Mexico granted $47bn IMF credit

The International Monetary Fund has formally approved a $47bn (£32bn) line of credit for Mexico.

It is the first country to get the credit under a new fast track scheme designed to help developing nations cope with the global economic crisis.

Several Eastern European countries are also seeking similar credit lines.

Mexico has said it does not intend to use the money, but applied for it as a precaution in the event of further deterioration in global markets.

Mexico, which sells 80% of its exports to the United States, has been hit hard by the global recession.

Industrial output last month fell by over 13%, the sharpest decline in 14 years.

The Mexican peso has also been on a generally downward path, falling around 20% against the dollar during the last year.

Applying for an IMF loan was once seen as a sign of desperation for developing countries.

News that the lender of last resort was stepping in would often be the final blow to their struggling economies.

But the Mexican government and the IMF are keen to stress that that there is no stigma attached to this particular type of loan, which is designed to support countries seen as strong economic performers during the global credit crisis.

Since President Felipe Calderon publicly announced his country was requesting the credit just before the G20 summit in London earlier this month, the peso and the Mexican stock market have strengthened.

India to grow at over 7 pc in the current fiscal: PMEAC

Prime Minister's Economic Advisory Council (PMEAC) said that it expects the country's economy to grow at over seven per cent in the current fiscal as it has already started showing signs of recovery.

"Seven per cent plus is what my 2009-10 overall forecast is...I think it has already started recovering in my own assessment," PMEAC Chairman Suresh Tendulkar told on the sidelines of a conference on broadband in New Delhi on Friday.


He further said it expects rebound in the economy after September as the worst was over.


"I have been maintaining that the worst is already over, (I expect) good recovery after September," Tendulkar added.


Asked if the contracting industrial production worried him, he said the revised industrial production numbers were higher than the provisional ones, so it did not bother him much.


Despite three stimulus packages announced by the government, the Indian economy grew by 5.3 per cent in the third quarter of the last fiscal, its lowest rate in over five years, against a whopping 8.9 per cent a year ago.


In the first nine months of last fiscal, the economy grew by 6.9 per cent.



For whole of 2008-09, the advance estimates of Central Statistical Organisation (CSO) pegged the economic growth at 7.1 per cent, which seems a tough task in the wake of dismal industrial growth numbers.



On account of slackening demand hitting Indian trade more than anticipated, PMEAC lowered the country's growth estimate to 6.5-7 per cent from the earlier estimate of 7.1 per cent for 2008-09.


To boost the economy, the government came out with three stimulus packages in the month of December, January and in the interim budget, providing incentives to various sectors.


The Reserve Bank also took monetary easing measures by infusing more than Rs 4 lakh crore since October.


However, industrial growth turned negative in October, December and in January.


Besides, exports declined for the fifth consecutive month in February after it had a good run in the first half of 2008-09, growing by over 30 per cent.


The orders got cancelled and exporters found it difficult to get new bookings, thereafter, with demands slackening overseas due to global financial crisis.


As a result, from October onward, exports have been on a decline, with export in February falling by 21.7 per cent, the lowest in 13 years.

World's largest airline, Delta closes Indian call centers

America's Delta Airlines, the world's largest airline, has announced to close down its Indian call centers, a major setback to India's flourishing call centers which provide employment to thousands of youths across the country.

Airlines officials said the decision is driven by poor customer feedback.

Delta's call in India was handled by a call center of Wipro Ltd.

Media reports said Richard Anderson, the airline's chief executive, told employees in a recorded message on Thursday night that Delta had stopped forwarding calls to India in the first quarter and would be bringing the function back in-house in the US.

"The customer acceptance of call centers in foreign countries is low and our customers were not shy about letting us have that feedback," Anderson said.

A Delta spokesman, was quoted as saying in the media that the airlines has hired about 4,500 call-center workers in the US after it ended its current outsourcing operations in India.

However, Delta's call centers in Jamaica and South Africa would continue, the spokesman said.

In February, the United Airlines too had announced to end its 165 overseas call center jobs. After the merger of the North West Airlines, Delta is now the world's largest carrier.

It had sent its call centers to India in 2002 to save money, which at that time was estimated to be about USD 25 million a year. (BJ-18/04)

Citigroup results beat forecasts

Citigroup has reported its first quarterly net profit in nearly two years, the latest US bank to see an improvement in its performance.

It made a profit of $1.6bn (£1.1bn) compared with a loss of $5.1bn a year earlier. Revenues rose 99% to $24.8bn.

However, once dividend payments to preferred shareholders were taken into account, it suffered a near-$1bn loss.

Shares in Citigroup initially rose, before falling into negative territory, closing 9% lower at $3.65 in New York.

The news, together with better than expected results from conglomerate General Electric, boosted markets as Wall Street's winning streak extended to a sixth week.

Among banks, shares in Bank of America, due to post its quarterly results on Monday, gained 2.5%.

"We had our best overall quarter since the second quarter of 2007," chief executive Vikram Pandit said.

'Tentative hopes'

Citigroup made a pre-arranged $2.7bn dividend payment to preferred shareholders, and said it had made a $7.3bn credit loss from bad loans.

However, it gained from an accounting rule that allowed the bank to post a one-time gain of $2.5bn. The bank also said it had seen an improvement in trading activity and it had cut costs.

Citi's results came hot on the heels of positive earnings reports from Wells Fargo, Goldman Sachs and JP Morgan.

"Of course the fact that all of these have had such a strong first quarter has led to some tentative hopes that perhaps the banking sector crisis is bottoming," said Richard Hunter, head of UK equities at Hargreaves Lansdown.

Challenges remain

Although Citi reported a profit, its losses in credit cards and consumer loans both increased sharply, the BBC's Karen Nye in New York pointed out.

"Even the strongest banks have admitted to a few weak spots," she added.

Citigroup has received $45bn in government aid from the Troubled Asset Relief Program (Tarp).

The bank has also cut the size of its workforce to 309,000 people from 374,000 at its peak.

"It was slightly better than anticipated, but we probably underestimated how much government support would be a wind at their back," said Michael Holland, founder of Holland & Co.

But Citi's problems are not over yet, he added.

"There's no doubt the challenges are still enormous for Citigroup."

Oil prices rise in Asian trade

Oil prices rose in Asian trade on Thursday, buoyed by Wall Street's overnight rally, analysts said.

New York's main futures contract, light sweet crude for delivery in May, gained 97 cents to USD 50.22 a barrel. Brent North Sea crude for June delivery rose 89 cents to USD 53.33.



Oil prices are being lifted by Wall Street's rally as investors ignore the bigger-than-expected rise in US crude

stocks which is seen as an indicator of weak demand, analysts said.



"I think it's a bit of a follow-up effect from a rally in Wall Street," said Jason Feer, Asia Pacific vice president of energy market analysts Argus Media in Singapore.



The US Department of Energy said on Wednesday that crude stocks surged 5.6 million barrels in the week ending 10th April to 366.7 million barrels, the highest level since September 1990.



Crude inventories are now 16.5 per cent higher than at the same stage last year.



The Organisation of the Petroleum Exporting Countries (OPEC) cut its estimate for world crude demand again, arguing that a "devastating contraction" in consumption would keep prices under pressure in the months ahead.



"In the coming months, the market is expected to remain under pressure from uncertainties in the economic outlook, demand deterioration and the substantial overhang in supply," OPEC said Wednesday in its latest monthly report.

Pound rises to three-month high

Sterling rose above $1.50 on Wednesday, its highest level against the dollar since mid-January, as a UK housing survey raised hopes of a recovery.

It also rose against the euro, hitting a six-week high of 1.1372 euros.

Sterling received a boost after a survey of chartered surveyors suggested that interest from home-buyers had started to gain "real momentum".

The pound rose as high as $1.5037, but later fell back below the $1.50 mark to trade at $1.4986 in afternoon trading.

Sterling touched its lowest levels in 24 years in mid-January, nearing $1.35 as the depth of the UK's recession became clear.

A survey from the Royal Institution of Chartered Surveyors (Rics) found that new inquiries in the housing market had increased for the fifth consecutive month in March.

However, the study also found that surveyors had sold on average fewer than 10 homes each over the past three months.

"The strong Rics survey overnight has boosted sterling," Lee Ferridge, a currency strategist at State Street, told the Reuters news agency.

"It is higher than it was 12 months ago and people are seeing tentative signs of green shoots in the UK housing market," he added.

Swiss bank UBS to cut 8,700 jobs

Switzerland's biggest bank, UBS, has said it will seek to cut costs by shedding 8,700 jobs by next year.

The news came as the bank announced it had lost about 2bn Swiss francs ($1.75bn; £1.2bn) in the first three months of 2009.

UBS has been one of the biggest banks hit by exposure to the sub-prime loans crisis in the US and ensuing turmoil.

"Unfortunately I am not able, as yet, to offer you any good news," said chief executive Oswald Gruebel.

Later on Wednesday, the Swiss President told the BBC that the former UBS management had taken too many risks, but that he was confident the new team would restore the bank's reputation as the backbone of Swiss financing.

UBS has recently replaced both its chairman and chief executive.

Weak exports hit China's growth

Annual growth in China's gross domestic product (GDP) slowed in the first quarter of 2009 to 6.1%, the National Bureau of Statistics has announced.

This is the weakest growth since quarterly records began in 1992, but some analysts see signs of a recovery.

Growth was 6.8% in the last quarter of 2008, but the first quarter GDP figure dropped as exports fell 17% in March.

China's government has said it is determined to achieve annual growth of 8%, and to expand its domestic demand.

"There's little the Chinese government can do to help key markets for Chinese products in the US and Europe recover," said the BBC's Chris Hogg in Shanghai.

"That's why it's focussing on trying to stimulate domestic demand."

There has been a recognition among Chinese state officials that too sharp an economic slowdown could lead to growing unemployment and may fuel social unrest.

'Pressure'

Announcing the GDP figure, the National Bureau of Statistics (NBS) said that export demand had dropped sharply, cutting into company profits, reducing government revenues and raising unemployment.

"The national economy is confronted with the pressure of a slowdown," an NBS statement said.

China experienced double-digit growth from 2003 to 2007, and recorded 9% growth in 2008.

Analysts said the first-quarter drop in growth was in line with expectations.

But other data offered by the government suggested a tentative recovery may already be under way.

Industrial output expanded 5.1% in the first quarter. It was up 8.3% year-on-year in March, against 3.8% in January and February.

Fixed asset investment on items such as new factories and equipment was up 28.6% in March from 26.5% in February.

Spending on property development grew by 4.1% in the first quarter, and retail sales remained strong with a 14.7% growth during March.

'Surge in investment'

"Most of the indicators are better than earlier market expectations, although the annual GDP growth in the first quarter is a historical low," said Xing Zhqiang, analyst at China International Capital Corporation in Beijing.

"We expect that the most difficult time for China's economy has passed, as the surge in investment has partly offset the negative impact from declining exports."

China has started to implement a 4 trillion yuan ($585bn, £390bn) stimulus package to counter the impact of the global slowdown, and this package has been seen as helping to spur lending in the first three months of the year.

"The overall national economy showed positive changes, with better performance than expected," the NBS said.

It said that urban per-capita incomes were up 11.2% from a year earlier in real terms and that rural per-capita incomes were up 8.6%.

The consumer price index (CPI), China's main gauge of inflation, fell 0.6% in the first quarter of 2009 from a year earlier, according to the bureau.

China offers funds to boost Asean

China has unveiled plans to establish a $10bn (£6.8bn) investment fund for south-east Asian countries.

It has also offered credit of $15bn to the Association of South-East Asian Nations, or Asean.

Chinese Prime Minister Wen Jiabao had planned to announce the fund at the cancelled Asean summit this weekend.

Asean was set up in 1967 in part to counter influence from communist China but has since become a vehicle for close ties.

The collapse of the Asean summit, scheduled in Pattaya, Thailand, this weekend, delayed the conclusion of a key investment agreement between China and the economic bloc.

That deal is intended to create the world's largest free trade area, covering nearly two-billion people.

China funds

China's Foreign Minister, Yang Jiechi, announced the new funding plans in Beijing to a gathering of envoys from the 10 members of Asean - Indonesia, Singapore, Malaysia, Thailand, the Philippines, Brunei, Burma, Laos, Cambodia and Vietnam.

The $10bn investment fund was designed for cooperation on infrastructure construction, energy and resources, information and communications, China's state news agency Xinhua quoted Mr Yang as saying.

Over the next three to five years, China planned to offer $15bn in credit, including loans with preferential terms of $1.7bn in aid for cooperation projects.

China also planned to offer 270 million yuan ($39.7m) in special aid to Cambodia, Laos and Myanmar to meet urgent needs, inject $5m into the China-Asean Cooperation Fund, and donate $900,000 to the cooperation fund of Asean Plus-3, the side grouping of Asean plus China, Japan and the South Korea.

Oil prices slide in Asian trade

Oil prices eased in Asian trade on Monday as traders took profits from last week's strong finish before the start of the Easter holiday weekend, analysts said.

New York's main futures contract, light sweet crude for May delivery, shed 46 cents to USD 51.78 a barrel.

Brent North Sea crude for delivery in May fell 11 cents to USD 53.95. The contract for May delivery will expire Wednesday.


Oil and stock markets were closed Friday for the Easter weekend holiday.

"After a strong finish, we now see a bit of profit-taking. After all, it remains uncertain whether we have reached a bottom on the fundamentals of oil," said Victor Shum, senior principal of energy consultants Purvin and Gertz in Singapore.


Crude oil prices were boosted Thursday by a strong Wall Street rally ahead of the Easter holidays due to US banking giant Wells Fargo's projection of a "record" three-billion- dollar profit in the first quarter, which sent shares of major banks soaring.



The rally might carry forward to this week, when earnings reports of other banks are due to be released, added Shum.


"If the (earnings reports) are like Wells Fargo's, that will continue to provide some positive news for the oil market," he said.

UK moves towards car scrap scheme

The government is likely to introduce an incentive scheme for car owners to scrap old vehicles in exchange for new ones

The move would probably involve a payment of £2,000 to trade in cars that are a certain number of years old.

The controversial plans are designed to boost demand for new cars and help struggling carmakers who are suffering during the recession.

A similar scheme in Germany has seen demand for new cars rise dramatically.

France and Italy have also introduced so-called car scrappage schemes to boost their beleaguered car industries.

Details of the UK scheme are likely to be announced in the Chancellor's budget on 22 April
"A scrappage scheme will provide the incentive needed and the evidence is clear that schemes already implemented across Europe do work to increase demand," said Paul Everitt at the Society of Motor Manufacturers and Traders (SMMT).