Aconomic developments around the globe

A look at economic developments around the globe
By The Associated Press, 03.18.09, 02:24 PM EDT


A look at economic developments and stock market activity around the world Wednesday:
BEIJING - The World Bank cut its forecast of China's 2009 growth to 6.5 percent from 7.5 percent due to plunging exports but expressed confidence in Beijing's ability to keep the world's third-largest economy expanding amid global turmoil. The drop in trade will hurt investment and job creation, the bank said in a quarterly report. But it said China still should grow faster than other major countries due to its huge stimulus package and strong banks, which were unhurt by the global crisis.
Meanwhile, China rejected Coca-Cola Co.'s $2.5 billion bid to buy a major Chinese fruit juice maker in a closely watched case that stirred nationalist opposition to the sale of a successful homegrown brand to foreigners. Coca-Cola's purchase of Huiyuan Juice Group Ltd. was rejected on anti-monopoly grounds, the Commerce Ministry said.
Shanghai's benchmark Composite Index added 0.2 percent to 2,223.73. Hong Kong's Hang Seng index led the region, gaining 239.08 points, or 1.9 percent, to 13,117.17.
LONDON - Britain's financial services watchdog proposed sweeping changes to global banking regulations, including a crackdown on the "shadow banking" activities of institutions like hedge funds. The government-commissioned banking services report recommends new rules on a wide range of issues from increased requirements on banks on holding capital to stricter controls on bankers' bonuses to discourage excessive risk taking. Britain will host an April 2 summit of the Group of 20 rich and developing countries that will discuss ways to address the world financial crisis, including more regulation.
Meanwhile, unemployment in Britain rose above 2 million in January, the highest in 12 years, as the world economic downturn hit the manufacturing sector especially hard. The rise from 1.97 million out of work in December to 2.03 million in January raised the unemployment rate from 6.3 percent to 6.5 percent, the Office for National Statistics said.
Britain's FTSE 100 closed down 1.4 percent at 3,804.99.
FRANKFURT - German carmaker BMW AG said it was facing a "transitional year" and that it expected sales volumes to decrease 10 to 20 percent in 2009 because of the economic crisis. Chief Executive Norbert Reithofer said the company's priorities in 2009 are for liquidity, free cash flow and working capital, fixed costs and investments.
In other auto news, German Economy Minister Karl-Theodor zu Guttenberg said the U.S. and German governments share the same concerns over the possible bailout of Detroit automaker General Motors Corp. and its European subsidiary Adam Opel GmbH. Speaking after meetings late Tuesday with U.S. Treasury Secretary Timothy Geithner in Washington, Guttenberg said "we're now marching together" in looking at a bailout plan.
Germany's DAX added 0.2 percent at 3,996.32.
TOKYO - Japan's central bank kept its benchmark rate steady and boosted its purchase of government bonds to keep ample cash in the monetary system as the nation grapples with a debilitating global slowdown. The Bank of Japan has little room left to go on standard monetary policy, such as lowering interest rates, with its benchmark interest rate already close to zero. Wrapping up a two-day meeting, the bank's board voted unanimously to keep its key overnight call rate at 0.1 percent. The Bank of Japan also raised its monthly government bond purchase to 1.8 trillion yen ($18.3 billion) from the previous 1.4 trillion yen, effective this month. Late Tuesday, the bank said it is considering providing loans to commercial banks in an effort to shore up their capital base and encourage banks to lend themselves. Analysts said the move, if adopted, would be unusual for central banks. It is still unclear what the central bank's final plan might be.
In corporate actions, Toshiba Corp. said it named Norio Sasaki as its president and CEO, joining a string of other Japanese companies in shuffling management amid a crippling recession. Sasaki, 59, is a corporate senior executive vice president and is an expert in nuclear energy. Sasaki would replace Atsutoshi Nishida in June. Nishida, 65, will become chairman.
Tokyo's benchmark Nikkei 225 stock average added 23.04 points, or 0.3 percent, to 7,972.17.
PARIS - European Central Bank president Jean-Claude Trichet said economic growth could resume next year, although 2009 will be "very, very difficult." He told on France's Europe-1 radio that an economic recovery depends on the confidence of governments, businesses and consumers. "The essential problem is not to make predictions in an uncertain world, it is to find confidence again," Trichet said.
In markets, France's CAC 40 lost 0.3 percent at 2,760.34.
CANBERRA, Australia - The government announced curbs on big payouts to top executives, denouncing a system that has seen "the retirement gold watch replaced by a truckload of gold bullion." The move is the latest evidence of worldwide anger at what many see as disproportionate payments to the executives of companies despite mismanagement that has contributed to the global financial crisis.
With public anger at corporate greed spreading, the Australian government also announced an inquiry into the rules dictating how Australia's corporate directors and executives are paid.
Meanwhile, nagging fears that a $19.5 billion deal with a major Chinese company could fail sent debt-troubled Rio Tinto's share price tumbling almost 9 percent, just hours after the mining giant's newly-appointed chairman stressed the plan's importance. Australian regulators earlier this week deferred making a decision on whether Aluminum Corp. of China, or Chinalco, should be able to double its stake in the Anglo-Australian miner, prompting some minority lawmakers to publicly oppose the deal saying it was selling off assets that should stay Australian. The Foreign Investment Review Board said it would investigate the plan for another 90 days before making a recommendation to Treasurer Wayne Swan, who has consistently said he will only approve it if it is in the national interest. The plan also needs shareholder approval.
Australia's benchmark S&P/ASX 200 dipped 0.2 percent.
SEOUL, South Korea - South Korea's jobless rate rose for a fourth straight month as the country's worst slump in a decade takes its toll on workers. February's unemployment rate stood at 3.9 percent, up from 3.6 percent in January, according to the Korea National Statistical Office.
The Kospi stock index rose 0.5 percent to 1,169.95.
MILAN - Italy's Unicredit SpA said it may seek as much as euro4 billion ($5.18 billion) in state aid as it reported a 57 percent drop in fourth quarter profits, due mostly to trading losses in the global financial meltdown. CEO Alessandro Profumo said Unicredit was considering state aid to remain competitive with other banks in the market that have been shored up. That would make Unicredit the second bank in Italy, after Banco Popolare, to seek state aid in the form of convertible bonds that the bank would sell to the government.
BANGKOK, Thailand - Thailand's exports slid for a fourth straight month in February as demand for the country's cars, electronics and other goods dwindled. Exports dropped 11.3 percent from a year earlier to $11.7 billion, Permanent Secretary of Commerce Ministry Siripol Yodmuangcharoen said. Thailand's economy is the second-largest in Southeast Asia after Indonesia.
KIEV, Ukraine - Ukrainian Prime Minister Yulia Tymoshenko and her Cabinet cut their own salaries in half and urged lawmakers to follow suit as economic crisis grips the country. Ukraine is among the countries hardest-hit in the global financial meltdown. Ukraine's divided leadership is trying to secure a $16.4 billion loan from the International Monetary Fund.
BELGRADE, Serbia - Serbia this year needs up to euro1.5 billion in foreign loans to cover a swelling budget deficit created by the global financial crisis, Prime Minister Mirko Cvetkovic said. Those funds will be sought from foreign creditors, including commercial banks, the World Bank and the European Union.
COLOMBO, Sri Lanka - Sri Lanka's economic growth cooled to 4.3 percent in the fourth quarter as the global slump cut off demand for tea, rubber and other exports from the island. Growth slowed from 6.3 percent in the third quarter, while for all of 2008, the economy expanded 6 percent, down from 6.8 percent the previous year, according to figures from Sri Lanka's Department of Census and Statistics. Before the figures were announced, the central bank lowered interest rates for the third time in three months.
BRUSSELS - A group of European small businesses criticized EU states' economic recovery plans as "shortsighted and not very smart." Eurochambres, an association of European chambers of commerce, said plans from the European Union's 27 nations do little to kickstart long-term growth because more than half don't encourage research and don't promote energy efficiency, green products or clean technology. The group called for EU governments to coordinate their plans more because differences could give companies in one country an unfair advantage over rivals elsewhere. It also said businesses needed state guarantees to help them get credit.
WARSAW, Poland - Poland's industrial production dropped 14.3 percent in February compared to the same month last year. The figures mark the fifth consecutive month of declining industrial production - a key indicator of an economy's overall health.
Romania will get an emergency loan for euro18-20 billion ($24-26 billion) from the International Monetary Fund, the European Union and the World Bank to survive the global economic crisis, a Romanian official said Wednesday.
An IMF delegation is currently on a visit to Romania to discuss the loan.
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