Word: gdp
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...funny has been happening in the commodities trade. After spectacular plunges, the prices of oil, copper, palm oil and others are rallying. This shouldn't be happening given the parlous state of the world economy. The International Monetary Fund this week cut its global growth forecast for 2009, predicting GDP would contract by 1.3%, the most severe recession since the 1930s. Yet oil is some 50% more expensive now than in December. Palm oil, which is used in a wide variety of manufactured foods, has surged by about 50% this year. "The only area of the world economy I know...
China's economy expanded 6.1% on annualized basis in the first quarter, its slowest pace since 1998. Singapore's GDP contracted an astounding 19.7% in the same period - after shrinking 16.4% in the previous quarter. Hong Kong has yet to report first-quarter numbers, but its economic performance in the final quarter 2008 does not inspire confidence: GDP growth was minus 2.5%. In the same period, the South Korean economy contracted 5.6% while Japan, Asia's largest economy and the world's second biggest, shrank...
...that the markets anticipate GDP health six months or so in advance, so what this disconnect is telling us is that economic recovery is just around the corner. Sure, we're seeing some green shoots particularly in China, where industrial production rose 8.3% year-on-year in March, retail sales surged 15.9% in the first quarter, and investment in fixed assets jumped 28.6% in March after rising 26.5% in February. But it's difficult to see how Asia can return to real growth with export demand dead in the U.S. and Europe - and no one expects a resurrection there anytime...
...that China's communist rulers, fearful of social unrest that can force them from power, will succeed in buying their way to their target of 8% GDP growth, the magic number that will supposedly ensure that enough of the 1.3 billion population will have jobs. The central government has already started spending $585 billion in fiscal stimulus, second in size only to America's $787 billion (and counting) package. A second stimulus package valued at 130 billion renminbi ($19 billion) is expected to be unveiled soon...
...easy for the state's largesse to end up in the pockets of politicians and other vested interests. The other issue is the long-term damage to economies from the sheer size of the deficit spending. The Chinese spending is equivalent to nearly 13% of GDP while that in Japan comes to 5%. Australia's fiscal stimulus equals 5% of GDP too, while Korea's is at 3.7%, Taiwan's at 3.4% and Thailand...