French, German Economies Contract

The German and French economies both contracted in the final three months of 2012, official figures have shown.
Germany--the eurozone’s largest economy--saw its gross domestic product (GDP) shrink by 0.6 percent as exports declined, BBC reported.
That was the deepest contraction since the first three months of 2009--the height of the financial crisis.
The French economy shrank by 0.3 percent in the fourth quarter. Both numbers were worse than forecast.
Some analysts have predicted France is heading for a recession--usually defined as two consecutive quarters of contraction.
However, France’s central bank recently forecast that the economy would expand in the first three months of 2013.
The French President Francois Hollande is trying to make France more competitive by slashing government spending and relaxing labor regulations.

Outlook Promising
Comparatively weak foreign trade was the decisive factor for the decline in the economic performance at the end of the year. In the final quarter of 2012 exports of goods declined significantly more than imports of goods, The German statistics office said.
But economists remain upbeat about the outlook for Germany.
This is a temporary period of weakness in the German economy rather than the beginning of a long period of stagnation or even a recession, said Andreas Rees, chief German economist at the bank Unicredit.
The outlook is very promising. The chances that the economy will return to growth at the beginning of this year are very good, he added.
The growth figure for the whole eurozone is out later and is expected to show the recession in the region deepening. GDP is forecast to contract by 0.4 percent--which would be the third consecutive quarter of contraction.

Peugeot Citroen Loss
French carmaker PSA Peugeot Citroen has reported a net loss of €5 billion ($6.7 billion; £4.3 billion) for 2012, compared with a €588 million profit a year earlier.
The loss was mainly due to asset write-downs which Peugeot took to reflect the worsening state of Europe’s car market.
The carmaker said the write-down on assets totaled €4.7 billion.
Last year, Peugeot announced a program to cut its costs by €1 billion in response to falling sales, including the closure of one factory.
French unions have succeeded in stalling the closure plans in the French courts, but Peugeot said it had succeeded in cutting €1.2 billion over the past 12 months despite that.
The results of the cost reduction and asset disposal plans have exceeded our targets, said chief executive Philippe Varin, claiming that, “the foundations for our rebound have been laid”.
Group revenues were down 5.2 percent on 2011, at €58.4 billion, and income from new car sales fell 12.4 percent to €27.8 billion.
The company blamed the deteriorated environment in the automotive sector in Europe for the poor results.
Like other manufacturers, Peugeot’s sales have been hit by the continuing economic problems in the eurozone.
Car sales across Europe fell by 8.2 percent last year, according to the Brussels-based car industry group ACEA, while sales in France dropped nearly 14 percent.

UK Inflation
The UK inflation rate will remain stubbornly high for longer than previously thought, the governor of the Bank of England has said.
Sir Mervyn King now expects inflation, currently 2.7 percent, to rise to at least 3 percent by the summer and to remain above the Bank’s 2 percent target for two years.
In November he had said that inflation would fall back towards its target in the second half of this year.
But the governor also said that a recovery is in sight.
Sir Mervyn King, presenting the Bank’s latest Quarterly Inflation Report, 20 years after it issued its first one, said the economy had cause for optimism.

Own Goal
Sir Mervyn said that factors outside of the Bank’s control--increases in university tuition fees and utility bills--had added to inflation recently.
“If you like, it is a bit of a self-inflicted goal in terms of the damage done to real take-home pay, perhaps another way of trying to implement fiscal consolidation through moving up the price level,” he said.
This is not the result of easy monetary policy and nor does it reflect what’s going on in the economy.
He drew parallels between now and when the Bank’s first inflation report was presented in 1993.
“In February 1993, unemployment had just reached its peak. Although we didn’t know it at the time a recovery was on its way.”
Today there is cause for optimism. Today too a recovery is in sight.

Encouraging Picture
The economy shrank by 0.3 percent in the last three months of 2012, fuelling fears that the UK could re-enter recession, defined as two consecutive quarters of contraction.
Although economic output has been broadly flat for the past two years, Sir Mervyn said that masked a more encouraging underlying picture.
Manufacturing and services--which make up the bulk of the economy--had grown during 2012, seeing a similar performance to that in the US and considerably stronger than in Japan and the eurozone, he said.

Global Mobile Phone Sales Decline

Market research firm Gartner said in its latest that worldwide mobile phone sales declined in 2012 for the first time since 2009.
Tough economic conditions, shifting consumer preferences and intense market competition weakened the worldwide mobile phone market this year, said Anshul Gupta, principal research analyst at Gartner, Xinhua reported.
According to the research, with smartphones continuing to drive overall sales, worldwide mobile phone sales to end users totaled 1. 75 billion units in 2012, a 1.7-percent decline from 2011.
Demand for feature phones remained weak in 2012 and was down by 19.3 percent year-on-year in the fourth quarter of 2012, said the research. It is expected to keep falling in 2013.
But in the fourth quarter of 2012, smartphone sales rose by 38. 3 percent compared to the same period the previous year.
Gartner predicted that overall mobile phone sales to end users would reach 1.9 billion units in 2013 with smartphone sales accounting for almost 1 billion units.
Among smartphone vendors, Apple and Samsung together raised their worldwide smartphone market share to 52 percent in the fourth quarter of 2012 from 46.4 percent in the third quarter. Samsung claimed the No.1 position in both worldwide smartphone sales and overall mobile phone sales in 2012.
Meanwhile, China’s Huawei reached the No.3 spot in global smartphone sales for the first time. Garner said international markets are key for Huawei’s growth in 2013, and the company would be able to improve its product mix to a higher tier.
The research predicted that 2013 would be the rise of the third ecosystem as the battle between the new Blackberry 10 and Windows Phone intensifies. As carriers and vendors feel the pressure of the strong Android ‘s growth, alternative operating systems such as Tizen, Firefox, Ubuntu and Jolla will try and carve out an opportunity by positioning themselves as profitable alternatives, it said.

India Inflation Rate Dips

India’s inflation rate has dipped to a three-year low, giving more room to policymakers to take steps to revive its sluggish economy.
The Wholesale Price Index, India’s main gauge of inflation, eased to 6.62 percent in January, down from 7.18 percent in December, WSJ wrote.
India’s growth rate has dipped recently amid slowing exports, a decline in investment and subdued domestic demand.
India’s central bank cut interest rates last month and a slowdown in inflation may see it ease its policies further.
“We are looking at a sharp and sustained downward trend, which should give the Reserve Bank of India the elbow room to go ahead at least with a couple of more rate cuts,” said Abheek Barua, chief economist at HDFC Bank.
Barua said he expects the central bank to cut rates in March and April.

Growth Concerns
Earlier this month, India’s statistical office lowered its growth forecast for the year to 31 March 2013, saying it now expects the economy to grow by just 5 percent during the period.
The central bank has also lowered its growth projection for the year to 5.5 percent from 5.8 percent.
India’s economy has been hurt by a slowdown in exports and subdued domestic demand, the combination of which has affected the manufacturing and services sectors.
Meanwhile, a delay in key economic reforms has seen foreign investors become wary of entering the country.

Pakistani Rupee Sinks to All-Time Low

The Pakistani rupee sank to an all-time low over forex reserve fears as the country repayed $ 146 million to the International Monetary Fund.
The rupee fell to 100.1 to the greenback in trading in Karachi, down from 99.30 on the open market, and has now lost 39 percent of its value against the US currency since March 2008, AFP wrote.
“We have traded the dollar at Rs. 100.1, although there is a slight difference on the open market,” said currency dealer Mohammad Arshad.
The official inter-bank rate for the dollar is Rs. 98, but Mohammad Sohail, who heads brokerage firm Topline Securities, confirmed it had crossed 100 on the open market.
Pakistan had a $10.7 billion IMF loan until September, but had drawn only about a third of it. The government has indicated it would not seek a new loan.
Pakistan repaid $145.79 million to the IMF and is scheduled to repay another $375 million on Feb. 26, according to Syed Wasimuddin, spokesman for the country’s central State Bank.
So far Pakistan has repaid $2.57 billion, $1.5 million this fiscal year, ending June 30, according to the central bank.
The rupee is likely to remain under pressure because of IMF repayments, said Sohail. The foreign exchange reserves have declined to $8.7 billion as of Jan. 31 from $10.8 billion at end-June 2012, said the central bank last week.
The IMF last November urged Pakistan to reduce its large budget deficit to bolster the struggling economy’s resiliency, noting that foreign exchange reserves under $10 billion were below adequate levels.

Iran Secure Route for Energy Transit, Swap

A senior Iranian Oil Ministry official has described Iran as a secure route for transit and swap of energy in the entire Middle East region.
Director General of the National Iranian Oil Products Distribution Company (NIOPDC) Mostafa Kashkouli said on Thursday that Iran can play a major role in the global economy if the Islamic Republic establishes itself as a regional exporter of energy and a secure route for the transit and swap of energy resources, Presstv wrote.
He added that the realization of that goal would both serve Iran’s security and fetch the country millions of dollars in revenues.
Kashkouli stated that Iran is poised to increase its share in international gas trade to 10 percent by the end of the Fifth Five-Year Economic Development Plan (2010-2015).
Last August, Iran launched a liquefied gas swap route in the Caspian Sea.
Deputy Iranian Oil Minister Alireza Zeighami announced on August 11, 2012, that swapping other oil products, such as fuel oil, is currently underway with the Caspian Sea littoral states.
According to the official statistics released by the National Iranian Oil Company (NIOC), an average of 20,000 barrels per day (bpd) of crude oil produced by Caspian Sea littoral countries is being swapped for delivery in the Persian Gulf.
Iran imports oil from Central Asian countries to be refined at Tehran and Tabriz oil refineries and then delivered to potential buyers in the Persian Gulf.

IP Gas Pipeline Project Near Completion

Iran-Pakistan gas pipeline project is near to its completion, said deputy speaker of Pakistan National Assembly, Faisal Karim Kundi.
He told IRNA that Iran and Pakistan are moving forward on the gas pipeline project, adding that both neighboring nations have always stood by each other in difficult times.
Pakistan is hosting first conference of Parliamentary Association of ECO Members States (PAECO), he mentioned. “It is very important for us and this region also because the speakers of very important countries are participating in the conference,” he said.
He added that speaker represents the parliament and parliament represents the nation.
“You can see the nations are gathering and I am very optimistic about the outcome of the PAECO conference,” said the deputy speaker.
“We consider Iranians as our brothers,” he said. He added that people of Iran and Pakistan share same sentiments for each other.

India to Insure Refineries Importing Iranian Crude Oil

An Indian government source said New Delhi will provide insurance coverage for Indian refineries that import crude oil from Iran in defiance of US-led sanctions against the Iranian energy sector.
“Oil is as basic as food. Just as you need food, you need oil,” Reuters quoted the source as saying on Wednesday.
One day earlier, India’s state-owned refiner Hindustan Petroleum Corp Limited (HPCL) had expressed concern that it might have to stop using Iran’s oil if insurers did not renew contracts on its plants due to the sanctions, Presstv reported.
“As long as it is for Indian consumption, why shouldn’t we?” the source asked.
A top oil buyer from Iran, energy-thirsty India has already organized emergency cover for vessels carrying crude oil from Iran.

Thomson Reuters to Cut Jobs

News and financial information company Thomson Reuters said it is cutting 2,500 jobs, or about 4 percent of its workforce this year as it tries to reduce costs and turn around its largest division.