Indian economy in sharp slowdown

India's economy grew by less than expected in the last three months of 2008, official figures have shown.

The country's gross domestic product (GDP) grew by 5.3%, compared with 7.6% in the previous three months and 8.9% in the same period a year earlier.

Agriculture, which makes up about a fifth of the economy was one of the sectors to see growth fall.

The global recession has cut demand for exports, and economists are calling for further measures to boost growth.

These have included a clamour for further interest rate cuts.

The data saw India's main stock exchange index, the Sensex fall by 2% on Friday.

Domestic demand

Observers say the data will come as a blow to the Congress-led government, which faces general elections by May.

It has predicted that the economy, which grew by 9% overall to March 2008, will expand by 7.1% in the 12 months to March this year.

However analysts say this will probably be revised down.

The sharp slowdown in both China and India, which have been among the world's fastest-growing economies, will have a significant impact on the world economy, with the major industrial countries already mired in recession.

India's economy is Asia's third-largest, and is largely driven by domestic demand. It has seen strong growth of 9% or more in the past three years.

But the slowdown has "dismissed speculation India is more resilient in this global turmoil because its economy is more domestically oriented," said Sherman Chan, an economist at Moody's Economy.com.

Meanwhile Rupa Rege Nitsure, chief economist at Bank of Baroda in Mumbai said the growth figure was "way below my pessimistic expectations".

"Whatever the government is doing is not going to be very effective as large scale demand stimulus across the world has not proved to be effective in restoring business confidence."

Obama unveils his $3.6tn budget

President Barack Obama has unveiled a $3.6tn (£2.5tn) budget for 2010, aiming to pull the US out of financial crisis.

He has predicted the budget deficit for the current year will be $1.75tn, which is 12.3% of annual output and the biggest since World War II.

Planned spending includes $634bn to pay for healthcare reform and an extra $250bn to be set aside, in case it is needed to bail out US banks.

Mr Obama hopes to save money by cutting subsidies and tax breaks.

These announcements are an overview. There will be more details in April.

The $3.6tn of planned spending is still well below the spending of $3.7tn, which is forecast for the year to the end of September 2008 and includes economic stimulus packages.

Eliminate waste

The president promised to roll back tax cuts for the very wealthy and businesses that move jobs overseas.

He added that instead, he would bring in tax cuts that would benefit 95% of hard-working families. "There are some hard choices that lie ahead," he said, adding that there were areas where the government would like to spend money in normal economic times, but would be unable to at the moment.

"Each and every one of us has to compromise on certain things we care about, but which we simply cannot afford right now," he said.

He predicted that some of his decisions would be unpopular with special interest lobbying groups in Washington.

Healthcare subsidies

He also promised that his budgets would be an honest accounting of the country's economic situation and include "the full cost of fighting in Iraq and Afghanistan".

He projected spending of $200bn to fight those two wars over the next 18 months.

There are expected to be savings from the winding-down of the war in Iraq, but increased spending as a result of sending more troops to Afghanistan.

The president said he would introduce a scheme to give a subsidy to recently-unemployed people to help them maintain their healthcare funding.

Providing easier access to healthcare was one of his key election promises.

He has promised to halve the budget deficit by the end of his term in 2013 and said one of the ways he would do so would be by cutting back on waste in government.

"We're going to go through our books page by page, line by line to eliminate waste and inefficiency," he said.

"This is a process that will take time, but in the last 30 days alone, we have already identified $2tn in deficit reductions that will help us cut our deficit in half by the end of my first term."

Eastern Europe banks get bail-out

The banking sectors in Central and Eastern Europe are to get a 24.5bn euro ($31bn; £21.8bn) rescue package to support them in the economic crisis.

The European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and the World Bank have pledged the investment.

The funds are particularly aimed at helping small firms survive.

Countries such as Latvia and Hungary have seen their economies particularly hit by the global economic slump.

The two-year joint initiative will include equity and debt financing, and access to credit and risk insurance aimed at encouraging lending, the three groups said in a joint statement.

This initiative is on top of national government responses and was designed to "deploy rapid, large-scale and coordinated financial assistance... to support lending to the real economy through private banking groups, in particular to small-and medium-sized enterprises."

'Diverse challenges'

The EBRD will provide up to 6bn euros for the financial sector, the EIB will put up 11bn euros of lending facilities, while the World Bank will provide about 7.5bn euros.

"The response takes into account the different macroeconomic circumstances in, and financial pressures on countries in Eastern Europe, acknowledging the diversity of challenges stemming from the global financial retrenchment," the groups added.

Founded in 1991, the EBRD aims to assist the transition of former communist nations to market economies - investing across 30 countries including Ukraine, Moldova and Russia.

"The institutions are working together to find practical, efficient and timely solutions to the crisis in eastern Europe," said EBRD President Thomas Mirow.

"We are acting because we have a special responsibility for the region and because it makes economic sense.

"For many years the growing integration of Europe has been a source of prosperity and mutual benefit, and we must not allow this process to be reversed."

Exposure outgrown?

Earlier this week, ratings agency Moody's said that faltering economic conditions in Eastern and Central Europe would hit the local subsidiaries of Western banks.

Austria, whose banks have large exposure to Eastern Europe, has seen the cost of insuring its debt rocket.

On Friday, the country's Erste Group Bank signed a long-expected deal to get up to 2.7bn euros of government support.

But the talks to secure the funding have been going on since October, with some analysts saying that the mounting problems in emerging Europe meaning Erste's exposure may already have outgrown the government injection.

Vodafone announces 500 job cuts

Mobile phone operator Vodafone has announced plans to cut about 500 jobs in the UK in an effort to reduce costs.

Vodafone, the world's largest mobile phone company by income, is shedding jobs as part of previously-announced plans for £1bn ($1.4bn) of cost cuts.

Vodafone, which employs 10,000 workers in the UK, faces rising raw material prices and increasing competition.

The 500 job losses include 170 posts at Vodafone's head office in Newbury, Berkshire, in back-office type roles.

All the group's operations are set to be affected, including a reorganisation of some of its call centres.

Vodafone has call centres and offices in Newark, Banbury, Theale, Trowbridge, London, Warrington, Stoke-on-Trent and Hayes.

Vodafone UK has today announced reductions to its operating costs in order for it to compete more effectively in the UK market," the company said.

"As customers look for best value in their mobile services, Vodafone intends to reduce its cost base whilst continuing to invest in new products and services to meet changing customer needs."

Vodafone said it did not intend to close any stores, but planned to cut costs by offering more online services, as it believed its 19 million UK customers wanted a greater focus on value for money.

The company said in November last year that it expected to reduce its worldwide operating costs by £1bn a year by 2011.

Earlier this month, the firm reported revenue of £10.47bn for the last three months of 2008, up 14.3% on the same period a year ago, and raised its forecast for full-year revenues after benefiting from the weaker pound.

France set to help merging banks

The French government could provide up to 5bn euros ($6.4bn, £4.4bn) in loans to two merging French banks, Finance Minister Christine Lagarde has said.

Banque Populaire and Caisse d'Epargne are expected to finalise the merger deal, which was announced last October, later this week.

The merged group would be France's second biggest retail bank after Credit Agricole with 480bn euros in deposits.

Ms Lagarde said the state might become a direct shareholder of the new group.

"[The loans] could be converted into shares when they come due," she said, calling the merger "an intelligent marriage".

Losses

The government plans to provide the banks with subordinated loans, which do not have to be paid back until after all creditors are reimbursed.

Caisse d'Epargne and Banque Populaire have been hit hard by losses at their investment banking subsidiary Natixis.

Natixis said in December it could potentially lose up to 450m euros, as one of the victims of an alleged fraud involving investor Bernard Madoff costing $50bn.

Meanwhile, at the end of October French police detained a trader for questioning over the loss of 751m euros at Caisse d'Epargne.

The bank's top three executives resigned that month after the loss came to light.

Asian stocks rattled by US falls

Asian stocks fell sharply on Tuesday amid renewed fears over the health of the global financial sector and after US stocks hit a near 12-year low.

Japan's Nikkei index closed down 1.46%, the Hong Kong index closed down 2.9% and the Shanghai index fell 4.3%.

South Korean Kospi share index dropped 3.2%, while indexes in Singapore and Taiwan shed more than 1%.

Most Asian indexes had risen on Monday on hopes the US government was to increase its stake in Citigroup.

However, no formal move was made. US regulators said they were considering boosting government ownership in financial institutions, but without going all the way and nationalising them.

On Monday in the US, the Dow Jones Industrial Average closed down 250.9 points, or 3.4%, at 7,114.8, its lowest level since October 1997.

The tech-heavy Nasdaq index closed down 3.7%, while the Standard & Poor's 500 index fell 3.5% to 743.33, its lowest finish since 11 April, 1997.

No end in sight?

"Investors are just selling out in disgust across the board - disgust with the market, disgust with the financial problems," said Lorraine Tan, director of equities research at Standard & Poor's in Singapore.

"The government seems to keep throwing in money, but there doesn't seem to be any end to the declines or solutions to the problems," she said.

The Shanghai benchmark index fell as China's central bank said the country's economic downturn could worsen.

Meanwhile the index of Asia-Pacific stocks outside Japan, the MSCI, also fell, by 2.3%. And Australia's stock market was also down, by 0.6%. The Indian Sensex was down slightly, by 0.24%.

Among Asian financial shares, Nomura Holdings, Japan's biggest broker, lost 9.3% after announcing plans to raise $3.3bn.

Also in Japan, finance minister Kaoru Yosano said the government would consider a call to buy shares directly to support the stock market, which fell to near 26-year lows on Tuesday.

Gold remains unchanged at Rs 15,700; silver coins rise

Gold maintained an unchanged level at Rs 15,700 per 10 gram as retailers and stockists refrained from buying at record high levels amid reports of the metal remaining high on the overseas front.

However, silver coins maintained an upward march in the national capital on sustained buying by stockists to meet marriage season demand on Friday.



Marketmen said there was hardly any worthwhile buying activity in the market as people postponed their decision of buying for the current marriage season.

Slump hits China multinationals

Nearly 70% of multinational companies in China plan to cut recruitment this year, and more than a quarter have laid off staff already, a survey suggests.

Of the more than 350 companies questioned in different sectors across the country, finance, communications and IT firms were the hardest hit.

Two years ago the multinationals were competing to hire the brightest talent from China's universities.

But since the financial crisis, jobs there no longer look so secure.

Jobs in multinational companies are highly prized in China especially white collar jobs.

For a start the pay is often better than you might get as a public servant or the employee of a state-owned enterprise.

The jobs tend to be concentrated at the moment in the larger cities like Beijing or Shanghai, or in the areas where there are many factories making goods for export.

'Safer' alternatives

Since the financial crisis, jobs are less secure in multinational firms whose parent companies have run into trouble overseas like CitiGroup or Motorola.

This year there was a record number of applications for the civil service. More than 750,000 people applied for just 13,500 places.

The surveys of the multinationals reported in the state media suggest that those applicants were wise to seek safer alternatives.

Almost seven out of 10 of the firms polled made clear they planned to recruit fewer staff in the year ahead - that will make life even harder for this year's graduates.

There are fewer jobs available than before and they will be competing with other unemployed graduates from previous years and with newly laid-off workers who already have experience.

The graduate employment market has always been tough in China but this year it is looking like it will be tougher than ever.

Economy fears send stocks falling

Global stock markets fell on Friday amid fears over the state of the world economy and the banking industry, with finance firms among the main fallers.

The Dow Jones index was 1.8% lower in afternoon trade on Friday after seeing its lowest close since 9 October 2002.

Investors are worried over how long the slowdown will last, despite government intervention to boost their economies.

France's Cac 40 fell 4.25% to its lowest since April 2003, the FTSE 100 shed 3.2% and Germany's Dax shed 4.7%.

The Paris-based benchmark index ended at 2,750.55. The FTSE closed at 3889.06.

The Dow Jones industrial average declined 133.25 points to 7,332.70 just after noon in New York, while the Standard & Poor's 500 Index fell 1.84% to 764.58.

Japan's Nikkei index ended 1.8% down and Hong Kong's Hang Seng shed 2.49%.

'Lack of clarity'

South Korea was among the worst hit in Asia. Its main stock index fell 3.7%, while its currency, the won, weakened on fears about the health of local banks.

This week , US President Barack Obama signed a $787bn (£548bn) stimulus plan into law, but there is uncertainty over how much this will help boost the ailing banking sector.

Bank of America shares fell nearly 17%, while Citigroup shed more than 21%.

"We're going through a tug of war between optimism and pessimism," said Wasif Latif, portfolio manager at USAA Investment Management CoLatif.

"When there is a lack of clarity, it becomes more of an emotional or psychological environment. The mood can sway on any given day, based on the flow of news coming out."

ILO suspects unemployment in Asia to surge by 23 million

The number of people out of work in Asia could surge by 23.3 million in 2009 as the global financial crisis continues to batter the region's economies, says an ILO study.

The crisis could also force rural-to-urban migration to slow down, with many facing the prospect of returning to low paying agricultural sector as factories and firms slash jobs, the International Labour Organization (ILO) report said.

"A dramatic increase in working poverty of more than 140 million people by 2009 is projected under this scenario, representing regression of the Asia and Pacific region to a working poverty rate of 2004," the study said.

"These projections are not just numbers, they carry with them a real risk that children may be forced to withdraw from school in order to work and support their families," it said.

It said the region's robust growth in the past was not matched by "broad-based gains in real wages," leading to sharp inequalities in many countries.

"The substantial growth slowdown taking place is likely to lead to stagnant or falling real wages, with the potential for increased incidences of wage related disputes," the study said.

As Asia moves to spend about 3.9 percent of its gross domestic product (GDP) on stimulus packages, there is also a need to protect employment and support household purchasing power, it said.

Obama signs USD 787 billion stimulus package

US President Barack Obama has signed into law the USD 787 billion economic stimulus package, which according to him would rejuvenate the American economy and create as many as three to four million jobs in the next two years.

Minutes before he put his signature on the 1,534-page American Recovery and Reinvestment Act in Denver, Colorado, Obama said: "We have begun the essential work of keeping the American dream alive."



The stimulus bill was passed last week by the US Congress House of Representative and Senate - without much support from the opposition Republicans. While no Republican voted in its favour, only three Senators supported the bill in the Senate.



Obama cautioned Americans not to immediately expect miracles with the passage of the bill, as the US has a long way to go in reviving its economy.



"Today does not mark the end of our economic troubles. Nor does it constitute all of what we must do to turn our economy around," he said.



"But it does mark the beginning of the end the beginning of what we need to do to create jobs for Americans scrambling in the wake of layoffs; to provide relief for families worried they won't be able to pay next month's bills; and to set our economy on a firmer foundation, paving the way to long-term growth and prosperity," Obama said.



Terming it as the sweeping economic recovery package in the US history, Obama said: "What makes this recovery plan so important is not just that it will create or save three and a half million jobs over the next two years.



It's that we are putting Americans to work doing the work that America needs done in critical areas that have been neglected for too long work that will bring real and lasting change for generations to come."



The money would be used to not only save and create three to four million jobs, but also would result in mega

investment into modern infrastructure projects, funding projects which would help the US become energy independent, education and push more funding into scientific research.



"It will make the most significant investment in America's roads, bridges, mass transit, and other infrastructure since the construction of the interstate highway system. It will make investments to foster reform in education, double renewable energy while fostering efficiency in the use of our energy, and improve quality while bringing down costs in healthcare," Obama said.



Middle-class families will get tax cuts and the most vulnerable will get the largest increase in assistance, in decades, he said. "With this Act we begin the process of restoring the economy and making America a stronger and more prosperous Nation," he added.