According to this Bloomberg article:
Average gross wages grew an annual 8.9 percent in May, after rising 8.4 percent in April, and exceeded the 8.2 percent forecast in a Bloomberg News survey. Expectations central bank policy makers may lift rates as soon as July to curb inflation last week pushed Polish five-year bond yields to levels not seen since September.
Poland's main interest rate is currently 4.25 percent after a quarter-point increase in April, the first in almost three years. Forward-rate agreements show investors expect the central bank to boost borrowing costs by around 50 basis points this year.
And according to this Bloomberg article:
Polish nurses and midwives demonstrated in Warsaw today for higher wages along with striking doctors, who walked off their jobs almost four weeks ago for similar reasons.
According to police figures, about 4,500 protesters took part in the demonstration. Organizers said some 20,000 participated, private broadcaster TVN24 reported.
The starting gross monthly salary for Polish nurses can be as low as 1,100 zloty ($388), said Dorota Gardias, the head of the Polish Nurses and Midwives' Union, in a telephone interview, compared with an average monthly wage of $981 in May. In addition, wages are not regulated nationwide and vary from hospital to hospital, a situation that must also change, Gardias said.
More than 5 percent of Poland's 120,000 doctors and dentists have left to work elsewhere in the European Union since the country became a member in 2004, according to the Supreme Chamber of Medical Doctors in Warsaw.
Finance Minister Zyta Gilowska said this month that raising doctors' wages is out of the question because it will increase public debt too much. Kaczynski said today he would ``not allow'' a situation that will endanger plans to develop Poland and spur faster economic growth.
Kaczynski has said the state budget can't afford the wage increases sought by various groups, including teachers and railway workers. Poland is struggling to reduce its budget deficit to within EU limits in order to qualify for euro- adoption, a requirement of its accession to the bloc.
Wednesday, June 20, 2007
China Factory Investment
According to this Bloomberg article:
China's factory and property investment surged, fueling speculation that an interest-rate increase is imminent after exports, industrial production and inflation accelerated. Fixed-asset investment in urban areas rose 25.9 percent in the first five months from a year earlier to 3.2 trillion yuan ($420 billion), the statistics bureau said in Beijing today. The increase was 25.5 percent in the first four months. The final indicator for May underscores the government's failure to cool an economy that grew 11.1 percent in the first quarter.
China raised borrowing costs and deposit rates on May 18, pushing the benchmark one-year lending rate to 6.57 percent and the deposit rate to 3.06 percent, still less than the inflation rate. The central bank has also ordered lenders to set aside more reserves five times this year.
nflation accelerated to 3.4 percent in May, the highest rate since February 2005. Industrial production jumped 18.1 percent. Exports surged 28.7 percent and the trade surplus swelled 73 percent to $22.5 billion, pumping the financial system full of cash.
The number of new investment projects in the first five months was 74,701, an increase of 7,282 from a year earlier, the statistics bureau said. Investment grew 30.3 percent in the first five months of last year and 24.5 percent in all of 2006.
Spending by industries producing non-ferrous metals jumped 40.7 percent in the first five months from a year earlier, while real estate investment climbed 27.5 percent.
China's factory and property investment surged, fueling speculation that an interest-rate increase is imminent after exports, industrial production and inflation accelerated. Fixed-asset investment in urban areas rose 25.9 percent in the first five months from a year earlier to 3.2 trillion yuan ($420 billion), the statistics bureau said in Beijing today. The increase was 25.5 percent in the first four months. The final indicator for May underscores the government's failure to cool an economy that grew 11.1 percent in the first quarter.
China raised borrowing costs and deposit rates on May 18, pushing the benchmark one-year lending rate to 6.57 percent and the deposit rate to 3.06 percent, still less than the inflation rate. The central bank has also ordered lenders to set aside more reserves five times this year.
nflation accelerated to 3.4 percent in May, the highest rate since February 2005. Industrial production jumped 18.1 percent. Exports surged 28.7 percent and the trade surplus swelled 73 percent to $22.5 billion, pumping the financial system full of cash.
The number of new investment projects in the first five months was 74,701, an increase of 7,282 from a year earlier, the statistics bureau said. Investment grew 30.3 percent in the first five months of last year and 24.5 percent in all of 2006.
Spending by industries producing non-ferrous metals jumped 40.7 percent in the first five months from a year earlier, while real estate investment climbed 27.5 percent.
Azerbaijan Economy
According to this Bloomberg article:
Azerbaijan's economy, the world's fastest growing, will probably expand more than 35 percent this year as oil exports accelerate, Economic Development Minister Heydar Babayev said.
Growth in the $21 billion economy accelerated to 41.7 percent in the first three months of the year from 39.5 percent in the same period a year ago, more than triple the rate in China and Latvia, which has the European Union's fastest expanding economy. Non-oil gross domestic product makes up 12 percent of growth, helped by industrial output.
Azerbaijan, a former Soviet republic located on the Caspian Sea with 0.6 percent of the world's proven oil reserves, shipped 50 percent more oil last year than in 2005.
Natural gas production in 2008 will rise by a third to 8 billion cubic meters.
Growth in the country of 8.1 million has brought ``many problems,'' the 50-year-old Babayev said, speaking during a meeting of leaders from Georgia, Ukraine, Azerbaijan, Poland, Lithuania and Moldova. Inflation accelerated to 16.7 percent in the first quarter, compared with 5.4 percent in the same period a year ago, according to Bloomberg data.
The national currency, the manat, will strengthen as much as 7 percent against the U.S. dollar this year which may help the government to slow inflation, Babayev said. The manat traded at 0.8563 against the dollar today in Baku, compared with 0.897 almost a year ago, according to Azerbaijan's central bank.
The International Monetary Fund in February predicted growth would be 29 percent this year, down from 31 percent in 2006 while average annual inflation would accelerate to 21.1 percent from 8.4 percent last year. It suggested the central bank and government work together to allow the currency to appreciate further while also curbing government spending to slow inflation.
Azerbaijan's economy, the world's fastest growing, will probably expand more than 35 percent this year as oil exports accelerate, Economic Development Minister Heydar Babayev said.
Growth in the $21 billion economy accelerated to 41.7 percent in the first three months of the year from 39.5 percent in the same period a year ago, more than triple the rate in China and Latvia, which has the European Union's fastest expanding economy. Non-oil gross domestic product makes up 12 percent of growth, helped by industrial output.
Azerbaijan, a former Soviet republic located on the Caspian Sea with 0.6 percent of the world's proven oil reserves, shipped 50 percent more oil last year than in 2005.
Natural gas production in 2008 will rise by a third to 8 billion cubic meters.
Growth in the country of 8.1 million has brought ``many problems,'' the 50-year-old Babayev said, speaking during a meeting of leaders from Georgia, Ukraine, Azerbaijan, Poland, Lithuania and Moldova. Inflation accelerated to 16.7 percent in the first quarter, compared with 5.4 percent in the same period a year ago, according to Bloomberg data.
The national currency, the manat, will strengthen as much as 7 percent against the U.S. dollar this year which may help the government to slow inflation, Babayev said. The manat traded at 0.8563 against the dollar today in Baku, compared with 0.897 almost a year ago, according to Azerbaijan's central bank.
The International Monetary Fund in February predicted growth would be 29 percent this year, down from 31 percent in 2006 while average annual inflation would accelerate to 21.1 percent from 8.4 percent last year. It suggested the central bank and government work together to allow the currency to appreciate further while also curbing government spending to slow inflation.
Bulgarian Growth
According to this Bloomberg article:
Bulgaria's economy accelerated in the first quarter, driven by consumer spending and investment during the first three months of European Union membership.
The Balkan country's $31.5 billion economy grew an annual 6.2 percent, compared with 5.7 percent in the previous three-month period, the statistics office said in an e-mailed statement from Sofia today. The result beat the median estimate of 6 percent by five economists surveyed by Bloomberg. The economy grew 5.5 percent in first quarter of 2006.
Bulgaria sold its Jan. 1 EU entry on promises that membership will drive up wages and investment and help the economy catch up with the rest of the EU. Gross domestic product in the 13-nation euro zone, where 65 percent of Bulgarian goods are sold, expanded 3 percent in the first quarter.
The nation of 7.8 million people has per-capita GDP that is one-third of the EU average, the lowest in the bloc, and relies on growth to raise living standards.
Growth in 2006 slowed to 6.1 percent from a revised 6.2 percent in 2005. Bulgaria's growth rate trails other EU countries, including Lithuania and Latvia, which grew an annual 16.6 percent and 11.2 percent, respectively.
Gross fixed capital formation grew 36 percent in the third quarter after increasing 23.8 percent in the fourth quarter on imports of equipment and new cars, while end-user consumption rose 7 percent, after 6.1 percent growth in the fourth quarter, the statistics office said.
Exports rose 2.2 percent and accounted for 60.1 percent of GDP from 55 percent in the fourth quarter. Imports rose 13.2 percent comprising 88.8 percent of GDP from 83 percent in the previous quarter.
Gross value added by industry rose 7.6 percent and accounted for 27.4 percent of GDP, the office said. Services' GVA rose 8.1 percent, comprising 50.5 percent of GDP. Agriculture's gross value added rose 2.5 percent, while its share of GDP shrank to 3.8 percent from 5.4 percent in the fourth quarter.
Foreign investment reached 4 billion euros ($5.3 billion) in 2006, a 17-year record. January-April investment was 1.15 billion euros.
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Of course, all this growth is producing a pretty dramatic decline in unemployment:
As can be seen from this Eurostat chart, wages costs in Bulgaria rose by some 15.9% y-o-y in Q1 2007. So given the dramatic rate at which unemployment is declining the capacity issue is likely to arise pretty quickly. In fact the unemployment rate in Bulgaria in May 2007 is set to decrease to nearly 8.0% compared to 8.38% in April, according to Labour and Social Policy Minister Emilia Maslarova.
(please click on table for better viewing)
According to this Bloomberg article:
Bulgaria's economy accelerated in the first quarter, driven by consumer spending and investment during the first three months of European Union membership.
The Balkan country's $31.5 billion economy grew an annual 6.2 percent, compared with 5.7 percent in the previous three-month period, the statistics office said in an e-mailed statement from Sofia today. The result beat the median estimate of 6 percent by five economists surveyed by Bloomberg. The economy grew 5.5 percent in first quarter of 2006.
Bulgaria sold its Jan. 1 EU entry on promises that membership will drive up wages and investment and help the economy catch up with the rest of the EU. Gross domestic product in the 13-nation euro zone, where 65 percent of Bulgarian goods are sold, expanded 3 percent in the first quarter.
The nation of 7.8 million people has per-capita GDP that is one-third of the EU average, the lowest in the bloc, and relies on growth to raise living standards.
Growth in 2006 slowed to 6.1 percent from a revised 6.2 percent in 2005. Bulgaria's growth rate trails other EU countries, including Lithuania and Latvia, which grew an annual 16.6 percent and 11.2 percent, respectively.
Gross fixed capital formation grew 36 percent in the third quarter after increasing 23.8 percent in the fourth quarter on imports of equipment and new cars, while end-user consumption rose 7 percent, after 6.1 percent growth in the fourth quarter, the statistics office said.
Exports rose 2.2 percent and accounted for 60.1 percent of GDP from 55 percent in the fourth quarter. Imports rose 13.2 percent comprising 88.8 percent of GDP from 83 percent in the previous quarter.
Gross value added by industry rose 7.6 percent and accounted for 27.4 percent of GDP, the office said. Services' GVA rose 8.1 percent, comprising 50.5 percent of GDP. Agriculture's gross value added rose 2.5 percent, while its share of GDP shrank to 3.8 percent from 5.4 percent in the fourth quarter.
Foreign investment reached 4 billion euros ($5.3 billion) in 2006, a 17-year record. January-April investment was 1.15 billion euros.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Of course, all this growth is producing a pretty dramatic decline in unemployment:
As can be seen from this Eurostat chart, wages costs in Bulgaria rose by some 15.9% y-o-y in Q1 2007. So given the dramatic rate at which unemployment is declining the capacity issue is likely to arise pretty quickly. In fact the unemployment rate in Bulgaria in May 2007 is set to decrease to nearly 8.0% compared to 8.38% in April, according to Labour and Social Policy Minister Emilia Maslarova.
(please click on table for better viewing)
According to this Bloomberg article:
Austrian Financial Stability Reports
The Austrian National Bank has a series of Financial Stability Reports here.
Common Characteristics of Foreign Currency Loans
Based on the Austrian Experience
A foreign currency loan is a loan denominated in a currency other than that of the borrowers home country that must be repaid also in this currency. The majority of foreign currency loans are granted with a maturity of up to 25 years, but are rolled over every three or six months; the interest rate is linked to the London Interbank Offered Rate (LIBOR) of the relevant currency. The bank charges an additional 1.5% to 2%, depending on the size of the loan, the nature of customer relations, the collateral provided, etc.2) Interest (and principal) payments are due retroactively upon maturity and have to be made in the currency in which the loan is denominated. In many cases, the borrower may repay the loan before it is due or switch to another currency (including euro) at the rollover dates.
Loans denominated in a foreign currency are usually bullet loans combined with funding plans, which may differ from bank to bank. This means that until maturity, the borrower makes only interest payments. In addition, the borrower pays into a repayment vehicle during this period, for instance a life insurance policy or a mutual fund, which is to cover the principal to be repaid at maturity. Foreign currency loans at fixed interest rates are granted very rarely. The minimum amount required for currency swaps involving Japanese yen, for instance, would be too high; such arrangements may only be made in Swiss francs by large Austrian banks which are active in the Swiss market. In this case, however, borrowers do not have the option to cancel the foreign currency loan before maturity.
A foreign currency loan is a loan denominated in a currency other than that of the borrowers home country that must be repaid also in this currency. The majority of foreign currency loans are granted with a maturity of up to 25 years, but are rolled over every three or six months; the interest rate is linked to the London Interbank Offered Rate (LIBOR) of the relevant currency. The bank charges an additional 1.5% to 2%, depending on the size of the loan, the nature of customer relations, the collateral provided, etc.2) Interest (and principal) payments are due retroactively upon maturity and have to be made in the currency in which the loan is denominated. In many cases, the borrower may repay the loan before it is due or switch to another currency (including euro) at the rollover dates.
Loans denominated in a foreign currency are usually bullet loans combined with funding plans, which may differ from bank to bank. This means that until maturity, the borrower makes only interest payments. In addition, the borrower pays into a repayment vehicle during this period, for instance a life insurance policy or a mutual fund, which is to cover the principal to be repaid at maturity. Foreign currency loans at fixed interest rates are granted very rarely. The minimum amount required for currency swaps involving Japanese yen, for instance, would be too high; such arrangements may only be made in Swiss francs by large Austrian banks which are active in the Swiss market. In this case, however, borrowers do not have the option to cancel the foreign currency loan before maturity.
Austrian Foreign Currency Lending
1995, approximately, marked the beginning of a broadly based boom in foreign currency lending to both businesses and households; the preferred currencies were the Swiss franc and, more recently and increasingly, the Japanese yen. Foreign currency-denominated loans accounted for more than half of the increase in Austrian banks lending to businesses and almost two thirds of the increase in lending to households between the end of 1995 and mid-2002. In this period, the amount of foreign currency loans outstanding rose more than fivefold, which equals an average annual growth rate of 29%.1) In several quarters, the foreign currency share of the net change in bank lending came to more than 100%, i.e. in these periods, on balance, schilling- or euro-denominated loans were converted into foreign currency loans. By mid-2002, 19.4% of banks loans to businesses and 24.1% of loans to households were denominated in a foreign currency, compared to 7.8% and 1.5%, respectively, at the end of 1995 (including the euro legacy currencies).
(Click over image for a better view)
Early in the boom, the bulk of foreign currency loans was taken out in Swiss francs; from about 1999 on, the Japanese yen gained in popularity, accounting for 42% of the total amount of foreign currency loans at mid-2002. Up to end-1998, lending in Deutsche mark also played a major role. Given the close trade links between Austria and Germany, it can be assumed that loans in Deutsche mark were extended primarily to enterprises, which also seem to have been virtually the sole borrowers of U.S. dollar-denominated funds in Austria. A comparison with currency shares in foreign trade shows that, by contrast, the bulk of Swiss franc- and Japanese yen-denominated loans is not used for external transactions.)
(Click over image for a better view)
Early in the boom, the bulk of foreign currency loans was taken out in Swiss francs; from about 1999 on, the Japanese yen gained in popularity, accounting for 42% of the total amount of foreign currency loans at mid-2002. Up to end-1998, lending in Deutsche mark also played a major role. Given the close trade links between Austria and Germany, it can be assumed that loans in Deutsche mark were extended primarily to enterprises, which also seem to have been virtually the sole borrowers of U.S. dollar-denominated funds in Austria. A comparison with currency shares in foreign trade shows that, by contrast, the bulk of Swiss franc- and Japanese yen-denominated loans is not used for external transactions.)
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