Archive for the ‘inflation’ Category

Vietnam in quandary over inflation, global economic downturn

November 16, 2008

Vietnam, like much of the world, is trying to stimulate its economy amid the global downturn, but it is in a quandary because it must also keep rampant inflation from flaring up again, say experts.

With a small and relatively insulated banking sector, Vietnam was not directly exposed to the subprime crisis that sparked the Wall Street meltdown and the subsequent worldwide credit crunch and financial turmoil.

But the wider economic repercussions of what has been called the worst global economic crisis since the Great Depression are already being felt in Vietnam, especially in the crucial export sector.

Containers are seen piling up at Saigon port in Ho Chi Minh ...
Containers are seen piling up at Saigon port in Ho Chi Minh city in June 2008. Vietnam, like much of the world, is trying to stimulate its economy amid the global downturn, but it is in a quandary because it must also keep rampant inflation from flaring up again, say experts.(AFP/File/Hoang Dinh Nam)

Amid slackening overseas demand, Vietnam’s monthly exports have steadily fallen from US$6.5 billion (US$1 = RM3.59) in July, to US$6 billion in August,US$5.1 billion in October.

 

And, although it’s too early to say foreigners are pulling out of financial markets, in the past month they have been net sellers of bonds and stocks.

Inflation has been in double digits all year and stood at 26.7 per cent in October, a slight fall after a drop in global energy and commodity prices. The government’s target is to bring annual inflation down to 23-24 per cent in 2008, and to less than 15 per cent in 2009.

Aiming to reduce liquidity to fight inflation, the government had raised interest rates and bank reserve requirements several times this year. But this has also starved businesses of credit for investment and working capital, forcing the central bank to reverse its monetary policy as both local and international factors have slowed economic growth in Vietnam.

A farmer throws a net to catch fish on a flooded paddy field ... 
A farmer throws a net to catch fish on a flooded paddy field in Phuong My village, 25 km (16 miles) outside Hanoi November 12, 2008. Hanoi reported 22 deaths from the worst inundations in more than three decades, officials said.REUTERS/Kham (VIETNAM)

Read the rest from AFP:
http://www.btimes.com.my/Current_News/
BTIMES/articles/vope/Article/

Pakistan’s Zardari is Cozy With China; But His Fate Is Tied To The White House and Whoever Lives there….

October 17, 2008

Pakistan’s President Asif Ali Zardari completed his first state trip to Beijing on Oct. 17, signing a raft of new agreements with a nation he had hailed in Islamabad four days earlier as “the future of the world.” China and Pakistan tied up at least 11 deals on trade and economic cooperation, infrastructure projects, agriculture, mining rights and telecommunications; they now aim to double bilateral trade, which currently stands at around $7 billion, by 2011.

Chinese President Hu Jintao (R) and his Pakistani counterpart ... 
Chinese President Hu Jintao (R) and his Pakistani counterpart Asif Ali Zardari stand near their respective country’s flags during a signing ceremony at the Great Hall of the People in Beijing October 15, 2008. Zardari arrived on Tuesday for his first visit to China as president, and has said he wants his four-day trip “to remind the leadership of the world how close our relationship is”. Pakistan is set to usher in a series of agreements with China during the trip, highlighting Islamabad’s hopes that Beijing will help it through economic and diplomatic troubles.REUTERS/David Gray (CHINA)

By Ishaan Tharoor
Time Magazine
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The two countries have a long-standing, all-weather relationship, forged over decades of mutual animosity toward neighboring India, with whom they separately have fought wars. But Zardari’s visit comes at a pivotal moment. His fledgling democracy is not only threatened by terrorism, but is also teetering toward bankruptcy. Spiraling inflation, now at 25%, has eaten into Pakistan’s foreign exchange reserves at a rate of $1 billion a month and the country risks defaulting on debt repayment loans. These fiscal headaches have been compounded by a flare-up in tensions with its most vital ally, the U.S., which recently launched raids against terrorist targets in Pakistan’s remote tribal areas without notifying Islamabad — actions that have triggered a firestorm of protest and clouded relations with Washington.

Enter China. With nearly $2 trillion amassed in foreign currency holdings, China’s government had the largesse this week to grant Zardari an immediate soft loan of upwards of $1 billion, according to a report in the Financial Times. “As a long friend of Pakistan, China understands it is facing some financial difficulties,” said Chinese Foreign Ministry spokesman Qin Gang at a briefing with journalists on Oct. 16. Other new measures include the increase of access Pakistani goods will have in China’s markets as well as agreements to launch special economic zones within Pakistan with tax incentives for Chinese companies.

Beyond this, Zardari’s strengthening of ties with Beijing sends a clear signal to the U.S. On Oct. 8, Washington concluded a landmark nuclear energy deal with India — a pact that upset both Beijing and Islamabad, in part because it enabled India to skirt international regulations regarding the purchase of nuclear fuel, something the U.S. has ruled out offering Pakistan. Su Hao, professor of Asia-Pacific studies at China Foreign Affairs University in Beijing, says China’s foreign policy establishment is “highly concerned about the U.S.-India contract, because it was a unilateral decision by the U.S.”

A burgeoning Sino-Pakistani alliance may check what many in Islamabad and Beijing fear to be a solidifying Indo-U.S. consensus in the region. Though no official statement from either government was made, Pakistan’s ambassador to Beijing, Masood Khan, told The Nation, a Pakistani daily, that obtaining nuclear reactors and fuel for civilian nuclear technology would be the “main item” in talks with Beijing this week. Apart from being Pakistan’s main conventional arms supplier, China has played an integral part in building Pakistan’s nuclear weapons industry. In turn, Islamabad allowed the Chinese to build a deep-sea facility in Gwadar, a $250 million project that, once completed, will give Beijing an immensely strategic listening post on the Persian Gulf.

Still, a geopolitical Cold War is not at hand. The fate of Pakistan’s government remains tightly bound to the White House….

Read the rest:
http://www.time.com/time/world/article/0,8599,1851332,00.
html?xid=rss-topstories

Former Fed Chief Says U.S. Now in Recession; Addresses Inflation Fears

October 14, 2008

SINGAPORE (Reuters) – Former Federal Reserve Chairman Paul Volcker said on Tuesday the U.S. housing sector faced more losses and the economy was in recession even as authorities moved to stabilize the financial system.

Former Federal Reserve Chairman Paul Volcker addresses business ... 
Former Federal Reserve Chairman Paul Volcker addresses business leaders at the Spruce Meadows round table on Global Banking in Calgary, September 5, 2008.(Todd Korol/Reuters)

Volcker said the priority for U.S. authorities in the credit crisis was to stabilize the financial system even though that meant heavy government intrusion.

“The first priority is to stabilize the financial system. It is necessary even though the cost involved is heavy government intrusion in markets that should be private,” he said in a speech at a seminar in Singapore.

“House prices in the U.S. are still declining. There are still more losses to come there. The economy, I believe, is in recession.”

Volcker is chairman of the board of trustees of the Group of 30, an international body composed of central bank governors, leading economists and private financial sector experts.

He is credited for battling double-digit inflation that flared in the 1970s.

He was chairman of the U.S. central bank between 1979 and 1987, before handing the reins over to Alan Greenspan, and oversaw a sharp increase in interest rates to quell the price pressures.

Volcker was asked by a member of the audience if the massive infusion of liquidity by the Federal Reserve could lead to inflation or stagflation.

“It’s not going to be a problem in the short run. Inflation doesn’t flourish in the face of recession,” he said.

“It’s something we have to worry about when we get out of this recession.”

Read the rest:
http://news.yahoo.com/s/nm/20081014/us_nm/us_financial_
volcker;_ylt=AhvNr4xKaaHyXXI08NYXgd.s0NUE

Related:
https://johnibii.wordpress.com/2008/03/08/my-
personal-view-is-america-is-in-recession-admit-it/

Severe economic crisis threatens Pakistan’s stability

October 14, 2008

By Saeed Shah, McClatchy Newspapers

ISLAMABAD, Pakistan — A worsening economic crisis in Pakistan is pushing millions more people into poverty, and experts fear that it could help Islamic extremists recruit new converts.
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A Pakistani money-changer counts US dollars in Islamabad on ... 
A Pakistani money-changer counts US dollars in Islamabad on October 8, 2008. Already nearly broke when the global financial crisis took hold, Pakistan now faces further woes that could take the nuclear-armed nation’s security situation closer to the edge, experts said.(AFP/File/Aamir Qureshi)
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The crisis began early this year, as democracy was restored after more than eight years of military rule. Now Pakistan’s hard currency reserves have shrunk to $3.5 billion , and without an international rescue package, America’s key ally in the fight against al Qaida is likely to default on foreign debt repayments in the next two months, economic experts said.

Inflation is running at 25 percent, according to official figures, electricity is in short supply, and Pakistan’s currency, the rupee, has been devalued 25 percent against the dollar. Investor confidence has fallen so low that on Monday, police had to surround the Karachi Stock Exchange to protect it from angry investors. The Exchange already had lobbied the government unsuccessfully to be allowed to close for two weeks.

Terrorist acts by Islamist insurgents have accelerated capital flight and discouraged foreign direct investment. Depositors are lined up at banks to withdraw their money or to send it abroad.

“The canvas of terrorism is expanding by the minute,” said Faisal Saleh Hayat , a member of parliament and a former interior minister under Pervez Musharraf , the U.S.-backed former president. “It’s not only ideological motivation. Put that together with economic deprivation and you have a ready-made force of Taliban , al Qaida , whatever you want to call them. You will see suicide bombers churned out by the hundred.”

“In Pakistan , there are a huge proportion of people just above the poverty line. A slight shock in their income can push them below the poverty line,” said Sadia Malik , director of the Mahbub ul Haq Human Development Center in Islamabad , the capital. “This is the kind of shock that would have pushed a huge number of people into the poverty trap,”

The prices of wheat, rice and milk have more than doubled in the last year. The price of flour used to make roti bread, the food staple, has jumped from 12 rupees ( 15 cents ) a kilo last year to 28 rupees ( 35 cents ). Economists warn that prices would spiral even higher if Pakistan defaulted on its foreign debt.

Before the crisis, an estimated that 56 million Pakistanis, around a third of the population, already were living below the poverty line….

Read the rest:
http://news.yahoo.com/s/mcclatchy/20081013/
wl_mcclatchy/3071426_1

Philippines to Accelerate Food Security Discussion

April 20, 2008

From Peace and Freedom: A shortage of rice has created unrest in the streets in the Philippines.  As a result, as in many other countries, “food security” is now the number one topic in the government….

By Norman Bordadora
Philippine Daily Inquirer
April 20, 2008
 

MANILA, Philippines–After a six-week recess, Congress resumes its session Monday afternoon with food security at the top of the agenda and the population control bill to be given a second look.

Speaker Prospero Nograles said on Sunday all measures pending in the House of Representatives pertaining to food security should be addressed before Congress adjourns in June.

Nograles also said the chamber would pass a legislated wage hike if the regional wage boards were to fail to pass adjustments ordered by President Gloria Macapagal-Arroyo.

“Food is the priority for everyone, not only for the House,” Nograles told the Philippine Daily Inquirer (parent company of INQUIRER.net) on Sunday.

“All agriculture bills on food production and sufficiency will be discussed,” he said.

Read the rest:
http://newsinfo.inquirer.net/breakingnews/nation/view_article.php?article_id=131627

Malaysia to spend $1.3B to tackle inflation, food security

April 19, 2008

Today Online (Malaysia)

Malaysia’s government said Saturday it would spend four billion ringgit (1.3 billion dollars) to increase food production and tackle price hikes as the country faces spiralling global oil and food costs.

Prime Minister Abdullah Ahmad Badawi said he would also set up a high-level anti-inflation committee to tackle these issues, state news agency Bernama reported. However, he did not say how the money would be allocated. 
Abdullah Ahmad Badawi

Anger over rising food and fuel prices was a key issue in general elections last month, and one of the factors credited with Abdullah’s ruling coalition facing its worst performance in its half-century history.

Read the rest:
http://www.todayonline.com/articles/249353.asp

France to double aid for food crisis

April 19, 2008

PARIS (AFP) – France will double its emergency food aid this year, spending 60 million euros (100 million dollars), President Nicolas Sarkozy said Friday, as he warned the world’s food crisis was breeding unrest.
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“We must act urgently to strengthen food security at a time when 37 countries are going through a very serious food crisis,” Sarkozy told a major meeting on climate change in Paris.

A French farmer at work near Gaillargues. France will double ...
A French farmer at work near Gaillargues. France will double its food aid this year, spending 60 million euros (100 million dollars) as part of its response to the world crisis over soaring food prices, President Nicolas Sarkozy has announced.(AFP/File/Dominique Faget)

“We cannot remain indifferent to the unrest among those people who, in the developing countries, can no longer satisfy their hunger.”

Soaring prices for basic grains — rice, wheat, soybean and corn — have provoked protests and rioting in at least half a dozen developing countries in past months, and has toppled the government of one.

Last weekend, Haiti‘s premier Jacques-Edouard Alexis was ousted in a no-confidence vote after more than a week of violent demonstrations….

Read the rest:
http://news.yahoo.com/s/afp/20080418/bs_afp/francepovertyinflationaid_
080418095730

Food Inflation: Cambodia at 24% Per Month, Reflects World Trend

April 19, 2008

By John E. Carey
Peace and Freedom

Last month the cost of food in Cambodia rose 24%.  At this rate, the cost of food will almost double every four months.  Yet pay is not rising at all: especially among the poor.

Cambodia’s rural poor, who make up over 80 percent of the population, are particularly at risk from inflation.

The international crisis in food costs continues to spread, the Voice of America is reporting.

Last Monday, President Bush released $200 million to feed the poor internationally in an effort to prop up flagging economies.  But this amount is insignificant in the face of the troubles now upon so many nations.

China has restricted fertilizer exports to allow for adequate resources at home, even as it subsidizes farmers.

Rice exports from Egypt through Vietnam to China have almost ceased, leaving importers like the Philippines in crisis.

A soldier delivers a bag containing food supplies to a man as ....
A soldier delivers a bag containing food supplies to a man as part of a government aid program in a shanty town on the outskirts of Lima early April 16, 2008.(Enrique Castro-Mendivil/Reuters)

David Sands of the Washington Times wrote for today’s editions, “Egyptian President Hosni Mubarak ordered the army to start baking bread after deadly riots broke out in lines people waiting for food. Oil-rich Libya is discussing a deal to essentially rent a chunk of land-rich Ukraine on which it can grow its own wheat.”

The World Food Program’s Thomas Keusters said, “A lot of people who are now on the verge of surviving are going to face even more difficulties to make ends meet and really survive. This is condemning possibly a whole lot of generations because people will not go to school, people will not go into productive activities, because they will really be constrained by their search for food.”
A Somali women carries a sack of food aid on her head to her ....
A Somali women carries a sack of food aid on her head to her makeshift home on the road along the Juba river in southern Somalia near the village of Jamame December 6, 2006. A cholera outbreak in Kenya has killed 67 people so far this year, while a fungus has wiped out up to 20 percent of the country’s annual rice production, United Nations agencies said on Friday.REUTERS/Stephen Morrison/Pool

Related:
Food Shortages, Global Hunger Pushing Nations.

Food Shortage: More Bad News From China

Food Crisis in North Korea a “Disaster”

Food Shortages Causing Panic?

Inflation Hits Cambodia

April 19, 2008


18 April 2008

As in other developing countries from Egypt to Haiti, soaring inflation has recently emerged as a threat to Cambodia’s hard won social stability. While wages have remained low, the price of rice and other staples have skyrocketed pushing millions deeper into poverty. While the Cambodian government says it is doing its best to curb the worst effects of inflation, opposition politicians say it is not doing enough. Rory Byrne reports for VOA from Phnom Penh.

On the face of it, Cambodia’s economy is doing well.

Phnom Penh, the nation’s capital, is undergoing a building boom which is changing the face of the city.

Expensive new cars fill the city’s streets as a resurgent middle class has emerged to take advantage of new business opportunities.

But while some are prospering, many of the country’s poorest people are slipping deeper into poverty. The reason is inflation.

Location of Cambodia

Read the rest:
http://www.voanews.com/english/2008-04-18-voa22.cfm

China says prices of farm goods up 25.5 percent

April 18, 2008

By JOE McDONALD, AP Business Writer

BEIJING – China’s government issued more gloomy inflation news Friday, saying wholesale prices for farm goods jumped 25.5 percent in the first quarter in a sign that consumers could face more sharp rises in living costs.
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Communist leaders, worried about a possible public backlash, are trying to ease food shortages blamed for the price spike that began in mid-2007. But winter storms disrupted that effort, and analysts expect inflation to stay high as late as May before subsides.

Retail consumer prices rose 8.3 percent in March, a slight decline from February’s 8.7 percent, the highest rate in nearly 12 years. That was driven by a 21 percent rise in food costs, including a 66.7 percent increase for pork, the country’s staple meat.
An investor reacts at the stock price monitor at a private security ... 
An investor reacts at the stock price monitor at a private security company Friday April 18, 2008, in Shanghai, China. Chinese stocks sank to their lowest level in more than a year on Friday, as both retail and institutional investors unloaded shares in the absence of any market-boosting news. The Shanghai Composite Index fell 4 percent, or 128.07 points, to 3,094.66. It was its lowest close since it ended at 3,074.29 on March 23, 2007.(AP Photo)
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Read the rest:
http://news.yahoo.com/s/ap/20080418/ap_on_bi_ge/china_economy_2