TPT September 2007

From the Americas

The world, the Russian president said, needs a “new architecture of international economic relations based on trust and mutually beneficial integration. Today protectionism, which the WTO is meant to fight, often comes from developed economies.” If his criticism of the WTO consorted oddly with his nation’s active pursuit of membership in the Geneva-based forum for economic disputes, Mr Putin ignored any inconsistency. He also withstood the tepid response from the foreign officials in his audience. But the 11 th St Petersburg International Economic Forum – held to reassure business leaders and officials from around the world that Russia is committed to free trade and open to foreign investment – could be judged a success. According to the organizers, some 30 deals worth $13.5 billion were signed. Economics The US economy is seen as growing but retarded by the housing slump. “The leading index has slowed in recent months, suggesting a possible softening of the overall pace of economic activity later in the second half of this year,” conference board labour economist Ken Goldstein said in a statement accompanying the group’s latest report for the US. The ongoing slump in the housing industry will take a deeper toll of businesses and consumers, to judge from the closely watched gauge of future business activity, published 19 July. The index of leading economic indicators fell 0.3 per cent in June, steeper than the 0.1 per cent drop analysts were expecting. The index had risen 0.2 per cent in May after dropping 0.2 per cent in April. Conference Board reports, designed to forecast economic activity over the ensuing three to six months, track ten economic indicators. Negative contributors to the latest US report were building permits, unemployment claims, consumer expectations, vendor performance, and interest rate spread. Positive contributors were weekly manufacturing hours, new orders for non-defence capital goods, and stock prices. Manufacturers’ orders for consumer goods and materials and real money supply held steady in June. The index of leading economic indicators had gone up and down over the previous few months, suggesting that US economic growth is likely to continue in the near term, but at a slower pace. In a second day of testimony before Congress on July 19, Federal Reserve chairman Ben Bernanke endorsed this view, reiterating the Fed’s belief that the economy will grow gradually for the rest of the year, restrained by the housing slump. Based in New York, the Conference Board is a global, independent membership organisation in the public interest. Its reports on leading economic indicators for many countries may be accessed free from the press release archive at the website www.conference-board.org.

Foreign Policy

The US-Russia relationship may be souring – but not for Boeing-Aeroflot Boeing Co (Chicago) on 9 June announced the sale of 22 of its new 787 Dreamliner planes to the Russian national airline Aeroflot, for a catalogue price of $3.5 billion. The mid-sized wide-body planes, to be assembled in Everett, Washington, for delivery to Aeroflot in 2014, will replenish the Russian fleet of Soviet-era aircraft built by Boeing and its European rival Airbus. Boeing announced its big sale to Aeroflot at the 11 th St. Petersburg International Economic Forum, a gathering of business leaders from more than 200 companies. The event was billed by the Russian government as a kind of Davos for emerging markets – a reference to the Swiss city that hosts political and business elites at the annual meetings of the World Economic Forum. Recent growth in the Russian oil-driven economy has been defying expectation that the worsening political climate between Russia, on the one hand, and the US and European Union might deter investment in Russian industry. In the first quarter, Russia’s gross domestic product grew 7.7 per cent, and foreign investment was up 150 per cent over the comparable period of 2006. • The Russian nuclear power company Atomstroyexport is actively seeking to meet global demand for nuclear power, mainly from developing countries. The state company, a former branch of the Soviet atomic energy ministry, is building seven nuclear reactors in Iran, China, Bulgaria, and India: more reactors, it claims, than any competitor including General Electric and Westinghouse of the United States. Westinghouse, which designed 45 per cent of the world’s operating reactors, has contracts for four new reactors in China, but has not begun the work. Russia’s President Putin wants to see regional economic alliances supplanting the IMF and WTO The economic meeting in St Petersburg at which Boeing announced its big sale to Aeroflot (see above) provided an opportunity for President Vladimir V Putin of Russia to generate some news of his own. Mr Putin called for a new global economic framework that would play down the role of global institutions like the International Monetary Fund and the World Trade Organization and instead emphasize regional trade pacts. The Russian president told an assemblage of international corporate executives that advanced industrial economies dominated the institutions of world trade in an ‘inflexible’ manner, even as the share of global wealth held by emerging-market economies is growing. The system he proposes would, he said, more accurately reflect the decline of the United States, Europe, and Japan, and the ascendancy of Russia, China, India, and Brazil. On the long-term trend, Mr Putin would appear to be on firm ground (the global investment bank Goldman Sachs has predicted that, by 2050, Brazil, Russia, India, and China will be the world’s dominant economies). Likewise in his assertion that more than 60 per cent of the world’s industrial output is produced outside the Group of 8 industrialized countries.

Steel Canada’s last independent steel maker considers a sale amongst other options

Stelco Inc (Hamilton, Ontario) has confirmed that it is in “very preliminary” talks that could lead to a sale of all or part of the

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J uly /A ugust 2007 S eptember /O ctober 2007