Home' Trinidad and Tobago Guardian : November 12th 2015 Contents BG22 INTERNATIONAL
BUSINESS GUARDIAN www.guardian.co.tt NOVEMBER 12 • 2015
A slowdown in international trade could be a harbinger of
a new recession for the world s leading economies, a leading
global policy organisation warned Monday.
The Organisation for Economic Cooperation and Development
says trade figures are worrisome because the stagnating or
declining rates of trade seen this year "have, in the past, been
associated with global recession."
In its world economic outlook issued Monday, the Paris-
based group projected global trade growth at two per cent
this year, improving to 3.6 per cent next year.
In only five years of the past 50 has global trade grown at
two per cent or less, and each time has coincided with a world
economic downturn, said Angel Gurria, the OECD s secre-
"Trade should be growing at about double the speed of
growth of the world economy because trade is always a loco-
motive," Gurria said. Instead, the OECD predicted the world
economy would grow 2.9 per cent this year and 3.3 per cent
The group says that in contrast to two years ago, when slug-
gish trade was blamed on advanced economies, the fault now
centers on emerging markets such as China. As China transitions
from massive infrastructure investment and manufacturing
toward consumption and services, commodity prices have
fallen, hurting exporters such as Australia, Brazil, Canada and
New figures released Monday in China highlighted the extent
of the downturn: the country s imports fell by 18.8 percent
in October from a year earlier, while exports shrank 6.9 per
Ahead of next week s G-20 meeting of leaders of the world s
major economies, Gurria called on governments to roll back
protectionism, strengthen smart public investment, and carry
out structural reforms including improvements to education,
taxes and labor markets.
The OECD is made up of 34 of the world s most developed
countries and advocates for policies to promote growth, edu-
cation and social welfare issues.
In a nod to the upcoming COP 21 global climate talks in
Paris, the report says "action is needed now." The OECD urged
leaders from nearly 200 countries gathering for the talks aimed
at limiting emissions that cause global warming to not use
economic weakness as an argument for policy inaction.
The organisation also touched on European divisions over
how to handle the surge in migrants, saying a collective approach
and the right policies would not only lighten the economic
burden of the newcomers but would benefit host countries.
"In the medium- and long-term, given the aging in our
societies and given the mismatch in skills vis a vis what the
market it requiring it will still be a net positive for our
economies," Gurria said. AP
Greece failed to convince
European creditors Mon-
day to release vital bailout
funds to shore up the
country s public coffers
and its crippled banks but
hopes are high that a deal will be concluded
within a week.
Though the Greek government has met
many of the conditions attached to the coun-
try s third international bailout, it still needs
to push through some financial reforms,
notably how to deal with those in arrears
on their mortgages and the bad loans held
"There are open issues," Jeroen Dijssel-
bloem, the eurozone s top official, said after
a meeting of the bloc s 19 finance ministers.
Dijsselbloem said he hopes agreement on
these remaining issues can be agreed on in
the "coming days."
Greece is due two billion euros (US$2.2
billion) from its bailout as well as 10 billion
euros already set aside for the country s
banks, who are reeling from capital controls
and another likely recession.
But it needs to pass a series of economic
reform measures to get the money from the
three-year 86 billion-euro ($93 billion)
bailout program agreed on this summer in
the face of potential economic collapse.
Greece s finance minister, Euclid Tsakalo-
Greece: No agreement with
creditors on bailout release
Greek Prime Minister Alexis Tsipras, left,
meets with European Commissioner for
Economic and Financial Affairs Pierre
Moscovici in Athens, on Tuesday, November
3, 2015. Moscovici's talks with officials in
Greece's leftwing government will focus on
the progress of reforms demanded by the
country's European creditors in return for a
third multi-billion euro bailout. (AP)
Trade slowdown points to world recession risk, watchdog says
tos, said he was hopeful the Greek government
would meet creditor demands over issues relat-
ing to Greek banks and bad debts within the
timeframe outlined by Dijsselbloem.
"I have every expectation that we will have
very good news by this time next week," he
The Greek banks are perhaps the most press-
ing concern facing the Greek government. They
remain badly hobbled by the crisis that played
out over the country s euro future in the first
half of the year. They need cash and fast so
they can start operating normally --- the most
visible sign that they are nowhere near normal
is that cash withdrawals remain confined to a
paltry 60 euros a day or 420 euros a week.
Last month, the European Central Bank said
Greece s banks need 14.4 billion euros in fresh
money to get back on their feet and resume
normal business. That s actually lower than
many had anticipated. Up to 25 billion euros
is available from the bailout.
Klaus Regling, the head of the European Sta-
bility Mechanism, the institution that actually
pays out the bailout cash, said the smaller
capital shortfall means Greece s latest rescue
will "very likely" be less than the up-to-86
billion euros initially foreseen.
"That s good news for Greece because it
means the debt increase will be less and also good
for ESM as we keep more remaining firepower,"
Greece s European creditors have already put
aside 10 billion euros into a special account man-
aged that can be made available to Greece "rel-
atively quickly" but only after conditions are met.
"We hope that this can happen in the course
of this week," he added.
The bank recapitalisation has to be completed
by the end of the year as new rules are set to be
introduced in 2016 that will mean depositors with
over 100,000 euros in a bank will have to con-
tribute to the bank s rescue.
Given the amount of pain that would inflict on
Greeks who are already struggling with recession
and high employment, it s a scenario the Greek
authorities would like to avoid.
Greece has relied on bailout funds from its euro-
zone partners and the International Monetary
Fund since the spring of 2010 and is heading back
into recession after the government imposed painful
controls on money transfers in late June, when it
appeared the country was hurtling toward euro
Once the promised reforms have been passed
and the bank recapitalization has taken place, dis-
cussions between Greece and its creditors can
move on to how to lighten Greece s public debt
load, which after the anticipated recession will
see it rise to around 190 percent of the country s
annual gross domestic product.
As a condition of the bailout agreement---the
country s third since 2010---Greece has to enact
a series of measures to overhaul its economy, such
as reforming its labor markets, raising taxes, cutting
spending and putting state investments up for
sale. If it doesn t, Greece would be cut off from
its bailout funds and would again face the prospect
of bankruptcy and an exit from the euro. AP
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