Tag Archives: contraction

Flu seen prolonging, deepening recession

uk.reuters.com

Flu seen prolonging, deepening recession

LONDON  – The H1N1 flu pandemic is likely to push Britain into a longer and deeper recession because of its potential impact on consumer spending and travel, a consultancy and a business association estimated on Friday.

The total cost of the flu outbreak for Britain was likely to be around 5 percent of GDP, on top of the impact of the worst financial crisis to hit the country in decades, a report from consultants at Oxford Economics said.

This view was broadly shared by the Federation of Small Businesses, which said the pandemic could force 120,000 small businesses to suspend operations.

“We’re expecting the cost to the whole economy of 3 percent of GDP,” said the organisation’s spokesman Stephen Alambritis, who predicted disruption from cancelled meetings, suspended travel and parents staying home to care for sick children.

“The cost of absence at work is the main cost that has to be met by businesses, and that’s up to about 900,000 pounds a day,” he said. “We’re expecting the impact to start in September, but the worst will be the last quarter of this year.”

Britain has Europe’s highest death toll to date from disease, with 29 fatalities since the virus emerged in Mexico in April, and the World Health Organisation said 431 people had died globally as of early July.

British health officials are initially planning for up to 30 percent of the population to fall ill, with up to 12 percent of the workforce absent at once.

Both Alambritis and Oxford Economics said the pandemic’s most severe impact would occur in the last three months of 2009.

Even without the impact of the pandemic, Britain is facing its deepest recession since World War Two — earlier this week, the International Monetary Fund forecast a GDP contraction of 4.2 percent for Britain this year, with 0.2 percent growth in 2010.

Marie Diron, author of the Oxford Economics report, said she expected the pandemic to cause the economy to contract by an extra 1 percentage point this year, and a total loss of 5 percent of output during the six months of the pandemic.

This estimate assumes 30 percent of people worldwide and in Britain are infected, of whom 4 in every 1,000 will die, and that the economy will be affected in a similar way to how SARS hit east Asia in 2003.

But given the fragility of the world economy because of the financial crisis, Diron said there was a risk the pandemic could tip Britain’s economy into a downward deflationary spiral, potentially causing the economy to shrink 7.5 percent next year.

“(In) the worst-case scenario, recovery is postponed by three to four years,” she told Reuters, adding that between 2010 and 2012 consumer prices would fall due to cutbacks in spending.

Flu, Flu news, Flu world, Flu sport, Flu technology, Flu us, Flu malaysia, Flu Flu, Flu entertaiment, Flu video, Flu photo, Flu bf1,  world news, sport news, technology news, us news, malaysia news, Flu news, entertaiment news , video news, photo news, bf1 news, news, world, sport, technology, us, malaysia, Flu, entertaiment, video, photo, bf1, news channel, news web, news gallery, news space, channel news, channel, web news, web, gallery news, gallery, gay news, lesbian news, french news, japan news, thai news, vietnam news, nasa news, nasa, Flu, Flu news, korea news, un news, un, middle east news, bf1 news, deadline, deadline news, free news, newspaper, news paper, healine news, headline, interantional, international news

China Q2 growth quickens

uk.reuters.com

China Q2 growth quickens

BEIJING  – China’s economy gathered momentum in the second quarter thanks to massive fiscal and monetary stimulus, leaving the government’s full-year growth target of 8 percent within reach.

Annual gross domestic product growth accelerated in the second quarter to 7.9 percent, up from 6.1 percent in the first quarter, making China the best-performing major economy in the world. Economists polled by Reuters had forecast 7.5 percent.

A string of accompanying data for June from the National Bureau of Statistics depicted an economy successfully making up for a slump in exports through domestic demand, both investment and consumption, generated by a 4 trillion yuan (357 billion pound) pump-priming package and record bank lending.

“It’s very encouraging, the 8 percent growth target is in sight,” said Daniel Soh, economist at Forecast in Singapore.

“It’s by now clear that the fiscal stimulus package has offset the contraction in export activity.

The statistics office, however, offered a word of caution, saying a lasting recovery was not yet secure.

“The base for recovery is still weak. Growth momentum is unstable. The recovery pattern is unbalanced and thus there are still uncertain and volatile factors in the recovery process.”

Investment in fixed assets in urban areas grew 33.6 percent in the first half, up from 32.9 percent in the first five months, while industrial production growth quickened to 10.7 percent in the year to June from 8.9 percent in the 12 months to May and beating analysts’ forecast of 9.4 percent growth.

Retail sales, a rough proxy for consumption, rose 15.0 percent in June from a year earlier after May’s 15.2 percent increase.

Economists said the data gave Beijing every chance of achieving 8 percent growth for all of 2009 — the minimum deemed necessary to hold down unemployment, and the rate forecast by economists polled by Reuters last week.

Europe’s biggest bank, HSBC Holdings raised its 2009 growth forecast for China to 8.1 percent from 7.8 percent after the data. It also revised its 2010 forecast to 9.5 percent from 8.5 percent.

A few months ago, in the depths of the global recession, such strong growth appeared fanciful to many China-watchers.

Now, the central bank, nervous at the record pace of bank lending, has begun to tap gently on the monetary brakes, selling more of its paper to soak up cash and nudging up money market rates.

But economists believe the political imperative of putting growth on a solid footing is so great that the central bank will not threaten the recovery by raising interest rates any time soon.

Moreover, the depressed growth rates of late 2008 will offer an increasingly favourable base of comparison as this year wears on. As a result, GDP growth in the second half is likely to be higher than the 7.1 percent first-half rate reported on Thursday.

Unlike developed countries, China does not yet publish quarter-on-quarter GDP data, which give a better sense of current momentum than year-on-year growth rates.

But most banks produce their own estimates, and they show China building up a strong head of steam in the second quarter.

Goldman Sachs had forecast 7.8 percent second-quarter growth, which it said translated into 16 percent compared with the first quarter when expressed as a seasonally adjusted annualised rate.

growth, growth news, growth world, growth sport, growth technology, growth us, growth malaysia, growth growth, growth entertaiment, growth video, growth photo, growth bf1,  world news, sport news, technology news, us news, malaysia news, growth news, entertaiment news , video news, photo news, bf1 news, news, world, sport, technology, us, malaysia, growth, entertaiment, video, photo, bf1, news channel, news web, news gallery, news space, channel news, channel, web news, web, gallery news, gallery, gay news, lesbian news, french news, growth news, thai news, vietnam news, growthnews, nasa, growth, growth news, korea news, un news, un, middle east news, bf1 news, deadline, deadline news, free news, newspaper, news paper, healine news, headline, interantional, international news