Financial Japan stimulus to inject $60bn into flagging economy

Japan stimulus to inject $60bn into flagging economy
The Japanese cabinet has approved a plan to pump more than $60bn (£38bn) into the country's struggling economy.

The Japanese prime minister faces seemingly unsolvable economic problems
The aim of the plan - which still needs approval from parliament - is to boost growth, jobs and spending.

The Japanese economy is suffering from deflation and a strong currency; prices keep falling, but consumers hold off spending in hope of lower prices.

Analysts said the key problem is that the yen is at a 15-year high, making exports more expensive.

Earlier this week, the Bank of Japan set interest rates at just above zero.

Japan's Nikkei newspaper said the plan could boost GDP growth by up to 0.6% and help to save jobs.

Yen dollar doldrums
An extra budget is needed from parliament to fund the stimulus plan. This is expected to be submitted to parliament for debate later this month.

A previous stimulus package, announced last month, was intended to create about 200,000 jobs and shift GDP into positive territory, but was criticised as not going far enough.

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At the heart of Japan's woes is the strong yen, which has gained almost 50% in value against the dollar since mid-2007.

Japan has been stuck for the last 20 years in what economists call a "liquidity trap" - falling prices, interest rates stuck at zero, but savings rates remaining stubbornly high.

Much of the recent yen strength is actually to do with dollar weakness - the US has also cut rates virtually to zero and faces the risk of sinking into a liquidity trap just like Japan.

Despite the additional spending measures in the supplementary budget, Mr Kan has made clear that Japan must cut its budget deficit in the medium term.

Japanese government debt has risen to about twice the size of its economy during the last two decades of poor growth.
Coppied by http://www.bbc.co.uk/news/world-asia-pacific-11498607

Pakistan to seek IMF help for flood-battered economy

Enjoy Pakistan to seek IMF help for flood-battered economy


A boy walks into his family house which was destroyed by floodwaters in Mehmood Kod village in Pakistan's Muzaffargarh district of Punjab province August 23, 2010. (REUTERS/Reinhard Krause)
SUKKUR, Pakistan (Reuters) - Pakistan braced for more flooding in the south as officials were due to hold talks in Washington on Monday with the International Monetary Fund on how to shore up the battered economy to maintain stability.


A boy walks into his family house which was destroyed by floodwaters in Mehmood Kod village in Pakistan's Muzaffargarh district of Punjab province August 23, 2010. (REUTERS/Reinhard Krause)
The IMF said it would review Pakistan's budget and economic prospects because of the magnitude of a disaster that has ravaged crops and infrastructure, left more than 4 million homeless and raised concerns that Islamist militants may exploit the chaos.

Estimates for economic growth this year range from zero to 3 percent -- below the official target of 4.5 percent -- with Pakistan's ally the United States worried that a weak economy could destablise a key nation in the war against militancy.

Agriculture, the mainstay of the economy, has been hit hard.

The floods have destroyed or extensively damaged crops over 4.25 million acres (1.72 mln hectares) of land -- including cotton, rice, sugarcane, maize -- Food Minister Nazar Muhammad Gondal told Reuters.

The total area under cultivation is about 23 million hectares, food ministry officials say.

The IMF talks will evaluate the economic impact of the flooding, assess the measures needed to address the damage and discuss ways in which the IMF can help. [nSGE67M04A]

Help may come in the form of lowering some of the targets of the loan programme or allowing the government to abandon it and take on another disaster-relief loan.

Either way, the government is under intense pressure to deliver assistance to a public that is seething at its handling of the crisis.

Any unrest could fuel a Taliban-led insurgency that the military had said it had made serious progress against before the floods hit three weeks ago.

(For a slideshow: Pakistan flood relief, click http://in.reuters.com/news/pictures/slideshow?articleId=INRTR2GZF5)

Authorities have been accused of moving too slowly and Islamist charities, some with suspected links to militant groups, have rapidly provide relief to Pakistanis, already frustrated with their leaders' track record on security, poverty and chronic power shortages.

Since the floods struck, the Taliban had not staged any major attacks, but on Monday a suicide bomber killed pro-government cleric Noor Mohammad and 21 others in a mosque in South Waziristan on Monday, officials said.

"People were leaving the mosque after prayers when the bomber moved ahead to shake hands with my father and exploded the device," said the cleric's son, Noor Khanan, adding that the bomber was a young boy.

South Waziristan, a semi-autonomous ethnic Pashtun region, was a stronghold of al Qaeda and Taliban militants before the government launched a military offensive in October last year and largely cleared the region. Taliban militants often melt away when they are under pressure and return to former bastions.

Hours earlier, a bomb blast at a meeting of tribal elders killed seven people in Kurram tribal region near Afghanistan, a government official said.

In a third attack, a bomb planted under a cart went off in a market on the outskirts of the northwestern city of Peshawar, killing three people and wounding six, police said.

SOUTH ON ALERT FOR FLOODS

The worst floods in decades have been spreading through the rice-growing belt in southern Sindh province district by district, breaking through or flowing over embankments.

International Organisation for Migration (IOM) spokesman Saleem Rehmat told reporters about 80 percent of the 3.9 million people in Sindh affected by the floods have been displaced.

Hundreds of thousands of people have fled cities, towns and villages in the province for safer ground, disaster management officials said, adding that growing water pressure in the Indus River was one of their biggest concerns.

Food is running out in remote villages. Two exhausted-looking men wading along a flooded road in Sindh in search of supplies said they had walked for three days from their flooded village.
Coppied by http://thestar.com.my/news/story.asp?file=/2010/8/24/worldupdates/2010-08-23T210427Z_01_NOOTR_RTRMDNC_0_-510133-2&sec=Worldupdates

Fears over Latvia brain drain as economy struggles

Watch this Fears over Latvia brain drain as economy struggles
Every four years, more than 12,000 students and children gather on a giant stage in Riga to sing national folk songs.

Wearing brightly-coloured folk costumes, they are visibly moved as they sing traditional songs reminding them of Latvia's brave struggle for freedom from 20th-Century Soviet occupation.

But many of the young people here today may soon be forced to say goodbye to the homeland they love so much.

Latvia is losing more than 1% of its population annually, as the country's young people head abroad to find work.

With 2.2 million inhabitants, Latvia is already one of Europe's least populous countries. But every year around 30,000 people emigrate.

Engineer to strawberry-picker

Martins Neimanis is one of those planning to leave Latvia within the next few months. Today he has come to GP Recruitment, an agency in Riga which finds work abroad for Latvians.

Engineer to strawberry-picker

Martins Neimanis is one of those planning to leave Latvia within the next few months. Today he has come to GP Recruitment, an agency in Riga which finds work abroad for Latvians.


Martins Neimanis is one of thousands of unemployed young people in Latvia
Mr Neimanis lost his job in 2008 when the economic crisis struck. And although he is an experienced civil engineer, he will probably end up picking strawberries or packing vegetables in England.

But, like many Latvians, he is stoical about the future.

"I'll do any job. I have to earn my living to survive. To do that, I'm prepared to give up the dreams I had about my career," he explains as he waits for his consultation.

Mr Neimanis is not alone. Since the beginning of 2010, this agency has seen a 50% increase in Latvians wanting to find jobs abroad.

The work usually means living in a caravan and earning about 4.50 euros, or £3.75 an hour working in the fields.

All of the applicants here today are young and well-qualified - exactly the people Latvia can least afford to lose.

"Very often we have school teachers with a high education and reasonably good English, and they will end up simply sorting or picking fruit or vegetables," says Ginters Purins, director of GP Recruitment.

Dying countryside


Houses in the Latvian countryside are being abandoned
The results of this trend can be seen out in the Latvian countryside, where schools are closing and some villages are simply dying out.

Rural depopulation is common in many former Soviet countries. But in Latvia, where the economy shrank 18% last year, the economic crisis has exacerbated the situation. Unemployment rates, which are hovering around 20%, are the highest in the EU, forcing people to seek work abroad.

With its turbulent history of foreign occupation, Latvia has a long tradition of emigration. But, until recently, birthrates were high - typically three or four children per woman.

Today, partly because of financial insecurity, the birthrate is below 1.4 children per woman - not enough to sustain the population, even without emigration. This means that the Latvian nation is not only shrinking, but also ageing.

According to social anthropologist and government adviser Roberts Kilis, this abstract demographic trend will soon have very real consequences for people - hitting them in the pocket. By the end of the year, he says, the government will no longer be able to cover pension payments.

"That would be the first major shock, when people see a change in the way the pension system operates," Mr Kilis says.

Back at the festival, the songs provoke strong emotions as Latvians think back with pride to the events two decades ago which led to the establishment of their own nation.

But since then the country has lost a fifth of its people. So now voices are being raised not just in song, but also in protest, calling for the government to enable Latvia to have not just a past to be proud of, but also a future.
coppied by http://www.bbc.co.uk/news/world-europe-10913098

Watched beng this China Passes Japan as Second-Largest Economy

Enjoy China Passes Japan as Second-Largest Economy
SHANGHAI — After three decades of spectacular growth, China passed Japan in the second quarter to become the world’s second-largest economy behind the United States, according to government figures released early Monday.
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The Takeaway: David Barboza on the Chinese Economy

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The milestone, though anticipated for some time, is the most striking evidence yet that China’s ascendance is for real and that the rest of the world will have to reckon with a new economic superpower.

The recognition came early Monday, when Tokyo said that Japan’s economy was valued at about $1.28 trillion in the second quarter, slightly below China’s $1.33 trillion. Japan’s economy grew 0.4 percent in the quarter, Tokyo said, substantially less than forecast. That weakness suggests that China’s economy will race past Japan’s for the full year.

Experts say unseating Japan — and in recent years passing Germany, France and Great Britain — underscores China’s growing clout and bolsters forecasts that China will pass the United States as the world’s biggest economy as early as 2030. America’s gross domestic product was about $14 trillion in 2009.

“This has enormous significance,” said Nicholas R. Lardy, an economist at the Peterson Institute for International Economics. “It reconfirms what’s been happening for the better part of a decade: China has been eclipsing Japan economically. For everyone in China’s region, they’re now the biggest trading partner rather than the U.S. or Japan.”

For Japan, whose economy has been stagnating for more than a decade, the figures reflect a decline in economic and political power. Japan has had the world’s second-largest economy for much of the last four decades, according to the World Bank. And during the 1980s, there was even talk about Japan’s economy some day overtaking that of the United States.

But while Japan’s economy is mature and its population quickly aging, China is in the throes of urbanization and is far from developed, analysts say, meaning it has a much lower standard of living, as well as a lot more room to grow. Just five years ago, China’s gross domestic product was about $2.3 trillion, about half of Japan’s.

This country has roughly the same land mass as the United States, but it is burdened with a fifth of the world’s population and insufficient resources.

Its per capita income is more on a par with those of impoverished nations like Algeria, El Salvador and Albania — which, along with China, are close to $3,600 — than that of the United States, where it is about $46,000.

Yet there is little disputing that under the direction of the Communist Party, China has begun to reshape the way the global economy functions by virtue of its growing dominance of trade, its huge hoard of foreign exchange reserves and United States government debt and its voracious appetite for oil, coal, iron ore and other natural resources.

China is already a major driver of global growth. The country’s leaders have grown more confident on the international stage and have begun to assert greater influence in Asia, Africa and Latin America, with things like special trade agreements and multibillion dollar resource deals.

“They’re exerting a lot of influence on the global economy and becoming dominant in Asia,” said Eswar S. Prasad, a professor of trade policy at Cornell and former head of the International Monetary Fund’s China division. “A lot of other economies in the region are essentially riding on China’s coat tails, and this is remarkable for an economy with a low per capita income.”
coppied by http://www.nytimes.com/2010/08/16/business/global/16yuan.html