TPT November 2011

G lobal M arketplace

› If in coming months signs emerge of enduring economic weakness, rates should be lowered where there is scope. Where there is no scope, other measures could include further central bank intervention in securities markets, even if that brings diminishing returns; › To stop contagion and restore confidence, the governance of the euro area must be further improved and the capitalisation of banks in the region strengthened. The annual competitiveness survey from Davos shows improvement in many emerging markets “Much of the developing world is still seeing relatively strong growth, despite some risk of overheating, while most advanced economies continue to experience sluggish recovery, persistent unemployment, and financial vulnerability, with no clear horizon for improvement.” Klaus Schwab, founder and chairman of the World Economic Forum, was summing up the findings in the forum’s annual Global Competitiveness Report (GCR), which assesses countries based on 12 categories including innovation, infrastructure and the macroeconomic environment. Fittingly, perhaps, the Geneva-based group known widely and simply as “Davos” – for the Swiss resort where its A-list invitees gather every summer – found an exception in a markedly advanced economy. For the third consecutive year, Switzerland ranked first in the forum’s survey. The other results in the GCR, released 7 September, contained some surprises, but not many. Here, abstracted by the International Herald Tribune ’s Matthew Saltmarsh (See “OECD”, above), are the main findings: › The US, which topped the list in 2008, continued its decline, also for the third year in a row – falling one place to fifth. The weaker performance was attributed to economic vulnerabilities as well as “some aspects of the United States’ institutional environment,” notably low public trust in politicians; › While Singapore overtook Sweden to claim second position, Western European countries dominated the survey’s top 10 economies. Behind Sweden, Finland ranked fourth and Germany sixth, followed by the Netherlands and Denmark. Britain was 10 th , France 18 th . (Heavily indebted Greece slid to 90 th place among the 142 major and emerging economies surveyed); › China, the highest-placed of the large developing economies, ranked 26 th – up one place from a year earlier. Among the other major emerging economies, South Africa was 50 th , Brazil 53 rd , India 56 th , and Russia 66 th . › Among major Asian economies, Japan ranked ninth and Hong Kong 11 th . Qatar was the highest-ranked country in the Middle East, at 14 th , followed by Saudi Arabia at 17 th . The United Arab Emirates was in 27 th place. Dorothy Fabian , Features Editor (USA)

Other metals . . . › The Canadian integrated mining company HudBay Minerals (Toronto) said it has agreed to sell its Fenix ferro-nickel operation in Guatemala to Russia’s Solway Investment Group for US$170mn. The transaction, expected to close before the New Year, gains for Solway a fallow (since 1980) brownfield nickel laterite mine and a processing plant. Capacity of the plant, now 25 million pounds per year, is to be raised to 50 million ppy. As reported by Mineweb (8 August), Fenix is believed to have 41.4 million metric tons of mineral reserves. Output over the 30-year projected life of the operation is estimated at 1.3 billion pounds of nickel. Solway, which has its headquarters in Cyprus, also operates the Pobugsky ferro-nickel plant in Ukraine; plans to build a $3bn nickel smelter in Indonesia; and has invested in polymetallic projects in Peru and Laos as well as in Russia. The global economy The Organisation for Economic Co- operation and Development sees weak growth ahead but no return to ‘the great recession’ While economic growth in most of the developed world is set to remain limp through the end of 2011, “a downturn of the magnitude of 2008 and 2009 is not foreseen.” This is the view expressed by the Organisation for Economic Cooperation in its latest outlook, published 8 September. The Paris-based OECD projected growth in the Group of 7 economies excluding Japan of less than one percent at annualised rates on average in the second half of this year. In Japan, growth was less negative than foreseen in the immediate aftermath of the March earthquake and nuclear disaster, the OECD said. But activity in China slowed in the course of the first half and manufacturing production there weakened. For the three largest euro zone countries – Germany, France, Italy – the growth forecast was for 1.4 per cent in the third quarter and negative 0.4 per cent in the last three months of the year. The international research group predicted an expansion in the US of 1.1 per cent in the third quarter and 0.4 per cent in the fourth. Writing from London in the International Herald Tribune , Matthew Saltmarsh noted the OECD acknowledgement of “particularly high” uncertainty surrounding its projections this time. But the report also said that the unwinding of temporary factors that had dampened growth in Germany – like the shutdown of nuclear plants – and in France, such as the phasing-out of car scrapping subsidies, “may prompt a sharper than projected rebound in activity in the third quarter.” In addition, data on the federal budget had been better than expected the US by autumn, the OECD said. The OECD report contained a few pieces of advice: › Official interest rates in most advanced economies should be kept on hold;

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