Archive for May, 2010

British Airways cabin crew continue strike (AP)

Monday, May 31st, 2010 | Finance News

LONDON – British Airways cabin crew are striking for a 14th day against the airline in a protracted dispute about working conditions and job security.

Striking cabin crew walked off their jobs May 24 for five days and began the new round of strikes Sunday after the latest round of talks collapsed. The cabin crew union has called for another five days of strikes beginning on June 5 if there is no settlement.

The airline says it plans to fly more than 70 percent of its long-haul flights, compared to the 60 percent it had operated during last week's strike, and 55 percent of short-haul flights, up from 50 percent last week.

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Poland’s economy grew 0.5 percent in 1st quarter (AP)

Monday, May 31st, 2010 | Finance News

WARSAW, Poland – Poland's economy grew by 0.5 percent in the first quarter, expanding at a slower pace than in the previous quarter during a particularly harsh winter but still on track for a strong full-year performance amid Europe's broader financial and economic turmoil.

The quarter-on-quarter growth figure released Monday by the Central Statistical Office compared with growth of 1.1 percent in the last three months of 2009.

The numbers were largely in line with economist' expectations, said Maja Goettig, chief economist with Bank BPH in Warsaw, attributing the less robust growth to the harsh winter.

Goettig said she believes the country can achieve 3 percent overall growth in 2010. She and other economists expect growth to accelerate later in the year.

"We're satisfied with this figure," Goettig said.

The data released showed that gross domestic product rose 2.8 percent compared with the first quarter of 2009.

Poland, a country of 38 million people, has done better than many of its neighbors during the past three years of economic turmoil.

It was the only European country that consistently posted growth during the global economic downturn — expanding by 1.7 percent last year. It is the largest of 10 ex-communist countries that joined the European Union in recent years, and its large domestic market helped buoy the economy during the rough times.

It also benefited from being less dependent on exports than neighbors such as the Czech Republic and Slovakia.

Goettig said that domestic consumption remains "the main driver to GDP growth," and that the newest figures show factories are rebuilding inventory.

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India’s economy grows at fastest pace in 2 years (AP)

Monday, May 31st, 2010 | Finance News

MUMBAI, India – A rebound in manufacturing and recovering farm output drove India's quarterly economic growth to 8.6 percent, the best in two years as Asia's third-largest economy returns to pre-crisis levels of expansion.

Growth for the financial year ended March was 7.4 percent, beating a government forecast of 7.2 percent, officials said Monday. The acceleration in the January-March quarter is likely to add to pressure on the central bank to raise interest rates to contain inflation.

India has rebounded from the global downturn faster than expected thanks to strong domestic consumption and investment, but two uncertainties loom: Rain and Europe.

As India's farmers wait for the monsoon, hoping last year's drought won't be repeated, the nation's business elite watches Europe — which accounts for a fifth of India's exports — hoping its sovereign debt crisis won't dampen the investment that's needed to drive growth.

Manufacturing surged an unsustainable 16.3 percent off a low base for the March quarter, up from 0.6 percent a year earlier and its strongest performance in at least two years. Agriculture — which remains an important source of employment — limped along at 0.7 percent, up from the prior quarter's contraction of 1.8 percent, but worse than a year earlier, when it grew 3.3 percent.

"We remain vulnerable to the monsoons, as ever," said Enam Securities economist Sachchidanand Shukla. "This is an annual uncertainty that can shave off 60 to 70 basis points (0.6 to 0.7 of a percentage point) from growth. If the monsoon were to fail again, growth will definitely slip below 8 percent."

He said an unusually bountiful winter crop boosted growth after the worst rainfall since 1972 diminished summer yields.

Monday's figures showed that investment is becoming a key driver of growth as private consumption falls as a share of overall economic activity.

"It's a sign of India moving on to a higher growth trajectory," said D.K. Joshi, chief economist at Crisil, an Indian research and ratings agency. "Investment has picked up really fast and is at par with other economies when they started lifting on a sustained basis."

Investment as a share of gross domestic product rose to 34.6 percent during the March quarter, government data showed. That's far higher than it was in the 1990s, when it hovered near 22 percent of GDP, and close to its peak of 37 percent not long before the global recession, Joshi said.

Europe, India's most important export market, could drag on India, especially if its debt crisis undermines global growth.

Joshi calculates that only about 7 percent of investment comes from abroad. Still, if foreign funding — which Indian companies have used to feed their growing appetite for overseas acquisitions — dries up, domestic sources will be stretched, he said.

"We are more connected to Europe than ever, but we have our own strengths," he said.

From 2003-2008, economic growth averaged 8.8 percent a year, before slumping to 6.7 percent last fiscal year as the Great Recession roiled India's economy.

India's prime minister Manmohan Singh says the billion-plus nation needs to grow at 10 percent a year to eradicate chronic poverty.

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