DAILY TRUST
Thursday, January 6, 2011
Bus in ess/I nte r"n ati 0 naI Egypt sees annualised 04 GDPgrowth at 6.2% EGYPT'S economy is estimated to have grown by an annualised 6 to 6.2 percent in the October to December quarter, the cabinet's spokesman said yesterday, heralding its best performance since the global downturn. "It's on the back of the recovery in Suez Canal and tourism revenue. as well as in construction:' Magdy Rady told reporters after a cabinet meeting. Gross domestic production (GDP) growth has been gradually picking up since hitting a quarterly low of 4.2 percent in April-June 2008, climbing to 5.5 percent in JulySept 2010. A survey of 12 economists predicted last month that G D P in the Arab world's most populous nation would grow 5.4 percent in the fiscal year that end in June 2011, while the ruling National Democratic Party last month predicted growth of6 percent. (Reuters)
Oil price is risk to economic recovery, says lEA THE current high price ofoil will threaten economic recovery in 20 II, according to the International Energy Agency (lEA). It said oil import costs for countries in the Organisation for Economic Co-operation and Development had risen 30 percent in the past year to $790 billion (£508bn). The agency says this is equal to a loss ofincome of0.5 percent ofOECD gross domestic product (GDP). The lEA's chiefeconomist said oil was a key import of any developed country. In an interview with the BBC World Service, Fatih Birol warned about the current high price ofoil: "There is definitely a risk of major negative implications for the global economy:' He explained tha~the oil price was central to both national and personal budgets."If the oil price goes much higher, it affects everything from the trade balance to household spending:' He added that that meant pressure on household budgets and higher inflation.
The lEA was established in the 1970s as the West's energy watchdog to counter the growing influence of the Organization of the Petroleum Exporting Countries (OPEC). The agency's latest look at the prospects for 2011 was a month ago, when it forecast a pick up in global demand. 111e price of US light oil rose to a 27-month high earlier this week, but has since fallen back to $88.98 a barrel, with Brent Crude at $92.83. OPEC members have been unconcerned by higher recent oil prices and have not shown an inclination to change export quotas. While higher oil prices bring in more money to oil exporting countries, making life too difficult for its customers can backfire. Mr Biml told the Financial Times newspaper: "Oil exporters need clients with healthy economies but these high prices will sooner or later make the economies sick, which would mean the need fur importing oil will be less." (BBC)
World food prices at fresh high, says UN GLOBAL food prices roseto afresh high inDecember,acoording to the UN's Food and Agricultural Organisation (FAO). Its Food Price Index went above the previous record of2008 that saw prices spark riots in several countries. Soaring sugar, cereal and oil pric~ had driven the rise, the report said The index, which measures monthly price changes fur a fuod basket composed of dairy, meat and sugar, cereals and oilseeds, averaged 214.7points last month,up from 206 points in November. It stood at 213.5 points at the high of/une 2008. However, despite high prices, FAO economist Abdolreza Abbassian said that many of the factors that triggered fuod riots in 2007 and 2008 - such as weak production in poor countries were not currently present, reducing the risk ofmore tunnoil. But he added that "unpredictable weather" meant that grain prices could go much higher, which was "a concern:: Last year a drought furced Russia to suspend wheat exports.
Andrecenttloodsin Quee~d,Australiaarealreadybegin ning to hit prices ofkey exports - which are critical fur food supplies to markets in Asia, particularly India, Bangladesh and Japan. Australia has cut its furecast fur sugar exports this year by 25 percent as tlooding has reduced the sugar content of the cane, while wheat crops have also been hit . The news carne amid concerns about intlation in the prices of other key commodities. The International Energy Agency (lEA) said yesterday that the current high price of oil would threaten economic recovery in 2011. Oil import costs fur countries in the Organisation for Economic Co-operation and Development had risen 30 percent in the past year to $790 billionn (£508bn), it said. And copper prices went into 2011 at record highs - in a rally driven byincreased demand from the global economic recovery andthatfactthatmostcow.:triesareholdinglowstockpiles.(BBC)
WIBank issues bond denominated in Chinese yuan THE World Bank has issued its first bond denominated in the Chinese currency, joining a small but fast-growing market. The yuan-denOminated bond is being issued to promote the use of the Chinese currency in international markets. It will raise 500m yuan ($76m;£49m). Other bodies, including the Asian Development Bank, and finns such as McDonald's and Caterpillar have issued yuan bonds. Chinas stake in the World Bank, which gives financial and technical assistance to developing countries, is set to
increase. It could eventually see China as the third-largest stakeholder in the lender after the US and Japan.
Doris Herrera-Pol, the global head ofcapital markets at the World Bank, said: "This is a landmark transaction for the World Bankas it is the first World Bankissuance in RMB (yuan), and Signals the strong interest of the World Bank in supporting the development of the RMB markef' Themarketin HongKong foryuan-denominated bonds started just over three years ago. In September last year, the Chinese govenunent itself started issuing bonds in its currency, also known as the renminbi~ there. Hong Kong, although part of China, has a welldeveloped and more open financial market and is a conduit between China and the capitalist developed world (BBG
.. , : 0;.'-'-