Emerging Markets: Stumble or Fall? Economist

Will the global financial crisis halt the rise of emerging economies?

NOBODY talks about “decoupling” any more. Instead, emerging economies are sinking alongside developed ones. In 2008 emerging stockmarkets fell by more than those in the rich world, and financial woes forced countries such as Hungary, Latvia and Pakistan to go cap in hand to the IMF. Taiwan’s exports have plunged by 42% over the past year, and South Korea’s by 17%; even China’s have shrunk. Singapore’s GDP fell by an annualised 12.5% in the fourth quarter of 2008, its biggest drop on record. Is this the end of the emerging-market boom?

Over the five years to 2007, emerging economies grew by an annual average of more than 7%. But in the past three months their total output may have fallen slightly, according to JPMorgan, as the fall in exports was exacerbated by a sudden drying up in trade finance. For 2008 as a whole, average growth in emerging economies was still above 6%, but recent private-sector forecasts suggest that this could slip to less than 4% this year. That is grim compared with the recent past, though still robust set against an expected 2% decline in the GDP of the G7 countries.

Short-term pain is only to be expected. But some economists argue that emerging markets’ longer-term prospects have been badly hurt by the global financial crisis. From Brazil to China, they claim, the boom was driven largely by exports to American consumers, easy access to cheap capital and high commodity prices. All three props have now collapsed. In particular, as America’s housing bust causes households to save more, they will import less over the coming years. This could reduce emerging economies’ future growth rates.

For more on this article, please click on the following link: Emerging Markets: Stumble or Fall? Economist

Iran, Pakistan Agree on New Terms in Gas Deal: Fars News

TEHRAN (FNA)- Tehran and Islamabad have agreed on a revised price formula and a new price review mechanism for Iranian gas that will be piped to Pakistan, a senior Iranian official said.

The new formula and review mechanism update terms reached in 2006 during the long-running negotiations on the project that are part of Iran's effort to become a major gas exporter. 

Hojjatollah Ghanimifard, the Iranian oil minister's special representative to the pipeline talks, said both sides agreed to amend terms because of changes in the energy market since 2006. 

He said agreement was reached after two days of talks in Tehran. 

"We agreed that the formula should be changed," he told Reuters, adding that the price review formula was also amended. 

"One of the changes (to the review formula)... was that a year before the commencement of delivery of the gas we are going to have a price review. Of course, this can be an option that either side can use," said Ghanimifard, who is also a senior official in the state-owned National Iranian Oil Company. 

He said the changes have to be approved by the authorities in both countries, after which details would be announced. 

This could lead to setting a date for signing a contract, he added. 

"Almost five years after the contract is signed we hope that the commencement of gas delivery starts," he said. 

India had been part of the $7 billion pipeline project, but stayed away from talks in September saying it wanted guaranteed security of supplies as the pipeline should go through a restive province in Pakistan. 

For more on this article, please click on the following link: Iran, Pakistan Agree on New Terms in Gas Deal: Fars News

China to fully finance Diamer Bhasha dam in Pakistan: Daily.pk

In a major development regarding the construction of Diamer Bhasha dam, China has agreed to completely finance the $8.5 billion project, sources in Water and Power Development Authority (WAPDA) told on Thursday. 

German Company Lemhyer has issued final draft of the dam in which the company has projected the cost of dam at $8.5 billion against the earlier projected cost of $6.5 billion in the year 2005. Government wants to start the construction work on Bhasha dam in the year 2009, sources added. 

Pakistan has turned to China regarding the financing of the project after World Bank refused to add the project in the $1.4 billion aid for current financial year 2008-09. They further said that World Bank lending rates are higher and China would provide loan on lower rates. Pakistan had submitted the draft of detailed engineering design of the dam and in response China has agreed to provide financing for the said project. Sources informed that China has also great expertise in the working on big dams and it has expert labour force and machinery for such purposes. 

Chinese government has offered Pakistan to provide skilled labour for the construction of the Bhasha dam as it has 17,000 skilled labourers who have worked on three Gorges Dams in china, which are generating 30,000MW electricity. They said that China has also assured that it would hire a company to provide financing to Pakistan for the construction of the dam. Earlier, Pakistan was looking at Asian Development Bank (ADB) and World Bank.

For more on this article, please click on the following link: China to fully finance Diamer Bhasha dam in Pakistan: Daily.pk

Pakistan invites China to join IPI: UPI

ISLAMABAD, Pakistan, June 19 (UPI) -- The Pakistani government formally asked China to join the Iran-Pakistan-India Pipeline should India withdraw from the project, Pakistani officials said.

Pakistani President Pervez Musharraf during his visit to Beijing in May invited China to join the $7.4 billion, 1,724-mile natural gas pipeline.

Senior officials in Islamabad told the Daily Times of Pakistan Beijing followed up with a preliminary request for more information on the project. The pipeline will deliver natural gas from the Iranian South Pars field to Pakistan and India.

For more on this article, please click on the following link: Pakistan invites China to join IPI: UPI

Pakistan to help establish special economic zone for Chinese investors: Daily Times

ISLAMABAD: Prime Minister Syed Yousuf Raza Gilani Wednesday said Pakistan would extend all possible help to establish the first-ever Chinese Overseas Economic Zone in the country.

PM welcomed the Haier Ruba joint venture and said the government would encourage more joint ventures to promote economic cooperation between the two countries.

Talking to Lu Keng, chairman of the Haier Group and Haji Koch Muhammad, chairman Ruba Group at PM House, he said joint ventures between the private sectors was the best way to promote trade and investment between our two countries.

He said foreign investment was fully protected in Pakistan and all economic sectors were open to Foreign Direct Investment.

Pakistan makes no distinction between local and foreign investors, as 100 percent foreign equity, remittance of royalty, profits and dividends is allowed under Pakistani laws, he said.

For more on this article, please click on the following link: Pakistan to help establish special economic zone for Chinese investors: Daily Times