Trust reappears while market watchers shift attention to Asia
Wednesday, 22 October 2008
From Fazle Rashid
NEW YORK, Oct 21: The news that a new stimulas package initiated by the Democratic Party and vigorously endorsed by the Fed chief Ben Bernanke and President Bush being 'open to the idea' has considerably receded the fears in the Wall Street. Frozen flow of credit has began to thaw. The trust among the lenders have reappeared, raising the hope that pressures on the US banks and businesses would ease.
Market watchers and researchers say 'this crucial first step in conjunction with central bank liquidity programmes accelerating into the year end should ultimately facilitate renewed lending from money market funds'. On the other side of the Atlantic, France announced that it would inject $14 billion into country's six largest banks in a move to bolster their balance sheets and help them to provide credit to consumers and businesses.
The attention of the market watchers and analysts has shifted to Asia. China so long out of the purview appeared on the scene with the news that its GDP growth rate which has been in double digit for past five years will come down to 9.0 per cent this year. China which has been immune to the global financial meltdown has shown signs that its economy will slow down at a faster rate than earlier estimated.
Meanwhile, the confidence exuded by the government leaders, economists and business leaders during two hours of intense discussions on the global economic meltdown and its possible impact on Bangladesh was largely misplaced, many here tend to say. The two-hour long meeting jointly sponsored by a TV channel and Federation of Bangladesh Chambers of Commerce & Industry (FBCCI) and FBBIC was watched by a large segment of the Bangladeshi diaspora here in New York
The discussants based their assumptions on two highly debatable premises. The drop in oil price and export of garments will not be hurt. Six Organisation of Petroleum Exporting Countries (Opec) members who are meeting in an emergency meeting on Friday said they would cut daily oil production by two million barrels to stabilise the oil price at a minimum of $100 a barrel. The consumption of oil for heating purposes will rise during the coming winter. So any hasty thinking that oil price will remain at its present level of $70 a barrel is far fetched. And the assumption that the garment export will not be hurt because people will continue to buy cloths in the lower segment of the market is not based on facts. It is the other way round, the sale of brand named products will not be affected. The common people will cut their spending on buying new cloths.
The reliance on the Middle-East for the flow of remittance will suffer a setback. The growth in the region will fall due to decline in the price of oil, the International Monetary Fund (IMF) predicted. The Fund said the deceleration could be sharper than forecast, if the present recessionary trends becomes protracted in the US and Europe. There have been sharp fall in stock markets and banks are tightening their credit programme there.
The optimistic projections of some market watchers that the developing world, China in particular could 'decouple' from a a recession in the rich economies now look forlorn. It was always too optimistic to assume that Asia could manage to hold on its own, an analysts said. India lowered its interest rate and prodded its banks to maintain adequate flow of credit to industry and trade. India has revised its GDP growth rate to 7.0 per cent from 9.0 per cent projected earlier.
Malaysia said it would inject $1.4 billion into the stock market which plummeted by 37 per cent this year. Vietnam's present rate of inflation is 28 per cent. Vietnam's central bank raised the interest rates to tame the inflation
NEW YORK, Oct 21: The news that a new stimulas package initiated by the Democratic Party and vigorously endorsed by the Fed chief Ben Bernanke and President Bush being 'open to the idea' has considerably receded the fears in the Wall Street. Frozen flow of credit has began to thaw. The trust among the lenders have reappeared, raising the hope that pressures on the US banks and businesses would ease.
Market watchers and researchers say 'this crucial first step in conjunction with central bank liquidity programmes accelerating into the year end should ultimately facilitate renewed lending from money market funds'. On the other side of the Atlantic, France announced that it would inject $14 billion into country's six largest banks in a move to bolster their balance sheets and help them to provide credit to consumers and businesses.
The attention of the market watchers and analysts has shifted to Asia. China so long out of the purview appeared on the scene with the news that its GDP growth rate which has been in double digit for past five years will come down to 9.0 per cent this year. China which has been immune to the global financial meltdown has shown signs that its economy will slow down at a faster rate than earlier estimated.
Meanwhile, the confidence exuded by the government leaders, economists and business leaders during two hours of intense discussions on the global economic meltdown and its possible impact on Bangladesh was largely misplaced, many here tend to say. The two-hour long meeting jointly sponsored by a TV channel and Federation of Bangladesh Chambers of Commerce & Industry (FBCCI) and FBBIC was watched by a large segment of the Bangladeshi diaspora here in New York
The discussants based their assumptions on two highly debatable premises. The drop in oil price and export of garments will not be hurt. Six Organisation of Petroleum Exporting Countries (Opec) members who are meeting in an emergency meeting on Friday said they would cut daily oil production by two million barrels to stabilise the oil price at a minimum of $100 a barrel. The consumption of oil for heating purposes will rise during the coming winter. So any hasty thinking that oil price will remain at its present level of $70 a barrel is far fetched. And the assumption that the garment export will not be hurt because people will continue to buy cloths in the lower segment of the market is not based on facts. It is the other way round, the sale of brand named products will not be affected. The common people will cut their spending on buying new cloths.
The reliance on the Middle-East for the flow of remittance will suffer a setback. The growth in the region will fall due to decline in the price of oil, the International Monetary Fund (IMF) predicted. The Fund said the deceleration could be sharper than forecast, if the present recessionary trends becomes protracted in the US and Europe. There have been sharp fall in stock markets and banks are tightening their credit programme there.
The optimistic projections of some market watchers that the developing world, China in particular could 'decouple' from a a recession in the rich economies now look forlorn. It was always too optimistic to assume that Asia could manage to hold on its own, an analysts said. India lowered its interest rate and prodded its banks to maintain adequate flow of credit to industry and trade. India has revised its GDP growth rate to 7.0 per cent from 9.0 per cent projected earlier.
Malaysia said it would inject $1.4 billion into the stock market which plummeted by 37 per cent this year. Vietnam's present rate of inflation is 28 per cent. Vietnam's central bank raised the interest rates to tame the inflation