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Wed, Aug 30, 2006
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Economy News in Brief
Poverty in US Has Serious Implications for Public Health
S. Africa Should Translate Productivity Into More Jobs
GEF $3b Richer
Russian Ministry Concerned About
Oil Fund Usage
Another Blow to
Bolivia’s Nationalization
ILO Asia Meeting Seeks
To Improve Work Conditions
Karzai for Tough Action
Against Corruption

Poverty in US Has Serious Implications for Public Health
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A young American cleans up garbage with family members in New Orleans, USA. (Reuters File Photo)
NEW YORK, Aug. 29--Since 2000, Americans have been getting poorer, and national rates of severe poverty have climbed sharply, according to Eurekalert.
The researchers reported that the growth in the poverty rate is due largely to a rise in severe poverty and that “moderate“ poverty has grown little.
The percentage of Americans living in severe poverty--earning less than half of the poverty threshold--grew by 20% between 2000 and 2004, and the proportion in higher income tiers fell. The researchers reported that the number of Americans living in severe poverty increased by 3.6 million between 2000 and 2004.
“These trends have disturbing implications for society and public health,“ said Steven H. Woolf, MD, MPH, Professor of Family Medicine, Epidemiology and Community Health, Virginia Commonwealth University, and lead author of the study.
The researchers found that the only category of Americans to increase in size were those whose earnings were at least $8,000 below the poverty threshold, who grew by approximately 50% between 2000 and 2004. All other income tiers decreased during these years. The poverty threshold in 2004 for a family of four was $19,307.
“The rise in severe poverty is striking children the hardest,“ said Woolf. His study found that children under age 5 are twice as likely to be living in severe poverty as the rest of the population.
“In 2004, one of three Americans with incomes less than 50% of the poverty threshold--5.6 million people--was a child.“ Severe poverty is also dramatically worse among African Americans and Hispanics, and minority children therefore face the greatest risk. The researchers reported that children account for 45% of Hispanic and African Americans living in severe poverty.
Likely health consequences include a higher prevalence of chronic illnesses, more frequent and severe disease complications, and increased demands and costs for healthcare services. Adverse effects on children carry long-term implications.
“Except for a small class of highly affluent Americans, income for the entire US population has fallen since 2000.“ The researchers describe a “sinkhole effect,“ in which “families and individuals in the middle and upper classes appear to be migrating to lower income tiers that bring them closer to the poverty threshold.“
US household income, adjusted for inflation, fell by 3.6% between 2000 and 2004. Woolf says that the sinkhole effect and the upsurge in poverty could deeply affect society and calls for the reexamination of policies enacted in recent years to foster economic progress.

S. Africa Should Translate Productivity Into More Jobs
JOHANNESBURG, South Africa, Aug. 29--South Africa has to translate its productivity gains into more jobs to improve the standard of living of its entire people, AllAfrica quoted Labor Minister Membathisi Mdladlana as saying on Monday.
Minister Mdladlana was speaking at the start of a week-long conference in Johannesburg, for the promotion of the productivity movement in Africa.
The conference is being hosted by the National Productivity Institute, Pan African Productivity Association (PAPA) and the Asian Productivity Organization (APO).
Quoting the recent Competitiveness Report, the minister said South African multifactor productivity had increased by a “healthy“ 3.5 percent.
Within the first decade of democracy, the South African economy grew by 3 percent. Since then, it has exceeded 4 percent per year, reaching 5 percent in 2005.
“I am not suggesting that we remain complacent. We still have a challenge to translate these productivity gains into more jobs and improved standard of living for our people,“ said Mdladlana.
He said looking at the strides South Africa had taken since 1994, he was confident that government would achieve the goals to reduce unemployment and poverty, and increase economic growth by six percent.
However, he added that high levels of poverty in the country were not challenges that were only echoed in Southern African communities, they affected communities throughout Africa and other developing countries.
He said they reflected a social system, which for many years perpetuated gross injustices to fundamental human rights - the right to work, and the right to dignity.
Mdladlana explained government’s interventions saying youth development had become an integral part of addressing the challenges of post apartheid South Africa.
Nevertheless, as part of youth development, young people needed to be placed within companies for experience.
By doing this in the broader context of reconstruction and development would encourage common developmental goals and a spirit of co-operation and co-ordination.
It is also expected that by building the productive capacity of the youth, whether through mentoring or formal training, entrepreneurship would flame a vibrant SMME sector, he said.
Sustainable Development The Minister paid tribute to the workers, adding that “their contribution to economic growth is often unrecognised.“
He told delegates that government had committed more than R370 billion under the Accelerated and Shared Growth Initiative for South Africa (AsgiSA) over the next three years, towards infrastructure projects such as roads, schools, and municipal infrastructure.

GEF $3b Richer
WASHINGTON, Aug. 29--A UN-managed fund designed to protect the global environment from catastrophic threats has received a funding boost of $3.13 billion, AFP said.
The World Bank said donors’ record contribution to the Global Environment Facility (GEF) could not be better timed as ecological “red flags“ mount, including climate change, loss of species, land degradation and pollution.
“This strong show of support from the international donor community is remarkable, and signals firm commitment to protecting the global environment,“ said the GEF’s chairwoman, Monique Barbut.
“We cannot be complacent, and time is not on our side,“ she warned after the money was agreed by international donors attending the fund’s third annual meeting in Cape Town, South Africa.
“The global environment is facing unprecedented threats, and these funds have to be translated rapidly into projects, programs and policies that make a difference in developing countries,“ Barbut said.
The GEF was a fruit of the 1992 Earth Summit in Rio de Janeiro to fund global environment protection projects. It is administered by the UN Development Program, the UN Environment Program and the World Bank.

Russian Ministry Concerned About
Oil Fund Usage
MOSCOW, Aug. 29--Russia’s finance ministry, concerned the state is becoming hooked on oil money, proposed capping the amount of oil revenues used for current budget spending at 3-4% of gross domestic product.
According to Reuters, the proposal comes after Finance Minister Alexei Kudrin, the government’s leading fiscal hawk, lost a battle to curb budget spending with ministers seeking to woo voters ahead of a general election next year and presidential polls in 2008.
While Russia already squirrels away 80% of windfall oil revenues in a budget stabilization fund, from which it has already drawn $40bn to pay down foreign debts, oil revenues still cover a hefty share of current spending.
Non-oil revenues, meanwhile, fell as a share of GDP to 12.9% of GDP last year from 15% in 2002 as a result of tax cuts, the finance ministry said in its proposal.
Russia is on track to run a budget surplus of 6.5% of GDP this year, but stripping oil out of the equation the budget would swing to a deficit of 5.2% of GDP.
And with growth in oil and gas production to slow in Russia, the world’s leading producer of hydrocarbons, the structural non-oil deficit could become greater, the ministry warned.
“Already today, the federal budget is starting to encounter serious risks stemming from the dwindling of its resource base,“ the ministry said in the document.
Kudrin, the architect of the renaissance in Russia’s public finances over the past six years, introduced a flat-rate income tax to tackle the black economy and launched the budget stabilization fund in 2004.
The rainy-day fund, originally designed to absorb the shock of a possible oil price crash, is piling up revenues earned when the oil price exceeds $27 a barrel.
But Kudrin has been forced on to the backfoot by ministers eyeing the electoral cycle, and next year’s budget foresees a 13% hike in spending. He has warned that the higher spending would fuel inflationary pressures.
Russia overtook Saudi Arabia as the world’s top crude producer.
Russia became the world’s top producer, pumping 9.636 million bpd in May. Saudi Arabia’s output stood at 8.93 million bpd, sharply lower than the 9.432 million bpd it produced in the same month last year.
The US was the third largest producer last May, with its output standing at 5.092 million bpd.
It was followed by Iran (4.010 million), China (3.836 million), Mexico (3.337 million), the UAE (2.651 million) and Kuwait (2.579 million).

Another Blow to
Bolivia’s Nationalization
LA PAZ, Bolivia, Aug. 29--President Evo Morales’ already delayed drive to nationalize the nation’s hydrocarbons industry suffered another setback Monday with the resignation of the state oil company’s president, reported AP.
Jorge Alvarado, president of Yacimientos Petroleos Fiscales Bolivianos, was one of the key figures in the leftist Morales’ push to bring natural resources under state control, but his leadership of YPFB has come under increased scrutiny and even a probe into possible corruption as the nationalization has run into troubles.
Despite announcing Alvarado’s resignation, Morales said he had committed “neither harm to the state nor any act of corruption,“ and alleged there was a “conspiracy“ between opposition figures and international petroleum interests.
Morales named YPFB Vice President Juan Carlos Ortiz to fill Alvarado’s position, saying, “With a new team, we will complete nationalization.“
The Bolivian government last week said that Alvarado had violated the terms of Morales’ May 1 nationalization decree by having YPFB contract to export crude oil through trading firm Iberoamerica to Brazilian energy company Univen in exchange for diesel fuel.
Hydrocarbons Minister Andres Soliz tendered his resignation last week after being censured by Bolivian lawmakers over the nationalization’s limited progress, but Morales’ rejected the offer.
The Bolivian government is also embroiled in a dispute with a local affiliate of Spanish-Argentina oil company Repsol, and Brazil’s state-owned Petroleo Brasileiro SA, or Petrobras, over a 2002 contract between the two companies to allegedly export Bolivian natural gas to Brazil at prices lower than the official rate.
Meanwhile, Bolivian protesters cut the flow of a natural gas pipeline to Argentina on Monday in protest against new migration policies restricting border crossings by Argentines into Bolivia.
According to local radio broadcasts, protesters from the Bolivian towns of Yauiba and Pocitos closed the valves of a pipeline that transports natural gas to Argentina, Bolivia’s second-biggest gas customer.
The measure also limits the value of purchases Argentines can make in the Andean country to $50 per trip.

ILO Asia Meeting Seeks
To Improve Work Conditions
BUSAN, South Korea, Aug. 29--The International Labor Organization kicked off a four-day regional meeting Tuesday aimed at improving working conditions in the Asia-Pacific, home to more than half the world’s workers, AP said.
“The Asia-Pacific region is the most dynamically developing region in the world,“ South Korean Labor Minister Lee Sang-soo, the meeting’s chairman, told participants. “And 60 percent of the global work force resides here.“
Representatives from some 40 countries and regions in the Asia-Pacific as well as workers’ and employers’ organizations were attending the ILO Asian Regional Meeting through Friday. They are expected to discuss a wide array of topics related to globalization’s effects on labor.
The ILO is the UN agency covering work and workplace issues. Ahead of the meeting’s start, it released a report, titled “Labor and Social Trends in Asia and the Pacific 2006: Progress toward Decent Work,“ which will form a basis for much of the discussion.
The report’s findings show that while economic and working conditions in the region have improved, much remains to be done.
On the positive side, it said that economic growth in China and India has dramatically reduced the number of people subsisting below the poverty level of US$1 a day, with about 250 million people having risen above that benchmark since 1990.
Still, over 600 million Asians live below that level, or “more than two-thirds of the world’s poor,“ the report said. “If the poverty line is raised to US$2 a day, Asia has about 1.9 billion poor people,“ or more than three-fourths of the world total, it said.
“The two main engines behind the rise of Asia are China and India,“ the report said. “They have emerged as global economic powerhouses, shifting the growth pole from the West to the East.“
The percentage of people living on US$1 a day in South Asia, which includes India and Bangladesh, dropped to 28.4 percent in 2003 from 40.9 percent in 1990, the report said.
In East Asia, which includes China, it fell to 14.9 percent from 31.2 percent.

Karzai for Tough Action
Against Corruption
KABUL, Afghanistan, Aug. 29--Afghan President Hamid Karzai has directed the Attorney General of Afghanistan to take drastic steps against corruption and bribery to cleanse the government departments of the evil.
According to Asia Pulse via Yahoo, the directives were issued during the cabinet meeting on Monday. On the issue of corruption, the President said: “I’m assigning the Attorney General to crackdown, arrest and prosecute the perpetrators of corruption in the government offices. I’m assigning him to take decisive action in eliminating corruption at all levels, even if its tentacles reach high levels of the government and to present a report to me.“ Attorney General Abdul Jabbar Sabbit was invited to the cabinet meeting to report on the current status of corruption in the country.
The President asked ministers to extend full cooperation to the Attorney General and other relevant authorities to eliminate the evil of corruption and bribery from the country.
The Attorney General was directed to start implementing the administrative reforms to ensure the establishment of an efficient and corruption-free administration.

iEconomyCol1
Unemployment
TOKYO--Japan’s unemployment rate fell to 4.1 percent in July from 4.2 percent the month before, the government said Tuesday, showing the economy continues to recover.

WTO Promises
BEIJING--The United States is concerned that a potential rise of economic nationalism in China could undercut Beijing’s implementation of World Trade Organization promises, the top US trade official said on Tuesday.

Interest Rates
SYDNEY--Outgoing Reserve Bank of Australia chief Ian Macfarlane said on Tuesday that political criticism would not stop the central bank from again lifting interest rates if it was necessary.

End to Deflation
TOKYO--The Japanese government may declare the economy has finally escaped the shackles of years of deflation in September, a report said Tuesday.

Severing Ties
WASHINGTON--The financial noose is tightening around North Korea as international banks sever ties with the nation--a move championed by the US.