Archive for September, 2010
THE NUMBERS: U.S. new automobile exports to China –
Full year 2000215
WHAT THEY MEAN:
Is the worst over for car-makers? For long-suffering Michigan? Compiling data in the depths of the Commerce Department, the automotive team finds some good news: American car exports are soaring, up from last year’s $100 billion worth of cars, trucks and parts to a possible $150 billion this year, overseas car sales account for more than a fifth of America’s likely $230 billion in manufacturing export growth. More detail suggests the jump comes in part from a natural rebound from crisis, but also from a shift toward more export-minded car production and the appearance of a big new customer.
The Department’s automotive data report that in 2005 American auto plants – including production by Big Three and international car companies — made 11.5 million cars, SUVs and pickup trucks. Of these, 1.9 million went abroad, with 1.15 million going to Canada and Mexico and another 120,000 to Germany. In the crisis year 2009, production fell to 5.6 million, mainly because of the drop in buying at home, while 1.7 million went abroad. If their early figures for 2010 hold up through the fall, production will rebound to about 9.3 million cars and trucks, and exports will jump to 2.5 million.
Some of this reflects reviving sales to Mexico and Canada — but car exports to China are rising at an astonishing rate, with sales quadrupling in a single year. The jump lifts China above Germany as the 3rd-largest American automobile buyer this year (up from 10th in 2005 and 48th in 2000), the U.S.’ largest trade-surplus country for vehicles (though still much more a supplier than buyer of auto parts) — and also lifts China above Japan and Germany as Michigan’s third-ranking export market.
The jump has lifted Michigan state exports by 38 percent this year — the fastest growth among the top ten exporting states. The state has picked up about 150,000 jobs this year; its unemployment rate has dropped from 14.5 percent in January to 13.1 percent in August, and from 16 percent to 14 percent around Detroit. Far from enough – but perhaps a sign that the worst is past.
ADDIS ABABA (Reuters) – Ethiopia’s inflation rate slowed to 5.3 percent in August from 5.7 percent in July, helped by a 22.3 percent year-on-year decline in the cost of cereals, the statistics office said in a statement.
The Central Statistical Agency said the overall food price index fell 1.0 percent in August from a year earlier, although, with the exception of cereals, most other food components rose.
The agency said non-food inflation was running at 15.6 percent in August, down from 17.7 percent in July and the lowest rate since October 2009 when it was 14.8 percent.
Ethiopia was hit by soaring inflation in 2008 and much of 2009, driven by record global food and fuel prices. The rate plummeted from July 2009 to October 2009 after the government stopped state borrowing and increased bank reserves.
Prime Minister Meles Zenawi says his government will target annual inflation of 6 percent over the next five years.
Analysts say, however, that there is a risk inflation rates will creep higher after the central bank devalued the birr by 16.7 percent at the start of September.
© Thomson Reuters 2010 All rights reserved
The United States government on Thursday signed a $ 229.3 million agreement with Ethiopia, aimed at expanding cooperation on development programs in education, health, and economic growth, including agriculture and trade.
The amount, due to be channelled through the United States Agency for International Development (USAID), results from close consultation between the governments of Ethiopia and the United States on priorities for the improvement and expansion of health and education services, the advancement of rural development and opportunities to generate income and create private enterprises.
The agreement was signed in Addis Ababa between USAID and the Ethiopian Ministry of Finance and Economic Development.
According to the agreement, $23 million will be provided to improve the quality of primary education, with emphasis on increasing girls’ access to education and teacher training.
An additional $157 million will support life-saving maternal, child and reproductive healthcare, as well as combat HIV/AIDS, control malaria, and improve water and sanitation.
In the economic growth sector, $49.3 million will support agricultural productivity and marketing, expansion of trade and private enterprises, protection of natural resources and adaptation to climate change.
USAID Ethiopia is supporting over 100 projects throughout the country.
In addition to these bilateral agreements, the US government also is providing Ethiopia an additional $582.4 million for food assistance, the Productive Safety Net Program, and special initiatives to promote public health, education, food security, conflict resolution and governance, bringing USAID funding to Ethiopia to $812 million in 2010.
It was reported that the total US government assistance to Ethiopia in 2010 has increased to $983 million.
“We will be inking a deal with the Ethiopia government next month for getting at least 50,000 hectares of area for growing crops like pulses and maize, which will be exported to India and Europe,” Confederation of Potato Seed Farmers President Sukhjit Singh Bhatti told PTI here.
Bhatti will lead a delegation of 16 interested potato growers from Punjab to carry out farming in Ethiopia.
What encouraged these potato growers to try their hand at farming overseas was land availability at almost throwaway rates, duty free imports of capital goods and the zero duty on farm exports offered by Ethiopia.
“Unlike here, most of the agricultural land is with the Ethiopian government and it has offered us to acquire land on lease for a period ranging between 25 to 40 years at a nominal rate, which works out to Rs 400 per acre per annum in Indian currency. Moreover, we will not have to pay for the first five years of our operations,” he said.
Furthermore, the cropping pattern in Ethiopia is not that intense as it is in Punjab. “With less pressure on land there (Ethiopia), the soil will be suitable for growing pulses, maize and other cash crops,” he said, adding, “These crops will be exported to India and Europe.”
The Ethiopian government has also assured that it will not levy any duty on the import of machinery like farm implements and export of agricultural commodities.
The Ethiopian Ambassador to India led a delegation from Punjab to his country in the month of June and asked Punjab farmers to invest in farming. The Punjab farmers were shown three farm estates, including Oromia, Gambella and Ben Hul Gul by Ethiopian authorities when they visited the country.
According to Bhatti, the initial cost for farming in Ethiopia works out to Rs 1.5 crore per 100 hectares of land. “This cost involves spending on infrastructure, farm machinery and land development,” he said.
The idea of land cultivation in foreign country has also clicked with the Punjab government, as state-owned Punjab Agro plans to take eight farmers from the state to CIS countries including Uzbekistan, Azerbaijan, Ukraine and Kazakhstan next month to explore the possibility of cultivating land on lease and exporting fruits, vegetables, basmati rice, etc.
This year, the ambassadors of various African countries, including Tanzania and Uganda, visited Punjab and encouraged farmers of the state to till the land in their countries.
International finance corporation the World Bank’s private-investment arm started a loan-guarantee facility worth as much as $30 million for Nib International Bank SC to support Ethiopia’s coffee industry.
The guarantee is expected to result in lending to an additional 70 coffee cooperatives in the first year and the production of an extra 3,542 metric tons of beans and 2,000 jobs over three years, IFC said today in a statement handed to reporters in Addis Ababa, Ethiopia’s capital.
The guarantee will enable NIB to provide loans worth as much as $12.5 million for the 2010 coffee season, increasing to $25-30 million by 2013, according to the statement.
“This facility reduces NIB’s financial risk of lending to coffee-farmer cooperatives and will go a long way to strengthen NIB’s commitment to expand support to small farmers in the coffee sector in Ethiopia,” the bank’s president, Amerga Kassa, said in the statement.
Ethiopia, Africa’s largest coffee producer, earned $528 million from shipments of coffee in the year to July 7, according to Ministry of Trade and Industry figures.
The agreement should boost the cooperatives’ incomes by as much as 30 percent by providing working capital and allowing them to purchase equipment such as wet mills for processing high-quality coffee, IFC Resident Representative Aliou Maiga told reporters.
The deal will support the Ethiopia Coffee Initiative that is targeting 160 cooperatives representing 90,000 farmers. The program is run by Washington-based TechnoServe and funded by the The Bill & Melinda Gates Foundation.
The not-for-profit organization initiated the loan- guarantee facility and will help the cooperatives access credit from NIB and provide technical assistance, Michelle Buckles, TechnoServe’s East Africa Regional Credit Manager, said today in an interview.
By William Davison
China is taking steps to increase the volume of goods it receives from Ethiopia, the state-owned Ethiopian News Agency cited Chinese Ambassador Gu Xiaojie as saying.
China is using policy measures such as zero tariffs on products from developing countries and organizing trade fairs for Ethiopian exporters to improve the balance of trade for the Horn of Africa nation, Gu said in an interview, according to the Addis Ababa-based agency.
Trade between China and Ethiopia totaled $785 million in the first half of 2010, an increase of 27.6 percent from the same period last year, ENA cited Gu as saying.
The ambassador said exports to China from Africa’s largest coffee producer increased 163 percent to $215 million in 2009. The value of 1,230 Chinese investment projects in Ethiopia was $2.5 billion, he said.
By Barry Malone
ADDIS ABABA (Reuters) – The Ethiopian birr was devalued by 16.7 percent on Wednesday, according to exchange rates published on the central bank’s website, a move welcomed by the International Monetary Fund (IMF).
The birr was quoted by the National Bank of Ethiopia at a weighted average of 16.3514 against the dollar compared with 13.6284 on Tuesday. A central bank official confirmed the new rate but was not authorised to make further comment.
“The IMF welcomes this move given it will help bolster Ethiopia’s competitiveness,” IMF representative in Ethiopia, Sukhwinder Singh, told Reuters. “It will need to be supported by appropriate monetary policy.”
Last month, the government unveiled an ambitious five-year economic plan which targets average annual economic growth of 14.9 percent over the period and aims to end the Horn of Africa nation’s dependence on food aid.
Ethiopia is Africa’s biggest coffee exporter and the world’s fourth largest exporter of sesame. It is also one of Africa’s biggest potential markets — with a population of 80 million — and most of its people have no telephones or bank accounts.
The devaluation is the Horn of Africa nation’s fourth since January 2009. Devaluations can spur economic growth and reduce current account deficits to the extent they boost exports and discourage imports, although they carry the risk of importing inflation.
‘DEPRECIATION LIKELY TO CONTINUE’
“I think it’s related to the new five-year plan and a strategy of export promotion and import substitution,” Tewodros Mekonnen, an economist with local think tank, the Ethiopian Economic Association, told Reuters.
Obviously there’s a risk it could cause inflation. It will probably also boost foreign direct investment and remittances.”
Inflation in Ethiopia hit a high of 64.2 percent in July 2008.
After that peak, the government halted state borrowing and increased bank reserves to drive down the rate.
The country’s central bank also instructed private banks to restrict borrowing.
The inflation rate slowed to 5.7 percent in July.
“Years of high inflation have eroded the country’s export competitiveness, and the government has continually favoured sharp currency depreciations to counteract this,” Joseph Lake, an analyst at the Economist Intelligence Unit, told Reuters.
“Though inflation has eased in recent months, this pattern of currency depreciation is likely to continue. Low levels of foreign exchange reserves, and twin fiscal and current-account deficits will continue to put pressure on the currency,” Lake said.
The country — one of the world’s biggest recipients of foreign aid — is keen to attract foreign investment in agriculture and mineral exploration.
Ethiopia has operated a managed floating exchange rate regime since 1992.