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Financial markets turbulence probably will curb global economic growth slightly this year, the managing director of the International Monetary Fund, Rodrigo Rato, said Wednesday.
   ‘It would not be surprising if the turmoil had a certain impact on growth, more intense in certain countries than in others,’ Rato said at a news conference in Sao Paulo, Brazil.
   Asked whether the IMF would lower its 2007 global growth forecast of 5.2 per cent, he acknowledged ‘it is possible, but not in a dramatic way,’ suggesting a revision to ‘slightly above 5.0 per cent.’
   ‘We are facing a major financial correction on the credit market, in the context of a good economic situation worldwide, that will have some consequences for the economy, probably more for some than others,’ he said.
   Rato stressed that ‘the risks have increased but in the positive context of the world economy’ where the fundamentals remain ‘good’ regarding inflation, debt, trade and growth.
   The IMF last month hiked its 2007 and 2008 growth forecasts to 5.2 percent, from 4.9 per cent, citing robust growth in emerging markets, led by China, during the first half of the year.
   Fears of a credit crunch spreading from problems in the US housing sector have gripped financial markets around the world, triggering a series of heavy sell-offs.
   The US Federal Reserve, the European Central Bank and other central banks have pumped hundreds of billions of dollars into financial systems in the past two weeks to ward off a seizure that could threaten the world economy.
   Rato welcomed the interventions: ‘The central banks acted in a decisive and appropriate manner to guarantee the liquidity of the markets.’
   However, he warned that national and multilateral authorities ‘must remain very vigilant in the coming days.’
   The turmoil stems from a crisis in the US sub-prime mortgage sector, where home loans are granted to people with poor credit.
   Amid falling home prices and tightening credit after the collapse of the US housing market boom in early 2006, an increasing number of home buyers are struggling, and failing, to make their mortgage payments.
   A surge in US home foreclosures and the credit squeeze are forcing home lenders across America to scale back business. Some have declared bankruptcy.
   The sub-prime crisis has affected the broader financial markets, with several Wall Street banks hit with multibillion-dollar trading losses in mortgage-backed securities, spooking investors.
   The IMF chief said the turmoil ‘probably will have an impact on growth in the United States,’ but that strong corporate profits, robust employment and ‘moderate’ inflation ‘would play in favor of the soundness of the American economy.’
   Given the weight of the world’s biggest economy, however, the risks to the global economy ‘lean toward the negative side,’ he said, affecting world trade, commodities and interest rates.
   US treasury secretary Henry Paulson said Tuesday that US economic growth would likely be dented by the credit turmoil, but also stressed the strength of the global and US economies.
   ‘This will play out over time and liquidity will return to normal when the market has a better understanding, when investors have a better understanding, of the risk return trade-off,’ Paulson said.

China will next month begin marking food exports that pass quality tests with a special label, following recent safety scandals that have hurt the industry’s reputation, state media said Thursday.
   Food exports that have passed inspections will carry the label “CIQ”, which stands for China Inspection and Quarantine, the China Daily reported, citing a regulation from the nation’s quality watchdog.
   Packing must also carry information, such as the producer’s name and address, batch number and production date, to keep the source of any potential quality problems on record and stem fake exports, the report said.
   The new labelling system would begin on September 1.
   The system is likely to increase the costs for Chinese food exporters, with about 20,000 shipments worth 100 million dollars in Dongguan, Guangdong province in the south alone to be affected each year, the China Daily said.
   However, the move is necessary as many of the recent food safety problems have involved illegal exports that were not subject to inspections, the China Daily said, citing a Chinese industry executive.
   Thai health authorities last week warned consumers to be cautious in buying food imported from China, especially fruits and vegetables that may contain dangerously high levels of chemicals.
   Contaminated seafood has also been found in the United States.
   Aside from food, toothpaste, car tyres, blankets and toys have been some of the exports to have come under sharp international scrutiny in recent months over safety concerns.

Mortgage industry layoffs rose Wednesday and have jumped dramatically of late as surging home foreclosures and a credit squeeze force home lenders across America to scale back business.
   Ailing mortgage companies have announced thousands of job cuts in recent weeks as the slump afflicting the industry has worsened and funding for fresh home loans has become harder to obtain.
   Accredited Home Lenders Holding Co., based in California, became the latest mortgage firm Wednesday to unveil job losses, saying it was cutting 1,600 jobs due to the ‘ongoing turmoil’ sweeping the industry.
   The company specializes in subprime mortgages, or home loans granted to people with patchy credit. Subprime loans make up the majority of troubled property loans resulting in foreclosure.
   Hours later, Wall Street investment bank Lehman Brothers said it was closing down a mortgage subsidiary, BNC Mortgage LLC, with the loss of 1,200 jobs.
   John Challenger, the chief executive of Challenger, Gray Christmas, a private firm that monitors America’s job market, said over 11,000 layoffs have been announced since Friday, mainly at financial companies impacted by housing- and credit-related woes.
   ‘What’s remarkable about these job cuts is just how quickly they’ve come. Many of these companies have just turned on a dime,’ Challenger said.
   He compared the job losses roiling the mortgage industry to technology industry layoffs after the dot.com bubble burst in 2000, and other deep job cuts during the 1991-1992 recession.
   The number of people being laid off by mortgage companies has accelerated rapidly this month.
   Arizona-based First Magnus Financial, a national mortgage lender, filed for bankruptcy protection late Tuesday after informing almost 6,000 staff they had lost their jobs.
   Capital One Financial Corporation, a big bank and loan company based in Virginia, said Monday it was closing down a mortgage business it owns with the loss of 1,900 jobs.
   American Home Mortgage Investment Corp., one of America’s biggest mortgage companies, announced around 6,000 job losses on August 3 before filing for bankruptcy protection three days later.

Japan’s central bank on Thursday left its super-low interest rates unchanged for a sixth straight month as governor Toshihiko Fukui warned recent credit market turmoil could bring more pain.
   The Bank of Japan’s policy board voted 8-1 to maintain the benchmark lending rate at 0.5 per cent at the end of a two-day meeting.
   Until recently markets had been betting on an August rate hike but plunges in global share prices and a sharp appreciation of the yen prompted analysts to push back their forecasts for when Japanese interest rates will next go up.
   Recent credit market problems could require more time and ‘pain’ to resolve as investors reprice risk, Fukui warned.
   The central bank will keep a close watch on financial market volatility as it decides when to next raise interest rates, he said.
   ‘Even if the market correction progresses is an orderly manner it will most likely take some time, and the process could also bring losses and pain. ‘The Japanese economy continues to expand gradually but there has been high volatility in global financial markets. We need to continue to monitor the situation,’ Fukui said.
   The BoJ chief has made clear his desire to wean the world’s second-largest economy off the central bank’s emergency, anti-deflation measures before he steps down early next year.
   But the yen’s recent spike threatens to put the brakes on exports and reduce the price of imports, pushing back prospects of a return to inflation. Analysts said it seemed highly unlikely that the BoJ would raise interest rates in September as the US Federal Reserve would also hold a meeting at about the same time when it could cut rates.
   But a Japanese rate hike is still possible by the year end if financial markets continue to stabilise, they added.
   ‘We think the (BoJ) remains hawkish and, if a degree of calm returns, then the next rate hike is probably only one or two months away,’ said Macquarie Securities economist Richard Jerram.

South Korea said Thursday it has set up a 200-billion-won (212 million dollar) fund to cut greehouse gas emissions blamed for global warming.
   The fund will finance projects to reduce carbon dioxide emissions such as solar energy and waste heat recovery projects, said Cho Seok, head of the energy and resources policy bureau at the energy ministry.
   He said the cash will also be used to reduce other greenhouse gases.
   An investment firm to run the fund was set up on August 14 and registered with the Financial Supervisory Service on Monday, Yonhap news agency reported.
   The government announced Wednesday it would set up a carbon exchange market by the end of the year to allow companies to sell their cuts in greenhouse gas emissions.
   The government and state energy companies, including Korea Electric Power Corp, Korea Hydro Nuclear Power Co and Korea District Heating Corp, will be the main buyers.
   South Korea is not a member of Annex I of the Kyoto Protocol that went into effect in early 2005, but it ranked 10th in the world in terms of carbon dioxide emissions as of last year.
   Annex I countries must cut greenhouse gas emissions by at least five percent from 1990 levels during the 2008-2012 period.

Thirty years ago, Swe thought she was heading into the good life as the wife of a successful civil servant in Burma.
   Her husband’s membership in the ruling Burmese socialist party seemed to guarantee them and their seven children a bright future.
   They owned a duplex in suburban Yangon, and when her husband took early retirement in 1983 because of a hearing problem, his pension of 1,100 kyats a month seemed enough to keep them going.
   ‘Fried eggs were just a side dish at that time,’ said her husband Win.
   But after years of rampant inflation and economic mismanagement by Myanmar’s military government, his monthly pension is worth less than one dollar and eggs are a luxury.
   Their struggles are becoming typical for many in Myanmar. The difficulties were heightened last week when the government doubled key fuel prices, leaving many workers unable to even afford bus fare to their jobs.
   The fuel prices hike has sent hundreds of people into the streets in protest this week—a brazen act unheard of in a country where the regime tolerates no dissent.
   Win, 73, is no longer able to work and just finding enough to eat has become a daily challenge.
   When Win retired, the then-dictator Ne Win ruled the country with an iron fist and chaotic economic policies.
   Ne Win had largely sealed off Burma from the rest of the world. His government dealt with financial problems by demonetising bank notes.
   In 1985, the kyat notes in 20, 50 and 100 denominations were made worthless, and replaced with new notes in the peculiar units of 25, 35 and 75.
   Two years later, those notes were scrapped and replaced with equally unexpected denominations of 15, 45 and 90. That change made three fourths of the currency in circulation worthless.
   It was also one of the underlying causes behind a pro-democracy uprising in 1988 that was crushed when the military opened fire on student protesters, killing hundreds—and maybe thousands.
   Although the military has opened up the country to investment, the economy remains crippled by mismanagement and western sanctions over the detention of democracy leader Aung San Suu Kyi.
   The United Nations ranks Myanmar among the world’s 20 poorest countries, and the World Food Programme said in a report last year that food security is a year-round problem here.
   ‘A large segment of the population faces difficult socio-economic conditions with an increasing number living in acute poverty,’ it said.
   The government claims that the economy grew by over 12 percent last year, but private estimates put the growth at 1.8 percent.
   About one-third of the nation’s children are malnourished, according to the UN food agency.
   With inflation at more than 30 percent, life in Yangon has become increasingly difficult for the poor.
   For Swe and Win’s family, the nation’s economic woes mean her sons have never found regular work. Two of her sons began injecting drugs and caught HIV, either sharing needles or from unsafe sex. It’s impossible to know for certain, she says.
   Swe watched both of them die seven years ago, powerless to get them any treatment. Her youngest son is now suffering the same fate.

Two US toy companies on Wednesday recalled more than 300,000 Chinese-made toys, saying they contain potentially dangerous levels of lead.
   Two other companies also recalled nearly 22,000 pieces of children’s jewelry, saying they, too, contained excessive levels of lead.
   The alerts come eight days after a massive global recall by US toy giant Mattel Inc., of 18 million toys that were made in China.
   Prior to Wednesday’s recalls, there had been four recalls of toys imported to the US from China.
   The latest recall included 250,000 Sponge Bob spiral address books and journals, 66,000 spinning tops, including some from the popular Thomas the Tank Engine series, and 4,700 pails, the US Consumer Product Safety Commission said in separate statements issued jointly
   with the two companies concerned.
   The paint on the metal spiral bindings of the address books and journals, and on the metal handles of the tops and pails, ‘contain excessive levels of lead,’ the US importers of the toys, Martin Designs of Ohio and Schylling Associates of Massachusetts, said.
   The Schylling company had earlier this month recalled 24,000 Chinese-made ‘Thomas Friends’ spinning tops, warning that they were painted with lead-based paint.
   Some 7,900 children’s ‘Divine Inspiration’ charm bracelets and 14,000 ‘Toby and Me’ jewelry sets, including necklaces, bracelets, rings, earrings and pendants, were also recalled Wednesday because of high lead levels, the importers of those products said.

Thailand on Thursday revised down its forecast for export growth in 2007, citing an expected slowdown in global demand and the strong baht, which makes Thai products less competitive abroad.
   Exports are likely to rise by 12.5 per cent this year, down from 13.0 per cent seen earlier, the finance ministry said. Exports account for 60 per cent of the Thai economy.
   ‘We expect overseas demand to weaken slightly’ in the rest of 2007, Pannee Sathavarodom, director-general of the ministry’s fiscal policy office, said, adding the rising baht also added pressure on export growth.
   The Thai baht traded at near 10-year highs against the dollar in July.

China accused the United States Thursday of becoming increasingly protectionist, as it hit back following a wave of high-profile trade disputes and export safety scandals.
   Senior officials told a briefing in Beijing their US counterparts were uncooperative and that the US government had broken World Trade Organisation rules while carrying out anti-dumping investigations against Chinese products.
   ‘Recently, the United States has carried out a series of measures with a distinct protectionist flavour,’ assistant commerce minister Wang Chao said.
   ‘It’s also fair to say that they have not given full consideration to Chinese requests for consultations.’
   The violation of WTO regulations has come about in the process of anti-dumping and anti-subsidy investigations launched by the United States against five product categories, vice commerce minister Gao Hucheng said.
   ‘Investigations and measures undertaken by the United States will lead to double taxation,’ he said. ‘You can’t do that according to WTO rules.’
   The five categories — including items such as art paper, steel pipe and tyres — have been targeted in a series of probes since November, a frequency rarely seen in contemporary global trade, Gao said.
   ‘This will directly impact 860 million dollars of exports, the activities of over 500 enterprises and the jobs of 70,000 people,’ he said.
   Gao also complained about the US this month asking the WTO to mediate a copyright trade dispute with China. The United States said bilateral talks had failed to close loopholes that allowed Chinese counterfeiters to flourish.
   ‘It is with regret that we notice the US suggestion to set up an expert panel,’ Gao said.
   The WTO actions have highlighted rising concern in the United States over the ever-widening trade imbalance between the two countries.
   The US trade deficit with China hit 232.5 billion dollars last year, according to official US figures, fuelling complaints that cheap Chinese exports are causing job losses in the United States.
   Trade tensions have further heightened amid a spate of safety scandals surrounding Chinese exports to the United States and elsewhere — ranging from toys and tyres to seafood and toothpaste.
   A commerce ministry statement released at the start of Thursday’s briefing accused the US press of exaggerating the problems.
   ‘The American media have been playing up the quality and safety issues of China-made products,’ the statement said.
   Gao also criticised foreign media in general, saying that while many reports had been objective, others had been unfair in their reporting of sub-standard Chinese exports.
   ‘Some media reports have been biased and deliberately blown the issue out of proportion. There has been no lack of reports throwing doubts on Chinese products and even harmed the reputation of Chinese products,’ he said.
   Assistant commerce minister Wang in Thursday’s briefing reiterated China’s view that only a tiny portion of its exports were substandard.
   ‘We adopt a conscientious attitude towards the quality problems that have emerged with Chinese products,’ Wang told the briefing.
   ‘Even though only one per cent of all products have quality issues... we will earnestly investigate all problem enterprises.’
   China has previously said that less than one per centof its exports have any quality problems.

Germany recorded a surplus in its public accounts for the first time since reunification in 1990 in the first half of the year, preliminary figures showed on Thursday.
   The surplus of 1.2 billion euros ($1.6b) amounts to 0.1 per cent of the country’s gross domestic product, the federal statistics office Destatis said in a statement.
   The public accounts include spending at the federal, regional and local levels, as well as the social security budget.
   The finance ministry said it was happy with the state of the public books, but ruled out any tax cuts.
   ‘It is very satisfactory,’ a spokesman for the ministry told AFP.

The US sub-prime mortgage loan problem which has caused stocks to tumble worldwide, remains manageable, officials of the Association of Southeast Asian Nations said in Manila Thursday.
   Ong Keng Yong, secretary-general of ASEAN said this was the consensus of ASEAN trade officials meeting in Manila ahead of an economic ministers’ summit due to begin on Friday.
   ‘Many of us feel that what you see in the stock market can be managed by ASEAN economies,’ he said, adding that ‘our ASEAN economies are not as exposed as other economies.’
   ‘We regard it as one of the challenges,’ Ong said but added that in their meeting, the ASEAN investment officials ‘did not see it as something that required a detailed discussion.’
   He said that despite the global fears spawned by the sub-prime mortgage problem, ASEAN would remain an attractive investment destination, citing the 28 per cent rise in foreign direct investment flows into ASEAN in 2006, amounting to 52.4 billion dollars.
   ‘The overall picture is one of optimism,’ he said.
   ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. The organisation is seeking to create a single economic community by 2015.

Three offshore natural gas fields in Myanmar hold the largest reserves to be discovered in that country, South Korea’s Daewoo International said Thursday.
   The blocks in the Bay of Bengal near the border with Bangladesh have been certified to hold up to 219.2 billion cubic meters of exploitable gas, Daewoo International said.
   A spokesman told AFP the size of the reserves is a record for Myanmar and had been certified by international consultants Gaffney, Cline and Associates.
   The reserves were certified as between 4.5 to 7.7 trillion cubic feet, he said, with the upper figure equivalent to Korea’s total gas consumption for about seven years.
   Daewoo has a 60 per cent stake in the fields. The state-run Korea Gas Corp owns 10 per cent and the remaining 30 per cent is held by two Indian firms — Gail India and Oil and Natural Gas.
   Daewoo hopes to supply 600 million cubic feet of gas per day, or 3.7 million tons of liquefied natural gas per year, for up to 25 years, the spokesman said.
   However, the company said it would be cheaper and quicker to pipe the gas to neighbouring countries. ‘We are in talks with potential buyers in China, Thailand and India,’ the spokesman said.
   The Seoul government would like the gas to be liquefied and delivered to South Korea, which imports most of its oil and gas.
   Economic sanctions imposed by the United States on Myanmar for its poor human rights record will not affect the project, the spokesman said.

Businessmen in India and Japan could tapped into various business opportunities in sectors like infrastructure, power, automobiles, auto components and electronics hardware, a white paper release said Thursday.
   The white paper titled Nihon and Bharat — two ancient Asian giants engaging to take economic relations to a new level, was released on the occasion of India-Japan business seminar organised by the Department of Industrial Policy and Promotion and the three business chambers, FICCI, CII and Assocham.
   The visiting delegations of CEOs of the Japanese companies accompanying the Japanese prime minister Shinzo Abe attended the seminar.
   The white paper said sectors like power, auto and electronic hardware offer lot of potential.
   Commenting on the white paper, Pradeep Udhas, Head, Markets, KPMG in India said Japan’s technological prowess and design/engineering skills, if combined with India’s skilled labour and IT leadership, can prove symbiotic to both the countries.

Oil prices were higher in Asian trade Thursday as global financial markets recovered, easing concerns of faltering economic growth which could lead to lower demand for crude, dealers said.
   New York’s main contract, light sweet crude for October delivery rose 26 cents to 69.52 US dollars from 69.26 in late US trades Wednesday.
   Brent North Sea crude for October delivery gained 11 cents to 68.81 dollars.
   ‘The financial markets appear to regain some level of stability and the crude commodity market is reacting to that,’ said Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz.
   There had been fears that the global financial turbulence whipped by a crisis in the US sub-prime mortgage market could slowdown economies worldwide and dent demand for oil.
   Shum said a delay in the delivery of Mexican crude oil to the United States because of Hurricane Dean has also helped push prices higher.
   ‘There is some concern about delays in Mexican
   crude deliveries to the US in the wake of Hurricane Dean,’ he said.
   Shum said prices also recovered after investors realised that a surprise rise in US crude inventories last week was due to imports in anticipation of the hurricane.
   The US Department of Energy said Wednesday that American crude inventories rose by 1.9 million barrels in the week ended August 17, beating analysts’ consensus forecasts for a drop of 2.75 million barrels.
   Some analysts had interpreted the data as showing that US crude oil demand was falling, prompting some investment funds to exit the oil market.
   But Shum said: ‘That was really a pre-hurricane effect. There were a lot of crude oil imports in anticpation of storm-related interruption.’
   The DoE said that US gasoline, or petrol, reserves sank by 5.7 million barrels—larger than market expectations of a drop of 800,000 barrels —but the decline had little effect on the market as the US summer driving season is nearly coming to an end.
   The weather remains a key factor for oil prices as September is the peak hurricane season in the United States, analysts said. US oil production facilities in the Gulf of Mexico can be threatened by the storms.
   ‘Going forward in the next few weeks, the oil market faces upward exposure because September is the peak hurricane month. We have seen what hurricanes can bring about to the oil market,’ Shum said.

German consumer spending picks up
German consumer spending picked up slightly in the second quarter despite a slowdown in economic growth, the federal statistics office Destatis said on Thursday. The rise in consumer spending failed to compensate for weakness elsewhere, mainly in the building sector, and economic growth slowed to 0.3 per cent in the period on a quarterly basis, Destatis said, confirming a first estimate given on August 14. Growth in gross domestic product in the first quarter had been 0.5 per cent. The data released on Thursday showed that consumer spending increased by 0.6 per cent in the second quarter after a fall in the first quarter.
— AFP

Vietnam consumer prices rise
Vietnamese consumer prices rose almost 8.6 per cent year-on-year in August, according to preliminary data released Thursday, heightening concern about rising inflation. Vietnam has slashed a range of import tariffs and reduced retail fuel prices recently in a bid to keep the annual inflation rate below the yearly economic growth target of 8.2 to 8.5 per cent for 2007. According to a preliminary report by the government-run General Statistics Office, Vietnam’s consumer price index for August rose 8.57 per cent compared to the same month last year.
— AFP

Thai auto exports
up 38pc
Thailand’s vehicle exports in July jumped 38 per cent year-on-year thanks to robust demand in Australia and the Middle East, an industry group said Thursday. Auto exports rose to 56,042 units in the month with the value of vehicle shipments up 34 per cent from a year earlier at 24 billion baht ($694m), the Automotive Industry Club said. Strong demand in Australia and the Middle East helped lift vehicle exports, offsetting pressure from a strong Thai baht, said club spokesman Suraphong Phaisitpattanapgong. The baht traded at near 10-year highs against the dollar in July.
— AFP