Archive for December, 2010

November pending home sales up 3.5 percent: source

Thursday, December 30th, 2010 | Finance News


WASHINGTON (Reuters) – Contracts for pending sales of previously owned U.S. homes rose faster than expected in November, though sales remained below "normal" activity levels, a real estate trade group said on Thursday.

The National Association of Realtors Pending Home Sales Index, based on contracts signed in November, rose 3.5 percent to 92.2 from a downwardly revised 89.1 in October. The index showed sales were 5 percent lower than the 97.0 reading in November of last year.

Economists polled by Reuters ahead of the report were expecting pending home sales to rise 2 percent.

Lawrence Yun, the association's chief economist, said low interest rates and early signs of economic recovery boosted sales, "but further gains are needed to reach normal levels of sales activity."

(Reporting by Corbett B. Daly; Editing by Neil Stempleman)


Spain PM says economy will grow in 4th quarter

Thursday, December 30th, 2010 | Finance News


MADRID – Spain's prime minister said Thursday he expected the Spanish economy to grow again in the final three months of the year after a flat third quarter performance raised fears that the eurozone's fourth largest economy could be heading back into recession.

Jose Luis Rodriguez Zapatero said his prediction last year that 2010 would see a return to growth had been vindicated, but that further reforms were necessary in the year ahead to strengthen the economy.

"This has happened." he said. "But we know that it is slow and weak growth and we still have decisive tasks ahead to consolidate and strengthen that growth."

Giving reporters an end-of-year review of the country's economic and political situation, Zapatero said none of the three quarters this year had falling output and that he expected the final quarter to show growth had returned _official figures for the fourth quarter are not due till early 2011.

The Spanish economy posted a flat quarterly performance during the July-September period though it rose 0.2 percent on a year-on-year basis — the first such rise in seven quarters. In the first two quarters of the year, growth was extremely tepid.

Spain's recovery from recession has been the slowest of Europe's main economies, such as Germany and France.

The country's recession was triggered by a collapse in its key real estate sector during the international financial crisis.

One of the government's chief tasks is to slash a swollen deficit from 11.2 percent of gross domestic product in 2009 to within the European Union limit of 3 percent by 2013.

Zapatero said the government was on track to meet those objectives following a series of labor market reforms and austerity measures introduced earlier this year.

However, international bodies insist Spain needs to do more.

Zapatero said he was determined to present reforms to the country's pension system — including pushing back retirement age from 65 years to 67 years — by the end of next month.

"It would be doing the country a disservice not to make these changes now," Zapatero said.

He said that the raised retirement age would be phased in gradually between 2013 and 2027.

Zapatero argued that adjustments to how pensions are calculated are needed now if the system is not to collapse in the coming years as the number of people retiring swells.

The planned change in retirement age has triggered threats from unions of a second general strike, following one called in September against the austerity measures and labor reforms.

Zapatero said he was confident 2011 would lead to greater employment and help bring down a jobless rate of nearly 20 percent, the highest rate in the eurozone.

The premier also announced increases of between 1 percent and 2 percent for pensioners and minimum wage earners, saying that even in hard times the government would not forget those who had least.


Latin American economy outshone US, Europe in 2010

Thursday, December 30th, 2010 | Finance News


SAO PAULO (AFP) – In 2010 Latin America has thrown out the old rules to accommodate a new reality: a period in which its dynamic rebound from the global financial crisis left the United States and Europe in its dust.

Figures from the International Monetary Fund show the topsy-turvy result.

This year, the United States' economy should show 2.6 percent growth and the European Union just 1.7 percent.

Latin America is forecast to post five percent growth.

Why the gap? Analysts point to responsible policies and booming world demand for the commodities Latin America offers.

As a result, the region was one of the least affected by the crisis that broke open in September 2008, and it has emerged stronger than before.

Augusto De la Torre, the World Bank's chief economist for Latin America, said the region had shown itself to be less vulnerable to external shocks, which previously had amplified weaknesses in currencies and financial systems.

That was in part because the Latin American countries were "much more diversified" than in the past, reducing their trade dependence on Europe and the United States.

Now, business is done "also with emerging markets like those in Asia," which was also expanding strongly, he said.

Another positive aspect was "the way in which Latin America is integrated into the international financial system," becoming a creditor for the first time and also receiving huge direct foreign investment following "growing appetite for risk."

Alberto Ramos, the head economist at Goldman Sachs for the region, said the hike in commodities prices between 2003 and 2008 helped Latin America "reduce its vulnerability, increase currency reserves and lower the level of public debt."

The prime example was Chile, the world's top copper producer, which used part of its revenues from the metal to finance measures spurring growth, said Francisco Castaneda, an economics professor at the University of Santiago.

Brazil, Latin America's biggest economy, was in the front row of countries which had pursued responsible policies to keep its finances stable before the crisis hit.

The country was forecast to have growth of 7.5 percent this year, a performance buoyed by a domestic market enjoying greater access to credit and higher employment which fueled consumption.

Signs of Brazil's broad prosperity were seen in the fact that there were now more mobile phones than inhabitants, and 1.5 million Brazilians took a plane for the first time during the southern summer.

Other regional economies were also in good shape, such as Argentina which was seeing nine percent growth this year after implementing counter-cyclical policies and social programs in the wake of its 2000 economic collapse.

"We maintained jobs in companies in trouble... and ensured pay increases for the poorest," explained Alfredo Garcia, the head economist for the bank Credicoop.

Mexico, too, was bouncing back from the crisis, which struck it harder because of its greater dependence on the United States.

It was expected to show five percent growth this year thanks to "fiscal discipline, a broadening of the tax base, more manufactured exports, checks on inflation, and a low interest rate," said Alejandro Asencio, an analyst for Bursametrica.

The only exception in the region was Venezuela which was expected to see its economy shrink 1.6 percent because of an energy crisis and sharp drops in investment and consumption, along with high inflation. In 2011, that country was forecast to grow just two percent.

Next year, the experts agreed that Latin America would be looking to the northern hemisphere, seeking signs of a turnaround that would positively impact Latin America's economies.

"If the outside scenario grows, we will have a very good year. If the outside scenario slips, we will only have a good year," said Ramos, who added that any idea of a recession in Latin America should be completely discounted.