Economic growth in Latin America and the Caribbean will fall next year to 1.9 percent from its estimated level of 4.6 percent for 2008, the U.N. Economic Commission for Latin America and the Caribbean said Thursday
In its Preliminary Balance 2008, Santiago-based ECLAC – however – emphasized that 2008 has been the sixth consecutive year of growth for the region, a period during which the labor market indicators also improved and poverty fell.
Almost all the region’s countries gave priority to macroeconomic equilibrium and generated budget surpluses, Alicia Barcena, the ECLAC executive secretary, emphasized upon presenting the document. Barcena said that today the region is better prepared to confront the global economic slowdown, but it is certainly not immune to it.
Looking at individual countries, this year it was Uruguay that led the region’s growth with a rate of 11.5 percent, followed by Peru at 9.4 percent; Panama, 9.2 percent; Argentina, with growth of 6.8 percent; and Ecuador, 6.5 percent and Brazil at 5.9 percent.
Surya Roshni Ltd has decided to reduce the production of traditional bulbs in a phased manner and replace it with more eco-friendly lamps due to increasing environmental concerns.
“The European Union has drafted a plan to switch over to low-energy bulbs from high power consuming bulbs by 2011-12, so we too decided to convert to a energy efficient lamp manufacturer by gradually cutting down production of traditional bulbs,” Mr Jaiprakash Agarwal, Chairman and Managing Director, Surya Roshni Ltd, said while addressing a press conference here on Wednesday.
He also said that Surya Roshni has launched a nation-wide campaign for creating awareness about conserving energy and educate more than one lakh retailers on the use of energy efficient lamps.
The company currently has a 25 per cent market share in domestic lighting products market. It exports its products to around 45 countries. “Major expansions have been planned in high mast, sodium lamps, energy efficient lighting products for various sectors including highways, sports facilities and housing,” he said. The company currently has a production capacity of 25 million Compact Fluorescent Lamps (CFLs) but intends to increase this to 60 million in the next two years.
There will be over 1,000 green buildings dotting the Indian skyline by 2010 saving energy. Already 375 buildings are under construction. Indian industry will also be a key player in the $40-billion green building material business in the world. There will be over 50,000 accredited green professionals in the country to make India a leading player in green building business and technologies.
The green building goal is set by the Indian Green Building Council (IGBC). It envisages one billion sq ft of green building footprint to be registered for certification by 2012, 1,000 green buildings to be registered by 2010, a major share in the $40-billion market for green building materials by 2012 and training of 5,000 IGBC accredited green building professionals by 2010.
“With a modest beginning of 20,000 sq ft, green footprint in the country in 2003, today about 375 green building, including 77 houses, measuring over 25 million sq ft, are being constructed all over India under the IGBC Green Homes Certification programme’’, C N Raghavendran, chairman, IGBC, Chennai chapter, said here on Monday. With the current growth rate, India would be one of the world leaders in green buildings and technologies, he said.
In his address at the three-day `Energy Summit 2008’ – energy efficiency in buildings, organised by the Confederation of Indian Industry (CII), he said, green buildings save up to 30% to 40% energy compared to other new buildings mainly through an integrated approach to design and construction.
Politicians, stuck in an industrial era mindset, love to “protect jobs” since that plays well among interest groups like unions, while they completely neglect skill-building, the key to not only citizens being eligible for many jobs in the knowledge era, but also in a position to create jobs as entrepreneurs.
Unlike someone who has been a freight elevator operator on a construction site (inside source: on chicago construction sites, a $70,000+ salary), shielded from reality by a union contract, a person like Ronaldinho whose skills with a soccer ball are superhuman, doesn’t need his “job” to be protected by Lula. With skills like that, he can get a “job” at any top European club. Clubs he’s had a job with include Gremio, PSG, FC Barcelona and now, AC Milan.
I am amazed at how the private insurance markets have not been tapped to provide for “occupational loss insurance” in many countries. It makes more sense for government to subsidize individual contributions to those types of policies than protect particular jobs.
Modeled on long-term disability insurance, the payments can cover 60-70% of salary for upto 2 years worth of job loss and the necessary retraining. Employees can choose to supplement this salary by purchasing additional coverage.
In the example below, it is better to beef up the employee safety net than provide blanket company loan guarantees.
Brazilian President Luiz Inácio Lula da Silva highlighted the formalisation of preferential tariff agreements between Mercosur and India, and Mercosur and the Southern Africa Customs Union (comprising Botswana, Lesotho, Namibia, South Africa and Swaziland), as well as the expansion of the trade agreement with Chile to include services, as is also being pursued with Colombia.
The creation of a fund to guarantee loans taken out by small and medium companies, set up to stimulate this sector especially in Paraguay and Uruguay, is part of Brazil’s commitment to “strengthening the smaller economies,” said Lula, who announced that in 2009 “Brazil will double its contribution to FOCEM” (the Mercosur Structural Convergence Fund), created in 2005 to mitigate the asymmetries within the bloc.
“Protecting jobs and social inclusion”(??) was a concern expressed by several of the presidents, in the context of a crisis which, in Lula’s view, reflects the “perversions of the dominant economic system.”
One of the most outrageous example of lax U.S. lending practices was someone making $14,000 a year approved for a $720,000 mortgage with no down payment!
“In India, we never had anything close to the subprime loan,” said Chandra Kochhar, the chief financial officer of India’s largest private bank, Icici. (A few days after I spoke to her, Ms. Kochhar was named the bank’s new chief executive, in a move that had long been anticipated.) “All lending to individuals is based on their income. That is a big difference between your banking system and ours.” She continued: “Indian banks are not levered like American banks. Capital ratios are 12 and 13 percent, instead of 7 or 8 percent. All those exotic structures like C.D.O. and securitizations are a very tiny part of our banking system. So a lot of the temptations didn’t exist.”
Part of the reason is cultural. Indians are simply not as
comfortable with credit as Americans. “A lot of Indians, when you push
them, will say that if you spend more than you earn you will get in
trouble,” an Indian consultant told me. “Americans spent more than they
Mr. Parekh said, “Savings are important. Joint families
exist. When one son moves out, the family helps them. So you don’t
borrow so much from the bank.” Even mortgage loans tend to have down
payments in India that are a third of the purchase price, a far cry
from the United States, where 20 percent is the new norm.
But there was also another factor, perhaps the most important of all.
India had a bank regulator who was the anti-Greenspan. His name was Dr. Y.V. Reddy, and he was the governor of the Reserve Bank of India. Unlike Alan Greenspan,
who didn’t believe it was his job to even point out bubbles, much less
try to deflate them, Mr. Reddy saw his job as making sure Indian banks
did not get too caught up in the bubble mentality.
Indian outsourcing industry has entered a new era of growth. Infosys (INFY), Satyam (SAY), HCL, and other IT outsourcing majors that once specialized in lower-value tasks such as application maintenance and business process outsourcing are seeing increasing success in providing outsourced high-value tasks such as total IT outsourcing, R&D, and business transformation services.
Here are six reasons why this is true.
1. Faced with high turnover, rising salaries, and a weak public education system, top Indian companies started investing heavily in workforce education and development.
2. Attrition rates have been remarkably low and are dropping.
3. Rising salaries in Indian IT shops are no longer a problem.
4. Faced with brutal cost-control pressures caused by the global economic downturn, many companies are more desperate to outsource than ever before.
5. There has always been a trickle of highly skilled [Indian] workers returning from the U.S. and Europe to their home countries for family reasons and because they felt homesick.
6. India has been dramatically increasing the output of its engineering colleges, and now quality is improving.
State-run Indian Oil Corp is planning to buy a sugar mill and set up a refinery in Brazil to produce ethanol, the Indian government said on Monday.
Indian oil firms view investments in Brazil for ethanol production as highly strategic, the country’s junior food, minister, Akhilesh Prasad Singh, told parliament in a written reply to a question.
Another Indian petroleum refiner, Bharat Petroleum Corp Ltd, was working with Brazil’s Petroleo Brasileiro S.A. for investments in the country to produce ethanol, the minister said.
He told lawmakers India’s ethanol production was estimated at 2,730 million litres in the year to September 2008, down from 2,900 litres a year ago.
India, which imports 70 percent of the oil it consumes and heavily discounts fuel sales, asked oil firms to mix ethanol with petrol to 10 percent from October, when the new sugarcane crushing season began.
Before October, oil firms were mixing 5 percent ethanol, an alternative fuel made from cane or corn, with petrol almost nationwide. India has set an ambitious target of reaching 20-percent biofuel use within a decade.
[P]ost-mortem analysis, [after deleveraging driven by financial crisis] indicates that currencies in Latin America were over-inflated and the 30 percent downturn will likely settle at a 20-25 percent decline, proving to be a healthy correction that brings some much needed competitiveness back to the region’s export industries.
That analysis, however, is appropriately limited to the region’s key investment markets, namely Mexico, Brazil, Colombia, Chile and Peru, which capture most of the region’s inbound FDI. The difference between correction and devaluation is that, historically, Latin America experienced devaluations under conditions of high foreign debt and poor financial management that led to spiraling inflation and further devaluation. This time around, the big five markets mentioned above all share well-trained ministries of finance, record levels of foreign reserves, conservative levels of foreign debt, and a rapidly maturing political class that understands the need for fiscal prudence. The investment grade standing of the sovereign debt of these five countries is being put to the test and, thus far, is winning.
CORPORATES: ACHILLES HEEL
Where this financial crisis has revealed real weakness in Latin America is in the irrational exuberance of its rapidly growing and highly indebted corporate sector.
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