1 UK on triple-dip recession alert (Larry Elliott in The Guardian) The City has put the UK on triple-dip recession alert after news that falling factory and North Sea production have sent the output of industry plunging to its lowest level in 20 years. With the financial markets fearful that the final three months of 2012 will see the economy contract for the fourth quarter in the last five, David Cameron said manufacturers were short of skills and needed to learn lessons from Germany in order to develop a modern industrial workforce.
The prime minister was speaking as the coalition's hopes of economic recovery received a setback from far weaker than expected official data from industry – the sector of the economy targeted for growth by the government. Amid signs that a collapse in demand from the crisis-stricken eurozone is affecting UK exporters, manufacturing production dropped 1.3% in October and was more than 2% down on a year earlier.
Germany, the biggest economy in the single-currency area, reported that its manufacturing sector is also stuttering. Output from German factories dropped 2.4% in September. Financial markets were optimistic that UK industrial production, which includes oil and gas from the North Sea and energy supply as well as manufacturing, would post a healthy rise in October. But the Office for National Statistics reported a 0.8% drop in output to a level not seen since the recession of the early 1990s. North Sea production has fallen by almost 50% in the past three years and saw a fresh fall in October. Samuel Tombs, of Capital Economics, said: "The further drop in industrial production in October to its lowest level in two decades raises the chances of a triple dip recession in the wider economy.
2 China recovery gains momentum (Simon Rabinovitch in Financial Times) China’s economic recovery gained ground in November as industrial output and retail sales growth hit eight-month highs. After slowing for seven straight quarters, the world’s second-largest economy appears set to finish 2012 with a moderate rebound, fuelled by looser monetary policy and a burst of government spending on infrastructure. “We believe the economy will maintain its moderate upturn into next year,” said Liu Ligang, an economist with ANZ. “Fiscal policy has already had a strong impact on the real economy.”
Industrial output in China increased 10.1% from a year earlier in November, up from 9.6% in October, while retail sales rose 14.9% year on year, up from 14.5%. Both came in slightly ahead of most forecasts and were the highest since March. With many European economies contracting and the US posting only anaemic growth, China stands out as a relative bright spot in the global economy. However, many investors consider the Chinese upturn fragile, driven by government actions rather than private investment.
The acceleration in activity has also started to filter into a slight pickup in inflation. Consumer prices rose 2% in November from a year earlier, rebounding from a 33-month low of a 1.7% rise in October. A sharp pickup in price pressures would constrain the government’s ability to stimulate the economy, but Zhang Zhiwei, an economist with Nomura, said inflation would remain below Beijing’s target of a 4% rate for at least the next three months. After slowing for seven straight quarters, the world’s second-largest economy appears set to finish 2012 with a moderate rebound, fuelled by looser monetary policy and a burst of government spending on infrastructure.
3 Chinese money changes Australian landscape (Khaleej Times) Soaring coal prices fueled by China’s economic growth have made mining parts of the Australian landscape far more lucrative than farming it. It’s one example of how China’s emergence as a global trading power may transform countries in ways never contemplated and not yet fully understood.
The Associated Press analyzed China’s
trade with other countries as a percentage of their gross domestic product,
using an International Monetary Fund database. It found that, on average, trade
with China had climbed to 12.4% of GDP by 2011. By comparison, the peak reached
with the US in the past 30 years was 10% in 2001. In Australia, where trade
with China hit 7.7% of GDP last year, exports of coal and iron ore have helped
Australia fend off recession for 21 years and deliver the largest trade
surpluses in 140 years of record-keeping.
China’s rapid rise has given
Australia its strongest terms of trade since a global wool boom in the 1950s,
says economist Peter Robertson at the University of Western Australia. ‘That
boom was fairly short-lived,’ he wrote in an email response to questions. ‘This
one’s length is unknown. It may turn out much bigger depending on China’s
future growth.’
The former British colony’s
relationship with China is deepening in other ways too: More than 29,000
Chinese became permanent residents in the year ending June 30, 2011, for the
first time eclipsing the United Kingdom, the traditional source of migrants.
While India topped China in the next 12-month period, that appears to have been
a blip. China accounted for nearly two-thirds of the 10,407 business visas in
the most recent year — investors and entrepreneurs either given residency or
put on a likely path to it.
In eastern Australia, the China boom
is reawakening the sleepy town of Gunnedah. Construction workers and surveyors
in high-visibility, fluorescent green shirts are a common sight, a constant
reminder that the plans to mine are the cause of the economic resurgence. Not
everyone is happy. The prospect of mining has divided the town of 12,000, including
members of the extended Clift clan. There are fears that coal dust, endless
coal trains and damage to the aquifers could forever alter a pastoral way of
life, perhaps even make it untenable.
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