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Archive for the ‘emerging economies’ Category

Is the Euro zone must regain their health through a stronger European integration to transfer money to poorer countries or must rather be oriented towards a debt restructuring, starting in Greece?

That is in essence the dilemma presented by a senior official of the euro area to a group of European ministers, other officials and businesspersons gathered at an informal breakfast at the World Economic Forum (WEF) in Davis.

If Europe hesitates between these two options, “time is running out” by certain leaders of the Old Continent did not reveal his identity, despite the relative calm markets show few days ago.

The first, advocated by the so-called peripheral countries, major stakeholders, such as Greece, Portugal and Spain, is clearly rejected by Germany, the main provider of funds in Europe.

Berlin proposes instead respect the rules and conditions their support to drastic measures for fiscal consolidation.

As for the second alternative, many economists, who estimate that some euro zone countries, starting with Greece, have no choice because of its huge debt, advocate a debt restructuring.

This issue remains a taboo in Europe and all the rumors and press reports evoke this possibility is rejected immediately.
“This would cause a horrible trauma,” judged on Friday a senior European official. The Greek Prime Minister Georges Papandreou again rejected this alternative on Friday in Davis.

“We’re not heading toward a restructuring. We have a very clear path, a road map out of our debt problem,” said Papandreou.
Greece, recalled his first minister, has done what was necessary through a grueling set and now has the solidarity of its members.

“It is not only in Greece, even including solidarity. This concerns the conditions for stability” in Europe, said on this issue a top European.
Meanwhile, solidarity is organized around the Financial Stabilization Fund, established in 2010 and will become a permanent instrument in 2013.

However, not at this point there is consensus, as some European officials privately recommended doubling the amount and others resist.
The fund is now endowed than 440,000 million euros in loan guarantees. The Economic Affairs Commissioner, Olli Rein, confirmed on Friday in an interview with the Wall Street Journal that the borrowing capacity will be increased, but did not refer to the amount.

President Felipe Calderon declared that Mexico’s economy grow despite the violence and challenging times lived in the country, as the country is seena to “constructive optimism” for the world.

“The truth is that, despite very challenging times we have experienced and very important action that has had, mainly the Federal Government, driving the strategy for the security of Mexicans, and although, of course, actions violent criminals, mainly in fight with other criminal groups and drug cartels in Mexico, we found these rates of economic growth, “Calderon said in a press conference to take stock of their participation in the World Economic Forum in Davis.

The federal agent told international media that Mexico is working hard in public policy with the idea of certainty and security for investors, tourists and the Mexican population.

“Mexico is working hard in public policies aimed at giving certainty and security to investors, tourists and, of course, the Mexican population, increasing economic competitiveness,” he added.

Given the increased competitiveness of the economy, Calderon said the country expected to again record growth rates of formal employment and more people this year.

“I would take nothing more than words of Mr. Klaus Schwab. The world is seeing here in Davis, constructive optimism was what he said, and I think that may also apply to data that is throwing the Mexican economy right now, “he said.

“Several companies have announced major investments in this forum are examples of the trust that exists in Mexico as a safe and attractive destination for investment. The Spanish company Bedroll will invest nearly $ 370 million in its operations in Mexico this year, and Magna will invest more than $ 100 million to expand operations in our country. This is a sign that we have left behind not only the worst global crisis since the 30′s, but our economy is back on track for growth “, he said.

Calderon said the euro and other currencies are going through a finding, as the Mexican peso.

“However, without entering the analysis of imbalances that still exist in the global arena and, in my opinion, are a major cause of these currency movements and, not without going to the analysis of speculative flows are likely ago of these processes, “he said.

“For me the key is not only how to deal with, as we are, with orthodox policies with these phenomena, but how to become more competitive, for me that am the key. In addition, while we have the same assessment process as other currencies, Mexico has won in competition, “he said.

Both in 2011 and in 2012 the growth of emerging and developing economies remain strong and will reach 6.5%, i.e. a small slowdown compared to growth of 7% recorded last year, “the agency said.

In its latest update of the World Economic Outlook, released today, the IMF also expects “capital inflows in emerging markets remained strong, and financial terms, its solidity.”

The report also noted, “Commodity prices will remain high and inflation is rising in some emerging economies.”

It is projected that “consumer prices in these economies will increase 6% this year, i.e., an upward revision of three quarters of a percentage point from the October 2010 edition of World Economic Outlook,” according .

In this context, “in emerging economies, the most important risks are linked to warming, a rapid escalation of inflationary pressures and the possibility of a hard landing,” so “should establish or maintain a restrictive monetary policy if they are starting overheating pressures emerge. “

For its part, the advanced economies are expected to advance 2.5 percent in the period from 2011 to 1912, up a quarter of a percentage point from the perspective of the October 2010 edition.

“In advanced economies, it urges that more is to relieve the financial strain of the euro area and advancing the consolidation and reforms of the financial system and the medium-term fiscal consolidation,” the IMF said.

However, “are expected to remain intense financial strain in the periphery of the euro area, where still of concern to market participants sovereign risk and banking, the political viability of the current austerity measures, as provided, and the absence of a comprehensive solution. “

There, “comprehensive measures are needed, quick and decisive action to deal with downside risks” and “in many countries remains critical to further strengthen national policy measures to further strengthen fiscal sustainability and revive growth.