The Daily Business Digest

The European zone is not getting the kind of employment generation their governments want. The private sector in the European zone is consciously cutting down on manpower and are only adding temporary workers rather than permanent employees.
This has resulted in the unemployment levels remaining at 10% levels, the highest in the last 12 years. The private sector alone needs to help the economy on this issue by generating more employment. For that it needs more orders from the exports market, which looks uncertain as of now.
Japan and US remain weak and they are the largest importers of European products and services. So the European unemployment level can come down only if there is an economic recovery in the US and Japan.

The Pakistan economy has been in doldrums for the last five years due to political issues , coupled with increasing internal insurgency issues. There are different sects of people living in that country and they do not trust each other. Hence the country is troubled with sectarian violence regularly and the Iraq – Afghanistan problem has only made things worse for Pakistan.
Now the poor country is saddled with massive monsoon floods not seen in the last ten decades. Over 20% of the country is now under water with most of them being the agricultural producing areas. Over two million people have been rendered homeless and a world health organization review has indicated that Pakistan would take years to get back to normalcy in the flood affected areas, as almost everything has been washed out.
If 15% of the population of a country see their belongings and their livelihood vanishing overnight, you can imagine the plight of the country in the following years.

The US economy is now heading into recession, if you go by the latest downward revision of the second quarter GDP by the commerce department. The latest data is one more confirmation of the sluggish US economic recovery, and that may complicate things for the US FED in the coming days.
On one hand, the US FED does not any leeway on interest rates which are already near zero, and further pumping of new printed currency notes would only spike up the inflation further. Also there are chances of a steep cut in the governmental spending, as a downward rating on some of the European nations’ sovereign rating could spark fears in the minds of global investors.
US is also running on a huge budget deficit , far higher than most of the European countries, and hence that could warrant some directional action by the US government. Once the November elections are over, we can expect some token action at least from Obama, and that could spell doom for the US in the medium term.

China has surpassed the claims of being the top- energy consumer globally. China has rejected the proofs of International Energy Agency saying it is unreliable. According to IEA calculations most of the energy comes from coal which is a heavy polluter. Hence the total accounts to the quarter of US consumption which was in the former first.

China is not the same which was in the previous decade it has become prosperous China. The blooming industries in China are helping the Chinese Families to buy many modern home electronics. Chinese Cabinet National Energy Administration announced the doubt over the statistics of IEA. The report of the rejection of IEA statistics came on last Tuesday by Xinhua.

The official even confirmed that IEA is really not understanding the efforts of China. The efforts of China to cut the use of energy,pollution and global statistics of Energy consumption. During the climate change talks China spoke about the energy consumption patterns of developed nations.

It is indeed correct from China’s stand point to assert that it is not the largest energy consumer in the world.
Also when you say that you are the largest energy consumer then you also become the largest environment polluter, which is not a tag you would like to hold.

Gordon Brown has used his first major speech since leaving office to say the future growth of the world economy is reliant upon the development of Africa.

Speaking in Kampala, the Ugandan capital, the former UK prime minister said he wanted to see the continent achieve its full potential.

Mr Brown also made light of losing the British general election in May.

He said he was someone who “spent some time as a politician before becoming a community organiser”.

Mr Brown contrasted himself with President Barack Obama “who spent some time as a community organiser before becoming a politician”.

Speaking to Ugandan political leaders, Mr Brown said he wished to see the creation of an “African century”.

China’s central bank says it plans to keep the Chinese yuan “stable” and there will be no immediate revaluation of the currency.

The comments come just a day after the bank announced plans to make the exchange rate more flexible.

But Chinese authorities have ruled out a large, one-off adjustment in the exchange rate.

China has come under increasing international pressure to change its currency policy.

The US in particular has complained that China is artificially keeping the value of the yuan low to help its exporters at the expense of foreign competitors.

On Saturday, US President Barack Obama welcomed China’s promise of increased flexibility in exchange rates, but the Chinese central bank’s latest comments cast doubt over the scale of its plans.

The year 2010 is not going to be good for the US economy as a whole, if you go by the latest US home foreclosure data for the month of May 2010. Yes, the home seizures by the banks and other lending institutions from defaulters has climbed up to a record 94000 homes in the month of May 2010, due to high unemployment levels.
In the next few months the foreclosure rate is expected to remain high , which in turn would put pressure on the housing price recovery across the country. And that could be a big dampener for new home buyers, for whom the tax breaks also would not be available from next month.
The oil spill in the Gulf of Mexico is only expected to make foreclosures accelerate further, because the house prices are already going down in the Gulf region due to the oil spill.
So the housing sector recovery could be very difficult in the coming months, and further drop in housing prices could only make things worse.
Given the huge budget deficit that the US government is running on, it does not have any scope for providing another round of housing stimulus measures.
So expect the 2010 GDP growth for US to be bad, especially in the second half.

The Venezuelan economy depends on crude oil exports for nearly 90% of the export revenue, and the crashing crude oil prices in the last two years has pushed the country into deep recession. And it is only possible for the country to earn extra valuable dollars by pumping out more oil than what it has committed to OPEC.
The country is already reeling under deep recession and it is also suffering from inadequate foreign fund flow. So it is working hard to increase oil production. It is now in the process of adding 10% more to the production capacity from the end of this year i.e, in the next few months. That could well be a good news for oil consuming neighbor i.e, US.
The country is also in the process of drilling more new wells with the target to increase the crude oil production capacity by another 40% in the next three years. Even if only 50% of the planned increase comes into effect, there could be a big improvement in the overall crude oil supplies for the world. That could in turn keep the crude oil prices in acceptable price range.
We can also expect some production increase in Iran and Russia as these countries are also reeling under economic distress.

The Greece bailout plan has been cleared by IMF and European Union authorities but the largest financial contributor to the scheme i.e, Germany is yet to take a call on the issue. The Germany government has been facing lot of domestic resistance to any Greece bailout contribution and the Greece government does not want to take any chance with the public opinion.
So Germany is now saying that it would read through the entire agreement between Greece and IMF / EU, understand the issues thoroughly and then take a call on whether to contribute or not.

The Greece government is not able to raise a penny in the international money markets after Standard and Poors downgraded the country to Junk status. The Greece government needs over 40 billion dollars of loans in the next three weeks to roll over the maturing debts, for which it is seeking the help of IMF and European Union countries.

The financial support is going to come through only if Greece agrees to bring lot of austerity measures that could cost the massive Greece public lot of hardship. The Greece unions are planning to go for major protests across the country in the next few days to force the government to not implement the austerity measures.

How Greece government and the public handle the dangerous financial mess up over the next several months is a billion dollar question which would affect the entire European Union setup as a whole.