Peer across the Atlantic and one would one get the sense that the intensified campaign to stabilize Libya will be done and dusted by early spring.
At the start of the week, investors pushed the Dow Industrials back above the 12,000 mark with a surge of 1.5%. At last count, the index is up better than 5% for the year, the broader S&P 500 nearly 4%. Part of the late March market madness was based on expectations of an early resolution in the Middle East. Once the missile attacks got underway, the general feeling was that decisive action was taken by the West and that would begin to put the worst behind us.
It is not with some irony then, that the Cairo stock exchange opened for the first time since January 27 and plunged nearly 9% on the day, making it the worst performing equity market in 2011. They say equity markets are good lead indicators for the state of play in their respective economies. Which is more accurate today: the New York Stock Exchange or the Cairo Stock Exchange?
Investors must feel very confident that the U.S. economy can continue to expand by around 4%, without the help of government stimulus. There is also an assumption that energy prices have peaked after the unrest that started in Tunisia but at this juncture knows no limits with Syria, Yemen and Bahrain - all part of today’s "great unknown."
The International Monetary Fund was predicting growth of 4% for the Middle East and North Africa before the year got underway. It is difficult to see how the region can obtain half of that output, with tourism receipts already under pressure and a climate that will only scare off foreign investors.
In the past ten years, the MENA region pulled in over a half trillion dollars of investment –- the bulk of that $450 billion came in the last five years alone according to UNCTAD. Prior to the new millennium, the region garnered less than 1% of global FDI; that figure peaked in 2009 at 7.7%.
The creator of the BRIC acronym Jim O’Neill of Goldman Sachs recently stated that the Arab world could ride the revolution into the club of fast growing emerging markets. Rapid birth rates and high productivity are essential tools for growth. The region’s geographic advantage between Europe and East Asia could also benefit more than just the fast growing airlines, which call Dubai, Abu Dhabi and Doha their home.
O’Neill had been so bullish on the region, that he included both Egypt and Iran into his group of the "Next 11" - the list of nations that hold the greatest promise of joining the bigger global players. But he rightly adds, this climb up to the next level will depend on how the leaders of today respond to the challenges from its youth.
This is not only a Western-held view. Saudi Arabia’s former Director General of Intelligence, Prince Turki bin Faisal Al Saud notes, “We have to formulate new policies that could be up to the expectations of the people of the Gulf, very effective and coping up with the recent developments.”
Prince Turki drew parallels of today’s regional uprisings to the fall of communism in Eastern Europe. It was not widely predicted; it provided historic change and eventually paid a huge dividend in terms of unleashing economic power.
That could be the medium term result of today’s fight for more accountability by the region’s youth, but near term it certainly will not deliver the quick resolution investors on Wall Street have been betting on.
Tendai Biti, the Zimbabwean Finance Minister, is a history buff. He loves to read about the Second World War and he is passionate about understanding his country in the greater context of history.
While he doesn’t want to underestimate the political challenges facing Zimbabwe, he believes the international community has failed Zimbabwe and that he and his countrymen have been “hung out to dry.”
When Biti and his party, the MDC, joined Robert Mugabe’s party in a coalition government two years ago, there was hope that the stabilization brought about by the political agreement would see a flurry of foreign investment. It wasn’t to be.
Biti is now on a mission to urge the West to engage more with Zimbabwe and quotes the impact of the 1947 Marshall Plan as proof of what can be done if there is political will.
Biti believes the international community has mismanaged recovery in the past two years. He says the West has failed to understand the dynamics of the country and been “unstrategic” in their dealings with Zimbabwe.
He identifies three attitudes hindering foreign investment in Zimbabwe. The first school of thought is “wait and see what happens.” The second approach urges Zimbabweans to “show progress, give proof they are moving” and the third way is to say, “as long as Mugabe is there we will never engage.” He says all positions are wrong. He suggests finding ways to do business with ordinary Zimbabweans.
Many who listen to his studied argument are not convinced. There is a sense that Zimbabwe – despite the unity government – is still firmly in the grip of Robert Mugabe and that the political future of the country is unpredictable.
Will foreign-owned companies be expropriated? How secure are property rights? How much longer can the fragile coalition hold? Will an early election bring more violence and intimidation?
All questions that no doubt infuriate Tendai Biti as he tries to rebuild an economy on the rickety foundations of a coalition government that even he calls an “unholy alliance.”
But here’s another: Will Zimbabwe confound the sceptics and increase investor confidence if the international community continues to be blamed for being too cautious?
A merger of AT&T and T-Mobile could transform the U.S. cellular phone landscape. CNN's Maggie Lake reports.
One of the best bits of theater that plays out in the British parliament every year is when the Chancellor of the Exchequer (Finance Minister) stands before the House of Commons and announces the following year's Budget.
George Osborne will do this on Wednesday afternoon, less than a year after his Conservative Party came to power promising a massive five-year deficit reduction plan.
But this is not Osborne's first Budget speech. He fronted the new government's "Emergency Budget" in June last year. Following that speech and last October's spending review, the British public now know what's in store until2015: Austerity.
You would hardly know it, yet.
Politicians and celebrities are all fair game for Jimmy Lai, the Chinese media mogul and self-made businessman.
Tony Tyler has been Cathay Pacific’s high-flyer for 15 years, but at the end of the month he's hanging up his wings.
As the Hong Kong-based airline’s CEO since 2007, he has navigated the company through the turbulent times of recession and record oil prices. FULL POST
(CNN) – The total cost of the quake and tsunami on the Japanese economy could hit $235 billion and take five years for the nation to rebuild, according to a World Bank report released Monday.
“If history is any guide, real gross domestic product growth will be negatively affected through mid-2011,” the report said. “Growth should though pick up in subsequent quarters as reconstruction efforts, which could last five years, accelerate.
“While it is too early to estimate accurately, the cost of the damage is likely to be greater than the damage caused by the 6.9 magnitude Kobe earthquake in 1995,” the report added.
The report projects that cost estimates could range between $122 billion to $235 billion, or between 2.5% and 4% of GDP, citing government and private estimates. The Kobe earthquake, which killed nearly 6500 people, cost around $100 billion.
(CNN) – “Coordinated foreign currency intervention” may prove a mouthful, but get used to it. It’ll be the catchphrase for the next few news cycles, as we talk about Japan’s attempt at economic recovery. And as one J.P. Morgan analyst told me, this intervention is “a big deal.”
G7 finance ministers and central bank governors held a special conference call early Friday morning Tokyo time. Their goal with this intervention: to weaken a super strong yen. And at least for today, their actions are working. Before the G7 announcement, the yen was trading at around the 79 yen to the dollar mark. Right after the communiqué was released, the yen weakened sharply to push past the 81 yen mark.
But wait, a two-yen uptick? Is that really significant? You bet.
(CNN) - Within hours of the Japanese earthquake, natural gas price futures for summer delivery started to rise. Within three trading days, Barclays reports that UK natural gas prices have shot up more than 13%. It's only a matter of time before the suppliers pass that rise onto customers.
Why should this happen?
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