. Before their products were covered only in ink – now they have to handle a whole host of substances.
Johnson Electric is far from being a household name. But the billion electric motors it produces each year are fitted into dozens of household products including food blenders, treadmills, cars and electric toothbrushes.
The Hong Kong-based company has weathered the global crisis by focusing on specialisation – it’s a niche player in hundreds of niches – and ir plans to stick to its strategy.
South Korea’s policy makers must be breathing sighs of relief thanks to signs that the economy has been perking up recently.
Industrial production increased 14.4 per cent in February from a year earlier, after a Lunar New Year holiday caused contraction last month. Still, the pace of growth is slowing, with output rising 0.8 per cent month on month in February, compared to 3.2 per cent in January.
In a surprise bounce, India’s industrial output grew by 6.8 per cent in January compared with a year earlier – significantly higher than the 2 per cent most economists had predicted, according to data released on Monday.
But economists believe the high growth – up from 1.8 per cent the previous month – is probably unsustainable, not only because of the erratic nature of IP as an indicator, but because it was driven by an explosion of thus far inexplicable 92.6 per cent growth in the food and beverage segment.
While the eurozone sputters into a recession, Poland’s economy continues to do well: industrial production numbers released today show an annual increase of 9 per cent in January.
“Polish industry is still strong,” writes Malgorzata Starczewska-Krzysztoszek, chief economist with Lewiatan, the Polish employers confederation. She notes that the decent numbers came in despite a strong January 2010.
Indian industrial output growth braked sharply in December to 1.8 per cent, down from 5.9 per cent in November, according to data released Friday.
But the lower than expected output is unlikely to accelerate the Reserve Bank of India’s widely-anticipated April cut to interest rates, economists told beyondbrics. And regardless, any rate cuts won’t do much to revive investment without the kind of meaningful policy reform that the Congress Party-led government has so far been unable to provide.
By Hermann Simon of Simon-Kucher
For many years, Putzmeister was one of my favorite ‘hidden champions’ – little-known German companies which are world famous in their industries. The concrete pump-maker’s equipment was used at Burj Chalifa, the tallest building in the world, and at the 2011 Fukushima nuclear power plantdisaster site, just as it was at Chernobyl 25 years earlier.
But now Putzmeister’s days as an independent business are over, following the announcement this week of its planned acquisition for €360m by its huge Chinese rival, Sany Heavy Industry. Should we lament the loss of a proud member of the Mittelstand? Or should we be glad that a financially-vulnerable company with top-class technology has a solid backer? And what does the deal say about the Mittelstand’s future?
After a dismal October, India’s industrial production swung back into positive territory, growing 5.9 per cent year-on-year in November, according to data released by the Central Statistics Office.
After five months of IP growth falling – and indeed contracting in October - it was a welcome respite, but might the comeback be too good?