Business
Dubai halts three-day drop, Kuwait continues rebound Page 22 France offers to pick up tab for young hires Page 23
THURSDAY, AUGUST 30, 2012
India GDP figures set to deepen gloom
Daikin to buy Goodman Global for $3.7 billion
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CHICAGO: In this Wednesday, April 4, 2012 photo, a worker at the Ford Stamping Plant moves a stack of Lincoln MKS body sides in Chicago Heights, Ill. The US economy grew at a 1.7 percent annual rate in the April-June 2012 quarter, boosted by slightly stronger consumer spending and greater imports. — AP
US Q2 growth revised up Pending home sales hit two-year high in July WASHINGTON: The US economy fared slightly better than initially thought in the second quarter but the pace of growth remained too slow to shut the door on further monetary easing from the Federal Reserve. Gross domestic product expanded at a 1.7 percent annual rate, the Commerce Depar tment said on Wednesday, as stronger export growth offset a pull-back in restocking by businesses wary of sluggish domestic demand. That was up from the government’s initial estimate of 1.5 percent growth released last month and in line with economists’ expectations. The economy grew at a 2.0 percent pace in the January-March period. A second report showed contracts to buy previously owned homes in July rose to their highest level since April 2010, suggesting the housing market recovery was gaining traction. While the composition of economic activity was fairly favorable, growth remains well below the 2 to 2.5 percent rate required every quarter to hold the unemployment rate steady, which could compel policymakers at the U.S. central bank to offer additional stimulus at their Sept. 1213 meeting. “It shows slightly better government spending and consumer spending but overall the data suggest the economy stays in slow growth mode and is not likely to change,” said
Peter Cardillo, chief market economist at Rockwell Global Capital in New York. “This certainly strengthens the hand of the Fed to aid the economy.” US stocks were little changed on the data, but Treasury debt prices fell. The dollar rose against a basket of currencies. Speculation the Fed would loosen policy further had been dampened by a pick-up in job growth and a rebound in retail sales in July but other data on business spending and inflation supported more action. Fed Chairman Ben Bernanke could offer more clarity on the near-term outlook for monetary policy when he gives a speech at the Kansas City Fed’s high-profile gathering in Jackson Hole, Wyoming at the end of the week. The jobless rate rose to 8.3 percent in July from 8.2 percent the prior month. The weak economy could be a stumbling block to President Barack Obama’s quest for a second term in November elections. Second-quarter economic growth was revised up to show strong export growth, despite slowing global demand. Import growth was the smallest in a year. Trade contributed 0.32 percentage point to GDP growth instead of subtracting a third of a percentage point, as previously reported. That helped to offset the drag from inventories. Business inventories increased $49.9 billion instead of $66.3 billion and subtracted 0.23 percentage point from
GDP growth in the April-June period. However, the careful management of stocks can be a boost to the economy in the third quarter. Excluding inventories, GDP rose at a 2.0 percent rate rather than 1.2 percent. In the first quarter, final sales of goods and services produced in the United States increased at a 2.4 percent pace. There were also upward revisions to growth in consumer spending, which was bumped up to a 1.7 percent pace from the previously reported 1.5 percent. That was a step-down from the 2.4 percent pace recorded in the first quarter, however. The revision to consumer spending was to account for stronger growth in services than previously thought. Investment in construction of nonresidential structures was stronger than previously reported. But growth in business investment in equipment and software was lowered to a 4.7 percent pace, the slowest since the third quarter of 2009, from 7.2 percent previously. Growth in spending by businesses on equipment and software has slowed sharply from a peak of 18.3 percent in the third quarter of last year. That appears to have intensified early this quarter, with a measure of business spending plans falling sharply in July. The pullback likely reflects worries of deep government spending cuts and higher taxes scheduled to kick in at the start of 2013, as well as troubles from the debt crisis in Europe.
British deputy PM calls for emergency tax on super rich LONDON: Rich Britons should face a temporary tax hike to help Britain out of its stubborn recession, Deputy Prime Minister Nick Clegg said in an interview published yesterday. Clegg, who leads the Liberal Democrats-the junior partner in a coalition with Prime Minister David Cameron’s Conservatives-told the Guardian newspaper the super-rich should do more to help Britain out of “economic war”. Britain fell back into recession at the end of 2011 after climbing out of a deep downturn in late 2009. The coalition has introduced steep austerity cuts since it came to power in 2010 in a bid to shrink its massive deficit, while Britain continues to suffer the ongoing fallout from the crisis in the eurozone, a key trading partner. “If we are going to ask people for more sacri-
fices over a longer period of time, a longer period of belt tightening as a country, then we just have to make sure that people see it is being done as fairly and as progressively as possible,” Clegg said. “If we want to remain cohesive and prosperous as a society, people of very considerable personal wealth have got to make a bit of an extra contribution.” Figures released last Friday showed that British gross domestic product (GDP) shrank 0.5 percent between April and June compared with the first quarter. The centrist Liberal Democrats have previously campaigned for a “mansion tax” on properties worth more than £2 million ($3.2 million, 2.5 million euros). But Clegg’s political foes point out that he backed Britain’s last budget in March, which introduced tax reductions for top earners.
“He talks about a tax on the wealthiest, but he voted for the tax cut for millionaires in (finance minister) George Osborne’s budget,” said Chris Leslie, treasury spokesman for the opposition Labour party. Clegg’s proposal appears to indicate a fresh bid to differentiate the Lib Dems’ economic policies from those of the Conservatives. The two parties have fallen out in recent months on policies ranging from Europe to constitutional reform. Senior Conservative lawmaker Bernard Jenkin attacked the plan, saying it could “strangle the goose that lays the golden egg”. “If you go on raising tax on rich people-and that’s why, in agreement with Nick Clegg we have had to cut the top rate of tax from 50p to 45p-you drive wealth abroad,” Jenkin told BBC radio. — AFP
“There’s no question that as we look toward the end of the year and the risk presented by federal spending cuts and tax increases, the economy remains in a vulnerable window,” said Jim Baird, chief investment strategist at Plante Moran Financial Advisors in Kalamazoo, Michigan. The report also showed that after-tax corporate profits rose at a 1.1 percent rate after sinking 8.6 percent in the first quarter. Growth in spending on homebuilding was cut to an 8.9 percent rate from 9.7 percent. Still, the housing market is on a rebound, with home construction, sales and prices firming in recent months. “While the level of housing activity remains depressed, housing has turned the corner,” said Fred Dickson, chief market strategist at D.A. Davidson & Co in Lake Oswego, Oregon. Although government spending declined in the second quarter, the drop was not as deep as previously reported. Defense outlays fell at a 0.1 percent rate instead of 0.4 percent. Despite consumer spending being bumped up, inflation pressures remained muted in the second quarter. A price index for personal spending rose at an unrevised 0.7 percent rate, the slowest pace since the second quarter of 2010. It rose 2.5 percent in the first quarter. A core measure that strips out food and energy costs advanced at an unrevised 1.8 percent pace, slowing down from 2.2 percent in the prior quarter. — Reuters
Qtel to offer KD 2.6 per share for remaining Wataniya stake KUWAIT: National Mobile Tele-communications Company KSC ( Wataniya Telecom) announced that the board of directors of Wataniya Telecom has decided that the offer made by Qatar Telecom (Qtel) Q.S.C’s (Qtel) for the acquisition of all Wataniya Telecom shares not currently owned by Qtel, at KD 2.600 per share is appropriate to shareholders that are interested in accepting the offer and selling their Wataniya Telecom shares; based on the report of the independent Investment Advisor (Protiviti - member of Protiviti Inc., a global consulting firm. Wataniya Management has
endorsed the findings of the report and agreed that the offer is fair. Qtel received approval of its Offer Document from the Kuwait Capital Markets Authorityon 15 August 2012. The Offer Document and other related documents are available for review on the websites of Wataniya Telecom at www.wataniya.com and Qtel at www.qtel.qa until the end of the offer period, which will start on 4 September 2012 and conclude on 4 October 2012. A copy of the independent report is available for the review of Wataniya Telecom’s shareholders at Wataniya Telecom’s head office.