Sudan: The black giant struggles to rise and shine.

Bilad as Sudan. The land of the Blacks. A vast country with hidden potential and promise of prosperity. Sudan is one of those countries whose potential remains untapped and unexploited because of persistent internal disturbances, and unwarranted external interference from interested quarters.

Sudan is one of the countries on the U.S. hit list as a “state sponsor of terrorism” (whatever that means!), that disqualifies it from accessing American in particular, and Western in general, technology and aid freely, and creates all sorts of hurdles in it’s path towards economic progress and prosperity.

Compared to it’s neighbors, Sudan has recorded a decent average growth of 7% to 8% in the last few years, and is expected to notch up % growth in the current fiscal according to official sources.

The major source of revenues for this African giant are from oil that contributes over 50% of its revenues, though livestock and related products are gaining in importance as a contributor to the national kitty. In fact, the Sudanese Government is keen to develop this sector in a big way to take advantage of the vast expanse of land available to it, to develop this activity.

Sudan recently drafted the International Monetary Fund to monitor and report on its economic performance and policies in order to achieve the objective of sustained economic growth, macro economic stability, and rebuilding foreign exchange reserves.

According to the IMF, the major reasons for a fall in Sudan’s revenues is the fall in the oil prices, and it’s penchant for intervention in the foreign exchange markets in order to conserve precious foreign exchange, among other things.

On its part, the Sudanese Government holds the sanctions regime against it to be mainly responsible for its economic troubles, though at the same time, it also points that this very fact has insulated Sudan from the worst effects of the global economic recession.

The Samurai economy is emerging out of recession.

It may not be time yet to celebrate. But the air in Japan is pregnant with subdued optimism and expectation of a turnaround in the economic fortunes of the island nation.

After France and Germany, Japan appears to be breaking out of the recessionary cycle. That was the official announcement of the Japanese Government, that had promoted a USD 260.00 billion stimulus package to revive the economy, and has recorded an upward trend in the major economic indicators.

However, the most important and explosive problem facing Japan, namely, unemployment, is still far from being resolved. Part of the problem is said to be the surplus staff maintained in many of Japan’s manufacturing facilities.

Some of the major reasons attributed to Japan’s economic recovery, though nascent at this point of time, is in the export sector, particularly to China, especially in the electronics and auto sectors. Public spending by Government is also said to have had a positive effect. The stimulus package has also persuaded the Japanese public to loosen their purse strings, and increase consumer spending.

The fact is, there is a fall in the negatives that had battered the Samurai economy for more than a decade and a half. And that is being latched on to by the Government to project a positive image in economic growth.

Be that as it may, the real test of Japan’s recovery would be in sustaining the momentum in economic growth, until such time that not only it recovers the lost ground, but also registers fresh progress. The Samurai have to fight hard in the coming months before they can take it easy.

Venezuela on a slippery economic path.

The oil giant of Latin America is slipping into a recession, even as Germany and France are just about coming out of it. Venezuela risks slipping up on economic growth on the same path as it zoomed into the growth zone until a few years ago, that is oil.

The slump in oil prices, the mainstay of the Venezuelan economy, is the single most important reason for the economic woes of the country. This fall in prices begot reactions of the negative kind from the Government side, as it often happens, with even more negative effects.

In order to deal with the oil crisis, the Venezuelan Government has introduced severe controls on prices and foreign exchange to reduce its outflow. This has impacted on the industries that depend on imports, which nevertheless contribute to the gross domestic product, and more importantly, proved jobs, that are getter scarce by the day.

Manufacturing has fallen sharply in the last two quarters, as also retail sales. Food shortage, long a constant companion of the Venezuelan system, is affecting the welfare of the people in many ways. Housing is another area where the Government does not seem to have done creditably. On the other hand, increase in Government participation in the economic development process, beyond the normal level, has had its own effect in terms of deficits, and efficiency at different levels of operation.

Most of the economic sectors have recorded a fall led by oil, the manufacturing sector, retails sale, with the fall in consumption adding to the basket of worries of the Government. Deficit financing has become the norm in recent months, and likely to add to future problems in this regard.

Even though Venezuela has spent its proceeds of oil wealth in creating infrastructure, the sheer fall in oil prices has had a cascading effect on its economy, now poised to enter a recession.

South Africa risks economic short circuit.

The economy that had recorded steady growth for the last decade and a more, is under threat of a short circuit, literally.

The serious shortage of power supply is considered to be the most potent threat to the country’s economic progress, by bringing down production and output. Literally, it could mean shutting down the economy.

The economy has already registered a slump of around 3% for quarter ended June 2009, and more hard knocks seem to be in store, by the look of things.

Apart from the energy problems, unemployment has become a major source or worry, prompting the Government to initiate special programs to generate jobs.

For the record, South Africa has excellent infrastructure and a world class legal system in place with business-friendly laws relating to labor, commerce, trade, etc. In spite of the plus points, the country is presently in a recessionary mode which is undoing the good done in the last decade and a half.

The country’s economic mainstay, namely, mining is stagnant, and not contributing to the national production, and domestic product to the desired level. However, the construction industry has picked up smartly, mainly because of the World Cup 2010.

One account of the shortage in power supply, several mega and minor projects are on hold, adding to the lines of the unemployed with all its attendant consequences. If things to do not improve fast, there is a risk of South Africa slipping into a severe recession, which could take a long time in coming out of. As it is, the country is in the danger zone, with a severe fall in production and consumption, and increasing unemployment.

The Spanish Matador takes a beating.

If only running an economy were as simple as bullfighting! Spain’s economy has come down a long way from the highs of a couple of years ago, when it drew green glances (of the envious variety) from its European neighbors. Today, Spain carries the burden of the highest unemployment in Europe at 18%, and it’s economy groping in the dark, looking for a way out of the recessionary tunnel.

The major reasons for Spain’s fall from an economically sound position to its present pathetic state, are said to be the high unemployment rate and the crash of its real estate sector. That apart, it’s tourism sector, that provides a healthy dose of foreign exchange to the economy, and large scale employment, has suffered on account of the ongoing global economic crisis, with a fall in the number of foreigners visiting Spain.

The practical truth in the maxim “the higher you go up, the harder you fall”, seems to apply to Spain’s economy just right. After registering a rocket like trajectory northwards, with a fast paced growth in the past few years, Spain’s economy has fizzled out like a burnt out rocket.

The Spanish Government, though is going through the motions of reviving the economy and putting up a brave show with the help of statistics that somehow do not appear to be strong in substance. The attributes of an economic recovery that the Spanish Government is projecting to buttress its claims, are the reduction in the shrinkage of its GDP, upward trend in consumer confidence, negative inflation, etc, in recent weeks. Whether it all adds up to an economic recovery is something only the very ambitious economic ‘experts’ would certify.

For the present, the unemployed millions of Spain, hope for a further stimulus from their Government, to keep their home fires burning.

The solid Swiss economy survives a few hits.

The land of numbered accounts, cheese, cuckoo clocks, precision watches, et al, has not escaped the effects of the global meltdown, but has faced the challenges much better than many others, and is poised to come out of the crisis, in better shape.

Known for quality products throughout the world, the current crisis has hit Switzerland hard, though the Swiss continue to smile through the crisis, because of their self-reliance, and prudent savings and spending habits.

A neutral country, Switzerland has not had to expend money on arms and ammunitions, and has capitalized on this national trait in the crisis, and accumulated savings, instead of spending, especially on credit. This has provided a cushion to the Swiss, who have kept up a modest level of consumer spending that has kept their small and medium businesses in good health. With France and Germany, two of Switzerland’s biggest trading partners, on the road to recovery, from statistics released recently, the Swiss have reason to smile, as they expect their exports to these countries to pick up from the current lows.

An area of concern, however, is the rise in the unemployed, which is not the normal trend in Switzerland. With the economy said to have contracted by about 3% in fiscal 2009 so far, it is definitely a cause for concern for the Swiss Government known for its welfare measures and pro-people policies.

The Swiss are optimistic of their recovery because of the serious and prudent Government initiatives taken. Apart from that, there are certain natural advantages that the country has enjoyed for long. For instance, financial services firms are attracted to the tiny country for the sheer quality of the services and talent available there in Banking, welath management etc. An added bonus are the liberal tax laws that attract all kinds of businesses from all kinds of places to Switzerland.

Above all, the nature of the Swiss people, not given to excesses in money matters,and their disciplined approach, should see them emerge stronger from the crisis.

South Korea, the struggling tiger.

South Korea, not long ago was the envy of the world, with its dramatic growth and capture of markets for its consumer and other goods throughout the world. Even today, it is the fourth largest economy in Asia.

But like many such success stories, South korea’s success run has been rudely interrupted by the global recession, that has put paid to many a dream.

Some of the positive signals coming from the realm of the South Korean economy, are the confidence displayed by the Central Bank of the country in not slashing key interest rates any further, that has been the norm for the last few months.

The South Korean economy has got an uplift from Government policies in regard to public spending and low interest rates, that have contributed to growth and public confidence. The economy has grown in the second quarter of fiscal 2009 at the rate of slightly abov e 2%, resulting in a economic expansion of about 1%, compared to the contraction of about 5% in the previous fiscal.

On the negative side, is the steady increase in the housing prices. The Central Bank has cautioned against the rise in mortgage lending, and one of the options of dealing with this problem is a change in the regulations related to this. That apart, speculation in the Bond markets is also causing concern.

While South Korea has taken several practical steps to counter the effects of the global recession, and has been successful to an extent, a self-sustaining recovery which should be the goal of any recession-hit economy, is still some distance away. The Asian tiger is aware of the hard road ahead, and may spring out of the economic chaos if it makes the right moves.

Brazil in recovery mode.

Brazil, the largest country in Latin America, both in terms of land area, and economy, seems to have switched on to a recovery mode. It is one of those countries tipped to become a regional super power in its own right, but whose progress has been interrupted by the global economic crisis.

The Brazilian President, Luiz Inacio Lula da Silva or more popularly called Lula, was optimistic about his country’s recovery, and is in favor of cutting the lending rate further from its current historical low of 8.75%. The Brazilian President based his optimistic pronouncement on the fact that industrial activity and employment levels in the second half of 2009 had gone up. Foreign capital continues to flow into Brazil’s markets. The stock market is bouyant. And the currency has been gaining through the year. No wonder Lula is in an aggressive mood.

However, in order to temper the gungho mood prevailing in Brazil, the President of its Central Bank, cautioned against “excessive euphoria”. Like elsewhere, a little positive news in the markets leading to euphoria, Brazil is no exception in the present circumstances.

Overall, it would appear that Brazil’s economy is in the recovery mode. And if the current trends are sustained, it may actually come out of recession neat and clean. Experts believe that Brazil’s economy should really start looking up in 2010. With a little fine tuning of the interest rate structure in consonance with the inflation rate, it must be possible to strike a happy combination of growth and caution.

On balance, it appears Brazil is on way to recovery, as the confidence of foreign investors would testify. Sustaining the present optimistic upturn is the challenge facing Brazil.

Russia in for more economic trouble.

Russia, the dressed down version of the once mighty USSR, is heading for more economic trouble. Figures released point to a nearly 11% contraction in the economy in the second half of fiscal 2009, well above market expectations.

Russia had depended mainly on escalating energy prices to keep its economy on a gallop. With a glut in the oil market, a slump in the prices and lesser demand for commodities, the Russian economy took a big hit.

Right now, the situation is such that Russian Banks are not lending money, and the ruble, the Russian currency, has fallen over 2% against the U S Dollar. Demand for consumer goods is down and exports are badly affected. Overdependence on oil and gas exports has proved to be counter-productive.Unemployment has become a major issue with 13% of the workforce out of work.

In spite of the bleak environment in Russia, American companies companies continue to invest there, with the hop of encashing their fortunes in the near future, once the recession subsides. But no one is sure, at the moment, if their calculations are on target.

The underlying problem of the Russian economy is its narrow base of oil and gas. Diversification has not attracted the attention of the powers that be in Moscow, as much as it should, as the revenues accruing from oil and gas are quite substantial, and do not provide sufficient incentive to diversify. Commodities is another area of revenues, even though finished products is not such a big priority.

The stimulus package initiated by the Government has helped ease the effects of the crisis, but the much dreaded second wave of global crisis can really set the Russian economy back much farther.

Italy, a long way to go before recovery.

A country full of beautiful and scenic spots, Italy is in the throes of a economic crisis that appears just about to loosen its stranglehold on the country. The reason for this bit of optimism is the same as in the case of several other countries-that the economic contraction in the second half of fiscal 2009 is lesser compared to the earlier quarters!

One of the major reasons affecting the Italian economy, even otherwise, even before the recession, was slow economic growth on account of various regulatory issues, public administration issues, etc. Italy has recorded poorer growth compared to other eurozone and OECD states.

The financial system in Italy has not suffered as much as in other western countries, mainly because of the prudent principles adopted in credit and investment. That apart, the public debt of Italian Banks is said to be of a lower level.

However, interbank markets are beset with problems of liquidity, and the Governemnt, along with the Central European Bank had to intervene to smoothen out things to ensure proper functioning of the system.

A combination of the global crisis and certain outdated laws in relation to labor issues, the legal system, tax structure, etc., may compound Italy’s economic problems and delay the much needed recovery, that is bleeding the country and its institutions.

Political instability has always been the background of anything Italian, and it has compounded the economic crisis, on account of lack of consensus, and contrary policies.

The grave situation now prevailing in Italy may compel the Government to act fast and judiciously, to tackle the problem. And if the Italians can get their economic act together, they may come out of the crisis faster than expected. It depends upon their resolve.

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