November 6, 2009 A Postcard from the Americas U.S.: Orange Juice Demand Rises in Swine Flu Season

Florida orange juice exports are up 24.3% on a season-to-date basis through October 3, 2009.

As winter creeps in through the U.S., concerns are being raised about another possible deadly outbreak of swine flu. Travel companies shiver at the prospect, airlines fear a massive drop in passenger traffic, and pharmaceutical companies are hoping to be boosted by the expected surge in demand for swine flu vaccines. The possible pandemic is being endlessly debated, with reams of newspaper print and online space already devoted to the topic. Yet beyond this, swine flu is impacting what seems an unlikely sector: orange juice.

With U.S. consumers guzzling down orange juice in copious amounts, hoping to keep swine flu at bay, the orange juice market finally has some reason to smile. Fear is of some value, it appears. With the flu season still in the incubation stage, demand for vitamin C-rich beverages and food is only expected to rise when winter sets in completely. And orange juice is selling. Retail sales of orange juice have just recorded their sixth consecutive month of increase this year. And the price of a pound of frozen, concentrated orange juice is up to $1.07 recently on the U.S, ICE Futures exchange, having already gained around 73% this year.

The rise on the Futures Exchange was triggered by an October 9th report by the U.S. Agriculture Department, forecasting that Florida, which is the second-biggest producer of oranges after Brazil, would see a drop of around 16% in crop output this year. The last time orange juice prices rose was when a series of hurricanes damaged crops, pushing prices up to a record $2.095 per pound back in March 2007. That also led orange juice manufacturers to hike retail prices for their products.

Concerns have been raised on the future of this $10 billion industry in Florida, which has been ravaged by the curiously-named citrus greening disease or yellow dragon disease, which has devastated orange trees even in Brazil. With no cure as of yet, these diseases, have significantly reduced citrus production in Florida, causing entire trees to wither and die within a few years of being infected.

But ironically, swine flu, another disease, has emerged as an unexpected savior for a struggling Florida. And the Florida Juice Industry is cashing in as much as it can. “Support your immune system,” their website proclaims in an obvious reference to the swine flu. During these times, when companies are hard pressed to drive up demand in a recessionary market, anything that sells, no matter the reason, helps. Oranges and swine flu may be an odd combination, but this recession has taught us, if nothing else, that unusual alliances may just be what the doctor has ordered.

November 13, 2009 A Postcard from Europe Spain: What Ails the Aeronautical Industry?

Spain has significant aerospace clusters in cities like Madrid, Andalusia, Catalonia, and the Basque country to name a few.

Bailouts are not new. In fact, during the global meltdown of 2008, bailout was the catch phrase of the moment, invoking the reality of the financial crisis in the minds of many Americans. Since then, most major government’s have offered bailouts in some form or the other. Spain itself has been reeling in the aftermath of the meltdown, having entered its first recession in 15 years. The recent financial crisis has only exacerabated an ongoing correction in the construction sector. Yet, Spain’s new $5.50 billion bailout offered to its aeronautical industry comes at a time when many governments across the world are pondering withdrawing stimulus measures in the wake of positive economic data.

Although many associate Spain with olive oil exports and tourism, Spain’s aeronautical industry is fifth in Europe in terms of turnover and employment, with at least 34,000 people directly involved in the sector. With the industry posting steady growth of at least 12% in the decade from 1998 to 2007, the Spanish aeronautical market is clearly crucial in the government’s plan to revive the country’s economy. Industry turnover even in the last year totaled nearly $7.6 billion, an increase of around 25% over the previous year. Yet, with air travel dipping substanially over the past year, weary consumers have cut back on travel. With this, airlines have struggled to stay afloat, spurring a drop in aircraft demand and widespread cancellations of new orders. Spain is expected to see a year-on-year decrease in traffic of 8% in 2009 with almost all major market segments operating fewer flights than last year. The Spanish aeronautical industry has felt this aftershock.

It is a situation that is enough of a concern to the government, that a stimulus has been launched this late into the recession. The $5.50 billion aid package will be distributed between next year and 2014 towards what the Ministry of Industry, Tourism, and Trade has said will boost the ‘development of new products and maintain demand as well as aid work in Spain.’ Christened the new “Aerospace Sector Strategic Plan” or SPFS, the government is hoping that the intitiative will just be the trigger that will enhance the industry’s competitiveness. For example, the Spanish division of Airbus will receive a $748 million injection from this stimulus package to further its development of the A350 XWB model. Spain began developing expertise in carbon fiber composites decades ago and the country’s extensive research on carbon fiber is beginning to pay off. The A350 XWB model will be the first commercial aircraft to be made extensively with carbon fiber.

Decades ago, in 1919, when Juan de la Cierva flew the world’s first stable rotary-wing aircraft, few imagined that it would become the forerunner of today’s helicoper. That set a trend that has made Spain one of the leaders in technological innovation. Now the industry itself lies challenged. Much of the debris from last year’s financial wreckage has been clearing, but Spain’s aeronautical sector still has miles to go before it can fly again.

November 20, 2009 A Postcard from the Middle East Israel: Start-ups Spur Economy

In 2008, over $2 billion in capital was invested in over 480 Israeli high-tech companies, an increase of 18% year-on-year with 50% of the funds coming from investors in the U.S.

The Internet is a dazzling web of innovation. There are sites that emphasize collaborative processes, sites that promise intelligent mobile and video commerce platforms, and others that recommend movies, and provide peer-to-peer sharing. There are sites that offer virtual worlds to escape to and sites that offer social networking marketing solutions.

New sites such as these and more are flourishing on the Internet, surprising seasoned technology pros with their depth of innovation, creativity and promise. And these start-ups are not being launched in the heart of Silicon Valley, not in the U.S., and not from the IT boomcity of Bangalore, India or even the financial hub of Shanghai. These start-ups are coming from Israel - a country with a population of just around seven million, almost constantly at war, and with almost negligible natural resources. Israel has more companies listed on the NASDAQ than any other country outside the U.S. How did Israel manage to achieve such high-end expertise in a way that economic powerhouses like India, China or South Korea have not?

Israel is known for its R&D but it might well surprise Americans that the country has the largest number of high-tech startups in absolute terms after the U.S. The land of milk and honey is also the land of venture capital start-ups. It is estimated that there is one start-up for every 1,844 Israelis. At a time when the U.S. is grappling with a decade-high unemployment rate and a stuttering economic revival, Israel has shown that technological expertise and innovation can chart new paths. The country attracts twice as much venture capital investment than the U.S., and almost 30 times more than Europe. There are lessons to be learned in Israel’s success – entrepreunership has its place, despite a recession. How does Israel breed so many of these successes?

Truly, Israel is undergoing one of its worst financial challenges ever. In 2008, Israel looked as if its boat was steady enough to navigate the choppy waters of the financial crisis. Its GDP rose 4% last year after five years of unprecedented growth. But things changed in the fourth quarter when the economy screeched to a halt. Industrial production fell 1% in the last two months of 2008 while retail sales tumbled 2%. The once flourishing high-tech industry, which accounted for more than 40% of Israel’s $40.1 billion in export sales in 2008, has taken a beating. What’s more, unemployment has been rising continuously, standing at 6.8% in January and expected to top 8% by the end of this year.

The answers are varied. A new book hypothesizes that Israel’s culture is wired towards thinking anew, and to thinking for the future. A nation that is almost constantly battling political crises has bred a people who are aware of a shifting present, and of a need for improvement in the future. The country’s military regimen also inculcates Israeli youth with such values as teamwork, communication and improvisation, apart from imparting mental toughness.

And the country’s isolation – surrounded as it is by political enemies – has meant that industry has had to adapt despite these barriers. In place of large, manufacturing industries with attached high shipping costs, Israeli investors and entreprenuers have started to develop smaller components and products, especially software.

Being cut-off from its land boundaries, Israel developed instead one of the most extensive and penetrative Internet networks in the world. Adversity has meant that Tel Aviv is a buzz of ideas, offering a springboard to creativity. Israelis have exported their minds in the absence of natural resources – and today, the world is learning from these skilled innovators. Take for example, one of Israel’s most path-breaking ideas – to create a world of that runs without oil using electric cars that can be easily recharged. Amazing as that idea sounds, an Israeli start-up is actively researching and developing a viable idea that may help to eventually wean Israel off its dependence on oil in the next ten years. The project includes developing a national network of battery exchange stations – where customers with an electric car can drive in, replace their weakened battery, and drive off in minutes with a new one, thus eliminating the long hours of charging that remains a major drawback of electric car technology.

The next time one sees a cutting-edge website that creates new waves in this dynamic and competitive Internet industry, chances are the portal was launched in Israel. If there is a new idea that changes the way the world thinks, chances are that spark of innovation came from Israel. And chances are that the next start-up one encounters may likely be Israeli. America and the rest of the world may find some surprising answers in this remarkably resilient nation.

November 27, 2009 A Postcard from the Asia Pacific New Zealand: Vaults over Denmark as the Least Corrupt Nation

Business confidence in New Zealand is rising, hitting a 10-year high as the country continues to rebuild from the global recession

New Zealand has become accustomed to being overshadowed by its larger neighbor – Australia. Often dwarfed in terms of size and importance, New Zealand has played traditional rival to Australia but has rarely, if ever, upstaged its Aussie counterpart. So it may come as a bit of a surprise to Australians that New Zealand has recently been ranked as the least corrupt country in the world by Transparency International, overtaking Denmark in the process.

Transparency International’s annual Corruption Perceptions Index (CPI) reflects the perceived level of public-sector corruption in a country. The index is essentially what Transparency International terms as a ‘survey of surveys,’ taken from as many as 180 countries and territories around the world. This year, New Zealand pole-vaulted its way to the top after a second place finish last year with a CPI score of 9.4. Australia dropped to eighth position in the table, mirroring the heavy bureaucracy in the country. The U.S., struggling in the aftermath of the 2008 financial crisis, slipped to the 19th slot, with a score of 7.5.

Upon the release of the 2009 Index, Transparency International’s Chair, Huguette Labelle, commented that “stemming corruption requires strong oversight by parliaments, a well performing judiciary, independent and properly resourced audit and anti-corruption agencies, vigorous law enforcement, transparency in public budgets, revenue and aid flows, as well as space for independent media and a vibrant civil society.”

Against the backdrop of these rigorous criteria, what has New Zealand done to earn such high marks? Simply told, the country has emerged as a safe environment for offshore investment. Despite slipping into a recession, the country did remarkably well in fighting the onslaught of a global slowdown. New Zealand has had a politically stable government and well-performing public sector institutions. Housing prices have been on the rise, tourism has been on an upswing, and the government has succeeded in attracting a high level of trust among investors. The country also boasts a State Services Commission that monitors the Standards of Integrity and Conduct, a strict code of conduct implemented in November 2007 to replace the old Public Service Code of Conduct.

New Zealand may have well climbed out of recession but it is a common adage that getting to the top is easier than staying there. As the Commissioner of the Standards of Integrity and Conduct code observed, the country did not arrive at the top spot through complacency. And now, more than ever, the country can least afford to be complacent. Trust is a fragile virtue and ethical behavior even more so. New Zealand would do well to guard both.

ASIA PACIFIC: ECONOMIC REVIEW NOVEMBER 2009

At the start of Asia-Pacific Economic Cooperation (APEC) summit, attention was focused toward the region and its ability to pull the world out of recession. It was a view that was supported by the International Monetary Fund (IMF), which projected Asia will grow at a rate of 2.75% this year and as much as 5.75% in 2010, even as the U.S. and Western Europe struggle with anemic or flat growth. At the conclusion of the gathering, the APEC leaders also promised to make it easier and faster to do business in the region by 2015.

Although Australia became the only nation in the region to raise interest rates for the second consecutive month, almost all other central banks kept their benchmark interest rates unchanged, even as the IMF warned that Asian economies may need to continue such monetary policy support until the recovery is strong and sustainable.

For the month ending November 15, MSCI Asia-Pacific Index marginally rose 1.66%.

Japan: Second straight quarter of expansion

The world’s second-largest economy appeared to be battling its way out of a prolonged recession when third quarter gross domestic product (GDP) results showed that the economy expanded 1.2% from the second quarter or at an annual rate of 4.8%. Domestic demand contributed almost half to the spurt in GDP, a clear result of the stimulus program that former Prime Minister Taro Aso pushed into place.

The various stimulus packages that are already underway in different countries have boosted demand for Japan’s exports, which also rose 6.4% for the same period from the previous three months. Imports climbed as well, increasing 3.4%, primarily led by oil and natural gas, reflecting the slow improvement in the country’s economy.

Adding to the green shoots of recovery in the land of the rising sun, machinery orders, a key indicator of the health of the economy, rose 10.5% in September over a month earlier. Year-on-year, orders were still weak, dropping 22%. While industrial production also rose 1.4% in September compared to the previous month, there are still signs of weakness when compared to year ago figures, which showed an 18.9% drop. Despite the jump in GDP and other positive indicators, Japanese Prime Minister Yukio Hatoyama commented that the economic situation remains ‘worrisome’ and has indicated that an amended budget may be needed to sustain the recovery. The economy also continues to be in the grip of deflation and the Bank of Japan has promised to maintain its accommodative monetary stance for as long as necessary.

For the month ending November 15, the MSCI Japan Index tumbled 1.95%, continuing its downward trend from the previous month’s 1.15% slide.

China: Industrial production and retail sales record growth

While developed economies struggle to emerge from a debilitating recession, China’s economy continues to leap and surge ahead. Data released from the National Bureau of Statistics shows that industrial production expanded by 16.1% in October over a year earlier, prompting the Bureau to express confidence that the Chinese economy would meet its 8% growth target this year. The 8% growth rate is considered the rate at which China needs to grow in order to keep unemployment levels down as its population grows.

Although much of China’s growth has been dependent on its export sector, there have been encouraging signs that domestic consumers may soon begin to contribute their share to the economy. Retail sales climbed 16.2% year-on-year in October to $171 billion. The country’s rural sector continued to boost retail sales, along with expected growth in China’s burgeoning property and automotive sectors. Meanwhile, the Consumer Price Index or CPI was down 0.5% for October over a year earlier. Foreign direct investment or FDI was up 5.7% year-on-year to $7.1 billion, slightly slower than the 18.9% rise recorded in September. Investors are clearly hoping that China’s economy, which expanded 8.9% in the third quarter of this year, will continue on its upward trajectory.

The FDI inflows were also boosted by speculation about China’s currency appreciation and a projected boom in the real estate market as the economy recovers and strengthens. The yuan has been pegged at 6.83 against the dollar, despite the U.S. urging to allow the yuan to appreciate. The dispute cast a pall on U.S. President Barack Obama’s first Asian visit since he took over as president earlier this year. China has thus far desisted calls for the currency to appreciate even as the dollar weakens, stating that such policies were not conducive or fair in the ongoing global economic recovery. The Chinese government also feels that a weaker dollar would make the U.S. more competitive. Chinese exports have still struggled to regain their pre-recession luster, with October shipments dropping 13.8% in October over a year earlier, the 12th consecutive month of decline.

The MSCI China Index surged 4.92% for the month ending November 15, an improvement over the 7.52% rise the previous month.

India: Inflation rises while export decline slows

Accelerating inflation continues to remain a cause of concern for the Indian economy as inflation as measured by the Wholesale Price Index (WPI) shot up 1.35% in October over a year earlier, almost doubling from September’s 0.5% gain. Despite facing a looming budget deficit that is estimated to reach as high as 6.8% of the GDP, the Indian government has indicated that it would not remove stimulus measures in place until the economic recovery stands firm. Still, India’s benchmark index, the Sensex, has reacted with jitters, fearing the government might consider revising some of its measures. In response, Indian Finance Minister Pranab Mukherjee was prompted to assure Corporate India that these economy-rejuvenating measures, which included cuts in factory duties, would remain in place for the time being. The Minister is expecting the Indian economy to grow 6% to 7% in the fiscal year ending March 2010. No doubt, he has been encouraged by recent October export figures, which showed that the steep drop in overseas shipments precipitated by the global recession may be slowing. Exports for the month of October were down 11.4% year-on-year to $12.5 billion, the smallest decline in the past 10 months. In comparison, September exports had slid 13.8%.

Advocates of the green shoots of recovery would also be heartened by the Index of Industrial Production (IIP), which rose 9.1% from a year earlier in October, slower though than an 11% expansion in September.

The MSCI India Index climbed 8.17% for the month ending November 15, continuing on its good run when it recorded a rise of 5.66% for the month ending September 15.

South Korea: GDP rises by 2.9% in third quarter

Cushioned by a 2.9% rise in GDP in the third quarter compared to the previous one, South Korea’s consumer confidence as measured by the Sentiment Index rose to its highest level in almost seven years in October. The government expressed surprise over the third quarter results, commenting that it is now hoping for full-year growth this year.

As expected, the Bank of Korea kept its benchmark interest rate again unchanged at a historic low of 2% in November. The central bank is expected to keep interest rates steady at least until next year in a bid to support the nascent revival in the Korean economy. The Bank observed that although exports, domestic demand and production have all increased recently, there still remained a degree of uncertainty about the sustainability of economic growth, and stressed that the bank’s accommodative policy stance would continue for some more time.

Consumer prices have remained stable over the past few months, allowing the bank more flexibility. Prices rose 2% in October over a year earlier, led by an increase in prices in the service and agricultural sectors. This was a slight drop from a 2.2% spike in September, which was due mainly to declining oil prices.

The MSCI South Korea Index marginally rose 1.83% for the month ending November 15, after a similar marginal rise of 0.7% for the previous month.

Australia and New Zealand: RBA raises GDP forecast; New Zealand housing prices rise

The Reserve Bank of Australia tripled the country’s growth forecast for 2009, stating that the economy is growing much faster than expected. The central bank raised its target for this year from 0.5% to 1.75%, and from 2.25% to 3.25% for next year. "Although consumption growth has moderated relative to the first half of 2009, following the end of the fiscal payments to households, spending appears to have been relatively resilient,” the bank wrote. The RBA commented that it expects Australia’s growth to be determined particularly by demand for its main resources of coal and iron ore from India and China, Asia’s powerhouse economies. Expressing confidence in a reviving Australian economy, the RBA remains one of the most aggressive central banks in raising interest rates. At its monthly policy meeting in November, the RBA decided to hike the cash rate by 25 basis points to 3.5%, stating that the global economy had resumed its growth.

Retail sales, meanwhile, unexpectedly fell by a seasonally adjusted 0.2% in September against a revised 0.7% rise the previous month. Australian inflation as measured by the CPI climbed 1.3% in September over a year earlier.

In its November Financial Stability Report, the New Zealand central bank followed its Australian counterpart by expressing confidence that the New Zealand economy and indeed the global economic outlook had improved over the past six months. “Financial market strains have eased, equity markets have mounted a recovery and confidence has improved. Economic forecasts are now tending to be revised upwards rather than downwards. However, global recovery has been fuelled by stimulatory fiscal and monetary policy settings which cannot be kept in place forever. Also, the global banking system remains vulnerable to further shocks,” the Bank observed.

The central bank also cautioned that an appreciating New Zealand dollar might hinder the country’s external balance. Underlying a gradual recovery in consumer confidence, retail sales rose for the second quarter in a row with a marginal increase of 0.1% in the third quarter. Housing prices also increased in October amidst expectations that mounting consumer confidence, which hit a 22-month high in October, would lead to an upsurge in the real estate market.

The MSCI Australia Index registered a rise of 4.92% for the month ending November 15, improving on last month’s 6.69% rise. The MSCI New Zealand Index, on the other hand, declined 0.39% for the same period after having climbed 1.94% for the month ending October 15.

Indonesia and Philippines: Bank Indonesia keeps interest rate steady; Philippines export slump eases

Bank Indonesia, the country’s central bank, kept its benchmark interest rate steady at a low of 6.5% for the third consecutive month in November. The bank has indicated that it may maintain interest rates unchanged for the rest of the year, but it may consider a rise in 2010 keeping in mind increasing inflationary pressures. Annual inflation slid to a low of 2.5% in October, allowing the central bank more room to accommodate its flexible monetary policy. Bank Indonesia forecasts the domestic economy will expand 4.3% this year and 5.5% next year.

Indeed, third quarter GDP figures were encouraging, with Southeast Asia’s largest economy accelerating at a pace of 4.2% annually. Quarter-on-quarter, the GDP increased 3.9% in the third quarter, with almost all economic sectors contributing to the rise. Indonesia has continued to recover well from the global recession. Barring the threat of inflation, the country remains poised for growth considering its healthy external payments situation, and a stable political outlook. Consumer confidence remains high with many Indonesians upbeat that President Yudhoyono, who began a second term in office, will be able to launch reforms, and fast-track infrastructure and development programs.

Meanwhile, in the Philippines, exports tumbled 18.3% year-on-year to $3.63 billion in September, precipitated by a slump in demand for electronics. The National Statistics Office, however, said that the export slump appears to be abating as overseas shipments actually gained 4.6% when compared to the previous month of August. Overseas remittances, one of the major contributors to the Philippines GDP, grew 8.6% in September over a year ago. The central bank commented that it expected overseas remittances to grow around 4% this year, which will help offset the impact of the devastating typhoons that swept through Manila and other parts of the country in the past one month or so. The bank has been doing its best to stimulate growth by keeping the benchmark interest rate unchanged at 4%, noting that current levels are appropriate to maintain growth. The World Bank recently upped its growth forecast for the Philippines economy, stating in a report that it would grow at around 1.4% this year. The World Bank criticized what it termed the ‘weak influences’ that may hinder economic growth in the Philippines in the years to come, citing dismal infrastructure in the energy and transport sector as well as a weak investment climate.

The MSCI Indonesia Index ascended 4.65% for the month ending November 15, dipping slightly from the previous month’s 5.85% rise. For the month ending November 15, the MSCI Philippines Index climbed 6.29%, a slight decline from the previous month’s performance when it had risen 7.11%.

Thailand: Central bank raises growth forecast

Following other banks in the region, the Thai central bank also raised its growth forecast for Thailand. GDP is now expected to shrink 2.5% to 3.5% this year, less than its previously forecasted 4.5% contraction. Although exports fell the least in September, the central bank said that it expects exports to drop around 13% this year before registering growth of around 10% to 15% next year. Inflation is anticipated to be in the range of around 0.5% to 1.5%. However, for the first time this year, inflation inched up 0.4% year-on-year in October, led by a rise in price in the food and beverage sector. In the first ten months of 2009, consumer prices dropped 1.5%, mainly from a fall in oil prices.

Facing constant pressure from opponents to his rule in Thailand, Prime Minister Abhisit Vejjajiva indicated that he may call for an early election once the economy stabilizes. His term ends in late 2011 but calling for early balloting may help end the churn of political instability that Bangkok has been facing of late.

For the month ending November 15, the MSCI Thailand Index rose 1.91% after an encouraging rise of 3.02% for the previous month ending October 15.

Hong Kong: GDP slows as exports remain weak

Economic growth in Hong Kong remained subdued in the third quarter, with GDP rising by just 0.4%, a drop from a 3.5% expansion the previous quarter. Despite robust domestic consumption, ongoing weakness in the export sector pulled growth down.

Although the figures dampened sentiment after the encouraging growth posted in the second quarter, the government believes that despite prevailing uncertainty in the global economic outlook, Hong Kong’s economy will contract by 3.3% this year, better than a previous forecast of 3.5% to 4.5%. Exports in the third quarter fell 13.2% from a year earlier, a larger drop than the second quarter's 12.4% decline.

Hong Kong’s jobless rate dipped to 5.2% in the August-October period, as business conditions rebounded and companies resumed hiring. Also, for the first time in almost seven months, retail sales surged 2.4% in September compared to the same period last year. Domestic tourism, one of the main drivers of retail sales, has shown consistent improvement and with the Christmas/New Year peak season looming ahead, Hong Kong retailers will perhaps have more reason to smile.

The MSCI Hong Kong Index marginally increased by 0.19% for the month ending November 15 after having registered an increase of 2.39% for the previous month.

Malaysia and Singapore: Central bank holds key interest rate in Malaysia; exports decline in Singapore

The Malaysian central bank kept interest rates steady at 2%, hoping to better stimulate growth in an economy that shrank in the first two quarters of this year. It is estimated that the economy will contract by around 3% this year.

In its most recent budget, the government moved to slash spending, aiming instead to reduce a ballooning fiscal deficit. Prime Minister Najib Razak said that although the Malaysian economy is expected to revive, the growth will be modest at around 2%. He indicated that a recent fuel subsidy, although popular with the population, is a massive drain on the state’s coffers, and may be withdrawn next year. Razak has repeatedly stressed that the downturn offers Malaysia an opportunity to adopt a new model that is based more on innovation, creativity and value-added activities. Among other ambitions, his goal is to increase domestic demand, making Malaysia more self-reliant. One way of increasing domestic demand is to provide consumers with increased spending power – and Najib offered exactly that by cutting income taxes for the second straight year.

Signs of a gradual recovery are permeating through the Asia-Pacific but in Singapore, exports unexpectedly declined in October. The country’s non-oil domestic exports plunged 6.1% for the month over a year earlier, after having fallen 7.3% the previous month as well. Singapore’s central bank has supported an economic revival in the tiny state by maintaining a zero appreciation stance in its monetary policy. The $182 billion economy is expected to have registered a modest growth of 0.8% in the third quarter compared to a year earlier, according to advance estimates. Retail sales also slumped 11.8% year-on-year in September, as automotive sales weakened. Still, there were a few positive notes, including tourism arrivals which climbed 7.1% in September and job losses which have eased.

For the month ending November 15, the MSCI Malaysia Index grew, 3.02% building on the 6.74%rise posted for the month ending October 15. The MSCI Singapore Index also climbed 4.47%, an improvement from the previous month’s 2.53% rise.

Pakistan: Terrorism strikes again

Pakistan continued to struggle with insurgency as terrorism wreaked almost daily havoc in the country. Although the Pakistan Army is engaged in a pitched battle with the Taliban, a wave of suicide bomb attacks have cast a pall of gloom on the struggling country. The attacks are having an impact, with jittery investors pulling money out of Pakistan. Foreign direct investment slumped by 60% in the three months to September.

However, South Asia’s second-largest economy breathed a sigh of relief when the latest data indicated that inflation, once the bane of the economy, slowed to a 22-month low in October. Consumer prices rose 8.87% from a year earlier in October, a decline from the 10.2% gain in the previous month. The central bank, which surprised the IMF by reducing the benchmark interest rate twice, has further room to cut rates as inflation for the first time in over a year has been lowered to single digits. The bank has said that it expects Pakistan’s economy to grow at around 3.3% in the fiscal year ending June 30, 2010. This is in sharp contrast to the forecast by the Asian Development Bank (ADB). The ADB slashed growth projections for Pakistan to 3% for the same period, noting that the economy continues to be jeopardized by the country’s uncertain security conditions.

The MSCI Pakistan Index declined 1.46% for the month ending November 15, declining after a 5.18% rise recorded in the previous month.

Taiwan: Inflation falls again

Taiwan’s CPI dropped for the ninth straight month in October despite higher oil prices. The Index fell 1.84% year-on-year in October compared to a 0.88% fall in September. The drop was attributed to a slump in vegetable prices, which collapsed 29.64% in the same period.

The country’s exports, meanwhile, fell the least in 13 months in October as demand increased for Taiwan’s main products like computer accessories and mobile phones. Overseas shipments slumped 4.7% in October over a year earlier, better than the 12.7% year-on-year drop recorded in September. This marked the smallest decline in exports since September last year and augurs well for the economy’s future. Current demand is being sustained from China as well as from the U.S., and Europe, as consumers begin to shop in earnest ahead of the Christmas season.

The MSCI Taiwan Index rose by 5.53% for the month ending November 15, after rising 1.83% for the month ending October 15.

Earmarks 'robust' in House $1T spending bill

A $1.1 trillion spending bill laced with budget increases and more than 5,000 congressional pet projects passed the House on Thursday amid criticism from Republicans and watchdog groups.

The package — which combines six annual spending bills into one — includes $447 billion in operating expenses, with an average increase of 10%, and more than $600 billion for Medicare and Medicaid.

It was approved 221 to 202 and now moves to the Senate. No House Republicans voted for the bill, and 28 Democrats broke with their party to oppose it.

"At a time when we have record deficits, the American people are concerned about the deficits and the increasing debt, and yet I'll guarantee you that we found a million here and a million there to fund somebody's little pork project in some state in America," House Minority Leader John Boehner of Ohio said.

Rep. Jim McGovern, D-Mass., called the bill "an opportunity to reverse years of neglect ... to our roads and bridges, neglect to our lower-income neighbors and friends, neglect to our education system, neglect to our veterans."

Projects, known as earmarks, are inserted into annual budget bills at the request of members. Stephen Ellis of Taxpayers for Common Sense said his organization identified 5,224 earmarks in the bill worth about $3.9 billion.

"They've given earmarks a haircut, a slight trim, but they are still there, and they are pretty robust," Ellis said.

Among the earmarks:

• Democratic Sens. Daniel Akaka and Daniel Inouye, both of Hawaii, secured $3.15 million for a Financial Education and Pre-Home Ownership Counseling Pilot Program in Hawaii.

Jesse Broder Van Dyke, an Akaka spokesman, said program grants will help identify successful methods of financial education and counseling services, and establish program models for others to deliver those services.

• Rep. Dan Lungren, R-Calif., secured $930,000 for maintaining exhibits at the Aerospace Museum of California in McClellan. "This is still part of the overall property that was essentially the Air Force base that was closed ... over a decade ago," Lungren said. "So this is part of the continuing process of making that whole area viable."

Lungren, who voted against the bill, said if all members gave up their earmarks he would do the same.

• Rep. Leonard Boswell, D-Iowa, secured $750,000 for the World Food Prize Foundation, which has undertaken a $29.8 million project to convert a century-old library in Des Moines into the Norman E. Borlaug Hall of Laureates.

The federal money would go toward educational exhibits on Borlaug, a Nobel Peace Prize winner, and his efforts to end world hunger, said Jane Slusark, a Boswell spokeswoman. "The World Food Prize's Hall of Laureates will teach our children and grandchildren about the state's deep rural roots and the great men and women who have contributed to feeding the world," Boswell said.

Ellis said he is not taking issue with these specific earmarks. He added, however, "I am sure there are millions of dollars that have been wasted in this legislation on these parochial projects."

Summit talks for Obama in Beijing

Barack Obama is set for a summit in Beijing with Chinese leader Hu Jintao, as he continues his first tour of Asia as US president.

Mr Obama will be given an official welcome in the Great Hall of the People, or parliament, and then have talks with the Chinese president.

Trade, climate change and economic issues are expected to dominate.

The two men have already met during the visit and had dinner together on Monday in the Chinese capital.

Mr Obama is also due to meet the chairman of the parliament, Wu Banguo, later on Tuesday and there will be a state banquet at the Great Hall.

In addition, the US leader, who is not being accompanied by his family on the tour, will fit in visits to the Forbidden City and the EU embassy.

He arrived by plane in the capital from Shanghai where he had addressed Chinese students, telling them that individual rights and freedoms should be available to all.

'Quite lively'

Mr Obama had told his audience that he was a "big supporter of non-censorship", and that unrestricted internet access was a "source of strength" that should be encouraged.

Communist China employs some of the tightest controls over internet content in the world.

Greeting his American guest in Beijing, President Hu noted Mr Obama's meeting with the students, calling it "quite lively".

Mr Obama smiled broadly as his host spoke, then told Mr Hu that the world recognised "the importance of the US-Chinese relationship" in tackling global problems.

During dinner on Monday, conversation centred upon the respective histories of the two countries, and both men outlined the economic challenges their states face.

They swapped ideas about the significance education plays in the advancement of their people, the Associated Press news agency reports.

Mr Obama visited Japan and Singapore earlier and is scheduled to fly to South Korea after leaving China on Wednesday.