GDP UPDATE
September/October 2014
McIlvaine Company
TABLE OF
CONTENTS
The Bureau
of Economic Analysis released its third estimate of real gross domestic product
for the second quarter of 2014 — covering April, May and June of this year. The
release showed output in the U.S. increasing at an annual rate of 4.6%. This is
relative to the first quarter when real GDP declined a sharp 2.1%.
The
revision is up from BEA’s 4.2% second estimate released last month as well as
its 4% advance estimate out in July. The revision, BEA said in a release, was
largely due to a larger than previously estimated increase in nonresidential
fixed investment and exports. Of the revision the BEA wrote, “The general
picture of economic growth remains the same” as when it released the second
estimate.
The 4.6%
growth in real GDP reflected growing personal consumption, private inventory
investment, exports, both residential and nonresidential fixed investment, as
well as local government spending. The gains were partially offset by an
increase in imports, which negatively impact GDP, and a 0.9% decline in federal
government expenditures.
“Given the
partial indicators in between the second and third estimate this was broadly
anticipated but that doesn’t dull the good news,” Jeremy Lawson chief economist
at Standard Life Investments. He also noted that consensus was for the upward
revision to be driven by growth in personal consumption but the real driver was
fixed business investments with 9.7% growth. This, Lawson says, is a strong sign
for future growth and critical for productivity. At the same time the 2.5%
personal consumption growth was slightly lower than anticipated but “not a
disappointment.”
The price
index for gross domestic purchases — which measures prices paid by U.S.
residents — increased 2%, up slightly from the prior estimate and compared to
1.4% growth in the first quarter. Real personal consumption expenditures
increased 2.5%, keeping with the second estimate and up from the 1.2% increase
in the first quarter.
The BEA
now estimates second quarter corporate profits increased $164.1 billion,
compared to a $201.7 billion decrease in the first quarter. Taxes on corporate
income increased $45.7 billion in the second quarter, compared with an increase
of $66.9 billion in the first.
The S&P
500, Dow Jones Industrial Average and Nasdaq Composite were all in the green
following the pre-market release pushing higher upward momentum seen earlier in
the day.
Argentina’s gross domestic product was unchanged in the second quarter from a
year earlier, the government, reviving doubts over the veracity of the data
after JPMorgan Chase & Co. estimated a 1.7% contraction.
First-quarter figures were also revised to an expansion of 0.3% from a 0.2%
contraction, the national statistics agency said. From the previous three
months, the economy grew 0.9% after shrinking for two quarters.
President
Cristina Fernandez de Kirchner’s government unveiled a new national consumer
price index in February and then revised growth numbers after the International
Monetary Fund threatened sanctions if it didn’t improve the accuracy of the
data. Doubt over the statistics has resurfaced as figures diverge from analyst
estimates, said Daniel Kerner, head of Latin America research at the Eurasia
Group.
“They
showed close to realistic numbers earlier in the year when they were under
threat from the IMF and since then they’ve been gradually moving away from
that,” Kerner said in a phone interview from Washington. “They never really
moved towards transparency.”
The median
forecast of 10 economists surveyed by Bloomberg was for a contraction of 0.4% in
the second quarter.
Maximiliano Castillo, director of Buenos Aires-based research firm ACM, said his
estimate for a 0.3% contraction was based on what he thought the government
would say. The economy shrank by 1.5 percent from a year earlier, according to
his calculations.
“It would
be very difficult for the government to say that GDP will fall in 2014 because
it contradicts their version of events of so many years of sustained growth,”
Castillo said in a telephone interview.
Imports
fell 10.5%, while exports slid 3.7%, the government said in a statement.
The
economy will deteriorate further in the second half of the year as the second
default in 13 years puts pressure on dwindling reserves that are forcing the
government to cut imports, said Miguel Kiguel, director of Buenos Aires-based
consultancy EconViews.
“The
economy began slowing from the first quarter because of a lack of reserves,”
Kiguel, a former deputy economy minister, said in a telephone interview. “The
default complicated a situation that was already bad.”
The July
default has spurred demand for dollars, pushing the peso down 23 percent against
the dollar on the black market to a record 15.95 pesos per dollar. The widening
gap with the official rate of 8.42 pesos per dollar is fueling speculation the
government will have to devalue.
Seeking to
preserve international reserves that have declined 19% in the past year to $28.2
billion, the government has increased import limits.
The limits
and weaker domestic demand pushed imports down 20% to $5.7 billion in August
from a year earlier, the biggest decline since October 2009.
The drop
in consumer spending and a flagging Brazilian economy cut Argentine vehicle
sales by 43% to 51,000 units in August from a year earlier.
In
response to falling demand, the government signed an accord with credit card
companies including Visa Inc. and MasterCard Inc. to provide shoppers with
interest-free credit payable in 12 monthly installments to buy
domestically-produced household appliances, bicycles and clothing.
The
government this month revised down its growth estimates for 2014 to 0.5% from
6.2%. The economy will grow 2.8% in 2015, Economy Minister Axel Kicillof said
Sept. 15 while presenting next year’s budget in Congress.
JPMorgan
said in a note to clients that growth figures may diverge from market
expectations. While the government is likely to report a contraction of 0.4%
this year, the New York-based bank expects the economy to shrink 1.6%.
A record
soy harvest helped cushion what could have been a worse second quarter with the
economy growing 0.5 percent from the previous quarter on a seasonally-adjusted
basis, the government report said.
“As
recession lingers the risk of a setback in the normalization of economic data
reporting increases,” analysts Vladimir Werning and Iker Cabiedes wrote in the
report.
Global
growth will improve to around 3.5% year-on-year throughout 2015 and 2016, as US
and India experience faster growth and Latin America normalizes, NAB said in an
update of its global and Australian forecasts.
However,
the report downwardly revised forecasts for Australian economic growth, amid a
weaker third quarter and deteriorating terms of trade. NAB expects GDP growth at
2.8% during fiscal 2015, down 0.1%, and 3.2% for fiscal 2016, down 0.2%.
NAB also
said it did not expect the Reserve Bank of Australia to move on interest rates
until the end of 2015.
The local
market will experience a weak third quarter, said NAB, driven down by a likely
sharp decline in terms or trade and retreating business confidence and
conditions.
"In
September, capacity utilization continued falling, forward orders declined and
employment slumped further into negative territory. In August, retail trade
growth was soft, vehicle sales fell, personal credit growth remained weak and
non-residential building approvals trended down."
The group
said there were still few signs of a sustained increase in non-mining investment
to fill the emerging mining investment cliff. But they added that the weakening
Australian dollar should assist trade-exposed sectors of manufacturing and
services.
NAB
expects the unemployment rate to peak at around 6.25% by the end of 2014 before
showing signs of improvement. The group cited weak demand for retail goods,
combined with a weak demand for personal credit and a barely growing business
credit demand as compounding factors on the employment market.
The terms
of trade are expected to lose 9% through the course of 2014 and be broadly
unchanged through 2015.
China's
economy likely grew at its weakest pace in more than five years in the third
quarter as a property downturn weighed on demand, a Reuters poll showed, raising
the chances of more aggressive policy steps that may include cutting interest
rates.
The
economy may have expanded 7.3% in the third quarter from a year earlier - the
weakest reading since the first quarter of 2009, when growth hit 6.6% during the
height of the global crisis, according to a poll of 20 economists.
None of
the economists believed Q3 growth will dip below 7%, although four penciled in
7.1% and one expected 7%.
The
economy expanded by 7.5% in the second quarter and 7.4% in the first.
The
government is due to release September data on trade, bank lending, investment
and factory output in the coming weeks, leading up to third-quarter GDP on Oct.
21
"GDP
growth is expected to slow to around 7.3% in the third quarter as property
investment growth slides and manufacturing deflation worsens," Tang Jianwei, an
economist at Bank of Communications, said in a note.
Softer
domestic demand, linked largely to the cooling property market, probably pulled
down growth in China's imports, investment and retail sales to multi-month or
multi-year lows in September, a related poll showed.
Premier Li
said that China will launch major investment projects in information networks,
water conservancy and environmental protection this year, and pledged to policy
adjustments made when needed.
But Li
also made clear the government will tolerate growth slightly lower than the
targeted 7.5% this year and rely more on reforms to generate new growth drivers.
The
prospects of weaker growth may raise the chances of more aggressive policy steps
such as cutting interest rates or reserve requirements across the board, but the
government may not rush into action as the job market still appears to be
holding up, analysts say.
Steps
unveiled since April included reserve requirement cuts for selected banks and
faster investment in railways and public housing. But much of their broader
impact may have been offset by the cooling property market and tighter credit as
banks grow more cautious about lending as the economy cools.
The
central bank and banking regulator recently relaxed lending rules for home
buyers, allowing banks to offer a maximum 30% discount to first time home
buyers, a group which is being expanded to include those who already own one
property but have paid off their existing mortgage.
But the
impact of the move remains uncertain amid reports of huge inventories of unsold
homes and state media reports that most banks are reluctant to offer big
discounts on mortgages for fear of hurting their earnings.
"As we
move into the fourth quarter, the base effect is expected to become slightly
more favorable. This can support a path of modest expansion," Qu Hongbin, chief
China economist at HSBC, said in a research report.
"However,
given the lingering downside risks to growth and clear signs of a negative
output gap, we think more easing measures are needed in the near term."
While,
HSBC believed a rate cut remains an option toward the end of the year, others
doubted the central bank will act soon.
"The
possibility of cutting interest rates and RRR within the year is not big, unless
there is a ugly turn," said Zhang Yiping, an economist at China Merchants
Securities in Shenzhen.
It's hard
to know where Beijing will draw the line in the sand for bolder policy action
given the rapid expansion of the services sector, which creates more jobs than
manufacturing.
Still, the
government may have to step up policy support if quarterly growth slips below
7%, government economists at top think tanks involved in policy discussions
said.
"There
should be a lower limit. If (quarterly) growth slips below 7%, policy should be
changed," said Zhang Yongjun, senior economist at China Centre for International
Economic Exchanges, a well-connected think-tank in Beijing.
Top
leaders have ruled out any massive stimulus as China struggles to deal with
piles of local government debt, the hangover from a 4 trillion yuan ($652
billion) spending package implemented in 2008-09 to help cushion the country
from the global financial crisis.
President
Xi Jinping and Premier Li Keqiang are seeking to push reforms to put the world's
second-largest economy on a more sustainable footing over the long term.
The
government is likely to cut its annual growth target to around 7% in 2015,
government economists said.
Come 2015
economy watchers and experts will have more updated GDP data to analyze the
Indian economy that is showing signs of reversing two years of slump. The
statistics office said that the base year of GDP will be revised to 2011-12 and
the new data will be available from 2015.
The
overhaul of the GDP is expected to expand the size of the Indian economy, due to
broadening of coverage of unorganized sectors, agriculture and corporate sector.
"In
accordance with the recommendation of the National Statistical Commission to
revise the base year of all economic indices every five years, it is proposed to
revise the base year of national accounts from 2004-05 to 2011-12 in 2015,"
ministry of statistics and program implementation said.
The new
series will provide more updated information about the Indian economy that has
seen a remarkable growth surge from 2004-05 up to global financial crisis in
2008 and deep slowdown in the last couple of months. "The new series of national
accounts is tentatively scheduled for release on January 31, 2015," the
statement said.
According
to experts, widening of national accounts coverage in different sectors will
likely push up India's absolute GDP numbers substantially from the Rs. 113 lakh
crore in 2013-14.
India is
currently the10th largest economy in the world in nominal GDP terms. The changes
are based on the recommendations of the Advisory Committee on National Accounts
Statistics (ACNAS) headed by Prof K Sundaram.
The new
series will incorporation corporate information from the MCA21 database of the
ministry of corporate affairs instead of the results obtained from the RBI study
on Company Finances, which would mean a more comprehensive inclusion of
corporate data in GDP numbers.
CSO will
directly source corporate data from the ministry of corporate affairs database
of more than 3.5 lakh companies to estimate GDP.
The
statistics department currently relies on financials of about 2,500 firms
compiled by the Reserve Bank of India to get an estimate for the entire
industry. "Use of MCA database will considerably change the manner in which we
estimate corporate sector data," said a Mospi official.
It will
also help improve accuracy, particularly for the services sector, which accounts
for about 60 per cent of GDP.
The
revision has got delayed as the earlier exercise with base year 2009-10 had to
be aborted as that year there was a severe drought. Base year is carefully
selected because of the impact it has on the numbers and is usually chosen as
one in which no serious anomaly was present.
The new
series of Index of industrial production and wholesale price index will be
released by March 2016, with revised base of 2011-12.
Malaysia
is accelerating infrastructure investment as Prime Minister Najib Razak leans on
public expenditure to boost growth amid concern subsidy cuts and a new
consumption tax will curb private spending.
The
government will start work on projects such as highways and rail worth at least
75 billion ringgit ($23 billion), Najib said in a budget speech in Kuala Lumpur
today. He announced wider exemptions of items under the goods and services tax
to reduce the impact of the levy, as the finance ministry targets growth of as
much as 6% this year and next.
Najib’s
efforts to narrow Malaysia’s budget deficit through subsidy cuts have left
companies and consumers grappling with higher costs, and inflation next year is
forecast to be the fastest since 2008. With a target of becoming a developed
economy by 2020 just six years away, the prime minister is shifting his focus to
attracting foreign investment, boosting education standards and adding
high-quality jobs.
“To remain
resilient and competitive, Malaysia must move to an economy based on knowledge,
high skills, expertise, creativity and innovation,” Najib, who is also finance
minister, said. “Economic planning and policies of a country need to be adjusted
according to the developments and challenges in the domestic and external
environment.”
Malaysia
narrowed the budget shortfall to 3.9% of gross domestic product in 2013, and
Najib said he is “committed” to trimming the gap to 3.5% this year and 3% in
2015, heading toward a balanced budget by 2020.
Among
infrastructure investment Najib announced today are the construction of a
1,663-kilometer (1,033 miles) highway between the states of Sabah and Sarawak on
Borneo island worth 27 billion ringgit, and rail projects around the Malaysian
capital.
“Infrastructure spending for 2015 is huge,” said Peck Boon Soon, an economist at
RHB Research Institute Sdn. in Kuala Lumpur. “This would continue to support the
construction sector activities just like this year.”
The
government raised fuel prices for the first time in more than a year on Oct. 2,
and the prime minister said he will announce a “new mechanism” soon on a new
petroleum subsidy program.
“Najib
knows the credit-rating agencies are watching closely, and he delivers what they
and the wider market players are looking for: fiscal consolidation,” said
Wellian Wiranto, an economist at Oversea-Chinese Banking Corp. in Singapore.
“There is really no easy way out but to either reduce unnecessary expenditure or
to boost the government’s receipts. It appears that a lot more emphasis is
placed on the former.”
GDP will
increase 5.5% to 6% this year, and between 5% and 6% in 2015, the Ministry of
Finance said in its 2014/2015 economic report. The central bank projected 2014
growth of 4.5% to 5.5% in March.
Malaysia
will exempt retail fuels, key food items and medicine from the GST of 6%, Najib
said. He announced bigger cash handouts to lower-income households to help them
cope with the tax that will start in April. Consumer prices are forecast to rise
4% to 5% in 2015, compared with an average 3.3% in the first eight months of
this year, the finance ministry said in its report.
“Inflation
is expected to remain manageable despite trending above the long-term average,”
according to the report. “The strong capacity expansion over the past years will
help to mitigate the cost pressures, while a more cautious stance of consumers
would also contribute to moderating demand and hence prevent inflation from
becoming more entrenched.”
The
ringgit advanced by the most in six months yesterday, amid optimism Malaysia’s
budget will outline commitments to improve public finances. The government will
“ensure” its debt level is capped below 55% of GDP, it said.
Najib’s
administration is forecasting federal spending of 271.9 billion ringgit in 2015,
according to the finance ministry’s report. Total expenditure for this year is
estimated at 262.2 billion ringgit.
The
central bank kept its benchmark interest rate unchanged last month after an
increase in July and said it will assess the balance of risks between the
outlook for growth and inflation when considering further policy moves.
“In 2015,
monetary policy measures will continue to support growth while mitigating risks
to economic and financial imbalances that could undermine the long-term growth
prospects,” according to the finance ministry report.
Najib
unveiled a new program for some first-time property buyers that will provide
financial assistance, stamp duty exemptions and 35-year loans to address
concerns that rising prices are hurting their ability to purchase their own
home.
Singapore’s central bank is keeping monetary policy steady despite the economy’s
sluggish growth, signaling greater worry about inflationary pressures than the
possibility of a slowdown.
The
government reported that third-quarter gross domestic product rose 1.2% on
quarter on a seasonally adjusted and annualized basis, according to advance
estimates. The measure is below a 2.2% growth forecast by economists in a Dow
Jones poll, though a reversal of a 0.1% contraction in the second quarter.
The
economy is estimated to have expanded 2.4% on year in the third quarter, the
same pace as in the second, the government said. The central bank said it
expects Singapore’s economy to expand at a moderate pace in the quarters ahead.
Though
Singapore’s growth rate has stabilized, it is still slower than in previous
years, as a multiyear restructuring plan takes its toll on headline figures.
Government-mandated limits on the hiring of foreign workers have pressured
Singapore’s manufacturing sector as the government introduces incentives—both
carrot and stick—to encourage companies to improve productivity and rely less on
cheap, imported labor.
Economists
say the figures, while modest, are encouraging given the tepid pace of global
growth. “I think the result is pretty positive,” said Jeff Ng, economist at
Standard Chartered in Singapore. Still, cooling property prices and
restructuring efforts have taken a toll, he said.
Mr. Ng
also said that while economic growth remains soft, core inflation is instead “on
the forefront of the policy makers’ thoughts.”
Wage
inflation is likely to remain relatively firm, and businesses in food-related
and some services sectors could further pass on cost increases, the central bank
said. Its core inflation measure is projected to stay above its historical
average over the next few quarters even as consumer-price inflation remains
subdued, it added.
Consumer
prices rose 0.9% on year in August, according to official data released late
last month. Excluding transport and housing, which heavily influence the overall
inflation figure, consumer prices rose 2.1% in August.
The
central bank said its policy should keep a cap on domestic and external
inflationary pressures and keep expectations “well anchored.”
The
Monetary Authority of Singapore said it will continue to closely monitor the
impact of external developments, such as uneven global growth, and would
continue to pursue a policy of modest and gradual appreciation of the local
dollar, its main policy lever in an economy where trade flows dwarf domestic
activity.
The bank
didn't flag the volatility seen in financial markets—a hallmark of the past few
weeks—as a significant risk, although it did highlight recent weakening pressure
on the Singapore dollar in August and September, which it said was “largely
reflecting a rise in geopolitical risks and market reactions to the possibility
of an earlier-than-expected rate hike by the U.S. Federal Reserve.”
On Sept.
30, Kenya announced the results of its “rebasing”—a recalculation of its gross
domestic product to include previously unaccounted-for economic activity. Its
GDP expanded 25.3%, to $55.2 billion, moving it up several rungs on the list of
Africa’s largest economies, to 9th. The government adjusted its 2013 growth rate
from 4.7% to 5.7%.
Kenya’s is
the latest in a series of rebasings that have reinforced investors’ perception
of the area’s growth potential. Even as Ebola ravages West Africa and civil war
devastates the Democratic Republic of Congo, many of the other economies in the
region remain dynamic: The International Monetary Fund predicts sub-Saharan
growth will be 5.8% next year, up from an estimated 5.1% for 2014. Many of the
area’s governments issue bonds that look like good bets based on that projected
growth. “Africa’s the final frontier among emerging markets for high yield,”
says Brett Rowley, emerging-markets sovereign analyst for TCW Group in Los
Angeles.
The first
big rebasing of 2014 took place on April 7, when Nigeria declared itself the
largest economy in Africa, surpassing South Africa in GDP. According to
Nigeria’s National Bureau of Statistics, the GDP numbers had been inaccurate for
years, and the state finally addressed the problem. A recalculation by the
statistics bureau, with help from the World Bank, the IMF, and the African
Development Bank, showed the country’s statisticians were missing almost half of
Nigeria’s economic activity.
The new
figure, which took more than a year to calculate, increased the GDP total from
$262.2 billion to $488 billion. It’s still not entirely accurate, because the
calculations for the farm sector were based on older numbers—highlighting the
difficulty of calculating GDP as well as the importance of the number. GDP is
the world’s most watched economic statistic, and Nigeria’s triumph over South
Africa made news around the globe. (South Africa regularly rebases its GDP, so
an announcement that the country’s GDP is much larger than previously claimed is
unlikely.)
Rebasings
are “something a country might use to market itself, and it has political
implications,” says Roy Adkins, Africa sovereign debt analyst for T. Rowe Price,
the mutual fund group. Politics played a role in Nigeria’s recalculations. A
national election is coming up in February, and incumbent President Goodluck
Jonathan will be able to brag that on his watch the country usurped South
Africa’s premier position.
Many poor
and middle-income countries have had to work with shaky statistics for decades,
according to the World Bank’s Bulletin Board on Statistical Capacity, which
surveys the quality of statistics from different countries. According to the
IMF, most African GDP figures are too low and need an update. Underestimating is
chronic because calculating GDP in the most accurate way is expensive. It’s also
impractical to conduct annual censuses of the population and all economic
activities—in short, counting every person, good, and service that can be found.
An affordable and faster option, which most countries choose, including the
U.S., is to conduct several types of census—for population and various economic
sectors—in a single year, and in the years between censuses use surveys,
statistical samples from which to extrapolate an overall growth rate.
Nigeria’s
old base year was 1990, and its new one is 2010. Nigeria in that time went from
having no cell phones to having one of the largest user populations worldwide.
Because there wasn’t a starting figure for the mobile telecom industry in the
1990 base from which growth was extrapolated, this part of its economy wasn’t
counted until now. The country’s film industry is another example: What were
just a few movies produced annually in 1993 have exploded into Nollywood, the
world’s second-largest film industry by volume. Both mobile phone networks and
films are now part of GDP. Nigeria’s case shows why recalculating GDP often is
important. Donald Kaberuka, president of the African Development Bank, says all
African nations should rebase their economies every five years to keep GDP
figures as accurate as possible.
Yvette
Babb, a fixed-income and currency strategist for Standard Bank Group (SBK:SJ) of
South Africa, Africa’s largest lender by assets, expects four economic sectors
to show the most growth in the rebased economies: services, telecommunications,
wholesale and retail trade, and manufacturing. If a wave of rebasings does
uncover more manufacturing, that would be important fodder for the “Africa
rising” debate. Skeptics say sustainable economic growth in Africa requires more
manufacturing and less reliance on exporting raw materials, the continent’s
established source of revenue. In Nigeria, rebasing took manufacturing from a
1.94% share of GDP to 6.83%, according to the National Bureau of Statistics.
German GDP
forecasts have been reduced to 1.25% from 1.8% for 2014 and to 2.0% in 2015.
Greece
revised data on last year's gross domestic product, showing its economy shrank
by 3.3% for the year as a whole, less than a previous estimate of a 3.9%
contraction.
The
country's statistics service ELSTAT said the revision reflected the use of new
and updated data on national accounts, in line with the new European Systems of
Accounts (ESA 2010).
The new
data also showed that the recession in 2012 was milder than previous estimates,
with GDP shrinking 6.6%, less than a previous 7% estimate.
Greece and
its EU/IMF international lenders project the economy will emerge from a six-year
recession and expand by 0.6% this year.
Nigeria
gross domestic product (GDP), is expected to increase by another 20% to make it
a competitive Information and Communication Technology hub through foreign
investments shortly after the Gulf Information Technology Exhibition (GITEX)
holding in Dubai, the United Arab Emirate.
This was
revealed by the Director General of the National Information and Technology
Development Agency,(NITDA), Mr. Peter Jack
shortly after the flagging off the
five –day event at the Dubai
World Trade Centre by the Dubai’s crowned prince, Sheik Hamddan Al-maktoum.
According
to him, by being a partnering country, Nigeria has huge opportunities to
leverage and tap from foreign investments that could further propel the
country’s GDP by some percentage.
Said he:
“What we are trying to do is to attract substantial investment in the ICT
sector. It is obvious that Dubai has an initiative of internet model and smart
tech. Where we are now is that Nigeria has substantial capacity, which is not
being properly harnessed. The moment we can harness that capacity, we should be
able to deliver internet connectivity across the country. By the time, we go
from here, we expect a substantial increase in the utilization of internet usage
in the country.
“This is
an opportunity to share with the world, the ICT sector in the country. Because
of that we have come with young start-ups entrepreneurs and seasoned ICT players
in the industry. There is a strong showing of the government Ministries,
Departments and Agencies (MDAS) at this year’s exhibition”.
NITDA is
an arm of the Nigerian Communications Commission (NCC), established by the Act
in 2007, primarily to create a frame work for the planning, research,
development, standardization, application, coordination, monitoring, evaluation
and regulation of IT practices, activities and systems in Nigeria.
Jack
maintained that GITEX will showcase Nigeria as Africa’s gateway for technology
investment opportunities In addition the country is looking at investment in
infrastructure, in original equipment manufacturers (OEMS) that will support
local manufacturers as well as those who will support the country’s start-ups,
who are the young innovators. While
projecting that NITDA is thinking of the actualization of a digital coast just
as it is located in the United States of America.
“One of
the projects that is really interesting to all of us is the Lagos Smart city
initiative, which is the Lekki free zone area. At NITDA, we dream of a digital
coast as we have in the United States of America. The digital coast will start
from Lagos through Delta, Bayelsa, Rivers, Akwa Ibom and end up in Cross River,
Tinapa knowledge city. The reality is that we are looking at the potential to
attract investors along these digital coasts. We are looking and working towards
creating an ecosystem in the ICT sector and investment will be across the board,
not just in one area. What we are also doing is to recognize the need for
capacity building that will produce the best level of software that can be
found. We need some levels of investment that will take Nigeria to the next
level”.
Meanwhile,
the Consul General to Dubai,
Ambassador Dr Mike Omotosho also disclosed that NITDA has put together a
laudable program that is quite significant for the consulate, saying, “Why this
is significant for us is basically because we are just celebrating our one year
existence. The consulate was created in October, 2013, and NITDA is coming with
a huge change with the exhibition. It takes all for Nigeria to be present in
GITEX to showcase her technology skill, which is match able anywhere in the
world.
“Nigeria
and Dubai are formidable in terms of ICT and when we come together, we share
experiences and compare notes for future use. This event is going to be a
partnership that is far from learning, “he said.
Switzerland has reduced its economic growth forecasts on the back of the
declining performance of its main trading partners in Europe, most notably
Germany. Gross domestic product (GDP) is now tipped to expand 1.8% this year,
rather than 2%.
The State
Secretariat for Economic Affairs (SECO) has also cut GDP growth predictions to
2.4% for 2015, down from the 2.6% it forecast earlier this year. But SECO warned
that changes to the way it calculates growth make a direct comparison between
these figures difficult.
“In light
of the dampened short-term economic outlook for the euro region, including
Germany, the conditions deteriorated compared with the last forecasts in June,”
SECO said in a statement.
“Even six
years after the outbreak of the global financial crisis, the global economic
recovery remains fragile and prone to many risks. A sweeping, broadly based
improvement in the international economic situation is still not in sight. As
uneven global recovery continues, there is no uniform picture in terms of
country and region.”
SECO’s
gloomy picture was backed up by a crash in the price of government bonds,
particularly United States treasury bonds, as markets reacted to a rash of bad
news from around the world. The price of oil is also in free fall, a certain
indicator of slackening industrial demand.
Swiss food
producing giant Nestlé also reflected the weakening economic conditions in its
third quarter results. Sales fell to CHF66.2 billion ($70.3 billion) in the
first nine months of the year, down 3.1% from the CHF68.3 billion posted in the
corresponding period in 2013.
Nestlé
chief executive Paul Bulcke bemoaned the "volatile global trading environment
where there are no tailwinds" for the disappointing result. Analysts pointed to
a slowdown in demand from Chinese consumers.
Practically all parts of the world have been affected by the latest economic
downturn with emerging economies in Asia and South America witnessing poor
returns recently.
But the
picture is especially bleak in Europe and the worsening relations between Russia
and the West over Ukraine have affected trade, worsening the situation. This has
been blamed for undermining the normally reliable German economy.
Earlier
this week, Switzerland’s single largest trading partner dropped its GDP forecast
from 1.8% growth this year to 1.2% and from 2% in 2015 to 1.3%.
German
Finance Minister Wolfgang Schäuble said the trend “is not particularly
wonderful” but said that it is “no reason to start talking about a crisis”.
But even
the short-term effects of the slowdown are filtering through to Switzerland.
“In view
of subdued economic activity in key foreign markets, a significant pick-up in
Swiss exports has not yet materialized,” said SECO. “In addition, domestic
demand, which has made a significant contribution to the robust economic
performance over recent years, lost some momentum in the first half of 2014.”
This
echoed warnings early this year from economists who feared that Switzerland had
used up much of its room for maneuver, having already dropped interest rates to
rock bottom, taken measures to cool down an overheating real estate market and
voted to restrict immigration.
Another
pillar of relative Swiss economic strength, high employment rates, is also
threatened but only marginally so. SECO raised its forecast unemployment rates
to 3.2% this year (previously prediction was 3.1%) and 3.1% (from 2.8%) in 2015.
However,
the labor market remains robust for the moment, according to an index published
by job placement agency Adecco and the University of Zurich.
The
employment barometer, which measures the number of jobs being offered by
companies, rose 2% for the whole of Switzerland in the third quarter, with the
best employment opportunities in the east of the country.
Further
bright news for the Swiss economy is coming from the United States, which is
starting to show signs of sustained economic recovery. Britain and Spain were
also hailed by SECO as showing steady progress, but these are the few rays of
light in a rather gloomy global outlook.
A range of
other forecasters, from the Swiss National Bank, BAK Basel and Credit Suisse
have also recently revised down their hopes for Swiss economic growth.
Falling
oil prices won’t hurt the gross domestic product growth of the UAE this year, a
Ministry of Economy official told reporters recently.
“Oil
accounts for less than 30% of our GDP, so there will be no impact. The UAE
economy is now very diversified,” said Mohammed Ahmed bin Abdul Aziz Al Shehhi,
undersecretary at the ministry.
“The oil
price impact doesn’t reflect highly in our GDP.”
Brent
crude oil futures hit a four-year low of $87.74 a barrel in recent days, down
more than $25 from their peak in June.
Private
economists agree, however, that unless prices decline further and stay at those
levels for at least a year, there will be little damage to the Arabian Gulf’s
big oil exporting economies.
Although
governments in the region rely heavily on oil income, they have built up huge
financial reserves and have very low debt, so they can continue spending on
economic growth if needed. Lower oil prices will not translate directly into
lower real GDP growth, which will slow only if oil production decreases. Also,
most Gulf private sectors have been booming.
A Reuters
poll of analysts in September, when the oil price slide was already well
underway, found they expected GDP growth in most GCC countries to accelerate
slightly next year. In the UAE, GDP is projected to grow 4.5% in 2015.
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