Germany registers 1.5 percent economic growth for Q1; France logs 1 percent
Berlin, Germany (AHN) – Germany and France surprised the eurozone with strong economic growth rates for the first quarter of 2011. From January to March, Germany logged a 1.5 percent economic expansion, while France logged 1 percent.
The healthy gross domestic product growth rates of the two largest economies in the European zone contrasts with lame 0.5 percent growth experienced by Britain for the same period. Germany and France account for about half of the 17-nation eurozone’s GDP.
Germany’s growth rate, reported on Friday by the Federal Statistics Office, was higher than analysts’ expectations and is an indicator of Berlin’s full recovery from the global financial crisis and the recession. Germany’s growth was fueled by the country’s investment, construction and consumer spending.
France also surpassed economists’ expectation with its largest hike in GDP growth since spring 2006. Business investment – which expanded by 1.9 percent – was the driver behind France’s unexpected GDP growth rate.
For the fourth quarter of 2010, Germany’s economy expanded by 0.4 percent only, while France registered a 0.3 percent GDP growth rate. For the same quarter, Britain logged a 0.5 percent contraction.
Given these trends, economists forecast Germany’s economy would expand by 3 percent or more this year.
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Approved daily minimum wage hike of $0.51 upsets Filipino workers, legislators
Manila, Metro Manila, Philippines (AHN) – Various Philippine groups criticized the measly $0.51 (PHP 22) daily minimum wage increase for Metro Manila workers approved by the wage board of the Department of Labor and Employment’s National Capital Region on Monday.
The hike was actually incorporated into the cost of living allowance of minimum wage earners, which slightly increased their daily compensation to $9.94 (PHP 426). However, the hike was paltry compared to the $1.75 (PHP 75) increase sought by trade unions.
Among the critics of the salary increase was Manila Auxiliary Bishop Broderick Pabillo, who said over a radio interview that the non-stop rise in gasoline, food and other basic commodity prices will eat up the small wage hike granted NCR workers.
Trade union officials said the hike was short of the promise of good news for Metro Manila minimum wage earners President Benigno Aquino III made before Labor Day. They hit the Aquino administration for being fast in approving hikes in transport fares, but too slow in alleviating the tight economic spot many Filipinos grapple with.
The wage increase, which will take effect by the end of May, was also hit by legislators who described the increase a “too little, too late.”
Akbayan party-list Rep. Walden Bello said the COLA adjustment is mere loose change compared to the escalating prices of goods and services.
Because of the widespread disenchantment by workers over the measly wage hike – which was defended by employers’ group as the only amount they could yield to without resulting in businesses closing – Bayan Muna party-list Rep. Teodoro Casino pushed for approval of a bill that proposes a $2.91 (PHP 125) across-the-board legislated daily salary increase for all Filipino workers.
Casino pointed to the 10.19 percent fuel price inflation, 7.28 percent transport fare increase and 4.03 percent food price hike as the justifications for the proposed across-the-board pay adjustment.
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China inflation edges lower to 5.3%
Inflation in China moderated slightly in April but remained stubbornly high despite government efforts to restrain rapid price rises
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Tropical storm Aere heads to Japan
Tokyo, Japan (AHN) – Tropical storm Aere on Tuesday headed to southern Japan after lashing the Philippines and leaving 24 deaths.
The storm is forecast to bring rain to southern Japan, including the area of Fukushima, which was heavily damaged by a tsunami on March 11.
Aere will pass within 300 miles southeast of the damaged Fukushima power plant between Thursday and Friday and dump about one to two inches of rain, according to AccuWeather.com. The storm will also have winds of 30 to 40 miles per hour around that time.
However, the storm is expected to weaken and downgrade into a tropical depression by that time.
The storm had 40 mph winds when it passed the northern Philippines on Tuesday, according to the Philippine weather bureau PAGASA.
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Wealth of worlds’ millionaires calculated to rise to $202 trillion by 2020
New York, NY, United States (AHN) – Financial analysts from service company Deloitte say the total wealth among millionaire households could more than double over the next decade in 25 major economies. Their wealth now calculated at nearly $92 trillion could rise to a staggering $202 trillion in 2020.
According to the study, the United States and Europe will continue to have the greatest concentrations of wealth, despite emerging markets closing in. The findings also highlight that numerous opportunities for growth in local markets across the country still remain.
“We wanted to go beyond some existing wealth management statistics by looking both into the future and across the globe to forecast how wealth among millionaire households might evolve,” says Andrew Freeman, executive director of the Deloitte Center for Financial Services. “Identifying and understanding how different market segments are changing can help formulate growth strategies.”
Freeman adds, “Which countries may offer the most promising future and how wealth managers can potentially increase profitability in the next decade are important questions for a wide range of financial institutions.”
Some of the other findings in the report include China continuing to be the driving force in the growth of millionaire wealth, followed by Brazil and Russia. Of the 25 countries examined in this study, China and South Korea will join the top 10 countries in terms of the total number of millionaires by 2020.
Millionaire households in the U.S. could reach $87 trillion in 2020, up from $39 trillion in 2011.
Among the forecasts for each of the 50 U.S. states, California is expected to remain the state with the wealthiest households, while New Jersey will continue to have the greatest density of millionaire households. The East Coast could see the highest growth rates with New York and Florida adding 1.5 million new millionaire households by 2020.
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Sage upbeat as it returns to growth
Sage Group has begun its recovery from the economic downturn, announcing strong half-year figures.
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Algeria Moves Quickly to Nip Protest in the Bud
Algiers, Algeria (TML) – Amid the most violent protests in nearly four months on Monday, the Algerian government responded quickly with promises of political reforms, price subsidies and jobs. But experts and human rights activists say President Abd Al-Aziz Bouteflika isn’t offering enough.
Demonstrations demanding better education and more political freedom turned violent, as student protesters confronted riot police in the capital Algiers. Some 20 protesters and three policemen were injured as policemen armed with anti-riot gear blocked a march from the central post office to the presidential palace.
But officials didn’t employ a stick-only policy. The same day, cabinet authorized digging into the country’s $150 billion cash reserves, increasing public spending by 25% to create new jobs, raise public sector salaries and subsidize staples such as flour, milk, cooking oil and sugar. Bouteflika said he would invite “national figures,” including opposition leaders, to discuss political reforms and constitutional amendments.
Algeria has remained relatively unscathed by the upheavals of the Arab Spring. While it suffers economic malaise and repressive government, energy-rich Algeria has the cash reserves to finance people-pleasing programs and undercut the opposition. In January, officials were similarly fast in restoring quiet by announcing a sharp increase in public spending and price cuts.
But opposition leaders said that in the new Middle East, where the street has been emboldened by the toppling of long-time leaders, the palliatives may not succeed so easily.
“The problem was never with the constitution, with the text,” Moustafa Bouchachi, President of the Algerian League for the Defense of Human Rights, told The Media Line. “The problem is that the men and women who run this country don’t respect the law. You can have the best constitution, but the interior minister will still violate the law.”
Turmoil in Algeria would add to the world’s energy woes. Oil exports from neighboring Libya have been sharply curtained in the wake of civil war, helping to raise prices to their highest since 2008. Algeria is one of the biggest exporters of gas and oil to the European Union, with estimated oil reserves of nearly 12 billion barrels and 159 trillion cubic feet of gas.
Bouchachi said he believed there was no political will in Bouteflika’s government to conduct serious political reforms, adding that institutions and people must be replaced, not simply laws.
“The people and institutions have lost all credibility and cannot continue,” he said. “The only solution is a unity transitional government which will call elections in which everyone can participate.”
Mathieu Routier, a program coordinator at the Euro-Mediterranean Human Rights Network, who has been following Algeria’s protest movement, said the government must immediately initiate dialogue with the country’s opposition.
“If the government doesn’t engage in sincere dialogue with the protest movement, there’s no telling how far things may deteriorate,” Routier told The Media Line. He said the demonstrations Monday were by no means limited to students, but included groups such as pensioners, doctors and firefighters.
“The limited reforms offered by the government can’t solve the deep-seeded social problems in the country,” he added. “With no mediation between civil society and the government, the only way for the public to express itself is through demonstrations.”
Demonstrations have been banned in Algeria since the start of the Arab uprisings in December, but students from the University of Algiers and others have nevertheless been staging periodical anti-government protests in the capital, demanding the release of political prisoners and more political freedoms. Their demands are also pedagogical, calling for the dismissal of the Minister of Higher Education Rachid Haraoubia.
Independent workers’ syndicates exist in the country, but Routier said that the government had marginalized them by creating parallel, state-controlled syndicates bearing the same names.
In an effort to appease demonstrators, the Algerian government in February lifted the state of emergency imposed in 1992. But Routier said the step was merely cosmetic, followed by no real political reforms on the ground. As long as the Algerian political system is not liberalized, demonstrators were unlikely to yield, he said.
“The proposed constitutional reform isn’t serious,” Bouchachi said. “Nothing has changed since the lifting of the emergency law and the country is on the verge of a social explosion. Algeria is one of the only countries in the world where assembly is outlawed.”
Last week, United Nations Special Rapporteur for Freedom of Opinion and Expression Frank La Rue condemned the killing of an Algerian Human Rights Activist and called on the government to conduct an independent investigation into the death. Ahmed Kerroumi, a professor at the University of Oran and member of the opposition party Democratic and Social Movement went missing April 19, his battered corpse found in his office four days later.
Routier said the fragmentation of the protest movement is what sets Algeria apart from its neighbor Tunisia. Attempts to unite the movement in January failed amid popular fears of a violent crackdown by government, similar to that of 1992. That year, the government annulled elections in which the Islamic Party won, prompting a bloody civil war that cost the lives of over 150,000.
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Caterpillar posts record 1Q
Peoria, IL, United States (AHN) – The world’s largest manufacturer of construction equipment posted first quarter profit on Friday that beat expectations and rising material costs.
Caterpillar said net income for the period was $1.23 billion, or $1.84 a share, an increase of 426 percent from $233 million, or 36 cents a share, in the same quarter a year ago.
Revenue grew 57 percent to $12.95 billion from $8.24 billion.
The record results pushed Caterpillar shares up 3.5 percent.
The Illinois-based company said a $4.07 billion higher sales volume and a $94 billion positive impact from currency led to the strong performance.
The manufacturer performed well in all geographic segments, including in developing countries, where despite a low level of construction activity sales rose as customers replaced fleets of equipment.
Caterpillar said manufacturing costs, particularly the price of steel, rose $219 million. Selling and administrative expenses also rose $219 million.
The company raised its full-year outlook from revenue of more than $50 billion, to &52 billion to $54 billion. It expects an annual profit of $6.25 to $6.75 per share, up from a previous forecast of near $6.
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Asian markets slip as US data disappoint
Asian shares retreated as weak US output growth fuelled uncertainty about the outlook for corporate earnings while a strong Australian dollar weighed on the Sydney market
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HSBC suspends retail banking in Russia
Moscow, Russian Federation (AHN) – Hong Kong and Shanghai Banking Corporation pulled out of retail banking in Russia. HSBC said it will focus on making available global lending services to industrial and corporation clients.
With the announcement, HSBC will close five retail units in Moscow and St. Petersburg.
Husein Ozkaya, manager of HSBC’s Russian operations, said Europe’s largest bank decided to stop retail banking after a review revealed that corporate banking offered it the strongest opportunity in the country.
With the announcement, HSBC became the latest foreign bank to leave retail banking in Russia after another leading British bank Barclays also pulled out recently from Russia as the retail banking sector becomes dominated by local banks.
Only one in four Russians have a bank account, making Russia one of the lowest banking penetration rates. But the potential yield is vast because of the country’s population of 142 million which resulted in the retail banking business doubling in size every two years prior to the 2008 financial crisis.
Barclays paid in 2008 $560 million (GBP 373 million) for Expobank, which was six times the book value to be able to offer retail banking services in Russia. But after barely two years, Barclays sought a buyer for its retail business in Russia and instead decided to focus on investment banking.
Banco Santander of Spain is also leaving retail banking in Russia.
The foreign banks attracted depositors with new services such as Internet banking, linked investment accounts and online bill payments. It helped foreign banks that Russians had a distrust of their own financial institutions due to a series of scandals and ruble devaluations, which wiped out savings of Russians in the 1990s.
But the anticipated decline of Russian state banks’ share of the retail market did not take place because of a matching of similar services by Sherbank – a former Soviet retail bank – to those offered by foreign banks. To further attract local depositors, Sberbank emphasized that it is a state-backed institution, while many western banks were on the brink of collapse.
HSBC advised account holders to close their accounts by June 30, while their credit cards could no longer be used after May 31. To help clients move their savings to other banks, HSBC said it would waive fees for cash withdrawals and outbound transfers.
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