The Daily Business Digest

Does the internet really help the poor? That is really the question. It is not really easy to answer that question. But, if you look at Brazil as the case study, you can possibly make some very tight hypotheses.

Let us look at Brazil.

Brazil is a country with a foot in two camps – part rich, mainly poor, so it’s a good place to take the financial pulse of a global phenomenon like the internet.

Brazilians love the web. Not everyone has access, but those who do spend an average of 70 hours a month online, which is more than anywhere else in the world.

Less than a third of Brazilians have a connected computer at home, so most people go online at internet cafes, known locally as Lan Houses.

There are more than 100,000 Lan Houses dotted around the country.

The country’s online revolution has created opportunities to establish small businesses that simply didn’t exist before. There are so many jobs created that now the internet is a part of the culture over there.

The UK’s goods trade deficit with the rest of the world unexpectedly widened to its biggest since August 2008 in January.

Exports saw their sharpest drop in more than three years, according to the Office for National Statistics (ONS).

The UK’s trade gap in physical goods widened to £7.99bn ($12bn), well above the £7bn forecast by economists.

The news was disappointing, especially since the weak pound might have been expected to boost sales abroad.

The UK’s currency has fallen by some 24% against a basket of world currencies since early 2007 – before the global economic crisis.

The exports have to be back for UK to get some amount of normalcy.

The latest review by US FED on the state of the US economy shows a slow but steady recovery. Many manufacturers have shown positive growth in demand and most of them are expecting improvement in recruitment scenario over the coming months.
Given the low inflation levels, we can expect the interest rates to remain at the current levels for one quarter at least, say experts. Housing sector is still not showing recovery in many states, and the government is likely to put special efforts on this sector over the coming months.
The high level of unemployment is still a cause for concern for the US FED authorities as full fledged economic recovery is not possible without reduction in unemployment levels.

The Australian Central bank has raised the bank rate for the fourth time today, by 25 basis points. This is the fourth rise in the last five months by the Central Bank. The Australian government is worried about the abnormal increase in the real estate prices in the country over the last six months.
The low rate of interest meant for industrial recovery has partly been routed for speculation and hence the central bank has decided to tighten the liquidity in the system. This is expected to cool down the property prices to some extent and would also help the country to stabilize the economic recovery.

A new Zimbabwean law that forces foreign-owned companies to sell a majority stake in their businesses to indigenous people has come into effect. This is going to force firms to flee Zimbabwe.

Overseas-owned firms worth more than $500,000 (£332,000) will have five years to sell a 51% stake, upon the threat of jail sentences. Harare-based economist John Robertson told the BBC’s Network Africa programme that it was “a very bad idea”. He said it would only deter further badly-needed foreign investment.

“The government appears to have no wish at all to make the country attractive to the [overseas] investors,” said Mr Robertson.

The Indian economy has been able to grow at a healthy 8% in the year 2009, next only to China. In fact even in the first half of 2009, only these two economies were able to be in the positive zone with reasonable stability. In the last two quarters the Indian economy has been able to grow steadily with a major recovery across industries.
The inflation is also slowly raising its ugly head and the government is also facing the problem of rising debt levels.

So the government has decided to slowly withdraw part of the stimulus measures taken at the beginning of 2009.
The government has partly reversed the excise duty and customs duty cuts, apart from raising the corporate tax for many industries. The service tax also been expanded to include railway ticketing. The interest rates are also all set to go up in the coming months, with the Central Bank raising the cash reserve ratio few days back.

Greece is expected to propose a revolutionary debt reduction budget exercise in the coming weeks in order to avoid becoming rated as junk country. And that is not going to happen easily, as hundreds and thousands of Greek took to the streets in a violent protest few days back.
And the government does not have the choice than to implement the plan, as it would not get any financial support from the EU and IMF without doing that. And implementing it could force Greece into social unrest issues which might go out of control anytime.
So nothing seems to be going right for Greece, and the entire European Union and even the global economy could be heading for trouble in the coming days.

Poor winter weather drove UK retail sales down by 1.8% between December and January, the sharpest drop in 18 months, official figures have shown.

The fall was more than three times faster than analysts had forecast.

However the figures were weighed down by the inclusion of petrol in the official figures for the first time as drivers stayed at home in the snow.

The data, from the Office for National Statistics, adds to concerns about the fragility of the UK economic recovery.

Sales by value were up 0.9% from January 2009.

The International Monetary Fund (IMF) has agreed to restore Zimbabwe’s voting rights after a seven-year suspension for unpaid debts.

But the fund said the country was still ineligible for loans until it had paid off more of the $1.3bn (£841m) it owes to creditors.

In the meantime, Zimbabwe can take part in IMF decision-making.

The move recognises the country’s efforts to repair its economy and improve relations with donors.

There are signs that the country’s economy is improving a year after former foes President Robert Mugabe and Prime Minister Morgan Tsvangirai united in a coalition government.

President Barack Obama has set up a taskforce to tackle the growing US budget deficit.

The body will report back by the end of the year on what steps need to be taken to get the deficit down to 3% of GDP.

This year’s deficit is expected to climb to 10.6% of GDP. Last year it reached 9.9%, the highest rate since World War II.

Erskine Bowles, ex-chief of staff to President Clinton, and ex-republican senator Alan Simpson will co-chair.

The US budget deficit for the year ending 30 September 2009 was $1.415 trillion (£907bn). It is expected to hit a record $1.56 trillion in 2010.