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business newsCIVETS Watch: Forecast for Developing Asia Tops 8%
By
Carol Kopp
Sep 29, 2010 11:50 am
The Asian Development Bank has just raised its forecast for growth this year in Indonesia, and in the entire 44-nation region economy that it tracks.
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Colombia
These are good times for Colombia’s coffee growers, as prices for their crops reach a 14-year high, reports the Los Angeles Times. You’re probably aware that Starbucks (SBUX) and other major brands just announced a price increase. It seems that worldwide consumption is rising by 2% a year -- twice as fast as supply, as consumers in India, China and Russia switch to coffee from the more traditional tea. Colombian farmers also have learned that they can get more for their crops by switching to fair trade and ecologically sound farming practices, and by growing specialty beans for the premium market. Prices for Colombian coffee are up 30% in a year.
Colombia’s central bank last week voted to keep its key interest rate at 3%, a record low, the Wall Street Journal reported. The key rate stood at 10% in 2008, when the bank gradually began reducing it. The bank’s chairman said in a statement that the board is satisfied its monetary policy is contributing to economic growth without jeopardizing the inflation goal. The nation’s GDP expanded 4.3% in the first half of 2010, while annualized inflation stood at 2.54% in August.
Colombian President Juan Manuel Santos, in New York for a UN General Assembly session, told Time magazine that his nation’s US-backed war on rebel insurgents, Plan Colombia, is working: “Colombia 10 years ago was a failed state; today it’s a vibrant democracy. You couldn’t have it better. The success of Plan Colombia, you can see it every day. And I think you should be proud of that, and we are proud of that.”
Indonesia
The Asian Development Bank has raised its forecast for Indonesia’s growth this year to 6.1% from 5.5%, the Jakarta Globe reports. The bank also raised its forecast for all of developing Asia to 8.2% from 7.5%. “Overall, developing Asia’s recovery seems to have taken firm hold,” the ADB said in a report released in Hong Kong on Tuesday. The ADB tracks growth in 44 Asian nations that are developing or newly industrialized, which excludes Japan.
About $1.4 billion in foreign money poured into Indonesian stocks in the third quarter, more than three times higher than in the previous quarter, according to Thomson Reuters data. The report came as Jakarta’s main stock index, the JKSE, set an all-time high on Tuesday. The region’s other markets ended flat to lower, suggesting that foreign buyers were taking profits in markets elsewhere in Southeast Asia.
Vietnam
Gains in industrial production pushed Vietnam’s economic growth to 7.16% in the third quarter compared to a year earlier, according to the state-run statistics office. If that pace is maintained through the end of 2010, it will be the nation’s fastest annual growth since 2007, according to Bloomberg News. Kevin Grice, an economist with Capital Economics Ltd, says Vietnam’s accelerated pace of growth “contrasts with just about everywhere else” in Southeast Asia. He sees a loss of economic momentum elsewhere in the region.
Egypt
Egypt’s government is on target to beat its own budget deficit reduction target for a second year as its economy recovers from the global slowdown, Bloomberg News reports. Finance Minister Youssef Boutros-Ghali said the deficit will likely decline to 7.5% of GDP for the fiscal year through June, from 8.1% in the previous 12 months. The target was 7.9%. (Boutros Boutros Ghali, former Secretary-General of the United Nations is his uncle). Boutros-Ghali also stuck to earlier estimates that Egypt’s economy may grow by 6% this year, based mainly on domestic demand. The country’s benchmark EGX30 index has risen 7% this year. The International Monetary Fund has advised Egypt to get its debt under control so that the nation’s borrowing from domestic banks won’t undermine private borrowing for business development.
Schlotzsky’s Deli, the Texas-based restaurant chain, is taking its recipes for round toasted sandwiches and Fresh-from-Scratch® buns to Egypt. The franchise company has signed a deal with a Middle Eastern company to open 40 stores in Egypt. The move will nearly quadruple Schlotzsky’s Deli’s international presence, a company statement said. Their Middle Eastern partner for the deal is Food & Entertainment, a Saudi Arabian company that already operates Cinnabon and Carvel stores in the region. Like Schlotzsky’s, those brands are owned by parent company FOCUS Brands Inc.
Turkey
Turkey’s main ISE 100 stock index closed at a record 65,589 on Tuesday. Prices surged after the central bank suggested it may again cut lending rates, according to Reuters News. Domestic markets have been rising steadily for weeks, with investors optimistic about the Turkish economy and hopeful that the nation’s pro-business single-party government will gain a third term in power. But some observers say Turkish stocks are overbought, and may face a correction soon.
South Africa
“If you’re an investor, you can consider this your official wake-up call on South Africa.” So says thereformedbroker.com’s Joshua Brown about Walmart’s (WMT) $4.6 billion preliminary offer for store chain Massmart, which operates 232 discount stores in South Africa and about 60 more in other African countries. Maybe so, but the deal, announced Monday, may not go smoothly. On Tuesday, the country’s largest labor union, the Congress of South African Trade Unions, issued a statement condemning Walmart as “notoriously anti-union,” according to the Johannesburg-based TimesLive site. An analyst quoted in the New York Times says that the price is too high, and the investment won’t pay off for years.
Brown is far more enthusiastic about the latest bold move by the world’s biggest retailer: “In the 1990s when Walmart began establishing their beachheads in China and Brazil, there was similar talk of how the company didn’t understand the lay of the land or the culture or whatever. Meanwhile, they’ve since opened hundreds of stores throughout both countries -- there is a Walmart directly facing the massive statue of Chairman Mao in the middle of Beijing, talk about a juxtaposition!”
South Africa is seeking private investment for the world’s biggest solar energy park, a planned 5,000 megawatt facility that is intended to help the nation shift from coal to green energy. (The largest solar power plant currently operating, in Nevada, is 64 megawatts). A feasibility study has been completed on the project, which could cost $21 billion. The government is hosting an investors’ conference in late October at the proposed site in the Northern Cape province. The non-profit Clinton Climate Initiative says the site is ideal for solar energy production. “South Africa can become a major force in the world in the export of solar power,” Ira Magaziner, president of the Clinton foundation, told AFP news service.
No positions in stocks mentioned.
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