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G7 promises robust aid for Ukraine n AFP, New York
The finance ministers of the world's top industrialized countries promised a firm aid package to Ukraine on Sunday, while calling for reform and a central role by the International Monetary Fund. Earlier, leaders of the countries symbolically billed themselves as the "G7," saying Russia's actions were incompatible with the Group of Eight Nations, which Moscow joined in 1997, and withdrew from preparations for June's G8 summit in Sochi. "We are united in our commitment to provide strong financial backing to Ukraine," the finance ministers of Britain, Canada, France, Germany, Italy, Japan and the United States said in a statement released by the US Treasury. They welcomed the planned visit of an IMF team to Ukraine this week to begin technical and policy discussions. "The International Monetary Fund remains the institution best prepared to help Ukraine address its immediate economic challenges through policy advice and financing, conditioned on needed reforms," the finance ministers said. "IMF support will be critical in un-
Tuesday, March 4, 2014
FAILING TO MAKE A GO OF OIL PRODUCTION
locking additional assistance from the World Bank, other international financial institutions, the EU, and bilateral sources." Interim Ukrainian authorities who succeeded ousted president Viktor Yanukovych had launched a call for IMF help and the world financial body immediately said it stood ready to respond. IMF programs, however, are usually conditioned on reforms taking place. "Closely monitoring" the situation, the G7 ministers said the governmental transition "offers a unique opportunity to put in place urgently needed market-oriented reforms that will restore financial stability, unleash economic potential and allow Ukraine's people to better achieve their economic aspirations." "We are also committed to mobilize rapid technical assistance to support Ukraine in addressing its macroeconomic, regulatory, and anti-corruption challenges," they added. In their separate statement, the G7 leaders said Russia's "clear" violation of Ukraine's sovereignty by sending troops into Crimea contravened the principles on which the G7 and G8 groupings operates. l
A view of one of South Sudan's last working petroleum facilities in the town of Paloch on Sunday. Fighting in South Sudan has cut production from the country's lifeline oilfields by about 29%, the press secretary to President Salva Kiir said in Khartoum yesterday AFP
Asian factory activity stutters, led by China n Reuters, Beijing
Manufacturing activity among Asia's major export economies stumbled in February, led by China where data suggested growth in the factory sector was stalling. New export orders in China fell in February compared with January and growth in overseas demand for Japanese and South Korean goods eased, purchasing managers' reports said. The data painted a gloomier picture compared with January when factories outside of China had shown signs of solid expansion. The HSBC/Markit purchasing managers index (PMI) on China manufacturing fell to 48.5 in February, a seven-month low and the third straight monthly decline in the index.
A government PMI released on Saturday fell to 50.2, indicating the slowest growth in eight months. A PMI above 50 points to growth from the previous month, while one below 50 suggests contraction. "Signs are becoming clear the risks to GDP growth are tilting to the downside," Hongbin Qu, chief economist for China at HSBC, said in a statement accompanying its PMI release. An HSBC/Markit PMI on South Korea fell to 49.8 in February, marking the first contraction in the sector in five months. New export orders are growing, but at their weakest pace in five months. Japanese manufacturers are still growing strongly off the back of aggressive economic stimulus policies promoted by Prime Minister Shinzo Abe.
But a Markit/JMMA PMI released late last week pulled back from an eightyear high to 55.5, marking the first decline in the index in seven months. New export orders showed demand was still expanding, but the index fell for the third straight month. In India, whose economy is less reliant on exports, the PMI rose to 52.5 for its highest level in a year. Overall new orders were also rising at their strongest pace in a year, which HSBC economist Leif Eskesen said was partly a reaction to reduced economic uncertainty compared with last year. At that time, the currency fell to a record low against the dollar as investors worried about a gaping current account deficit. Euro zone manufacturing PMI figures due later on Monday are expected to show steady growth in February from January. Similar US data - also due later on Monday - is forecast to show a sliver of improvement in growth in the manufacturing sector, although much focus will be on new order growth, which slumped in January - the most in more than three decades.
China
Containers are seen at a port of Shanghai Free Trade Zone
REUTERS
While Chinese manufacturers were struggling for growth, the services sector regained some momentum in February. China's official non-manufacturing PMI rose to a three-month high of 55. "If the services PMI is to be believed, the service sector is not doing so bad, but ... the manufacturing, or the investment-heavy sector, not as well," said Wei Yao, China economist at Societe Generale in Hong Kong.
Although the PMI indexes are seasonally adjusted, some analysts cautioned against reading too much into the latest Chinese data, given the possible impact from the long Lunar New Year holiday, which began on January 31 and covered early February. Many businesses close for periods surrounding the holiday. China's statistics bureau will release combined January-February figures for factory output, fixed-asset investment and retail sales later this month. In recent weeks, China's economic indicators have been mixed. Weak investment and declining PMI readings have been countered by surprisingly buoyant exports and bank lending figures. The annual parliament session, due to start on Wednesday, will provide the next marker for financial markets on the outlook for the world's secondbiggest economy. Premier Li Keqiang is widely expected to say that the government will maintain the 2013 economic growth target of 7.5% in 2014. Although the pace of China's expansion has slowed down sharply from the breakneck double-digit pace of the last three decades, analysts at Bank of America Merrill Lynch said a 7.5% growth rate was achievable this year. "We don't think policymakers will attach a big weight to the PMI readings in January and February," they said in a client note, arguing the government could stick with neutral fiscal and monetary policies for now. "We think the government has enough policy room to achieve 7.5% GDP growth this year." l
Yen gains in Asia on Ukraine conflict fears n AFP, Tokyo The yen gathered steam in Asia yesterday on rising geopolitical fears as Ukraine mobilised its army with Russian troops poised to invade the former Soviet state. In Tokyo afternoon trade, the dollar weakened to 101.45 yen, from 101.76 yen in New York Friday afternoon. The euro was also down at 139.79 yen from 140.44 yen, while it weakened to $1.3778 against $1.3800 in US trade. Russia's parliament voted Saturday to allow President Vladimir Putin to send troops into Crimea - a predominantly Russian-speaking peninsula in the southeast of Ukraine - following the ouster of the country's pro-Moscow government. The move was met with global condemnation, with the leaders of the world's top industrialised powers -- Britain, Canada, France, Germany, Italy, Japan, and the United States calling it a "clear violation" of Ukraine's sovereignty. Symbolically billing themselves as the G7, they warned in a statement that Russia's actions were incompatible with the Group of Eight Nations, which Moscow joined in 1997. They also said they would not take part in preparatory talks for June's G8 summit in Sochi, Russia. US Secretary of State John Kerry is to visit Kiev for talks on Tuesday that US officials said would lend support to Ukraine's interim Western-allied
leaders. "The escalating geopolitical risk is likely to raise risk aversion in markets until tensions ease," National Australia Bank said. The downbeat atmosphere was compounded by another disappointing set of manufacturing figures from China that added to concerns about growth in the world's number two economy. And on Friday, the US Commerce Department said US gross domestic product growth in the final quarter of 2013 came in at 2.4%, compared with its initial estimate of a 3.2% expansion. The downward revision dented confidence in the state of the US economic recovery, although the results have been partly dismissed as being due to extremely cold weather that dampened activity. The euro had enjoyed a brief rally Friday after data showed eurozone inflation was low but stable, giving some respite from fears the 18-nation bloc could slip into a deflationary spiral. The data reduced expectations of policy action by the European Central Bank at a meeting this week. The dollar was mixed against other Asia-Pacific currencies. It weakened to Sg$1.2674 from Sg$1.2675 on Friday, to 11,575 Indonesian rupiah from 11,645 rupiah and to 61.91 Indian rupees from 62.16 rupees. The greenback also slipped to 32.59 Thai baht from 32.66 baht, while it rose to 44.73 Philippine pesos from 44.67 pesos and to 1,070.45 South Korean won from 1,068.06 won. l
Ferrari returns to turbo as supercar makers face up to emissions rules n Reuters, Geneva Italy's Ferrari has mounted a turbocharged engine on its latest supercar for the first time in more than two decades, as even luxury automakers are forced to seek ways to cut emissions without sacrificing performance. The California T, which will debut at the Geneva auto show this week, will be equipped with an eight-cylinder engine that Ferrari says will consume 15% less fuel than its naturally-aspirated predecessor, reducing carbon dioxide emissions to 250 grams per kilometer (g/km) from 299. By pumping air into the cylinders, turbochargers get more power from a smaller engine, sometimes at the price of sluggish initial acceleration. Naturally aspirated engines, which instead draw in air through a valve, can deliver more consistent torque and a bigger engine sound. Unlike holdout Lamborghini and its naturally aspirated 5.2-litre Huracan on show in Geneva, Ferrari is breaking with tradition to offer its first turbo since the F40 coupe, sold between 1987 and 1992. The Fiat-owned sports car maker claims to have achieved "zero turbo lag" with new technology that adapts the torque curve to each gear change. "The California T ... is one of the results of significant investment in
product and technological innovation," Chairman Luca di Montezemolo said last month. The new model can accelerate from 0 to 100 km/h in 3.6 seconds, Ferrari said, 0.2 seconds faster than the 2012 California. Pricing has not been disclosed, although it is not expected to be significantly higher than the tag of around 185,000 euros ($255,500) on the last California. The Italian carmaker also said it had modified the car's exhaust to enhance engine noise, offsetting the turbo's muffling effect.
More efficient
Fans of Ferrari - ranked the world's most powerful brand last month by consultancy Brand Finance - are optimistic. Joe Adams, president of the Ferrari Club of America, said his members were excited about the prospect of getting more efficient horsepower and better fuel mileage out of the cars. "Ferrari needs to be able to show its technical prowess," said Adams, who has owned seven different Ferraris over the years. "Being green is just another challenge and that's something Ferrari relishes." The move by Ferrari coincides with the introduction this year of new Formula One rules requiring the use of tur-
The new car looks more like a younger brother to, rather than a distant relative of, the other vehicles in the current Ferrari range bocharged engines in the sport for the first time since 1988.
Fuel-efficiency improvements account for a large share of the 2bn euros
AFP
in planned research and development spending over five years, Ferrari has said.
The carmaker, which last year introduced its first hybrid, the 1 million euro LaFerrari, said its average CO2 emissions have already fallen 40% since 2007. While supercars will keep emitting more than small family cars, they need at least to show improvement, said Jay Nagley, managing director at Redspy, an automotive consultancy. "They don't want to look like dinosaurs," he said. Unlike Ferrari, Lamborghini is avoiding turbos for now and has no intention to pursue hybrids anytime soon. However, both technologies are readily available from parent Volkswagen should it choose to use them later. The Huracan LP 610-4 on show in Geneva is Lamborghini's successor to its bestselling Gallardo model, which ended production last year. The carbon fibre and aluminum car's 10-cylinder engine emits an average 290 g/km of CO2. "One thing that makes a Lamborghini so unique is the music that comes out of the exhaust pipes," said Nick Wirth, a fellow of Britain's Royal Academy of Engineering. "A turbocharged engine would make the orchestra a little bit quieter." However, Wirth believes it is only a matter of time before even the most exotic brands are forced to embrace turbos and hybrids to meet tightening emission rules. "Ultimately, everyone will have to move in that direction." l