SUNDAY, FEBRUARY 28, 2016
BUSINESS
Rollercoaster Irish economy key to election
DUBLIN: From Celtic Tiger to collapse and
back to growth again, Ireland’s recent economic history has shaped its election as voters looked to have punished Enda Kenny’s
coalition for years of austerity despite a
recovery. Here is a breakdown of the main
events over the past decade:
Celtic Tiger
The boom years which led to the economy being nicknamed the Celtic Tiger began
in the mid-1990s and reached their peak a
decade later. This period transformed an
island that had been one of Europe’s poorest
countries and caused a property bubble that
saw house prices quadruple between 1996
and 2006. Ireland saw average annual growth
of six percent between 1995 and 2007,
slashed unemployment and doubled its GDP
in a decade. But as an international financial
crisis took hold in 2008, the property bubble
burst, taking much of the economy down
with it, while banks which had given large
loans on property began to totter.
The economy slumped 3.5 percent in
2008 and almost eight percent in 2009, while
the failure of Anglo Irish Bank summed up
many of the problems which led to the bust.
Fianna Fail, long Ireland’s dominant political force, suffered a historic defeat in the election of 2011 due to anger over the property
crash and economic crisis on their watch.
Austerity
As turmoil roiled international markets in
September 2008, the Irish government guaranteed the debts and deposits of six Irish
banks. Ireland was forced to accept a
European Union and International Monetary
Fund bailout deal in 2010 under which the
government received loans in return for
imposing cuts and reforms.
A series of austerity budgets stripped billions from spending, cutting sectors including public sector pay and pensions, social
welfare, the health service, and education.
At the same time, taxes were raised,
including a new property tax and a water tax
that crystallised anger over austerity, sparking mass protests and refusals to pay.
Unemployment hit 15 percent in 2012, and
over twice that level for young people.
Emigration, long a feature of Ireland’s past
that was banished by the Celtic Tiger,
returned with about 240,000 people moving
abroad.
Recovery
Ireland became the first eurozone country
to exit its bailout in 2013. Economic growth
returned with a rate of 4.8 percent in 2014,
the highest in the European Union. This
showed signs of speeding up further in 2015
as seven percent growth was registered in
the first nine months. Average wages, which
fell or were stagnant since 2008, began to tick
upwards. At the election, Prime Minister Enda
Kenny campaigned for a second term on his
economic record, promising to “keep the
recovery going” and attract 70,000 Irish people to return home this year. — AFP
Global regulators may propose
rules for fintech: Carney
RANCHI: Indian construction laborers work on a building site on the outskirts of Ranchi yesterday ahead of the country’s annual Budget. India’s
Finance Minister Arun Jaitley is scheduled to present annual Budget for the financial year 2016-2017 in the Parliament tomorrow. — AFP
India sees growth above 7%
despite ‘grim’ global outlook
Govt gears to present reform-oriented budget
NEW DELHI: India on Friday offered a cautious forecast for economic growth to exceed 7 percent in the
next financial year, as the government prepares to
present its budget with clamor for promised reforms
growing. The Economic Survey, a yearly report
released by the finance ministry ahead of the national
budget on Monday, said gross domestic product
(GDP) would expand between seven percent and
7.75 percent in 2016-17.
The relatively upbeat prediction comes despite a
weak global economy, with a slowdown in China that
has worried investors, other major emerging markets
in recession and sinking global stocks.
India’s GDP likely grew 7.6 percent over the 201516 financial year, the government said, making it the
world’s fastest-growing major economy. However,
Friday’s forecast represents a paring back of expectations from last year’s survey which predicted growth
would top eight percent this year.
“We’ve learnt from the experience of last year. The
forecast for last year went wrong, maybe it was overoptimistic,” said Arvind Subramanian, the government’s chief economic adviser.
Last year’s survey did not anticipate how much
weak global demand would hurt India’s exports, nor
the impact of a second bad monsoon on its vast agricultural sector, he said. “This year’s assessment is really based on looking out at the external environment
which seems to be very grim,” Subramanian told
reporters. Prime Minister Narendra Modi has made it
a priority to boost India’s economic growth, vital for
lifting millions out of poverty, since sweeping to pow-
Japan inflation falls
back to zero in Jan
TOKYO: Japan’s inflation rate fell to zero in January,
government data showed Friday, in another blow to
Prime Minister Shinzo Abe’s three-year attempt to
put an end to a years-long battle with falling prices.
Japan has suffered deflation-a debilitating drop in
prices-off and on since the late 1990s and authorities have introduced various policies to fight it,
including record low central bank interest rates.
Abe came to power in late 2012 vowing to fix
the problem for good through an array of policies
dubbed “Abenomics” that include government
spending and a massive central bank bond-buying
program. The government’s internal affairs ministry
announced that Japan’s growth in core consumer
prices, which exclude volatile fresh food prices, was
unchanged in January from a year ago after two
months of tepid 0.1 percent growth.
Falling oil prices-resource-poor Japan is a major
energy importer-and a recent rise in the value of the
Japanese yen are seen as further hampering efforts
to achieve moderate price growth.
The latest figure underscores Abe’s challenge
with the outlook being for further price weakness.
“In light of falling import prices and sluggish
economic activity, we think that the slowdown in
underlying inflation has further to run,” said Marcel
Thieliant, senior Japan economist at Capital
Economics.
While offering pro-business policies, Abe has
also pushed Japan Inc to share profits with consumers via wage hikes, saying such a move would
be key to boosting consumption, prices and overall growth. Despite incentives, Japanese businesses have remained cautious to invest in their businesses and offer meaningful wage increases, citing the uncertain economic outlook. Last month,
the government said Japan’s inflation rate stood
at 0.5 percent in 2015, far short of the 2.0 percent
target that the BoJ had promised to achieve by
early last year. — AFP
er in a general election in May 2014.
But investors have raised concerns about the pace
of promised reforms needed to create jobs for India’s
tens of millions of young people. Economists said the
wide range of the growth forecast for 2016-17 indicated the government may be hedging its bets.
“What jumped out at me is that the government’s
estimate has become more cautious,” Hanna
Luchnikava, senior economist, Asia Pacific at IHS
Economics in Munich, told AFP. “We do not expect
any acceleration (in growth) next year, in fact the risks
are to the downside,” she said.
Challenges ahead
While its growth has outpaced that of powerhouse China in recent quarters, Asia’s third-largest
economy still faces challenges.
After cooling from previously high levels, India’s
once exorbitant inflation has ticked up again over
the past few months, with prices rising 5.7 percent in
January. India’s main stocks index has lost a fifth of
its value over the past year, private investment is
weak and the rupee is trading at near-record lows
against the dollar. The Economic Survey forecast consumer price inflation would ease to 4.5 to 5 percent
in 2016-17.
It also said India’s services sector remains one of
the main engines of growth, expanding more than
nine percent in the current fiscal year.
Services make up more than half of India’s economy although the government is pushing to increase
manufacturing through its Make in India campaign.
Investors will be looking to Monday’s budget for concrete reforms from the business-friendly government.
There are hopes it will move to overhaul a complex corporate tax regime seen as off-putting to
investors. The Economic Survey also said the government probably succeeded in reducing its fiscal deficit
to 3.9 percent of GDP in 2015-16 as economists
expect.
It remains to be seen whether Finance Minister
Arun Jaitley will look to relax the stringent fiscal
deficit reduction target for next year when he presents the budget. — AFP
LONDON: Global regulators may propose
rules to prevent “fintech” innovations from
destabilising the broader financial system,
the G20’s Financial Stability Board said yesterday.
FSB Chairman Mark Carney said in a letter to central bankers and finance ministers from the Group of 20 economies
meeting in Shanghai that assessing the
systemic implications of fintech innovations would form part of the task force’s
core policy work this year.
It marks the first time that regulators at
the global level have begun scrutinising
fintech, a sector that includes blockchain,
the distributed ledger technology underpinning bitcoin that proponents say could
radically change payments systems. So far
regulators have been treading carefully as
countries such as Britain are wary of crimping a sector that is still tiny compared with
banking, but could create many new jobs
in future. “The regulatory framework must
ensure that it is able to manage any systemic risks that may arise from technological change without stifling innovation,”
Carney said.
The FSB will discuss its findings in
March and consider its next steps, he
added.
Carney, who is also Governor of the
Bank of England, said the more difficult
economic and financial conditions since
the start of this year partly reflect weaker
growth prospects.
Banking shares have come under pressure, reflecting concerns that lenders have
to do more to adjust their long-term business models to a lower growth, lower
nominal interest rate environment, Carney
said.
Carney said the FSB will repor t in
September on whether there has been a
reduction in market liquidity and, if so, its
extent, drivers and likely persistence.
Banks and central bankers have locked
horns over why liquidity in secondary
bond markets has thinned, with bankers
blaming tougher regulation introduced by
the FSB and others since the 2007-09
financial crisis.
Central bankers say much of the heavier
liquidity in markets before the crisis was
“illusory” with insufficient evidence so far
to show that some of the new rules need
rolling back.
ASSET MANAGERS IN SIGHT
Linked to the liquidity issue is a worry
that asset managers could not cope with
heavy redemptions, or investors pulling
money out of bond funds en masse.
“We have prioritised work to analyse
structural vulnerabilities in asset management activities and to identify risks that
may merit policy responses in four areas,”
Carney said.
The FSB, which sets global standards
implemented by G20 member countries,
will issue policy recommendations in
September after looking at leverage in
funds, and their operational risks and securities lending activities.
“An over-optimistic ‘liquidity illusion’
may have been reinforced by the growth
of investment products offering redemptions at very short notice,” Carney said.
Policies to reduce “fire-sale” risks in
open-ended investment funds may also
help, he said.
Carney said IOSCO, which groups global
securities markets regulators, will publish
by December a “toolkit” of measures to
promote proper conduct by individuals
and firms in markets. Global regulators will
also consult on more detailed rules to prevent clearing houses, which stand
between two sides of a derivatives trade,
from becoming “too big to fail” due to their
size and reach, Carney said. — Reuters
SHANGHAI: Spain’s Economy Minister Luis de Guindos (left) shakes hands with Bank
of England Governor Mark Carney (right) as they pose for a photo after sessions of
the G20 Finance Ministers and Central Bank Governors Meeting at the Pudong
Shangri-la Hotel in Shanghai yesterday. — AFP
EXCHANGE RATES
Al-Muzaini Exchange Co.
Japanese Yen
Indian Rupees
Pakistani Rupees
Srilankan Rupees
Nepali Rupees
Singapore Dollar
Hongkong Dollar
Bangladesh Taka
Philippine Peso
Thai Baht
Saudi Riyal
Qatari Riyal
Omani Riyal
Bahraini Dinar
UAE Dirham
ASIAN COUNTRIES
25.562
4.394
2.865
2.087
2.741
214.230
38.655
3.826
6.303
8.430
GCC COUNTRIES
80.136
82.548
780.535
798.060
81.817
ARAB COUNTRIES
Egyptian Pound - Cash
35.250
Egyptian Pound - Transfer
38.423
Yemen Riyal/for 1000
1.402
Tunisian Dinar
148.320
Jordanian Dinar
423.540
Lebanese Lira/for 1000
2.002
Syrian Lira
2.142
Morocco Dirham
31.124
EUROPEAN & AMERICAN COUNTRIES
US Dollar Transfer
300.350
Euro
332.190
Sterling Pound
421.240
Canadian dollar
218.360
Turkish lira
102.510
Swiss Franc
304.000
Australian Dollar
217.450
US Dollar Buying
299.150
GOLD
244.530
125.190
63.440
20 Gram
10 Gram
5 Gram
UAE Exchange Centre WLL
CURRENCIES
Australian Dollar
Canadian Dollar
Swiss Franc
Euro
US Dollar
Sterling Pound
Japanese Yen
Bangladesh Taka
Indian Rupee
Sri Lankan Rupee
Nepali Rupee
Pakistani Rupee
UAE Dirhams
Bahraini Dinar
Egyptian Pound
Jordanian Dinar
Omani Riyal
Qatari Riyal
Saudi Riyal
TELEX TRANSFER PER 1000
201.91
219.82
306.95
336.85
299.90
431.04
2.67
3.817
4.375
2.083
2.732
2.860
0.08161
0.7970
0.03819
0.4265
0.7788
0.08269
0.07994
Dollarco Exchange Co. Ltd
Rate for Transfer
US Dollar
Canadian Dollar
Sterling Pound
Euro
Swiss Frank
Bahrain Dinar
UAE Dirhams
Qatari Riyals
Selling Rate
300.600
224.390
417.695
329.915
300.685
795.235
82.085
83.290
Saudi Riyals
Jordanian Dinar
Egyptian Pound
Sri Lankan Rupees
Indian Rupees
Pakistani Rupees
Bangladesh Taka
Philippines Pesso
Cyprus pound
Japanese Yen
Syrian Pound
Nepalese Rupees
Malaysian Ringgit
Chinese Yuan Renminbi
Thai Bhat
Turkish Lira
80.840
423.450
38.278
2.081
4.374
2.867
3.823
6.310
572.540
3.630
2.365
3.725
72.335
46.310
9.380
100.703
Bahrain Exchange Company
CURRENCY
British Pound
Czech Korune
Danish Krone
Euro
Norwegian Krone
Romanian Leu
Slovakia
Swedish Krona
Swiss Franc
Turkish Lira
Australian Dollar
New Zealand Dollar
Canadian Dollar
US Dollars
BUY
Europe
0.411552
0.004276
0.040473
0.324126
0.030910
0.086185
0.008916
0.031429
0.295256
0.096854
SELL
0.420552
0.016276
0.045473
0.332126
0.036110
0.086185
0.018916
0.036429
0.305456
0.107154
Australasia
0.206471
0.193484
0.217971
0.202984
America
0.217202
0.296530
0.225702
0.300850
US Dollars Mint
0.296850
0.300850
Bangladesh Taka
Chinese Yuan
Hong Kong Dollar
Indian Rupee
Indonesian Rupiah
Japanese Yen
Kenyan Shilling
Korean Won
Malaysian Ringgit
Nepalese Rupee
Pakistan Rupee
Philippine Peso
Sierra Leone
Singapore Dollar
South African Rand
Sri Lankan Rupee
Taiwan
Thai Baht
Asia
0.003442
0.044474
0.036665
0.004181
0.000018
0.002584
0.003006
0.000234
0.067711
0.002848
0.002715
0.006230
0.000067
0.211367
0.013326
0.001737
0.008929
0.008105
0.004042
0.047974
0.039415
0.004571
0.000024
0.002764
0.003006
0.000249
0.073711
0.003018
0.002995
0.006510
0.000073
0.217367
0.021826
0.002317
0.009109
0.008565
Bahraini Dinar
Egyptian Pound
Iranian Riyal
Iraqi Dinar
Jordanian Dinar
Kuwaiti Dinar
Lebanese Pound
Moroccan Dirhams
Nigerian Naira
Omani Riyal
Qatar Riyal
Saudi Riyal
Syrian Pound
Tunisian Dinar
Turkish Lira
UAE Dirhams
Yemeni Riyal
Arab
0.780066
0.033474
0.000083
0.000196
0.419746
1.000000
0.000150
0.020405
0.001234
0.773970
0.081815
0.079233
0.001273
0.145251
0.096854
0.080820
0.001357
0.798066
0.037810
0.000084
0.000256
0.427246
1.000000
0.000250
0.044405
0.001869
0.779650
0.083028
0.080183
0.001493
0.153251
0.107154
0.081969
0.001437