Thursday, February 18, 2016
Venezuela raises fuel price 6,000%; Japan exports slump the most since 2009; Bombardier to cut 7,000 jobs
1 Venezuela raises fuel price 6,000% (Sibylla Brodzinsky in The Guardian) Venezuela’s president, Nicolás Maduro, has announced the first rise in petrol prices in 20 years and a sharp devaluation of the currency which he said aimed to shore up the flailing economy, hard hit by falling oil prices which make up 95% of foreign income.
Prices at the pump in Venezuela will jump as much as 6,086% for 95 octane gasoline, from 0.097 bolivars to 6 bolivars, or 1,300% for 91 octane as of Friday. The official exchange rate used for food and medicine imports will weaken to 10 bolivars per dollar from 6.3, while a second rate will be allowed to float.
The socialist government’s announcement revealed some of the free market reforms that analysts have been clamouring for in the oil-dependent nation although critics say they don’t go far enough to right the country’s crisis-hit economy. “This is a necessary measure, a necessary action to balance things, I take responsibility for it,” said Maduro in a five-hour televised speech in which he announced the measures.
Maduro said the new fuel prices would help support social programmes such as housing, health services and education, which had won his predecessor, Hugo Chávez, a broad following when he set the country on a socialist path 17 years ago.
Maduro said he hoped the measures “will be understood by the people on the streets”, alluding to the 1989 wave of violence known as the “Caracazo” that left hundreds dead, sparked by a rise in fuel prices. Maduro also announced a 20% increase to the country’s minimum wage, effective 1 March.
But even with the rises, Venezuela’s petrol will still be the cheapest in the world, allowing Venezuelan’s to fill their tanks with high-octane gasoline for the equivalent of the price of three beers. Wall Street analysts previously said Venezuela needed a sharp currency devaluation, spending cuts and a rise in fuel and electricity prices to avoid further economic meltdown. But local analysts said the changes announced by Maduro had not gone far enough.
2 Japan exports slump the most since 2009 (Straits Times) Japan's annual exports in January fell the most since the global financial crisis as demand weakened in China and other major markets, leaving the economy in a precarious position after a fourth-quarter contraction.
Ministry of Finance data showed exports fell 12.9 per cent year-on-year in January versus a median market estimate for a 11.3 per cent drop, with the fourth straight month of declines led by a slump in shipments of steel and oil products. It was the biggest decline since October 2009 when the global financial crisis knocked demand across the world.
The latest data adds to growing concerns that Japanese authorities are left with few options to revive a stumbling economy even as the Bank of Japan remains proactive in policymaking, shocking markets last month by adopting negative interest rates to spark momentum.
The slowdown in China, Japan's biggest trading partner, remains a big drag on the domestic economy as well as globally, hurting exporters of commodities and a wide swathe of consumer products. In January, Japanese exports to China fell 17.5 per cent from a year earlier, down for a sixth straight month due to declines in shipments of liquid-crystal device and organic compounds.
The world's third-largest economy contracted an annualised 1.4 per cent in October-December. While analysts expect a return to moderate growth in the current quarter, sluggish exports and weak consumer spending underscore the difficulty policy makers have in putting the economy back on track.
Japan is not alone in suffering a rough start for its exporters, with the chill in China rippling across trade-reliant regional economies such as South Korea, Taiwan and Singapore. Shipments to Asia, which account for more than half of Japan's overall exports, fell 17.8 per cent in January, marking a fifth consecutive month of annual declines.
3 Bombardier to cut 7,000 jobs (BBC) Canadian plane and train maker Bombardier will cut its workforce by about 7,000 over the next two years, it has said. Job losses will be partially offset by hiring for the production of its CSeries commercial jets, it said.
Bombardier will also cut 270 management and contractor jobs at its trains business in the UK, with 44 permanent positions to go. The UK rail business employs 3,500 people. The firm said it had made a net loss of $5.3bn (£3.7bn) in 2015, and had revenues of $18.2bn - 10% lower than the year before.
Bombardier also forecast lower revenues for 2016, saying it expects to generate between $16.5bn and $17.5bn. The 7,000 posts to be cut will include 2,000 contractors, and will fall mainly on the transportation and aerostructure parts of the business.