Colombia's central bank kept its key policy rate unchanged on Friday.
The Central Bank of Colombia retained the interest rate at 3.5%. Last year, the bank had reduced its interest rate to the current level from 10% since December 2008.
Inflation rate eased in December. The consumer price index or CPI rose 2% year-on-year in December, slower than the 2.37% growth in the previous month. The central bank's inflation target was 2% to 4% for the year of 2009.
Canadian industrial product and raw materials prices drifted lower in December, impacted by lower petroleum prices, official data showed Friday.
The Industrial Product Price Index (IPPI) and the Raw Materials Price Index (RMPI) fell 0.1% and 1.7% respectively, according to Statistics Canada.
Economists expected both to edge higher.
The IPPI edged down 0.1% after the 0.9% upturn in November. The movement of the index has remained relatively stable since May 2009.
In December, petroleum and coal prices (-1.4%) contributed the most to the decline in the IPPI, while rising prices for primary metal products (+1.2%) tempered the decline in the IPPI.
Friday morning, Reuters and the University of Michigan released their final report on consumer sentiment in the month of January, showing that their consumer sentiment index increased by much more than economists had been expecting.
The report showed that the consumer sentiment index for January was revised up to 74.4 compared to the preliminary estimate of 72.8 and December's final reading of 72.5. Economists had been expecting a much more modest upward revision to a reading of 73.0.
Serbia's exports decreased 24% year-on-year to US$8.34 billion in the January to December period, the Statistical Office of the Republic of Serbia said on Friday. Meanwhile, imports fell 31.9% to US$15.58 billion.
During the period, the trade deficit stood at US$7.24 billion, which was a decrease of 39.2% compared to the previous year.
In December, export value increased 4.4% on an annual basis to USD 751.1 million, while imports value decreased 8.9% to US$1.46 billion. On a monthly basis, exports and imports decreased by 1.6% and 10.5% respectively.
With employment jumping to its highest level in nearly five years, the Institute for Supply Management - Chicago released a report on Friday showing that activity in the Chicago-area manufacturing sector unexpectedly expanded at a faster pace in the month of January.
The report showed that the index of regional manufacturing activity jumped to 61.5 in January from 58.7 in December, with a reading above 50 indicting growth in the sector. The increase surprised economists, who had expected the index to slip to a reading of 57.2.
Gold prices fell for a second week with yet another modest loss Friday. With the dollar surging to levels not seen since last summer on risk aversion and mixed economic news from the US, the shine has come off of gold following its run to record highs above $1200.
April gold slipped a buck to $1075 an ounce, having dropped about $20 on the week. Demand concerns have also impacted gold along with most metals following China's steps to slow down its robust economy.
The dollar rose to a six-month high against the Euro after data showed U.S. economic activity expanded for the second consecutive quarter in the final three months of 2009, with the pace of gross domestic product growth far exceeding economist estimates.
A preliminary report released by the Commerce Department showed that gross domestic product increased at an annual rate of 5.7 percent in the fourth quarter compared to the 2.2 percent growth seen in the third quarter.
Meanwhile, activity in the Chicago-area manufacturing sector unexpectedly expanded at a faster pace in the month of January, with employment jumping to its highest level in nearly five years.
Rising manufacturing activity has fueled speculation that the economy is on the road to a sustainable recovery from the most severe recession in decades.
The Institute for Supply Management - Chicago's index of regional manufacturing activity jumped to 61.5 in January from 58.7 in December, with a reading above 50 indicting growth in the sector.
Oil pared early gains and closed below $73 Friday, as traders weighed a soaring Dollar and demand concerns from major consumer China over the effect of upbeat data showing a stronger-than-expected economic growth in the US.
Crude oil for delivery in March settled $0.75 lower at $72.89 per barrel in the New York Mercantile Exchange, losing for the third consecutive week after touching a yearly high near $84 earlier this month.
The Dollar rose to a six-month high against the Euro after data showed U.S. economic activity expanded for the second consecutive quarter in the final three months of 2009, with the pace of gross domestic product growth far exceeding economist estimates.
A preliminary report released by the Commerce Department showed that gross domestic product increased at an annual rate of 5.7 percent in the fourth quarter compared to the 2.2 percent growth seen in the third quarter.
US Federal Open Market Committee had left its overnight interest rate unchanged in the range zero to 0.25%.
In yet another supportive news for the greenback, the US consumer sentiment improved in January to the highest level in two years. The Reuters/University of Michigan consumer sentiment index rose to 74.4 in January from 72.5 in December, against economists' expectations for a more modest increase to a reading of 73.0.
The US Senate had voted to confirm Ben Bernanke for a second term as Chairman of the Federal Reserve Thursday.
The latest inventory update from US Energy Information Administration had revealed a surprise decline by 3.9 million barrels in crude stockpiles during the week ended Jan. 22.
The euro was pummeled yet against versus the resurgent US dollar, plunging to its lowest level since last July on growing fears about the debt crises facing Greece and Portugal.
Additionally, better than expected US growth figures bolstered the dollar, which was already on the rise due to its status as the world's safe haven currency.
European Union officials insist there won't be a bailout for Greece, and Prime Minister George Papandreou said in Davos yesterday that the nation is determined to cut the massive 12.7 percent budget deficit that has been weighing on the euro for the past month.
Meanwhile, a flash estimate from the Eurostat showed that consumer price inflation in the euro area inched up to 1% in January from 0.9% recorded in December, giving the European Central Bank plenty of room to maintain or expand measures to kickstart the sluggish euro area economy. Economists had forecast the rate to rise to 1.2%.
U.S. economic activity expanded for the second consecutive quarter in the final three months of 2009, with the pace of gross domestic product growth far exceeding economist estimates.
A preliminary report released by the Commerce Department showed that gross domestic product increased at an annual rate of 5.7 percent in the fourth quarter compared to the 2.2 percent growth seen in the third quarter.
The euro extended its steep decline versus the dollar, dropping to 1.3874. With the loss, the euro moved further away from the 15-month high above 1.51 set back in November.
At the same time, the euro stayed near a 9-month low of 124.80 versus the yen.
Bank of Japan Governor Masaaki Shirakawa said on Friday that the central bank is ready to take swift, bold action if financial markets become unstable again.
Shirakawa's comments come after official data showed that consumer prices fell for the tenth straight month. The central bank has already pledged to tackle deflation, vowing that it "would not tolerate" consumer prices at, or below, zero.
The dollar finished a strong week in characteristic fashion Friday, surging to another six month high against the slumping euro after the release of better-than-expected preliminary fourth quarter GDP figures.
Analysts suggest that dollar has entered a sweet spot, rising on encouraging economic news from the US while enjoying its status as the world's safe haven currency when the global economic recovery is thrown in doubt.
U.S. economic activity expanded for the second consecutive quarter in the final three months of 2009, with the pace of gross domestic product growth far exceeding economist estimates.
A preliminary report released by the Commerce Department showed that gross domestic product increased at an annual rate of 5.7 percent in the fourth quarter compared to the 2.2 percent growth seen in the third quarter.
Meanwhile, activity in the Chicago-area manufacturing sector unexpectedly expanded at a faster pace in the month of January, with employment jumping to its highest level in nearly five years.
Rising manufacturing activity has fueled speculation that the economy is on the road to a sustainable recovery from the most severe recession in decades.
The Institute for Supply Management - Chicago's index of regional manufacturing activity jumped to 61.5 in January from 58.7 in December, with a reading above 50 indicting growth in the sector.
The dollar hit 1.3862 versus the euro, its highest level since last July. With its recent surge, the dollar has moved well away from November's 15-month low near 1.5100.
The euro has been crippled by sluggish EU growth and concerns about mounting debt in Greece and other member states.
One day after ratings agency S&P said the British banks were no longer among most stable in the world, the dollar rallied to a 3-week high of 1.5994 against the sterling.
The buck was steady versus the yen, holding above Y90.50. Bank of Japan Governor Masaaki Shirakawa said on Friday that the central bank is ready to take swift, bold action if financial markets become unstable again.
Shirakawa's comments come after official data showed that consumer prices fell for the tenth straight month. The central bank has already pledged to tackle deflation, vowing that it "would not tolerate" consumer prices at, or below, zero.
A modest increase in the price of oil limited the upside for the dollar against the petro-linked loonie. With traders also weighing data showing that Canadian GDP grew a bit more than expected in November, the dollar held near yesterday's 6-week high of C$1.0694.
With employment jumping to its highest level in nearly five years, the Institute for Supply Management - Chicago released a report on Friday showing that activity in the Chicago-area manufacturing sector unexpectedly expanded at a faster pace in the month of January.
The report showed that the index of regional manufacturing activity jumped to 61.5 in January from 58.7 in December, with a reading above 50 indicting growth in the sector. The increase surprised economists, who had expected the index to slip to a reading of 57.2.
The unexpected increase extended a recent upward by the index, which rose for the fourth consecutive month to reach its highest level since November of 2005.
A substantial turnaround in employment contributed to the strength in the sector, with the employment index surging up to 59.8 in January from 47.6 in December. With the increase, the index rose to its highest level since April of 2005.
Production and new orders also expanded at a faster pace compared to the previous month. The production index rose to 66.6 in January from 64.2 in December, while the new orders index increased to 66.4 from 64.4.
The report also showed that the inventories index jumped to 48.7 in January from 38.6 in December, indicating a notable slowdown in the pace of contraction in inventories.
On the inflation front, the prices paid index surged up to a reading of 66.2 in January from 55.6 in the previous month.
The ISM - Chicago noted that while rising prices are a curse to buyers, expanding price increases are a confirmation of expanding economic activity.
Commenting on the data, Peter Boockvar, equity strategist for Miller Tabak, said, " Bottom line, the number was solid and provides further evidence of the manufacturing contribution to GDP as inventories get built up again."
"However, the index measures the direction of improvement, not the degree so don't extrapolate that businesses are hiring again like its Apr '05 but we'll take what we can get for the labor market, particularly in the hard hit manufacturing sector," he added.
Earlier in the day, the Commerce Department released a report showing that GDP increased at an annual rate of 5.7 percent in the fourth quarter compared to the 2.2 percent growth seen in the third quarter. Economists had been expecting GDP to increase by about 4.7 percent for the quarter.
With the significant acceleration in the pace of growth, GDP growth for the quarter marked the biggest increase since the third quarter of 2003.
The strong growth in the quarter was largely due to a notably slower rate of decline in inventories, with private business inventories falling by $33.5 billion in the fourth quarter compared to a decrease $139.2 billion in the third quarter.
The Commerce Department noted that the change in real private inventories added 3.39 percentage points to the fourth quarter GDP growth.
House prices in the U.K. rose 1.2% month-on-month in January after rising an upwardly revised 0.5% growth in December, the Nationwide Building Society said Friday. Economists had forecast house price growth to ease to 0.3% in January. House prices have been rising since May 2009.
On an annual basis, the house price index climbed 8.6% in January after 5.9% increase in the previous month. The rise in January marked the fourth consecutive increase after prices stabilizing in September.
An index measuring industrial production in Japan climbed 2.2 percent in December compared to the previous month, the Ministry of Economy, Trade and Industry said in a preliminary report on Friday, standing at 91.6.
That was slightly below analyst expectations for a 2.5 percent monthly increase following the revised 2.6 percent expansion in November.
On an annual basis, output was up 5.3 percent - again missing forecasts for a 5.7 percent increase after the 4.2 percent contraction in the previous month.
Japan's housing starts dropped 15.7% annually in December following a 19.1% fall in the previous month, a report released by the Ministry of Land, Infrastructure and Transport showed Friday. The expected decline for December was 18.8%.
Annualized housing starts totaled 819,000 in December, larger than November's 792,000. Economists had expected housing starts to increase to 812,000.
At the same time, construction orders received by big 50 contractors showed an increase of 0.6%, reversing an annual fall of 11.6% in the previous month.
The value of credit extended to private sector recipients in Australia increased a seasonally adjusted 0.3% in December compared to November, the Reserve Bank of Australia (RBA) reported on Friday.
Housing credit increased 0.7% in December - the same rate of increase as in the previous month. Other personal credit was up 0.7%, while business credit declined by 0.2%.
On an annual basis, total credit extended to the private sector was up a seasonally adjusted 1.5%, the RBA said.
Industrial production in South Korea climbed a working day adjusted 33.9% year-on-year in December following the 17.9% growth in the previous month, the National Statistical Office reported on Friday, exceeding market expectations for a 30.8% increase.
On a monthly basis, industrial production grew 3.5%, accelerating from the 1.5% increase in the preceding month.
The statistical office also said that service industry activity rose 5.3% annually in December, faster than the 3.5% increase in November. Month-on-month, services activity rose 1.8%.
Friday, the South African Reserve Bank announced that the M3 money supply increased 1.62% year-on-year in December, faster than the 0.58% growth in the previous month. Economists expected an increase of 1.1%.
The M2 money supply rose 1.69% in December, after falling 1.04% in November. At the same time, the M1 money supply climbed to 6.88% from 2.52%.
Meanwhile, claims on the domestic private sector or PSCE dropped 0.76% annually in December, compared to the 1.59% fall in the previous month. Economists were looking for a decline of 0.5%.
Singapore's manufactured products price index jumped 6.9% year-on-year in December, accelerating from the 2% increase in the previous month, the Department of Statistics reported on Friday. The oil index grew by 49.7%, while the non-oil index slid 2.1%.
On a monthly basis, manufactured product prices fell 0.4%, reversing some of the 1.3% increase in the preceding month.
The statistical office also said that the domestic supply price index grew 12.7% annually in December after rising 6% in November. Month-on-month, the domestic supply price index was down 0.1%.
Friday, the Ministry of Manpower said Singapore's jobless rate fell to a seasonally adjusted 2.1% with the strong employment growth in the December quarter. The unemployment rate in the third quarter was 3.4%. Among the resident labor force, the jobless rate eased to around 3% from 5% in the prior quarter.
The ministry estimated an increase of 38,700 in total employment, much higher than the gain of 14,000 in the third quarter. For the whole of 2009, total employment increased 38,800, as job gains in the second half of the year more than offset the losses in the first half.
Automobile production in Japan climbed 8.6% in December from the prior year to 788,067 units, the Japan Automobile Manufacturers Association (JAMA) reported on Friday. This is the second straight month in which auto production has registered an increase.
Automobile exports were down 5% year-on-year to 400,827 units in December, extending the current period of decline to fifteen months. In value terms, however, total auto exports increased 18.8% to $11.34 billion.
Auto production plunged 31.5% to 7.93 million units in calendar year 2009 compared to 2008, JAMA said.
Japan's core consumer prices dropped 1.3% year-on-year in December compared to the 1.7% fall in the preceding month, the Ministry of Internal Affairs and Communications reported on Friday. Economists had expected a 1.7% decline. This is the tenth consecutive month in which core consumer prices have fallen.
Month-on-month, the core CPI, which excludes fresh food from the price basket, dropped a seasonally adjusted 0.1% in December, reversing the 0.1% increase in November.
Meanwhile, core consumer prices in the Tokyo region for January, a good indicator of future movements in the price index, dropped 2% from a year earlier, faster than the 1.9% decline in the previous month. Economists were looking for a 2.1% fall. On a monthly basis, Tokyo core CPI dropped a seasonally adjusted 0.2% in January, adding to the 0.1% slide in the preceding month.
Bank of Japan Governor Masaaki Shirakawa said on Friday that the central bank is ready to take swift, bold action if financial markets become unstable again.
"As I always stress, the bank is prepared to act swiftly and decisively should concerns that financial market stability might be hampered reemerge," Shirakawa told a business conference in Tokyo. He reiterated that it is necessary to maintain the extremely accommodative financial environment.
The Bank of Japan's Policy Board voted on Tuesday to maintain the key interest rate at 0.10% as the economy remains mired in deflation.
Shirakawa's comments come after official data showed that consumer prices fell for the tenth straight month. The central bank has already pledged to tackle deflation, vowing that it "would not tolerate" consumer prices at, or below, zero.
The governor also said the central bank's monthly JPY 1.8 trillion bond purchases are approriate given the current state of the economy.
The Reserve Bank of India increased the cash reserve ratio and maintained other key interest rates on Friday.
In its quarterly Monetary Policy review, the central bank raised the cash reserve ratio by 75 basis points to 5.75% from 5%. The CRR is the amount of deposits that a bank must set aside with the central bank.
The increase will take place in two stages, with the ratio set to be raised by 50 basis points from February 13 and by 25 basis points from February 27. As expected, the central bank maintained the repo rate at 4.75% and reverse repo rate at 3.25%.
The CRR increase will absorb around 360 billion rupees of excess liquidity from the system, the RBI said. "As growth accelerates and the output gap closes, excess liquidity, if allowed to persist, may exacerbate inflation expectations," RBI Governor Duvvuri Subbarao said.
The central bank also raised baseline projection for GDP growth for 2009-10 to 7.5% and for wholesale price index inflation for end March 2010 to 8.5%.
Japan is scheduled to release December nationwide consumer price index numbers among a raft of data on Friday, headlining a busy day in Asian economic news. Also on tap are December figures for employment, household spending, industrial production, vehicle production and housing starts.
Inflation is expected to contract 1.7 percent on year following the 1.9 percent annual decline in November. Tokyo inflation, considered a leading indicator for the nation, is forecast to fall an annual 2.1 percent after shedding 2.3 percent in the previous month. The unemployment rate is expected to climb to 5.3 percent from the current 5.2 percent.
Household spending is forecast to add 1.6 percent on year after climbing 2.2 percent in November. Industrial output is tipped to rise 2.5 percent on month and 5.7 percent on year after adding 2.2 percent on month and shedding 4.2 percent on year. Annualized housing starts are predicted to come in at 0.812 million yen after standing at 0.798 million yen in November.
South Korea will provide December numbers for industrial output and service industry output. Industrial output is forecast to surge 30.8 percent on year after the 17.8 percent annual expansion in November. Service sector output is tipped to add an annual 3.4 percent after climbing 3.3 percent in the previous month.
Thailand will release December numbers for imports, exports, trade balance, current account and manufacturing production. Imports are predicted to rise 30 percent on year after shedding 19 percent in November. Exports are expected to climb 27.6 percent after easing 2.6 percent in the previous month. The trade balance is tipped to reflect a surplus of $370 million following the $1.688 billion surplus a month earlier. The current account is forecast to show a surplus of $600 million after the $1.340 million surplus in November. Manufacturing output is expected to jump 24 percent on year after the 8.9 percent gain in the previous month.
British consumer confidence improved moderately in January, a survey conducted by market research firm GfK NOP showed on Friday.
The consumer confidence index stood at minus 17 in January compared to minus 19 in the previous month. The annual moving average also improved and stood at minus 24, the firm said. A year ago, the index stood at minus 37.
Three of the five components of the consumer confidence index experienced an improvement. The sub-index measuring general economic situation over the last 12 months climbed to minus 57 in January from minus 61 in the preceding month, while the sub-index measuring general economic situation over the next 12 months rose to minus 2 from minus 6. The sub-index assessing the respondents' personal financial situation over the next 12 months nudged up to 4 from 3.
On the other hand, respondents' assessments on the personal financial situation over the last 12 months stabilized at minus 14, while the sub-index measuring the climate for major purchases was unchanged at minus 16.
The improvement in the consumer confidence indicator, albeit a small one, along with the news that the British economy has emerged from recession should give a welcome boost to the government, commented Nick Moon, Managing Director of GfK NOP Social Research.
Last week, it was announced that unemployment levels in the U.K. fell at its fastest pace since April 2007. The number of people claiming jobseeker's allowance fell by 15,200 in December compared to November to reach 1.61 million.
The U.K. economy crawled out of its six-quarter recession in the December quarter, recording a dissapointing 0.1% quarterly expansion, led by growth in the manufacturing and services sectors.
The lacklustre nature of the recovery has sparked fears that the U.K. economy could operate well below its pre-recession levels for a long time.
Japan experienced deflation for the tenth straight month in December, while the nation's unemployment rate edged down, according to official data released Friday.
Japan's core consumer prices dropped 1.3% year-on-year in December compared to the 1.7% fall in the preceding month, the Ministry of Internal Affairs and Communications reported. The decline was less severe than the 1.7% decline expected by economists. The annual rate of deflation has now decelerated for the fourth straight month.
Month-on-month, the core CPI, which excludes fresh food from the price basket, dropped a seaonally adjusted 0.1% in December, reversing the 0.1% increase in November.
December's CPI results should keep up the pressure on the Bank of Japan, which has been in a running feud with the government on how to tackle deflation. The central bank has pledged to overcome deflation and said that it "would not tolerate" annual prices at, or below, zero. The bank promised to keep interest rates low earlier this week, but did not specify how it planned to combat deflation.
Meanwhile, core consumer prices in the Tokyo region for January, a good indicator of future movements in the nationwide price index, dropped 2% from a year earlier - faster than the 1.9% decline in the previous month. Economists were looking for a 2.1% fall.
On a monthly basis, the Tokyo core CPI dropped a seasonally adjusted 0.2% in January, adding to the 0.1% slide in the preceding month.
The Ministry of Internal Affairs and Communications also reported that the unemployment rate fell in December, confounding forecasts. The unemployment rate stood at a seasonally adjusted 5.1% in December, down from 5.2% in the previous month. Economists had expected the jobless rate to nudge up to 5.3%.
The unemployment rate was at 5.3% among males and 5% among females. The total number of unemployed persons declined to 3.39 million from 3.42 million, while on the other hand, the number of employed persons increased to 62.60 million from 62.47 million.
Also, household spending in real terms was up 2.1% annually in December, topping forecasts for a 1.6% annual increase after adding 2.2% a month earlier.
Spending on transportation & communication showed the biggest increase, up 10.8%, while on the other hand, housing expenditure registered the biggest decline, down 12.1%.
A separate report also showed that Japan's industry sector continued to expand in December, although the pace of growth slowed. The Ministry of Economy, Trade and Industry announced that industrial production climbed a seasonally adjusted 2.2% in December compared to the previous month - the tenth straight monthly increase. This was below analysts' expectations for 2.5% growth following the revised 2.6% expansion in November.
Industries that mainly contributed to the increase were electronic parts & devices, general machinery and others, the ministry said. Commodities that mainly contributed to the increase were electronic & electric toys, analytical instruments and reaction vessels.
On an annual basis, output was up 5.3% - again missing forecasts for a 5.7% increase after the 4.2% contraction in the previous month.
Meanwhile, survey data from Markit Economics showed that the Japan Nomura / JMMA Manufacturing Purchasing Managers' Index - a key indicator of the health of the manufacturing sector - stood at a seasonally adjusted 52.5 in January, down from 53.8 in the previous month. A reading above 50 indicates expansion, while one below 50 suggests contraction.
Manufacturing output reported growth for the eighth straight month in January, with respondents attributing the rise in output to a greater inflow of new orders. New order levels were up for the seventh successive month, although the pace of growth was the slowest in the sequence.
Employment levels in the manufacturing sector fell further in January, albeit at only a marinal rate. Panelits cited restructuring efforts for cutting staff levels.
Following the release of the reports, the Japanese yen edged slightly lower against its major opponents. The yen was quoted at 85.32 against the franc, 125.33 against the euro, 144.78 against the pound and 89.79 against the U.S. dollar.
The dollar continued its assault on the euro Thursday, bolstered by lingering concerns about the sustainability of the global economic recovery.
Stocks fell further on Wall Street despite decent corporate earnings, fueling increased risk aversion and interest in the dollar and yen, which are regarded as safe haven currencies.
Evidence of weakness in the US jobs market failed to hurt the dollar. First time claims for unemployment benefits showed a modest decrease in the week ended January 23rd, according to a report released by the Labor Department on Thursday, although economists had been expecting a more substantial decrease.
The report showed that initial jobless claims slipped to 470,000 from the previous week's revised figure of 478,000.
Debt problems in Greece and Spain have soured traders on the euro, helping the dollar rise to a 6-month high of 1.3935. With the advance, the dollar extended its strong move away from November's 15-month low near 1.5100.
Officials from France and Germany on Thursday denied reports that a support package for Greece is being planned.
Meanwhile, ratings agency S&P put out comments indicating that UK banks was are no longer among the most stable in the world. The dollar rebounded from early losses versus the sterling on the news, rising to 1.6150. The pair has been moving with in a cent or two of that mark for the past week.
The dollar rallied in mid-day dealing against the loonie as the price of oil slipped toward $73 a barrel. The buck was at C$1.0650, staying near yesterday's monthly high of C$1.0690.
Against the yen, the dollar failed to sustain its early gains, easing back below Y90.
In other economic news, the US Commerce Department released a report on Thursday showing that new orders for durable goods rebounded in December following two consecutive monthly decreases. However, the increase in orders was much smaller than economists had been anticipating.
The report showed that durable goods orders edged up by 0.3 percent in December after falling by a revised 0.4 percent in November.
The Bank of Japan's board members unanimously agreed that further steps likely would be required to hold deflationary pressures at bay, minutes for the BoJ's unscheduled monetary policy meeting on December 1 revealed on Friday.
The members also agreed that business sentiment was continuing to worsen, due mainly to deflation and a strengthening yen. They decided that lowering long-term rates may help the economy.
"Members shared the view that the Bank should implement an additional monetary policy measure to provide support for Japan's economy to overcome deflation and return to a sustainable growth path with price stability," the minutes said. "Many members said that, specifically, given that the overnight call rate had been virtually at 0 percent, encouraging a further decline in interest rates on term instruments in the money market would be most effective in further supporting the economic recovery from the financial side."
To that end, the central bank also decided to further enhance easy monetary conditions by introducing a new fund-supplying operation to encourage a further decline in longer-term interest rates.
It decided to lend commercial banks three-month funds at 0.1% fixed-rate. The central bank will accept Japanese government bonds, corporate bonds, commercial paper and loans on deeds as eligible collateral.
"The Bank has judged that, in supporting the economic recovery from the financial side, it is most effective at present to further spread the strong effects of monetary easing and encourage a further decline in longer-term interest rates in the money market through provision of ample longer-term funds at an extremely low interest rate," the minutes said.
The central bank also released the minutes from its December 17-18 policy meeting, in which the board members said that a clear stance on inflation may help to stabilize interest rates.
The central bank retained its assessment of the economy, saying that the Japanese economy is picking up mainly due to various policy measures taken at home and abroad, although there is not yet sufficient momentum to support a self-sustaining recovery in domestic private demand.
"The financial environment, with some lingering severity, had continued to show signs of improvement," the minutes said. "The overnight call rate had remained at an extremely low level, and firms' funding costs had declined somewhat. The stimulative effects from low interest rates were still constrained by the low levels of economic activity and corporate profits, but the degree of constraint had begun to moderate."
The central bank said upside risks for economic activity could stem from developments in emerging and commodity-exporting economies, while at the same time there are downside risks too. Downside risk factors include the possible consequences of balance-sheet adjustments in the U.S. and Europe as well as potential changes in firms' medium- to long-term growth expectations. Further, the BoJ said there remains a risk that the inflation rate might decline due to a fall in medium-to long-term inflation expectations.
"Members agreed that the economy was likely to continue improving as exports and production would probably remain on an uptrend," the minutes said. "Some members, however, said that the pace of improvement was likely to slow through the middle of fiscal 2010, since the effects of inventory restocking and economic stimulus measures were likely to wane."
At both meetings, the central bank kept interest rates on hold at the current record low of 0.10 percent.
Ben Bernanke was confirmed to a second term as Chairman of the Federal Reserve by the Senate on Thursday, ending weeks of speculation that the Fed chief would not receive enough votes.
The final vote was 70-30, with Bernanke needing only a majority to be confirmed for a second term. The vote came immediately after the Senate voted 77-23 to end further debate on his confirmation. The Senate needed 60 votes to pass that vote and avoid a filibuster.
The debate over Bernanke's confirmation has been a contentious one, as the Fed has come under increasing scrutiny since the 2008 financial crisis.
Though the central bank pumped $2 trillion dollars of liquidity into the economy when the crisis hit, many of Bernanke's opponents blame the central bank for failing to regulate the financial firms whose troubles led to the crisis.
Many lawmakers were angry with the Fed's bailout of large financial firms when the crisis hit.
"We all hated the bank bailout," President Barack Obama said during his State of the Union Address on Wednesday. "I hated it. You hated it. It was about as popular as a root canal."
However, there are many lawmakers that have said the bailouts were necessary to prevent a more devastating economic collapse.
Senators had been weighing in with their opinion about Bernanke throughout the day Thursday on the Senate floor.
Some lawmakers, such as Senator Judd Gregg, R-N.H., praised Bernanke for taking necessary actions to save the financial system once the crisis hit.
"He basically allowed the Fed to become the lender of the nation," Gregg said. "Nobody had ever done that. The way he did was extraordinary in its creativity, and the results were that the country's financial system did not collapse."
However, even some of Bernanke's supporters stressed that the central bank still needed to change.
"The status quo at the Fed is not acceptable, and the nation needs a central bank that is proactive in addressing concerns at our financial institutions," said Tim Johnson, D-S.D.
Opponents of the central bank chief were particularly vehement, criticizing Bernanke for failing to recognize the crisis before it started.
"Bernanke fiddled while our markets burned," said Richard Shelby, R-Ala. "If we don't hold Chairman Bernanke accountable what precedent are we setting for future regulators."
Bernanke's most outspoken opponent has been Jim Bunning, R-Ken., who has referred to his term as Fed chief as a "failure."
"We must put an end to his and the Fed's failure and there is no better time than now," he said.
Bunning was the only Senator to vote against Bernanke when he was nominated for the position as Fed Chairman in 2005.
Last week, Senators from all ends of the political spectrum came out against Bernanke's confirmation, raising concerns that he might not achieve the 60 votes need to end debate on his re-confirmation.
Senator Barbara Boxer, D-Calif., released a statement last week saying she would not vote to confirm Bernanke. In her statement, Boxer said that it is "time for a change - it is time for Main Street to have a champion at the Fed."
Boxer said Bernanke "played a lead role in crafting the Bush administration's economic policies, which led to the current economic crisis. Our next Federal Reserve Chairman must represent a clean break from the failed policies of the past."
Independent Vermont Senator Bernie Sanders also voiced his intention to oppose Bernanke last week, arguing that the American people "do not want another term for the man whose major job as Fed chairman was to protect the safety and soundness of our financial system but instead was asleep at the switch."
Despite so much negativity directed towards the Fed Chairman, he did have his supporters. White House spokesman Bill Burton told reporters last week that President Barack Obama "has a great deal of confidence in what Chairman Bernanke did to bring our economy back from the brink and continues to think that he is the best person for the job and will be confirmed by the United States Senate."
Senator Mark Udall announced earlier this week that he would support a second Bernanke term, saying he was "well aware" of all the criticism directed towards the Chairman, but argued there is "plenty of blame to go around, and making Ben Bernanke a scapegoat will not get our economy back on track."
Support for Bernanke continued to grow as the week went on, and Senate Majority Leader Harry Reid revealed earlier in the week that he had the 60 votes needed to avoid a filibuster on Bernanke's confirmation.
Germany's seasonally adjusted jobless rate rose 6,000 in January to 3.43 million, the first increase since June last year, data released by the Federal Labor Agency showed Thursday. However, the increase was less than the expected rise of 15,000.
The seasonally adjusted jobless rate rose to 8.2% in January from 8.1% in December.
Norway's jobless rate stood at 3.3% in January, up from 2.7% in December, the Labor and Welfare Organization said on Thursday. Economists expected the jobless rate to be 3.1%. A year earlier, the jobless rate was 2.6%.
The number of unemployed totaled 85,132 persons in January, larger than the 69,852 persons in the previous month.
Thursday, the Statistics Sweden announced that the jobless rate stood at 8.6% in December, up from 8% in the previous month. Economists' expected the rate to be 8.3%.
The jobless rate for men was 8.9% in December, while jobless rate for women was 8.1%.
The number of unemployed totaled 417,000 persons in December, which is an increase of 108,000 compared to the previous year.
India's annual food price index increased to 17.40% as on week ended January 16 from 16.81% growth in the preceding week, the Ministry of Commerce and Industry said on Thursday.
At the same time, fuel, power, light & lubricants prices climbed to 5.70%.
India's wholesale price index rose 7.31% on an annual basis in December, faster than the 4.78% growth in the previous month.
Sweden's retail sales rose 4.5% year-on-year in December, faster than the 3.6% growth in the previous month, the Statistics Sweden said on Thursday. Economists expected an increase of 5.3%.
Month-on-month, retail sales increased a seasonally adjusted 0.2% in December, after falling 0.6% in November. Economists were looking for an increase of 0.7%.
In the three months ended in November, retail sales rose 0.4% compared to the previous three months period.
In the whole year of 2009, retail sales grew 2.8% from the previous year.
Sweden's consumer confidence rose to 8.5 in January from 7.6 points in the previous month, indicating that households are somewhat more optimistic than normal, the National Institute of Economic Research showed Thursday. The expected reading was 8.8.
The economic tendency indicator, which measures business and consumer confidence in the economic situation stood at 103.4, up from 101.2 in December. The index stood above the consensus forecast of 102. Further, the survey found that the confidence indicator for the business sector rose 15 points between the third and fourth quarters of 2009.
The Philippines will release Q4 GDP data and also announce its decision on interest rates, headlining a modest day for Asian economic news.
Analysts are expecting GDP to add 1 percent on quarter and 1.1 percent on year following the 1 percent quarterly gain and the 0.8 percent annual expansion in the third quarter. Also, the central bank is widely expected to keep interest rates on hold at the current level of 4 percent.
Japan will provide December figures for retail sales, which are expected to add 0.3 percent on month following the 1 percent decline on year a month earlier. Large retailer sales are expected to shed 7.3 percent on year after the 9.6 percent annual contraction in November.
European Central Bank Executive Board member Gertrude Tumpel-Gugerell on Thursday said it is now time for fiscal and monetary policy to return to normal with the economic climate appearing to have stabilized.
"In the last few months, a stabilization of the situation has occured," she told a conference held in Innsbruck, Austria. "It is time to return monetary and fiscal policies to normality."
She added that the ECB will "gradually phase out" excess liquidity and reiterated price stability will remain the primary goal of the central bank.
Thursday, the Statistics South Africa announced that the producer price index or PPI rose 0.7% year-on-year in December, compared to the 1.2% fall in the previous month. Economists expected an increase of 0.4%. A year ago, the PPI was up 11%.
On a monthly basis, the PPI climbed 0.7% in December, faster than the 0.4% increase expected by economists.
Meanwhile, export prices dropped 6.1% on an annual basis in December, slower than the 11.9% fall in the previous month. At the same time, import prices fell 3.5%, after falling 5.7% in November. Month-on-month, export and import prices increased by 0.4% and 0.8%, respectively.
Tourist overnight stays in Spain fell 7.9% year-on-year to 3.5 million in December, Madrid-based National Statistics Institute reported on Thursday. Domestic overnight stays fell 5.3%, while foreign overnight stays dropped 10.3%.
In the whole of 2009, overnight stays in non-hotel tourist accommodation (holiday dwellings, campsites & rural tourism establishments) decreased 9.1% compared to 2008.
The Canary Islands was the preferred holiday dwelling destination in 2009, with more than 29.1 million overnight stays. Other favored destinations were the Balearic Islands, Valencia and Catalonia.
By tourist area, the island of Gran Canaria was the preferred destination, with more than 10.9 million overnight stays. The island of Tenerife reached the highest average occupancy rate (62%) in 2009.
India's imports of sensitive items during April-October 2009 rose by 34.5% at Rs.35,487 crore compared to the Rs.26,378 crore during the corresponding period last year, says a statement of the Commerce and Industry Ministry. However, the gross import of all commodities declined to Rs.7,16,535 crore from the Rs 9,16,483 crore during the corresponding period last year.
During the period under review, imports of automobiles, cotton and silk, products of SSIs and alcoholic beverages declined, whereas imports of all other items, including edible oils, pulses, fruits and vegetables (including nuts), rubber, spices, marble and granite, tea and coffee, milk and milk products as also food grains rose.
The import of edible oils increased to Rs.14,204.70 crore from the Rs.8,195.45 crore in the corresponding period last year. Imports of sensitive items from countries, including Indonesia, China, Myanmar, Brazil, Malaysia, USA, Japan, Canada, the Ukraine, Argentina, Australia, Benin and Guinea Bissau rose, while those from South Korea, Germany, Thailand, Cote D' Ivoire and the Czech Republic declined.
Philippines' central bank on Thursday kept its interest rates unchanged for a fifth straight rate setting session, with the Monetary Board retaining its view that the current monetary policy stance was appropriate.
The Bangko Sentral ng Pilipinas (BSP) maintained its overnight borrowing rate at 4.00% and its overnight lending rate at 6.00%, in line with expectations.
The central bank said in a statement that it expects the economy to grow at "a modest pace" and noted that with the inflation outlook being favorable, keeping policy rates steady would continue to support economic activity.
"Going forward, the BSP will continue to monitor closely all developments that could affect the assessment of risks to inflation over the policy horizon, including signs of a build-up in upward pressures on commodity prices," the bank said.
Legendary investor and billionaire philanthropist George Soros on Wednesday backed calls for limiting the size of banks that are seen as "too big to fail".
Speaking at the World Economic Forum in Davos, Switzerland, he also endorsed President Barack Obama's proposal to limit the size of banks, although he warned the plans were premature and not far-reaching enough.
"I am very supportive of it but I don't think it goes far enough, said Soros. "This development came too soon because the banks are not out of the woods yet."
He also called the banking community "tone deaf" for opposing the U.S. bank reforms.
Soros called the current economic crisis a "super bubble" that was the result of a number of smaller bubbles and misguided attempts to tackle them.
Turning attention to China's controversial exchange rate policy, Soros called on Beijing to let the yuan appreciate for the good of China and the world. "The case for revaluing the renminbi is getting stronger and stronger," he said.
The 79-year old also described gold as the "ultimate bubble".
U.K. borrowers would face another blow, if long-term interest rates return to a more normal level, the Bank of England Financial Stability Executive Director Andrew Haldane said Wednesday.
But, U.K.'s mounting debt levels suggests that the BoE is unlikely to hike the rates in the near future. Haldane said the debt position of the financial sector, households, companies and sovereigns paints a sobering picture. He pointed out, citing McKinsey research that U.K. debt ratios rose to around 450% of GDP by 2008, more than double compared to 200% in 1990.
A normalization of long-term interest rates would increase U.K. companies' debt servicing costs from 17% of profits currently to around 33%, he said.
The central banker said to date, servicing these debts has been cushioned by policymakers' actions. "Government debt and equity have substituted for private debt and augmented private equity to support impaired balance sheets, especially among financial firms: a third of capital raised by banks since the crisis began has come courtesy of government," Haldane said.
"Through monetary measures, interest costs have been lowered dramatically: debt servicing has fallen, often dramatically, across many sectors."
Further, he said extraordinary policy measures have acted like a painkiller for debt problems. But, painkillers offer only temporary relief. "Loans from government to repair balance sheets need ultimately to be repaid. And monetary stimulus will need ultimately to be withdrawn."
"Public policy can act as a balm for debt problems, not a long-run cure."
Retail sales in Japan fell 0.3 percent on year in December, the Ministry of Economy, Trade and Industry said on Thursday, standing at 12.995 trillion yen.
That missed forecasts for a 0.3 percent annual gain after the revised 1.1 percent contraction to 11.03 trillion yen in November.
On a seasonally adjusted monthly basis, retail sales were down 1.2 percent versus forecasts for a 0.2 percent decline after the 0.2 percent gain a month earlier.
For the fourth quarter, retail sales were down 0.8 percent on year to 34.848 trillion yen. For all of 2009, retail sales were down 2.3 percent to 132.312 trillion yen.
Sales from large retailers fell an annual 4.6 percent to 2.069 trillion yen. That was better than forecasts for a 7.3 percent fall after the revised 9.7 percent decline to 1.622 trillion yen in the previous month.
For the fourth quarter, sales from large retailers were down 7.0 percent to 5.252 trillion yen. For all of 2009, large retailer sales were down 7.0 percent to 19.778 trillion yen.
The data also showed that commercial sales were down 11.1 percent on year to 45.694 trillion yen in December. Commercial sales were down 15 percent in the fourth quarter and 20.5 percent for all of 2009.
Wholesale sales fell 14.7 percent in December to 32.699 trillion yen, also down 19.3 percent in Q4 and 25.6 percent for the year.
The Japanese currency edged slightly higher against its major opponents following the release of the data. The yen hit 85.7 against the Swiss franc, 145.58 versus the pound, 89.98 against the greenback and 126.2 against the euro.
U.S Treasury Secretary Timothy Geithner defended the Federal Reserve's $62.1 billion dollar bailout of insurer American International Group before the House Committee on Oversight and Government Reform on Wednesday.
In his testimony, Geithner, who was chairman of the New York Federal Reserve at the time of the 2008 bailout, called AIG's rescue "exceptionally difficult and enormously consequential."
The Treasury Secretary said that the steps taken to prop up the struggling firm were motivated solely by the best interests of the American people.
"Action was required," he said. "The world was watching. And the government did not have the luxury of time."
He added, "We acted because the consequences of AIG failing at that time, in those circumstances, would have been catastrophic for our economy and for American families and businesses."
Geithner went on to say that the New York Fed did not act alone in bailing out AIG, stressing that its actions were under the direction of the Federal Reserve Board of Governors and in cooperation with the U.S. government.
The secretary said that the bailout of AIG was essential to confronting the 2008 financial crisis and dampening the damage it caused to the economy and tax payers.
"Government support for AIG and our financial system more broadly will ultimately cost taxpayers far less than many feared," he said. "And importantly, if Congress adopts the President's proposed Financial Responsibility Fee, American taxpayers will not have to pay one cent for the rescue of our financial system."
He added, "Everyone should realize that because of the actions of the Treasury and the Federal Reserve, the American financial system is now in a position where it can provide the credit necessary for economic growth, not stand in its way."
The remarks come one day before Congress votes on whether to confirm Ben Bernanke to a second term as Fed Chairman. The regulatory actions of Bernanke and the Fed have come under increasing scrutiny since the financial crisis, though it is expected that Bernanke will be confirmed.
German consumer prices rose by less than forecast on annual basis in January, preliminary official data showed Wednesday.
German's CPI rose by 0.8 percent from a year ago in January, Destatis announced, suggesting that inflation remains well in check in the euro area.
CPI fell by 0.6 percent in January from the previous month.
Consumer prices were expected to rise 1 percent on year, and ease only 0.3 percent on the month.
The EU Harmonized reading slipped to 0.7 percent from 0.8 percent.
The Reserve Bank of New Zealand Thursday left its benchmark interest rate unchanged at 2.50 percent,
In a statement accompanying the rate decision, RBNZ Governor Alan Bollard said "The New Zealand economy continues to recover," and noting no sign of runaway inflation on the horizon.
Bollard noted that improved export earnings "have seen a pickup in household spending," although households remain cautions. Credit growth was "subdued," Bollard said, and "Business spending remains weak."
Bollard's statement indicated the RBNZ sees no immediate threat from inflation. "Annual CPI inflation is currently at the centre of the target band, and is expected to track comfortably within the band over the medium term."
Bollard also noted a continued recovery in global economic activity, pushing New Zealand's export commodity prices higher.
Gold prices fell further on Wednesday after treading water earlier in the week. A stronger dollar diminished gold's value.
The price of gold for February slipped $13.80 to $1084.50 an ounce, continue a move away from last year's record peak above $1200.
A busy day on the economic front was highlighted by the Federal Reserve's decision to keep its key interest rate near zero.
The Fed sounded a slightly more hopeful tone than last month, giving the dollar some added support.
"Information received since the Federal Open Market Committee met in December suggests that economic activity has continued to strengthen and that the deterioration in the labor market is abating,'' the Fed said.
The buck added to its 5-month highs versus the euro, rising to 1.4002.
US new home sales unexpectedly showed a notable decrease in the month of December, according to a report released by the Commerce Department on Wednesday, although the report also showed a significant monthly increase in new home prices.
The report showed that new home sales fell 7.6 percent to an annual rate of 342,000 in December from an upwardly revised November rate of 370,000. Economists had expected sales to edge up to 366,000 from the 355,000 originally reported for the previous month.
The dollar saw modest strength versus other major currencies on Wednesday after the Federal Reserve announced it would be keeping interest rates at near zero for an extended period amid stubborn unemployment.
Even though the central bank is not ready to unwind measures to prop up the fragile economy, the Fed sounded a slightly more hopeful tone than last month, giving the dollar some added support.
"Information received since the Federal Open Market Committee met in December suggests that economic activity has continued to strengthen and that the deterioration in the labor market is abating,'' the Fed said.
The Fed said it would end its program to buy mortgage-backed securities at the end of March.
Kansas City Federal Reserve Bank President Thomas Hoenig was the lone dissenting vote.
The buck added to its 5-month highs versus the euro, rising to 1.4002. At the same time, the buck moved toward a monthly high near C$1.0700 against its Canadian counterpart.
Versus the yen, which has become the more favored safe haven play, the dollar snapped out of its doldrums, rising to Y90 from a monthly low of 89.12.
Meanwhile, the dollar continued its run of choppy trading versus the sterling, improving to 1.6170 from an early low near 1.6250.
Traders also assessed another round of data on the US housing situation. New home sales unexpectedly dropped to a nine-month low December, official data revealed Wednesday.
Although the Commerce Department report also showed a significant monthly increase in new home prices, the second consecutive drop in overall sales added to mounting evidence that the government-aided recovery of the housing sector has petered out.
Overseas, the Bank of Japan (BOJ) in its monthly report on Wednesday maintained its stance that the nation's economy is picking up, but does not yet have sufficient momentum to support a self-sustaining recovery in domestic demand.
In Europe, German consumer prices rose less than forecast in January compared to last year, signaling the European Central Bank has a free hand to keep rates low without worrying about inflation.
The euro remained under pressure versus other major currencies, weighed down by debt concerns and the growing perception the euro area is being marginalized as the China and the US assume a more pivotal role on the world stage.
With stocks still in the doldrums and this week's mixed economic data failing to inspire much confidence in the global recovery, risk averse traders have flocked to the dollar, and to a greater degree, the yen.
Trading took place ahead of the Federal Reserve's decision on interest rates, scheduled to be made public at around 2:15 pm ET.
The Fed is unlikely to suggest an end to its near-zero interest rate policy, as the economy still grapples with unemployment and shaky consumer confidence, while facing a benign inflation environment. Traders will be looking to the Fed's accompanying statement for clues about the health of the US economy.
The euro touched a fresh 5-month low of 1.4020 versus the greenback overnight, and remained near that mark two hours before the Fed rate call.
US new home sales unexpectedly dropped to a nine-month low December, official data revealed Wednesday.
Although the Commerce Department report also showed a significant monthly increase in new home prices, the second consecutive drop in overall sales added to mounting evidence that the government-aided recovery of the housing sector has petered out.
New home sales fell 7.6 percent to an annual rate of 342,000 in December from an upwardly revised November rate of 370,000.
Against the the surging yen, the euro hit a new 8-month low of 125.22, extending January's slow and steady decline.
The Bank of Japan (BOJ) in its monthly report on Wednesday maintained its stance that the nation's economy is picking up, but does not yet have sufficient momentum to support a self-sustaining recovery in domestic demand.
The euro slipped to .8660 versus the sterling, heading closer to last week's 6-month low of .8649.
The Bank of England may find it difficult to keep inflation within the target as services and import price inflation continue to rise, the central bank's monetary policy member Andrew Sentance said Wednesday.
Wednesday, Japan's Finance Minister Naoto Kan said it is important to maintain investor confidence to stop a rise in the country's long-term interest rates.
A rise in the country's long-term interest rates may cause major impacts on the country's finances. Kan's remarks came a day after rating agency Standard & Poor's cut its outlook on the Japanese long-term rating to negative from stable, citing diminishing fiscal flexibility.
"We need to keep yields relatively near current levels by maintaining market trust," Kan told lawmakers in Tokyo.
Finland's consumer confidence index increased slightly in January, the Statistics Finland said on Wednesday.
The consumer confidence index stood at 14.5 in January, up from 14.4 in the previous month, and also better than confidence on the long-term average. In November, the confidence index was 10.9.
In January, the confidence in all four components of the consumer confidence indicator improved from the previous month The index measuring consumers' own economic situation in 12 months increased to 10.2 from 8.9 in December, while the corresponding index on Finland's economic situation rose to 21.7 from 19.8.
Further, the gauge measuring Finland's unemployment situation improved to minus 18.7 in January from minus 21.8 in December, while the index on households' saving possibilities dropped to 44.7 from 50.7.
Macau's jobless rate stood at 3.1% in the October to December period, down from 3.3% recorded in the September to November period, the Statistics and Census Service said on Wednesday. Meanwhile, the underemployment rate was 1.9%.
In the October to December period, the total number of unemployed persons decreased by 800 to 9,900 compared to the September to November period, while the number of employed persons totaled 322,000. At the same time, the labor force participation rate dropped to 71 from 71.2%.
In the fourth quarter, the unemployment rate of local residents stood at 3.7%, while the labor force participation rate was 66%.
For the whole year of 2009, the overall unemployment rate was 3.6%, up from 3% recorded in 2008.
World unemployment hit a record high in 2009 and is likely to remain at an elevated level through 2010, the International Labour Office forecast showed Tuesday.
The number of jobless worldwide reached nearly 212 million in 2009 following an unprecedented increase of 34 million compared to 2007, on the eve of the global crisis, the ILO said in its annual Global Employment Trends report. The jobless rate rose to 6.6% in 2009, up 0.9 percentage points from 2007.
In the developed economies and European Union, unemployment is projected to increase by an additional 3 million people in 2010. Regional unemployment rate is seen at 8.9%. Meanwhile, joblessness will stabilize at present levels, or decline only slightly, in other regions, the ILO foresees. It said global youth unemployment increased by 10.2 million in 2009 compared to 2007, the largest rise since 1991. The youth unemployment rate stood at 13.4%, an increase of 1.6 percentage points relative to 2007.
Further, the report revealed that there were variations in the employment impact of the crisis between regions and countries as well as in labor market recovery prospects.
"Avoiding a jobless recovery is the political priority of today," ILO Director-General Juan Somavia said. "We need the same policy decisiveness that saved banks now applied to save and create jobs and livelihoods of people."
Top business leaders and politicians from around the world are coming to the Swiss mountain resort Davos for a five-day forum, which kicks off on Wednesday.
The official theme of this year's Davos is "Rethink, Redesign, Rebuild". Debate on how best to reform the global financial system is set to be the dominating agenda in the event - the 40th of its kind. Bankers and regulators are expected to clash on where to draw the line when it comes to financial reform.
Ideas on how best to move the global economy forward will be explored by 2,500 participants from around 90 countries comprising heads of governments, ministers, bankers, CEOs and public figures.
"We have to look at the meeting in the context of what's happening in the world and we see that, clearly, the present system of global cooperation is not working sufficiently," said Klaus Schwab, the founder of the event. "So we want to look at all issues on the global agenda in a systemic, integrated and strategic way and we want to address in particular the issue of global cooperation."
A vast majority of the world's business leaders are optimistic about the outlook for the next three years, according to PricewaterhouseCoopers' (PwC) annual CEO survey, released on Wednesday.
More than 90% of 1,200 CEOs surveyed expressed confidence in growth over the next three years. With their worst fears of a prolonged recession behind them, confidence among bosses has also rebounded for the coming year, with 81% expressing optimism while only 18% said they remained pessimistic.
PwC said confidence levels were now back to the year 2000's levels. A year ago, 25% of all chief executives were pessimistic, while 64% had shown optimism for 2009.
The rising confidence has translated into a planned boost in recruitment, with nearly 40% expecting to increase their staffing levels this year.
The survey found that bosses in emerging economies such as India and China were more optimistic than their counterparts in North America and Western Europe. Some 97% of Indian chief executives were confident of growth in 2010 compared with 80% in the U.S.
The survey results were published coinciding with the start of the World Economic Forum in Davos, Switzerland, where 2,500 elites in the political and financial sector from all over the world meet to discuss the outlook for the global economy.
South Korea saw a current account surplus of $1.52 billion in December, the Bank of Korea said on Wednesday. That was below analyst expectations for a $2.23 billion surplus following the $4.277 billion surplus in November.
Seasonally adjusted, the current account surplus came in at $3.50 billion.
The capital and financial account in December saw a net inflow of 1.64 billion dollars, almost the same as the previous month's 1.54 billion dollars. Reserve assets shifted from the previous year's net decrease of 56.45 billion dollars to a net increase of 69.06 billion dollars.
For all of 2009, South Korea saw a record current account surplus of $42.67 billion - an increase from the previous year's 5.78 billion dollars deficit, as the goods account surplus widened substantially.
The capital and financial account shifted in 2009 from the previous year's net outflow of 50.08 billion dollars to a net inflow of 26.45 billion dollars.
The goods account surplus was 56.13 billion dollars, up from 5.67 billion dollars a year earlier, as the scale of the decrease of imports exceeded than that of exports.
The services account deficit registered a deficit of 17.2 billion dollars, similar to the previous year's 16.67 billion dollars, as the transportation account surplus narrowed and the other services account deficit widened while that on the travel account narrowed.
The income account surplus fell slightly to 4.55 billion dollars from the previous month's 5.9 billion dollars, led downward by worsening interest receipts.
The current transfers account registered a deficit of 0.81 billion dollars similar to the previous year's 0.67 billion dollars.
Direct investment registered a net outflow of 9.07 billion dollars, down from the previous year's 15.63 billion dollars, since the net outflow of outward foreign direct investment decreased more than the year before.
Portfolio investment shifted from a net outflow of 2.41 billion dollars to a net inflow of 50.68 billion dollars, as foreign investors' domestic securities investment shifted from a net outflow to a net inflow.
Japan's exports grew for the first time in 15 months in December led by increased demand from Asia, official data showed.
Exports climbed an annual 12.1% to JPY 5.41 trillion in December, reversing the 6.3% fall in the previous month, the Ministry of Finance reported on Wednesday. That was well above forecasts for 7.6% growth.
Exports to Asia, which accounted for more than 50% of Japan's total export revenue, surged 31.2% to JPY 3.03 trillion in December. China-bound exports jumped 42.8% to JPY 1.07 trillion.
Contrastingly, exports to the U.S. fell 7.1% to JPY 832.68 billion, while those to the European Union climbed a modest 1.4%.
The country breakdown offers a glimpse into the uneven nature of the global recovery and reaffirms the widely held view that Asia's emerging economies are driving the global economy from its slump.
Imports, on the other hand, continued to fall in December, although the pace of decline moderated. Imports were down 5.5% year-on-year to JPY 4.87 trillion, much slower than the 16.8% decline in the preceding month. That was better than forecasts for a 10.7% fall.
Imports from China dropped 5.8% to JPY 1.04 trillion, while those from the U.S. and the E.U. fell 9.5% and 6.4%, respectively.
In all, the country saw a merchandise trade surplus of JPY 545.32 billion in December, larger than the JPY 322.22 billion surplus recorded a year ago. Economists were looking for a surplus of JPY 633.3 billion.
The resurgent exports data offers a boost to the beleaguered Japanese economy, with the data coming on the back of the yen rising to a fresh one-month high this week. A strong yen diminishes the competitiveness Japan's trade merchandise as it makes them more expensive for potential buyers.
On Tuesday, the Bank of Japan opted to keep its benchmark interest rate unchanged at just above zero as it sought to maintain ultra-loose monetary conditions. The bank said the economy was improving, but further support measures were needed to maintain the recovery.
Japan's economy has been dogged by unemployment, deflation and a strong yen that has hurt the competitiveness of its goods in the export market. The economy grew for the second straight quarter between July and September, but its inability to overturn deflation has sparked fears that growth could stall. It pushed the government to unveil a JPY 7.2 trillion stimulus plan in December to prevent the country from slipping back into recession.
Financial reforms, climate-change and Haiti's reconstruction are set to dominate the agenda of the fortieth anniversary meeting of the World Economic Forum (WEF) at Davos, the picturesque Swiss mountain resort, beginning Wednesday.
Over 30 heads of either state or governments and 2,500 participants, including 1,400 business leaders, from 90 countries, will begin a five-day brainstorming session at the Congress Center. They will debate financial reforms, policies for creating jobs and other key elements of economic recovery--all to try to "rebuild and re-design" the global economy and institutions after nearly 18 traumatic months.
The theme for this meeting is: "Improve the State of the World: Rethink, Redesign and Rebuild."
The meeting is being held in the midst of a warning from the World Bank that the global economy may see a "double dip" (second recession) next year if the ongoing fragile recovery is "mishandled."
It also is coming when faith in large economic institutions and the people who run them, is at an all-time low and a day after the International Labor Organization (ILO) said in its report that 27 million persons around the world lost their jobs last year.
Also, the meeting is opening on the day of a highly-anticipated State of the Union message by U.S. President Barack Obama, whose administration seems to be alienating leading financial institutions and their CEOs, especially with his recent proposals for reforming the banking sector.
French President Nicolas Sarkozy will deliver the opening address that will initiate the debate on the theme of the summit, while Canadian Prime Minister Stephen Harper will deliver the keynote speech, the WEF said.
South Korean President Lee Myung-bak, as the chair of the 2010 G-20--a bloc of advanced developing countries and the developed nations--meeting, will deliver a special address.
The G-20 is expected to play a prominent role in reducing the global governance imbalance and contributing to a stronger, sustainable and more balanced world economy.
WEF founder and executive chairman Prof. Karl Schwab said in a preview interview that world leaders should look at the meeting in the context of what was happening in the world, in which the present system of global co-operation was seen not working sufficiently.
"We want to look at all issues on the global agenda in a systemic, integrated and strategic way, and we want to address in particular the issue of global cooperation. This is the reason why our Annual Meeting this year is tailored around the need to rethink, re-design and rebuild," he said.
Schwab warned that despite stock exchanges making smart gains over the past few months globally, many fundamental unresolved issues, notably that of government debt and unemployment, remained unresolved.
"We look at the stock exchanges and feel that we are coming back to the world as we had it. But this would be a false assumption. We still have many unresolved issues. We have a fundamental issue of government debt...unemployment," he cautioned.
Meanwhile, the CEOs who assembled in this picturesque town nestled by the snow-laden Alpine peaks, seemed positive about this year, though their optimism was well guarded.
The global economy may see its fragile growth wilting, the World Bank has warned in its latest report despite projecting a 2.7 per cent expansion this year and 3.2 per cent next year.
The world economy contracted by l2.2 per cent last year under the impact of the worst financial crisis set off in September 2008 since Great Depression of the 1930s.
Business climate in Germany rose more than expected in January, results of a survey conducted by the Munch-based Ifo Institute for Economic Research showed Tuesday.
The business climate index rose to 95.8 in January from a revised 94.6 in December, while economists had forecast a reading of 95.1.
Ifo's measure for current conditions in the country climbed to 91.2 from December's 90.4. That was a touch lower than the expected reading of 91.3.
Further, the outlook index increased to 100.6 in January from 98.9 in December and above the expected reading of 99.1.
Italy's consumer confidence indicator stood at 111.7 in January, down from 113.7 in December, economic think tank ISAE said on Tuesday. Economists expected a reading of 113.5 for January.
Households' view on overall economic situation of the country dropped to 88.8 in January from 92.4 in December.
The current assessment index increased to 119.8 in January from 118.8 in the previous month. However, personal situation index slightly dropped to 123.4 from 123.7.
UK's seasonally adjusted service sector output dropped 2.3% year-on-year in November, slower than the 3.7% decline in the previous month, the Office for National Statistics said on Tuesday.
On a monthly basis, service sector output increased 0.1% in November.
In September to November period, service index declined 3.3% compared to the same period of the previous year and was up 0.1% compared to the previous three months period.
Retail sales in Italy dropped 1.3% year-on-year in November, reversing the 0.4% increase in the previous month, the statistical office ISTAT reported on Tuesday. Economists had expected a 0.6% increase in sales.
On a monthly basis, retail sales were flat for the third straight month in November. Economists had expected sales to rise 0.1%. Sales in the food sector grew 0.5%, while those in the non-food sector slid 0.2%.
Switzerland's private consumption indicator edged down in December although it remained positive, UBS bank reported on Tuesday.
The consumption indicator fell to 1.20 in December from 1.26 in November, still below its long-term average of 1.50.
The index is calculated by taking five parameters into account namely new car sales, activity in the retail sector, the number of hotel stays by Swiss residents, the consumer confidence index and credit card transactions made via UBS points of sale.
New commercial registrations in Europe declined 32.4% in 2009 compared to 2008, the European Automobile Manufacturers' Association reported on Tuesday. In total, 1.71 million vehicles were registered throughout the year.
Registrations of vans dropped 30.3% in 2009, while those of heavy trucks fell 47.9%. Registrations of trucks and buses & coaches plunged 43.8% and 19.5%, respectively.
In December alone, new vehicle registrations decreased 10.6% annually, reflecting a more moderate drop in demand for vans than in the months before.
Tuesday, the Statistics Iceland announced that the consumer price index or CPI rose 6.6% year-on-year in January, slower than the 7.5% growth in the previous month. A year ago, the CPI inflation was 18.6%.
On a monthly basis, the CPI dropped 0.3% in January, in contrast to a 0.5% growth in the previous month.
The CPI less housing cost rose 10.9% on an annual basis in January and was up 0.03% compared to the preceding month.
Tuesday, the Netherlands' Central Bureau of Statistics announced that the producer confidence indicator dropped to minus 8.3 in January from minus 8.1 in December. Economists expected a reading of minus 7.
Producer confidence is composed with three component indicators: expected production over the next three months, opinion on orders received and the assessment of stocks of finished products, the statistical office said. The opinion on the order worsened slightly, while on stocks of finished products traders were optimistic than the previous month.
The British economy expanded only 0.1% sequentially in the fourth quarter of 2009, following the prior quarter's 0.2% contraction, the Office for National Statistics said Tuesday. Economists were expecting an increase of 0.4%. The fourth quarter growth follows six quarters of contraction.
The increase in output was mainly due to increases in distribution, hotels and restaurants and government and other services. Output of service and production industries edged up 0.1% each.
Year-on-year, gross domestic product was down 3.2%, while the consensus forecast was for 3% decline in the fourth quarter.
French consumer spending rose 2.1% month-on-month in December, quicker than a revised 0.1% rise recorded in November, survey data released by statistical office Insee showed Tuesday. Economists had forecast an increase of just 0.6%. The statistical office said the increase was led by scrappage programme for vehicles.
On an annual basis, consumer spending grew 5.9% in December, faster than the revised increase of 3.5% in the previous month and 3.8% rise economists expected.
The statistical office also said consumption grew 3% in the fourth quarter on a sequential basis, the highest increase over the last 10 years. It follows a decline of 0.8% in the third quarter. In 2009 as a whole, consumption increased 1% after a fall of 0.6% in 2008.
Tuesday, the Statistics Finland announced that the jobless rate stood at 7.9% in December, up from 6.1% recorded a year ago. Economists expected the jobless rate to be 8.6%. In November, the jobless rate was 8.5%.
Te number of unemployed totaled 206,000 persons in December, larger than the 162, 000 persons in the previous year. Total labor force stood at 2.62 million, down from 2.66 million a year earlier.
Meanwhile, the labor force participation rate was 64.9% in December, smaller than the 66.2% in a year ago.
In 2009, the average annual unemployment rate stood at 8.2%, up from 6.4% recorded in 2008.
Tuesday, the Statistics Sweden announced that the trade surplus stood at SEK 5 billion in December, up from SEK 1.9 billion surplus in the previous month. Economists expected a trade surplus of SEK 7 billion. A year ago, the trade surplus was SEK 8.9 billion.
Exports value dropped 1% year-on-year to SEK 82.3 billion in November, while imports value rose 4% to SEK 77.3 billion.
On a seasonally adjusted basis, the trade surplus stood at SEK 6.1 billion in December, down from SEK 6.2 billion in November.
In 2009, exports and imports value decreased by 17% each. During the period, the trade surplus totaled SEK 92.3 billion, down from SEK 105.8 billion in 2008.
Hong Kong's Census & Statistics Department announced on Tuesday that the trade deficit stood at HK$33.44 billion in December, compared to the HK$11.76 billion deficit a year ago. Economists were looking for a deficit of HK$22.90 billion.
The value of goods exports increased 9.2% year-over-year to HK$224.8 billion in December after a 1.3% rise in the previous month. Economists had expected a 12% increase.
At the same time, the value of goods imports surged 18.7% to HK$258.3 billion, after a 6.5% increase in November. Economists were looking for an increase of 16%.
For 2009 as a whole, exports and imports dropped 12.6% and 11%, respectively in comparison to the corresponding period of the previous year. During this period, the trade deficit amounted to HK$223.3 billion.