Category Archives: Emerging Markets

World Bank Bracing for US Rise in Interest Rates

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US interest rates, which have been hovering near zero for about 6 years, are expected to rise as the US economy continues its slow but steady recovery. The World Bank is closely watching what the US Federal Reserve will do, and when, and is expecting when that day finally does arrive, developing economies might be in for some hard times.

The hike in interest rates could come as early as this Thursday, when the Fed winds up a policy meeting. In a report issued by the World Bank they warn that such a rise could have a modest impact on developing countries, but also adds that there is a chance that the fall-out could be worse.

The World Bank has several reasons for their concern. They believe that a rise in interest rates could interfere with capital flows into developing countries, which can lead to stifling of economic growth, which could then lead to financial instability.

Despite their warning, they also site several reasons to be optimistic. First of all, any increase in interest rates will happen gradually, allowing developing economies to cope more easily with any changes. They also point out that any changes in rates will happen within the context of a strong, growing US economy, which usually bodes well for the global economy in general.

Pakistan to Hold US-Pak Business Opportunities Conference

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Chundrigar Road, with 20th century architecture, in central Karachi, Pakistan
Chundrigar Road, with 20th century architecture, in central Karachi, Pakistan

Businessmen, investors and others will be gathering on February 27 for the Pak-US Business Opportunities Conference to take place in Islamabad, Pakistan. In attendance will be US ambassador Richard Olson, plus members of the American Business Council and the Pakistani Minister for Commerce, Khurram Dastgir Khan.

On the agenda of events will be a speech by the Minister for Commerce, who will explain Pakistan’s efforts to bring more foreign investment to the country as well as to increase the amount of trade outside the country.

The major goal of the conference is to introduce Pakistan to the rest of the world as a reliable business and investment partner. Included in discussions about trade will be textiles, agriculture, rice, fruit and vegetables.

There will also be discussions about creating a “US-Pakistan Joint Business Forum.” Organizers of the conference have sent invitations to over 100 American companies and businessmen. The Ministry of Commerce has high expectations that the maximum number of attendees will participate.

New Study Ranks Indian Cities For Business Growth Potential

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With well over 1 billion people living within its borders it is no wonder that India is a powerhouse of economic development. The non-profit organization Global Initiative for Restructuring Environment and Management recently ranked India’s cities based on such parameters as human capital, energy, water, transport, healthcare, climate, office space availability, city culture and more in order to guide businesses to the best cities to grow their businesses.

Ranked numbers one, two and three were Bangalore, Chennai and Mumbai, out of a list of 21. According to a statement which was released along with the study the factors which decided the rankings constitute basic eco-socio-economic elements which are essential to predict the growth of a city.

“While popular destinations such as Bangalore, Mumbai, Chennai, and Pune continue to occupy top positions, the ranking revealed some unexpected contenders in the top 10 league including Indore, Bhubaneshwar, Kochi, Coimbatore and Nagpur,” the statement said.

Another purpose of the ranking was to establish which cities will continue to develop in the future as today’s largest cities reach their saturation points.

“Rapid and unplanned urbanization in the country over the past few decades has led to unprecedented job demand. Job creation is a crucial answer to this challenge which calls for the pressing need to develop new industrial townships and business districts to ease the pressure from the already saturated business destinations,” the organization’s Chairman Sankey Prasad said.

Chinese Vice President Xi Visiting US for High Level Talks

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High level talks are scheduled this Tuesday between President Obama and the up and coming leader of China, Vice President Xi Jinping. Xi is hoping that the talks will boost his international standing while he simultaneously tests Obama’s ability to balance diplomacy with China and his election-year pressures.

Xi’s visit has been carefully planned by his Chinese handlers so that it the once-every-ten-year Chinese transfer of power is accepted by Washington and the world as a significant rite of passage. Xi is expected to take the helm of the Communist Party, which leads China, later on in 2012, and then finally taking over the Chinese presidency in March of 2013.

The fifty-eight year old Xi arrived in Washington on Monday and was greeted with a dinner with veterans of US foreign policy, including former national security advisers Brent Scowcroft and Zbigniew Brzezinski. Former Secretary of State Madeleine Albright was also on hand.

Obama has been working on changing US economic policy toward Beijing quietly, trying to find new ways to get results on such touchy issues as improved market access and better currency practices with China which have historically been thorns in the sides of Obama as well as his predecessors.

Xi is the highest ranking Chinese official to visit the US since Obama began his new US leaning toward Asia, began in November. Obama would like to see a more balanced relationship with Asia, reducing China’s increasing assertiveness in the region.

Chinese Industry Is Slowing Down

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In November, the Chinese factory sector shrank more than in any month during the last two and a half years. This decline was caused by china’s domestic economic weakness according to a PMI Survey. The survey determines the HSBC purchasing managers index which showed a rapid decline from 51 in October to 48 in November. The PMI measures China’s industrial output which was the lowest it has been since March 2009. A score of 50 divides between the industrial sectors expansion and contraction.

Beijing has already publicized steps to help small businesses. Meanwhile, in china business is feeling the stress. Many businesses are trying to get new markets and to modernize their production processes so that they will be able to compete.

“Time is pressing. We have to invest more in technology and innovation to make our goods more competitive in the global market,” said Zhou Haichang, president of the Guoguang Electric Co Ltd. “This is the only way out, for Guoguang and most exporters.”

Zhou Jianqun, the general manager of Guoguang Electric, said, “Because of currency appreciation, nobody wants to make and accept long-term orders. I know some small industrial players have died out, as they were incapable of innovation, and many others are very anxious.”

Wang Hu, an economist at the Guotai Junan Securities in Shanghai, believes that by January there could well be decline in the Chinese bank reserve requirements, as Chin’s economy weakens.

For many Chinese companies it will be sink or swim. Companies that can improve, innovate and grow have a chance to succeed. Those that can’t will probably fall by the wayside. In the end, China will be stronger.