Just Economic Info

Finance Minister Sri Mulyani Indrawati expresses concern that the strengthening value of Rupiah against US dollar over the past four months can impact negatively on the country’s competitiveness and hurt its exports.

Mulyani said in Jakarta on Wednesday although the country’s exports still showed “positive level” when compared to its imports, there was a possibility that “negative signs” would emerge, following Rupiah’s appreciation.

“These days all developing countries will face fairly huge international capital flows, and this will affect their currencies’ exchange rates,” Mulyani said in her address before hundreds of central and regional government officials in a meeting discussing the national development planning for 2011.

“Indonesia is among countries experiencing very strong appreciation with its currency. India’s currency has only increased by 5 percent, and other countries’ under 10 percent.

“Rupiah’s appreciation, however, has reached 15 percent over the first four months of the year. This will really determine our economic competitiveness,” she added.

Mulyani said the government predicted smaller export growth in 2011 compared to the growth this year.

thejakartapost

South Korea's economic growth sharply accelerated in the first quarter of 2010 amid a rebound in manufacturing, exports and spending, the central bank said Tuesday.

Gross domestic product expanded 1.8 percent in the three months ended March 31 from the fourth quarter last year when it grew 0.2 percent, the Bank of Korea announced.

South Korea, Asia's fourth-largest economy, has recovered strongly from the global downturn boosted by record-low interest rates, government stimulus spending and robust exports as overseas markets recover.

The central bank said earlier this month it expects the economy to grow in 2010 at its best pace in four years. Moody's Investors Service, meanwhile, rewarded South Korea with a higher credit rating for emerging from the global crisis with its finances intact.

Growth figures for the first quarter are likely to intensify speculation regarding the timing of any move by the Bank of Korea to raise its key interest rate from the current record low 2 percent.

The GDP results are preliminary and may be revised.

Tuesday's figure marks the fifth straight quarter that South Korea's economy has grown after contracting over the final six months of 2008.

Despite growing in every quarter in 2009, the economy managed to expand a meager 0.2 percent for the year, the worst performance since it contracted 5.7 percent in 1998 during the Asian economic crisis.

Prospects this year, however, look much brighter. The central bank on April 12 raised its 2010 economic growth forecast from 4.6 percent to 5.2 percent on stronger exports and domestic demand. If achieved, that would be the best performance since a similar expansion in 2006.

Moody's on April 14 lifted South Korea's government bond ratings to A1 with a stable outlook from A2 - the first increase since July 2007. A1 is the fifth-highest level and six rungs above "junk" status.

Manufacturing grew 3.6 percent in the first quarter after contracting 1.7 percent in the fourth. Exports also rebounded to expand 3.4 percent after shrinking 1.5 percent.

Government spending jumped 5.7 percent after a contraction of 2.4 percent. Private spending, meanwhile, improved to grow 0.6 percent from the fourth quarter's 0.4 percent expansion.

South Korea's economy also grew in the first quarter compared with the same period the year before, expanding 7.8 percent. That was the best performance since an expansion of 8.1 percent in the final quarter of 2002.

thejakartapost

Retail sales volumes during March rose by 0.4% from the month before, a smaller increase than had been expected, official figures have shown.

The increase was below the average 0.6% rise predicted by analysts, and some economists said this could mean lower than expected growth for the economy.

Sales had risen strongly in February, but this came after January's sales had been disrupted by the cold weather.

March's sales volumes were up 2.2% from a year ago, the figures showed.

The Office for National Statistics also revised the monthly sales growth seen in February up to 2.5% from its initial estimate of 2.1%.

However, sales volumes during the first three months of 2010 were down 1.7% from the final three months of 2009.

Analysts said weakness in consumer spending could have hit economic growth in the first quarter of 2010. The initial growth estimate for the first three months of 2010 is due to be released on Friday.

"March's disappointing growth in retail sales fuels our suspicion that the upside for consumer spending - and hence overall economic growth - will be limited in 2010 as households still face very challenging conditions," said Howard Archer at IHS Global Insight.

However, some analysts took a more positive view of the figures.

"Month-on-month data is extremely volatile," said Amit Kara at UBS. "But the message from today's data... suggests that the February bounce back was not isolated and there is still a little momentum in retail sales growth."

source: BBC

Indonesia aims to increase its electricity capacity to 15,000 megawatts this year to support its economic growth target of 7 percent by 2014, a senior minister says.

"The15,000 MW capacity can be achieved through construction of new power plants," Coordinating Minister for the Economy Hatta Radjasa told a seminar organized by the Bogor Institute of Agriculture (IPB) in Jakarta on Saturday.

Hatta said that adequate power supply would help boost economic growth and increase competitive edge of the country’s industrial products in the world market.

The extra supply of electricity would keep state power producer from rotating blackouts.

"There would be no longer rotating blackouts throughout the country starting in June," he said as quoted by Antara.

He said the government's middle term target was to overcome power shortage in 2012-2013.

The first flights in northern Europe have taken off after five days of inactivity caused by the spread of volcanic ash from Iceland.

Three flights departed from Amsterdam's Schiphol airport late on Monday, bound for New York, Shanghai and Dubai.

There are hopes that many routes within Europe will be able to resume operations on Tuesday.

But UK air traffic officials said a new ash cloud spreading from Iceland cast doubt on plans to reopen UK airspace.

Earlier, the UK air traffic control body, Nats, said the flight ban would be lifted over Scotland, Northern Ireland and the north of England.

But it later said there was now a worsening situation in some areas. The outlook for Northern Ireland is most uncertain.

"This demonstrates the dynamic and rapidly changing conditions in which we are working," said a statement from Nats.

British Airways says it is "reviewing" its plan to resume flights from London airports from 1800 GMT, in the light of the latest reports.

Three zones

EU transport ministers proposed creating a core no-fly area, a limited-service zone and an open-skies area.

Dutch Transport Minister Camiel Eurlings said his country "taking a lead" in restarting flights, but warned that further suspensions might prove necessary if the situation worsens.

Swiss and northern Italian airspace will reopen from 0600 GMT, and France is opening some air corridors to Paris.

But the skies over Germany are due to remain closed until 1200 GMT.

The BBC's Nik Gowing at Frankfurt airport says that judging by the tranquil early morning scenes in the normally busy terminals, very few people will be flying on Tuesday.

The International Air Transport Association earlier labelled the chaos a mess and an embarrassment for Europe.

The body says its losses have soared over $1bn (£650m; 740m euros), since much of Europe's airspace was closed last week because of ash from southern Iceland's Eyjafjallajoekull volcano.

The European Union has admitted there were shortcomings in the way the decision to close parts of Europe's airspace was reached.

An official with the EU Transport Commission, Helen Kearns, said there was loose coordination in the decision-making process and that, working with the same scientific information, different countries had reached different conclusions.

She said, however, that in the future when deciding whether planes should be grounded, there'd be no change in the policy of putting safety first.


Warships deployed

Experts had earlier said the volcano - which erupted last Wednesday for the second time in a month - was now spewing more steam and less ash.

A US official said on Monday a Nato F-16 fighter jet had suffered engine damage after flying through the volcanic ash cloud.

In the high temperatures of an engine turbine, ash can turn to molten glass and cripple the engine.

Meanwhile, the UK deployed three Royal Navy warships to help pick up stranded passengers from Spain and the Channel ports.

In Spain, where all airports were open, the government offered to let Britain and other European countries use its airports as stopovers to get passengers moving again.

'No timer'

Airspace in Belgium and Denmark is also due to begin opening from Tuesday morning.

But Finland shut its airports again until Tuesday afternoon.

Airports have already reopened in Austria, Estonia, Hungary and Turkey.

EU Trade Commissioner Karel De Gucht said the bloc's economy would suffer badly if the disruption continued for a long time.

"What makes me a little bit afraid is that there is no timer on this volcano," he told news agency Reuters.

The shroud of fine mineral dust particles from the volcano has spread from the Arctic Circle in the north to the French Mediterranean coast in the south, and from Spain into Russia.

source : BBC