IMF chief warns of eurozone deflation; Japan trade deficit at record $112bn; Tesla foresees fast growth in China

1 IMF chief warns of eurozone deflation (BBC) The head of the International Monetary Fund has warned that deflation remains a real risk to economic recovery in the eurozone. Despite signs of recovery across the world, Christine Lagarde said that potential risks must not be ignored. One of these was the fact that eurozone inflation, at 0.8%, remained "way below" the 2% target set by the European Central Bank.

Deflation can hinder growth, as prices and the value assets continue to fall. Ms Lagarde told a Davos debate on the global economic outlook, that - despite signs of recovery everywhere, there were "old risks" and "new risks". Old risks included any failure to continue banking reforms and re-balance economies, she said. New risks were, how emerging economies responded to the winding down of economic stimulus measures in the US, and the problems facing economies whose inflation rate remained stubbornly below target.

Mario Draghi, president of the ECB, told the same conference that the bank was ready to act if necessary, but he insisted that deflation was not yet an issue for the eurozone. He said eurozone inflation is "subdued, and expected to remain subdued" for about two years. "The longer it stays at a low level, the more serious risk of deflation," he said. But he said the fall in inflation was primarily due to slowdowns in four heavily-indebted countries: Greece, Spain, Ireland and Portugal.

In Japan, prolonged deflation stunted economic growth for years. But government stimulus measures - so-called Abenomics - appear to be breathing new life into the world's third-largest largest economy. The Bank of Japan's chief, Haruhiko Kuroda, told the conference that the country's inflation rate should reach its 2% target within two years.

http://www.bbc.co.uk/news/business-25894050

2 Japan trade deficit at record $112bn (Straits Times) Japan's trade deficit swelled to a record $112 billion last year, official data showed, as the country's post-Fukushima energy bills soared. The shortfall of 11.47 trillion yen marked the biggest deficit since comparable data started in 1979, according to the finance ministry, with the December deficit alone doubling from a year earlier.

Japanese energy imports surged after the 2011 Fukushima crisis forced the shutdown of nuclear reactors that once supplied a third of the nation’s power. A sharp decline in the yen, which is good for exporters’ profitability, also forced up the cost of importing pricey fossil-fuels to plug the country’s energy gap. Exports in 2013 rose 9.5 per cent to 69.79 trillion yen, their first increase in three years.

http://www.straitstimes.com/breaking-news/money/story/japans-trade-deficit-2013-hits-record-high-143-billion-20140127

3 Tesla foresees fast growth in China (Alan Ohnsman in San Francisco Chronicle) Tesla Motors' Elon Musk said sales of electric Model S cars in China should match US levels as early as next year, with demand from the world's largest auto market eventually requiring a local plant. The electric-car maker said last week the Model S will be priced at $121,280 in China when deliveries begin. Musk, Tesla's billionaire co-founder and chief executive officer, will travel to China next month to inaugurate the company's entry there, he said.

After a rocky start ramping up Model S assembly in 2012, Palo Alto-based Tesla surprised analysts and investors this month when it said fourth-quarter deliveries were 20 percent above its target. Musk, 42, has pinned his goal of selling hundreds of thousands of electric autos annually to a global strategy in which China, Europe, Japan and other markets bolster its US business.

The company, named for electrical engineer and inventor Nikola Tesla, more than quadrupled in value in 2013. The price of Tesla's flagship Model S in China, a version equipped with a premium 85-kilowatt-hour battery pack, puts it in the same bracket there as Volkswagon's Audi S5 sedan and BMW's 5-series GT sedan, according to Autohome, a car-pricing website. It's also 50 percent more expensive than in the US, where the equivalent model sells for $81,070, according to Tesla.

Tesla's entry is also being closely watched by other automakers that have been trying to convince local consumers that electric vehicles are worth the hassle. China is lagging behind its target to have 5 million alternative-energy-powered vehicles by 2020 because of a lack of charging stations and high costs, even amid mounting concerns over worsening air pollution.

http://www.sfgate.com/business/article/Tesla-s-Musk-sees-Model-S-China-sales-rivaling-5175447.php