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NEWS INTERNATIONAL Japan’s economy shrinks for third straight quarter, defying forecasts BoJ, consumers more positive despite disappointing data Japan’s economy contracted for the third successive quarter in the last three months of 2012, as the economy defied analysts’ expectations for a mild rebound. Government data showed that Japan’s gross domestic product fell 0.1 percent in the October-December quarter, equivalent to an annualized drop of 0.4 percent. Overall growth in 2012 was 1.9 percent, after a 0.6 percent drop in 2011, a 4.7 percent increase in 2010 and a 5.5 percent contraction in 2009. Many analysts had forecast that the economy would emerge from recession late last year as the yen weakened against other major currencies, giving a boost to Japanese export manufacturers. “The biggest reason for the decline in GDP is external demand was weak and domestic demand did not recover as AMR Corporation, the parent company of American Airlines, and US Airways Group confirmed plans to merge in an US$11 billion deal that would create the world’s largest airline by passenger numbers. The boards of the two companies approved the deal on 13 February, 15 months after AMR sought bankruptcy protection. The combined carrier is expected to have US$40 billion in 6 March 2013 Taro Aso quickly as we thought,” Shuji Tonouchi of Mitsubishi UFJ Morgan Stanley Securities in Tokyo told BBC News. The poor data have given the government ammunition to defend its “weak yen” strategy as necessary to getting growth back on track. Finance Minister Taro Aso said the recent surge in share prices and weakening yen annual revenue and offer 6,700 daily flights. The move will require American Airlines and US Airways to unite two workforces totalling 113,000 people and integrate reservation and baggage handling systems, computer networks and terminals. (When US Airways and America West Airlines merged in 2007, The Wall Street Journal noted, poor technology integration caused has “brought huge benefits to the export sector.” The Bank of Japan, however, was seen to have a more positive economic outlook despite the country posting the third successive quarterly economic contraction. On 14 February, the bank kept monetary policy settings on hold as it noted that the economy overall “appears to have stopped weakening.” The bank pledged to adopt United States Federal Reservestyle open-ended purchases of financial assets and double its 1 percent target for inflation. It made no changes to the terms of its ¥101 trillion asset-purchasing programme and kept interest rates near zero in February, the Financial Times reported. Many in Japan expect at least a temporary bump to growth from higher government spending on public works. the airlines’ check-in systems to crash.) Doug Parker, the US Airways chief executive, will serve as chief executive of the newly merged company, to be known as American Airlines Group, while Tom Horton, AMR’s chief executive, will stay on temporarily as non-executive chairman. “The combined airline will have the scale, breadth and Coca-Cola revenues short of fizz The Coca-Cola Company, the world’s largest soft drink maker, saw revenue in Europe and China decline in the fourth quarter of 2012 as it faced a range of problems in its global markets. The company said worldwide sales were up by 3 percent, below some analysts’ estimates. Revenue for the quarter rose 4 percent to US$11.46 billion, missing analysts’ expectation of US$11.53 billion, according to Reuters. Coca-Cola said fourth quarter net income was US$1.87 billion, or 41 cents per share, up from US$1.66 billion, or 36 cents per share, a year earlier. In China, sales declined by 4 percent in the quarter after growing by 10 percent in the October to December period in 2011, while sales in struggling Europe fell 5 percent in the final quarter of the year. Boards approve merger of American Airlines and US Airways AFP AFP capabilities to compete more effectively and profitably in the global marketplace,” Parker said in a statement. “Our combined network will provide a significantly more attractive offering to customers.” AMR reported a US$107 million operating profit for 2012, against a US$1.05 billion loss for 2011. The deal cannot be completed until after a judge rules that AMR can exit bankruptcy.
Euro bloc recession deepens as major economies report GDP contractions France, Germany and Italy set grim tone with Q4 figures The euro zone’s recession intensified as gross domestic product fell at an annual rate of 0.6 percent in the fourth quarter of 2012 from the previous quarter, its fastest contraction since the financial crisis began more than four years ago. Official data, released last month, showed steep contractions in the currency zone’s biggest economies, Germany, France and Italy, in which gross domestic product fell more than expected. In the fourth quarter, the German economy contracted at an annual rate of 0.6 percent after expanding at a 0.2 percent rate in the previous quarter. Meanwhile, Italy’s economy shrank at an annual rate of 0.9 percent, while France contracted 0.3 percent, according to Eurostat, the European Union’s statistical office. “The decline of the gross domestic product at the end of 2012 Buffett dips into Heinz with takeover deal Billionaire American investor Warren Buffett teamed up with Jorge Paulo Lemann, Brazil’s second richest man, to take the H.J. Heinz Company private in what is reportedly the fourthlargest food and beverage acquisition ever. The US$28 billion cash deal, which has been approved by the Heinz board, brought together Buffett’s Berkshire Hathaway, a conglomerate with more than 70 businesses, and 3G Capital, a Brazilian private equity firm backed by billionaire Lemann. “It’s our kind of company,” Buffett said in an interview on CNBC, noting the food giant’s signature tomato sauce has been around for more than a century. “I’ve sampled it many times.” The deal has raised the hopes of bankers that other merger and acquisition activities will accelerate. EU banks might face more stringent financial reporting rules Banks might have to disclose their taxes and profits on a countryby-country basis in the latest development to talks on European Union reforms to make banks more stable. The European Parliament is calling for the tougher disclosure regime as part of an EU law implementing a global bank capital accord known as Basel III, the world’s regulatory response to the 2007-2009 financial crisis. 0.3 % 0.6 % 0.9 % GDP, Q4 2012 France Germany Italy AFP was mainly due to the comparably weak German foreign trade: in the final quarter of 2012, exports of goods went down much more than imports of goods,” said Germany’s Federal Statistical Office. The euro zone’s fourth quarter contraction was sharper than the 0.1 percent drop in the previous quarter. The October-December period was the worst for Europe’s economy since an almost 3 percent contraction in the first quarter of 2009. The results marked the currency bloc’s first full year in which no quarter produced growth. Representatives from EU states and the parliament are meeting to finalize a deal on the law as without it, Basel III cannot be implemented. The transparency requirements have the full support of the European Commission, however, most EU member states are resisting the initiative. The Financial Times reported that under the proposal, Barclays, for example, would be required Within the zone, only Estonia and Slovakia grew in the last quarter of 2012, although figures for Greece, Ireland, Luxembourg, Malta and Slovenia were yet to be released. The Financial Times said that consensus forecasts had predicted a 0.4 percent contraction in GDP for the zone in the final quarter, but fears at the end of last year about the sovereign debt crisis, unemployment and austerity hit output. Howard Archer, chief European economist for IHS Global Insight, said that the data “brought a dismal end to a very difficult year.” Despite this, Archer remains positive. “It is looking increasingly possible that the zone could at least stop contracting in the first half of 2013, significantly helped by a return to growth in Germany,” he said. to publish its profits and taxes in every national jurisdiction. Banks are worried that the requirements, which would leave them vulnerable to public pressure over taxes, could be passed when a deal on the law is reached. Meanwhile, EU lawmakers and member states will go ahead with plans to cap bankers’ bonuses at no more than their annual salary. Germany and France have backed parliament’s demand for limits on bonuses and argue that imposing caps on bonuses will prevent the sort of risk-taking that contributed to the financial crisis, Reuters reported. “This is a question of justice,” Sven Giegold, a German Green Party legislator, told Reuters. Parliament insisted on a 1:1 bonus to salary ratio, which could be raised to 2:1 with the backing of a majority of a bank’s shareholders. March 2013 7
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