LAUSANNE, SWITZERLAND – China’s renminbi, which Beijing has begun cautiously promoting as an internationally accepted trading currency, may surprise us, HSBC’s global head of commodity and structured trade finance told a Financial Times conference in Lausanne Wednesday 25 April.
Jean-François Lambert said that ”It’s a huge development and moving faster than many expected, so pay attention”. He noted that the US dollar continues to be the predominant currency for commodities trades despite its recent weakness, but the banker alerted delegates to China’s shifting stance on the renminbi during as the conference focused on China’s role as a global economic powerhouse.
Richard Elman, chairman of Noble Group, believes that the rate of spending on commodities, which in turn effects economic growth, will slow in China. Personal savings in the country’s “one-child” society will be held for old-age spending, and growing commodity costs burdened by expensive investments in infrastructure will reduce spending.
Elman says that energy consumption will decrease as China’s energy use becomes more efficient.
He expects the renminbi to become an international currency in 10 to 20 years. Elman notes that China, the world’s second largest economy, has begun to internationalize the renminbi through bilateral agreements, for its use in international trade and lending.
The Singapore-based Noble Group claims to be “Asia’s largest diversified commodities trading company”.
GENEVA, SWITZERLAND – Trains were halted and public transport in Lisbon stopped on Thursday 22 March as Portugal’s largest union vowed to bring the country to a standstill in protest over new labour reforms imposed as part of a €78 billion bail-out package.
Arménio Carlos, president of the confederation of unions (CGTP), told the Wall Street Journal, “Austerity didn’t work for Greece, and it won’t work for Portugal.” He said protests would be held in the capital and other cities throughout the country.
The union opposes the new labour laws that make it easier to hire and fire employees, which bailout officials feel is essential to make Portugal more competitive in global markets. Other rules would reduce the number of paid vacation days.
Portugal is facing its deepest recession since the 1970s, with the government expecting the economy to contract by 3.3 percent and unemployment to rise to 14.5 percent this year. The economy in 2011 shrank by 1.5 percent, and 12.7 percent of the working force was unemployed.
GENEVA, SWITZERLAND – Geneva’s financial sector remains a significant part of the canton’s economy, responsible for 20 percent of the gross domestic product (GDP), but in 2007 that figure was 25 percent, and 2011 shows new slippage. Ocstat, the canton’s statistical office, Monday 19 March said that while financial business rose by 0.9 percent in the first quarter of 2011, it then fell each quarter, down by 1.6 percent, 0.4 percent and 0.7 percent.
Overall, the Geneva economy showed growth in 2011, albeit slow and mainly thanks to be good first quarter, with the fourth quarter up 0.3 percent compared to previous quarters’ increases of 0.4 and 0.2 percent.
Ocstat published provisional figures 16 March. The final figures will be released in September 2012.
ZURICH, SWITZERLAND – Credit Suisse Thursday pushed its GDP growth forecast down sharply, from 2 percent to 0.5 percent, for 2012. The bank points to the euro crisis, which “continues to weigh on markets, with economic momentum in Europe fading unexpectedly quickly.” Switzerland will be hurt by the fall in exports due to “decidedly gloomier” prospects for countries to which the Swiss export, and the accompanying fall in capital investment on new machinery and equipment.
Consumers and the construction industry, which continues to boom thanks to low interest rates, will prop up economic growth, the bank’s analysts say.
Renovations, new construction: building industry and consumption will prop up Swiss economy in 2012
But “a significant cooling of European growth is no longer avoidable”, according to Credit Suisse, and “while the US economy has accelerated again slightly following the dip seen in mid-2011, the opposite is occurring in Europe. Most significantly, economic momentum in Germany – Switzerland’s key trading partner – has slowed. At the same time, the partial spillover of the debt crisis to Italy has brought increased volatility on the financial markets, growing tensions on the credit and interbank markets, and falling confidence among households and businesses.”
Sentiment is more of an issue than home-grown problems, the bank notes, pointing out that Swiss public finances and companies do not have excess debt.
“On the contrary, interest rates in Switzerland will remain low until at least the end of 2012. In addition, inflation is not an issue in Switzerland at present; pressure on consumer prices is holding up, so purchasing power is safeguarded (inflation in 2012: 0.4%). Finally, immigration is likely to remain strong, meaning an important driver of the growth in consumption will remain in place. By contrast, the constant talk of crisis, together with a deterioration in the labor market situation (unemployment rate in 2012: 3.3%), is increasingly impacting sentiment, and poses certain constraints for the growth in consumption.”
Time flies when trade is growing rapidly; Indian Trade Minister Arnand Sharna at Baselworld 2011
BERN, SWITZERLAND – Trade between India and Switzerland, currently negotiating a bilateral free trade treaty, has grown at a “fulgerant” rate in the past 20 years, the Swiss Customs Office says. Exports from Switzerland to India grew by 18 percent in the first nine months of 2011 and have now crossed the threshold of CHF3 billion.
Swiss exports grew seven-fold from 1990 to 2010, from CHF378 million to nearly CHF2.6 billion. Imports from India grew during the same period from CHF251m to CHF901m. Trade with India has thus grown dramatically, but India remains Switzerland’s seventh trading partner, well behind China, with Swiss exports of CHF7.1b and Japan, with CHF6.43.
Chemicals account for main exports as well as imports: mainly pharmaceuticals for Swiss exports, with basic chemical products and finished ones sharing the imports from India about equally. Other Swiss exports: machines, particularly precision instruments, and electronics plus watches.
Funds to help companies cover the cost of partial unemployment
BERN, SWITZERLAND – The two houses of parliament have given the green light to government measures to fight the high franc, with the lower house Wednesday approving the Federal Council’s CHF870 million project.
The bulk of the funds will go to help companies cover the cost of partial unemployment that is likely to rise as exports fall. The unemployment fund is being allotted a ceiling of CHF500 from the package, money that may not be needed.
Smaller amounts target specific areas, such as innovative products in the tourism sector and transformed agricultural products.
Trade figures for August, released Wednesday, show exports down 4.1 percent and imports down 6.2 percent, although exports grew by just over 1 percent when figures are corrected for inflation. Exports have grown by 2.6 percent since the start of 2011, but the increase has relied on only three business sectors: watchmaking, machinery and electronics, metal-working.
The State Secretariat for the Economy lowered its GDP growth forecast Wednesday, to 1.9 percent for 2011 and 0.9 percent, from earlier projections of 2.1 and 1.5 percent respectively.
Swiss green economy's fastest growing area is construction, says WWF (photo, ©2011 iStockphoto)
BERN, SWITZERLAND – The green economy is growing at twice the rate of the rest of the economy in Switzerland, figures published Tuesday 21 June by WWF Switzerland show. The green economy accounts for turnover of CHF29 billion and 116,000 jobs. It is expected to add another 53,000 jobs by 2020, with turnover reaching CHF57b.
The figures, compared to 2001, show an annual growth rate of 6.3 percent, compared to 3.2 percent for the Swiss economy as a whole in the past 10 years, according to “Environmental markets in Switzerland – outlook for the economy and jobs”, a report issued by the WWF training centre. “This level of growth requires developing matching environmental competences in professional fields,” says Helene Sironi, head of continuing education for the WWF.
The numbers look even more impressive, says the organization, when federal figures from a study on the Cleantech economy are added: CHF49b in turnover and 260,000 jobs, or 6.2 percent of the Swiss labour market.
The fastest growing green area is environmental construction, at 47 percent a year. Sustainable mobility is one of the weaker areas, growing at only 3 percent a year.
Report summary in French, WWF (3.9MB pdf)
Bern, Switzerland (GenevaLunch) - PostFinance, the financial arm of Swiss Post, has attracted 18,000 new clients in the first three months of 2011 and its earnings are up 39 percent over Q1 in 2010, to CHF 181 million, Swiss Post announced 9 May.
Customer deposits rose by CHF5.2 billion to CHF89.4 billion. “This increase lead to improved net interest income, up by 22 percent on the same period last year, despite a consistently narrow interest margin. This is the main reason for earnings of CHF 181 million,” the Swiss post office says in a statement.
The number of new accounts increased significantly, by 48,000, nearly double the number of new accounts the previous year, in the same period.
Female infanticide appears to continue
India’s census results were published Thursday 31 March, showing that the country is now the world’s second most populous, with 17 percent of the world population. India officially has 1.21 billion people, compared to China’s 1.34 billion.
India added 181 million new people, but the Guardian notes that the census commissioner told reporters in India that growth has slowed. “C Chandramouli, the census commissioner, told reporters in Delhi that the new count showed population growth in India had slowed. The 17.6% increase was down from 21.5% recorded in 2001.”
The child sex ratio has worsened in India in the past 10 years, the Times of India points out,”indicating that female feticide and infanticide remain rampant. Provisional data released by the census office for 2011 shows that the child sex ratio (0-6 years) has further declined to 914 girls for every 1,000 boys as compared to 927 in 2001.”
Links to other sites: Guardian, Indian Census Bureau, Times of India
The UK economy picked up in the second quarter of 2010, thanks in large part to the biggest rise in construction in nearly 50 years. New figures published by the Office for National Statistics Friday 23 July show a 1.1 percent GDP increase over the previous quarter, the largest such quarterly rise in four years, and a 1.6 percent increase over the same period a year earlier.
Links to other sites: Financial Times, Reuters
Ireland’s economy is now expected to grow by at least 1 percent this year, following the good news Wednesday 30 June that the country is moving out of recession: after eight quarters of negative GDP growth, the country saw growth of 2.7 percent in the first quarter. Over the past two years Ireland’s GDP has fallen by some 15 percent.
Ireland was the first economy in the eurozone to slip into recession and suffered eight consecutive quarters of negative GDP growth. GNP negative growth was even worse, falling by over 17 percent.
The good news was accompanied by bad, however, with the unemployment rate in Ireland rising to 13.4 percent.
Links to other sites: CNN, Irish Times
Inter-Europe air traffic remains weak
Worldwide improvement is concentrated in Asia, Latin America
Brands, not flags, must guide the industry to profitability, says Iata head
Geneva, Switzerland (GenevaLunch) – The airline industry is expected to have an overall loss of $9.4 billion for 2009, according to Iata, the Geneva-based air transport industry organization, which released new figures Thursday 11 March. The loss is lower than Iata’s December projected figure of $11b. “More significantly, we now forecast smaller losses in 2010 of $2.8b, compared to our previous forecast of $5.6b.”
The improvement is due to year-end growth in traffic that carried on into January, but it was much led by Asia and Latin America, with the US and Europe far more sluggish.
Growth in passenger demand, world airlines 2006-2009 (Iata)
Click on image to view larger
“We can be optimistic but with due caution,” Giovanni Bisignani, CEO and director-general says. “Important risks remain. Oil is a wild-card, over-capacity is still a danger, and costs must be kept under control – throughout the value chain and with labour.”
Asian and Latin American carriers posted international passenger demand gains of 6.5 percent and 11.0 percent respectively in January. North America and Europe lagged, with international passenger demand gains of 2.1 and 3.1 percent.
China now looks set to overtake Japan in 2010 as the world’s second largest exporter, with February figures well above even the optimistic forecasts: 45.7 percent over February 2009. Figures from a year earlier reflect the dip due to the economic crisis, but February figures were double the increase in January exports, up 21 percent. The Financial Times notes that Chinese authorities nevertheless intend to wait to lift stimulus measures because of an uncertain global economy.
Imports are also growing steadily, providing more evidence that the Chinese economy is rebounding.
Links to other sites: Financial Times, Xinhua
How many Swiss abroad know why this flag is not a true Swiss flag?
Bern, Switzerland (GenevaLunch) -The number of dual nationals in Switzerland is contributing strongly to the continuing rise in the number of the Swiss abroad, according to the federal government, which 16 February issued the latest figures. Seventy-two percent of all Swiss abroad are dual nationals.
At the end of 2009 Switzerland had 684,974 citizens living outside the country, an increase of 100,000 since the year 2000. The greatest increases were in France and Germany. Some 60 percent of Swiss abroad live in the European Community.
The largest community of Swiss abroad is found in France (179,106), followed by Germany (76,565), Italy (48,638), Great Britain (28,861), Spain (23,802) and Austria (14,194). Outside Europe, the largest number of Swiss nationals live in the USA (74,966), Canada (38,866), Australia (22,757), Argentina (15,624), Brazil (14,653), Israel (14,251) and South Africa (9,035).
Biel/Bienne, Switzerland (GenevaLunch) – Swatch reported in an upbeat mood Wednesday morning 20 January that 2009 turned out to be its third-best year on record and that unexpectedly strong sales in December made it the company’s best-ever December. Orders on the books for 2010 plus expected growth in middle class consumer spending in developing markets lead the company to predict continuing sales growth this year.
Gross sales for 2009 were CHF5.42 million, down only 6.3 percent at constant exchange rates. Sales in the second half of the year exceeded, although just barely, 2008 sales for the same period, making up for a weak first half of the year.
Zurich, Switzerland (GenevaLunch) – Economiesuisse has revised upwards its forecast for the Swiss economy for 2010. In June 2009 the umbrella organization for Swiss business had predicted a 2.9 percent drop in Swiss GDP (gross domestic product) for 2009 with a further drop of 0.8 percent in 2010. The group published revised figures Monday 23 November, saying it expects to see growth of 0.7 percent next year, and export growth of 3.8 percent after a year that has proved very difficult for some exporters.
Background: Economiesuisse lowers growth forecast, unemployment to climb, GenevaLunch, 15 June 2009
Africa now has one billion people, according to a report jointly released by Population Reference Bureau, a Washington-based non-profit organization, and USAid, the US government aid agency. The population growth is occurring mainly in sub-Saharan Africa where women tend to have more children than elsewhere in the world: 5.3 on average versus 2.6 worldwide. But Africa overall is currently the continent with the world’s fastest growth rate and fastest projected rate to 2050. Among the many details the report provides on the population, its notes that while Africa has one-seventh of the world’s population, it has one-quarter of the world’s refugees. AllAfrica, “2009 World Population Data Sheet” report and world population clock, data
The Chinese economy grew by 7.9 percent in the first half of 2009, showing a recovery after slipping to 6.1 percent for the first quarter. The government says it now expects to be on target and finish the year with growth of around 8 percent. The country’s GDP (gross domestic product) reached US$2.06 trillion. Financial Times, Reuters, Xinhua
Geneva, Switzerland (GenevaLunch) – Baboo, which serves 16 destinations from Geneva has put 60 percent of its staff on partial unemployment, reports Le Temps, despite continuing strong growth. Growth in fact is the source of the problem, the newspaper quotes company director Jacques Bankir as saying. Baboo’s sales increased 87 percent in 2008 to CHR56 million. The number of passengers rose 75 percent.
Neuchatel, Switzerland (GenevaLunch) - The Swiss population grew by 1.4% in 2008, to 7.7 million people, according to provisional figures released by the federal statistical office. The 1,800 weddings on 08.08.08 played a role in the higher number of marriages, part of the population change figures released.
