Protectionism a barrier to growth, says expert

Seoul – The global economy is expected to grow more slowly even after recovering from the current crisis but efforts to remove protectionism will help foster growth, a US expert said Tuesday.

“The global outlook is for growth no faster, and (possibly) slower, than in the past very successful years,” said Anne Krueger, a former vice president of the International Monetary Fund.

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Growth, inflation data give conflicting cues

Economic data are providing confusing signals to the Reserve Bank’s monetary policy committee (MPC), which starts its two-day meeting tomorrow. The bank has cut its repo rate by 3.5 percentage points since December, to 8.5 percent – after a hike of 5 percentage points between June 2006 and June 2008.

The argument for a further cut will be supported by data due today from Statistics SA, which will show gross domestic product (GDP) shrank in the first quarter, after contracting an annualised 1.8 percent in the previous quarter.

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Swine flu could hit global economy: IMF

Tokyo – The global spread of swine flu could have “notable effects” on the world economy, a senior IMF official said Monday, warning that the economic crisis was far from over.

John Lipsky, first deputy managing director of the International Monetary Fund, said the risks from the new type of flu “are hard to predict as it is unknown, as well as regarding its spread and its mortality.”

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Inflation target open to debate

South Africa was managing its debt to ensure it did not overborrow in its efforts to boost growth, new Finance Minister Pravin Gordhan said yesterday.

Gordhan, who was sworn in as finance minister on Monday, said in a series of radio and television interviews that the government would be discussing policy issues, including inflation targeting – one of the investor friendly policies that labour and the ANC’s communist allies wants to change.

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Mboweni looks east for growth

Continued growth in China and India will support the local economy while advanced economies contract by 3.8 percent this year, according to Reserve Bank governor Tito Mboweni.

Mboweni, who last week cut the repo rate by a further 1 percentage point to 8.5 percent, linked South Africa’s fortunes to those of the global economy, which was in a “severe synchronised downturn”.

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Economic crisis threatens Aids fight

Bangkok – The global financial crisis could wipe out years of progress in fighting the spread of HIV and Aids and treating patients, a leading authority on the disease warned on Monday. Michel Kazatchkine, executive director of the Global Fund to Fight Aids, Tuberculosis and Malaria, said he was “very concerned” that international donors would be unable to meet their pledges.

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SA stands out in fight against financial crime

South Africa is in a very fortunate position at this time of the worst global financial crisis in recent history. Our banks have not seen the same sort of liquidity crunch experienced by those in countries such as the US and the UK, let alone Iceland.

Yet although international credit rating agencies are not racing to upgrade local banks, they will find solace in yet another thumbs-up to South Africa from an international body.

In a report released last week by the Financial Action Task Force, the Paris-based body commended South Africa for “its strong commitment” and its “good progress in developing its anti-money laundering system”.

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Relieved investors help lift rand

Johannesburg – The rand remained firm on Monday and could break R9.00 to the US dollar. At 8.55am the rand was bid at R9.0116 to the dollar from an overnight close of R9.0310. It was bid at R12.2080 against the euro from a previous R12.2020 and at R13.4548 to the pound from R13.4085 before. The euro was bid at $1.3529 from $1.3514 overnight. RMB analysts said in their morning report that local political risk is set to diminish on Monday as, by all newspaper accounts, the NPA looks likely to drop charges against ANC leader Jacob Zuma.

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Bankers to get keys to kingdom

Nationalization, stimulation, subsidization, appropriation, bond buybacks and bailouts. In the space of a year, global policymakers have thrown away 30 years of free-market orthodoxy in an unprecedented intervention in the global economy. The Financial Post takes a look at the repercussions for growth, banking and monetary policy.

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Investors return to emerging markets

Emerging markets may have weathered the worst of the financial storm and could benefit as massive pension funds, with yawning deficits, desperately seek higher yields.

Chris Hart, an economist at Investment Solutions, said last week that global investors who had left emerging markets as risk aversion rose were starting to return. The flow of investment was likely to accelerate as “some decoupling” took place between the developing and developed world.

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