Esta tarde se inauguró la 47 Conferencia Anual de Ejecutivos – CADE 2009, evento empresarial más importante del Perú, organizado cada año por IPAE. Este año, el lema de la conferencia es “Nuestro Futuro, Nuestra Oportunidad”.

Como Centro de Estudios Estratégicos de IPAE, nos complace anunciar el lanzamiento de 5 publicaciones nuevas:

- 03 documentos preparatorios de CADE 2009, cuya supervisión fue encargada al Centro de Estudios Estratégicos de IPAE de parte del Comité Organizador del evento:

1. El reto del cambio empresarial: del entorno del pasado al entorno del futuro. Autor: Claudio Herzka, investigador asociado del CEE de IPAE.
2. Crecimiento inclusivo: una mirada retrospectiva hacia la próxima década. Autor: Eduardo Morón, PhD en Economìa y profesor de la Universidad del Pacìfico.
3. La educación y el talento necesario para desarrollarnos. Autor: Hugo Díaz Díaz, vicepresidente del Consejo Nacional de Educaciòn y vicepresidente del Instituto de Investigaciòn para el Desarrollo y la Defensa Nacional (INIDEN).

- Cuaderno El futuro ahora, una publicación que difunde estudios del CEE de IPAE enfocados en temas vitales para el desarrollo nacional en los próximos años. 

1. Aprovechando mejor el agua en la agricultura: el caso de los cultivos de agroexportación. Autores: Julio Paz y Patricia Herrera (CEE IPAE)

Pronto ofreceremos estas publicaciones -vía online- para todos nuestros lectores. Gracias por su interés.

aus orf.on:

Der Internationale Währungsfonds (IWF) hat die in Mittel- und Osteuropa tätigen Banken davor gewarnt, das Risiko von Kreditausfällen zu unterschätzen. Diese Geldhäuser hätten den Spielraum der Bilanzierungsregeln ausgenutzt und Vorsorgen für faule Kredite zu langsam aufgebaut, sagte IWF-Berater Christoph Rosenberg gestern auf einer Bankenkonferenz in Wien.

Zwar würden die meisten Banken dadurch in diesem Jahr einen Gewinn erzielen. Es bestehe aber die Vermutung, dass Banken zu lange an nicht werthaltigen Krediten festhielten, ohne dass diese zurückgezahlt würden. Langfristig sei das nicht im Sinne des Finanzsektors.

Ukraine besonders betroffen
Nach Einschätzung der Europäischen Bank für Wiederaufbau und Entwicklung (EBRD) ist der zurückhaltende Aufbau von Risikovorsorgen besonders in der Ukraine ausgeprägt. Die Rechnung dafür müssten die Banken Anfang nächsten Jahres zahlen, sagte EBRD-Chefvolkswirt Erik Berglof.

Die Ukraine gehört in Osteuropa zu den Ländern mit den höchsten Raten an faulen Krediten. Die Gefahr sei, dass am Leben erhaltene Risikokredite wegen der steigenden Arbeitslosigkeit und zunehmenden Insolvenzen letztlich doch noch ausfielen, warnte Berglof.

Österreichische Banken gehören zu den größten Kreditgebern in Mittel- und Osteuropa. Die UniCredit-Tochter Bank Austria, die Erste Group Bank und Raiffeisen International hatten indes zuletzt erklärt, das Schlimmste hinter sich zu haben. Die Banken hatten allerdings ihre Vorsorgen für faule Kredite massiv erhöht.

Ormai è quasi assodato che la nuova generazione- quella dei trent’anni con mamma e papà o, come dice qualcuno, del vivere dissoluto- è vista con occhi discretamente smessi e considerata di retaggio etico inferiore con picchi di malinconica memoria del tempo che fu; l’epoca in cui gli attuali grandi crescevano a pane e lavoro – e come amano ricordare- facendosi da soli. Considerato che appartengo a questa odiatamata generazione post-moderna e sopportando a stento le continue analogie, mi son chiesto, alla luce di questo abnorme divario ostentato, quali siano stati i fattori che hanno giocato in favore degli eroici padri, a cui va la mia più sincera stima, cercando sinteticamente di sondarli in correlazione delle contingenze storiche coeve, visto che le valutazioni di qualsiasi sorta non possono mai prescindere dal contesto, per non ricadere in osservazioni che si scostano da ogni tipo di trasparenza, che hanno visto in altri campi paragoni di infondata pregnanza, come lo storico dilemma calcistico su Maradona e Pelè o musicale con Battisti e Vasco Rossi coinvolti in mille discussioni tra giovani e adulti. Ritornando al nostro discorso una chiara realtà balza all’attenzione con lampante ovvietà ossia il divario socio-economico tra le due ere: gli anni sessanta sono stati il palcoscenico della strabiliante ripresa economica italiana con il made in Italy che si avviava ad essere epigonizzato da tutto il mondo, con le FIAT 500 come il sale o i cinesi che dir si voglia (vista la cospicua presenza) che si elevava a simbolo di quella classe medio borghese tanto colpevolizzata nel dopoguerra, per non parlare delle politiche a sostegno della casa, varate dal DC Fanfani con un piano settennale, che nel concreto erano dei veri mutui sociali visti i tassi di interesse agevolati. Queste in sintesi sono le componenti più importanti del puzzle che fungeva come sfondo alla nascita  consolidata della società italiana che avrebbe visto i nostri “vecchi” primi attori di tale ripresa dandoci in dote un mondo decisamente migliore. Passando al vaglio la società coeva, malgrado il buon punto di partenza, ci si rende conto che qualche ingranaggio forse doveva essere meglio lubrificato per dare un giusto seguito auspicato ma mai raggiunto in pieno, creando quel malessere esistenziale che attanaglia molti giovani, aldilà del ceto sociale di appartenenza, poiché il figlio del contadino avrà il problema di arrancare inizialmente, mentre il figlio dell’imprenditore sentirà per tutta la vita addosso l’ombra del padre e la gente magari lo riconoscerà vita natural durante come il figlio di….Nel concreto vediamo come la così rosea situazione socio-economica sessantina abbia acquisito delle sfumature olivastre con l’entrata del nuovo millennio. Certo molti passaggi sono stati dovuti, come l’entrata della moneta unica ( giacché l’Italia con il trattato di Roma nel 1957 fu una delle prime 6 firmatarie della CEE ed in seguito della CECA e CEEA), o l’ampliamento ad est dei mercati mondiali ( risvolto naturale dopo l’abbattimento della cortina di ferro comunista), ma ciò non toglie l’evidente handicap arrecatoci. Innanzitutto, come anticipato, il made in Italy è stato epigonizzato o meglio ancora clonato da molte altre aziende, riducendo i costi di produzione ed finalizzando con prodotti a primo acchito simili- le conseguenze di ciò sono note ai più- la più grossa casa automobilista italiana sopra menzionata ultimamente in Sicilia ha avuto qualche problemuccio ( i tagli al personale di Termini Imprese), la Parmalat ha chiuso i battenti, la Cirio quasi, molti brand italiani sono stati accorpati da aziende estere ect. La politica si attiene sempre meno alla sua condicio sine qua non, ossia la promozione sociale, pensate che a distanza di 50 anni un pur sempre democristiano a “Porta a porta” dichiara che i mutui sociali sono una utopia (Casini). A fronte di questi problemi il giovane d’oggi è solo in mezzo ad altri soli e solo unendosi ai soli altri si creerà da solo.

Lorenzo Mannarà

from: Paul Krugman’s Blog:

November 9, 2009, 1:44 pm

And another: one assertion I keep hearing in comments is that well, maybe China never got much capital from abroad, so you can’t attribute its takeoff to modern finance, but lots of other fast-growing developing countries did.

To which the answer has to be a question: who are you talking about?

Since the early 1980s there have been three big waves of capital flows to developing countries.

The first wave was to Latin American countries that liberalized trade and opened their markets in the wake of the 80s debt crisis. This wave ended in grief, with the Mexican crisis of 1995 and the delayed Argentine crisis of 2002.

The second wave was to southeast Asian economies in the mid 90s, when the Asian economic miracle was all the rage. This wave ended in grief, with the crisis of 1997-8.

The third wave was to eastern European economies in the middle years of this decade. This wave is ending in grief as we speak.

There have been some spectacular development success stories since 1980. But I’m not aware of any that were mainly driven by external finance. The point is not necessarily that international capital movement is a bad thing, which is a hotly debated topic. Instead, the point is that there’s no striking evidence that capital flows have been a major source of economic success.

“What we’ve learned is that a good reputation takes a long time to build, and can be ruined almost overnight.” This is roughly what a Hungarian property market analyst told us a couple days ago over the phone. This reputation is less important for the various rental markets, but it’s vital for investor confidence.

The Guardian has published a depressing, but thoughtful piece on the current plight of the region’s people and it’s the Hungarians and Latvians that come out as the biggest losers. It’s clear that the optimistic CEE narrative  that drove yields down and further down for the past decade has ended. Hungary, and the rest of the region, needs to start creating a new one, before things can really begin to shift, or else these sorts of stories will continue to dominate the minds of editors and readers.

The financial and economic crisis was made in the west, but has hit hardest in the east. After years of growth far outstripping rates in the west, governments in Hungary, Latvia, and Romania have fallen, economies have slumped, and leaders have had to call in the salvage squads from the International Monetary Fund, whose tens of billions in bail-out funds are conditioned on swingeing budget cuts.

At my university we have a group of students in social sciences who are organizing panel discussions on the Hungarian transition in 1989 every Tuesday till December 8. I’ve been attending the events from the beginning and I have to admit that the one of today was the best so far. We had political researcher, political philosopher, constitutional law expert and historian among the panelists, and also a journalist as moderator.

After the discussion the audience (university students) could ask their questions, and a boy raised the issue of what would they say if our PM, Gordon Bajnai asked them what to do for the society to increase trust towards government and help poor people, for example. First, the panelists denied answering by saying if a PM asks something like that, then he should leave his post fast because a PM must have a conception on what to do. Finally László Lengyel, associate professor and political researcher, stated that actually Bajnai really had asked him a question like this a few weeks ago, and it’s sort of okay, since Bajnai is PM only for one year, for a temporary government. Lengyel declared it would be better to raise the question of what should we (university students) do. “If we were in 1989, Viktor Orbán would have already sent me to my mother in the fifth minute of the discussion.” he said.

By his words the Civil Society Forum came to my mind. There I attended a session with Jiři Pehe and Martin Bútora, both had been advisors to Václav Havel, and much to my astonishment Martin Bútora raised the same question when they were talking about the transitions in Central and Eastern Europe. He turned to the table where some of us from the younger generation were sitting and said: “Your parents did 1989, now it’s the time for you to do something.”

So, now it was the second time I heard from senior experts in politics that they are expecting “something” from the generation born around the transition. But what? In Hungary, for example, young people are not that concerned about politics, indeed they can’t be because they can’t even understand it. After high school, we’re starting the university without arriving to the transition in our History studies. Better teachers try to talk about it but it’s a sensitive topic, and so influenced by actual politics that if one doesn’t want confrontation with parents or other colleagues, then he just leaves this out from the syllabus. And if a pupil wants to know more, he has to learn it by himself, or at private classes, or at extra classes in the afternoon, so from somewhere else, but not from school. The latest historical event, where everyone is about to finish their Hungarian History studies is the Revolution of 1956. (Not that easy field either!)

I can’t imagine what are these people expecting from a generation which was not informed about what happened during the transition, and whose first thing to remember when it comes to politics is related to DuckTales. I also remember (I was 6 years old then) the day when the public TV interrupted its Disney show at 17:20, December 12 in 1993. The announcement of the death of József Antall, the first democratically-elected PM of Hungary, interrupted an episode of DuckTales. According to the oral history of our generation these had been the last broadcasted moments of the cartoon. (Be careful, it’s in Hungarian.)

The Facebook group “Akik nézték a vasárnapi Disney-t, amikor meghalt Antall József!” (“Those who had been watching the Sunday Disney when József Antall died!”) now has 10697 members, so these are who had been in the age of watching cartoons on TV and are registered on FB. Some 11 thousands seem to be a high amount in politics. If I was trying to start up something, I would use them. These are young electors without any remembrance of the USSR, grown up by watching commercial TVs and surfing on the worldwide web. They (we) are thinking totally different than those who lived their lives during the communism.

Of course the declarations I quoted were not addressed to this after-transition generation generally, but to those who feel themselves at least a bit concerned. And it’s very hard to attract the attention of everybody who had been watching TV December 12 in 1993. If I was told to do something, I would set up an NGO. An organization promoting democracy to young Hungarian people: what’s that, how to elect, how to govern, what is the so-called politics for etc. And I would found an NGO for collecting and representing under-30 generations interests, but never a political party. Never.

Esta fue nuestra colaboración publicada hoy en la sección especial “EL FUTURO AHORA” (página 25) del Diario Gestión, donde se abordó el tema “Las tecnologías emergentes”. Tuvimos como invitado en la sección “Análisis” a Christoph Ettl, investigador de la Sociedad Max Planck de Alemania, una organizanización de investigación en ciencia y tecnología reconocida a nivel mundial.

El informe selecciona dos tecnologías que podrían llegar al Perú con rapidez, de las diez tecnologías emergentes del 2009 -que han sido recientemente destacadas por la revista Technology Review del MIT- , las cuales prometen generar un gran impacto en la sociedad.

Para leer el informe completo, haga click sobre la imagen. ¿Qué opina sobre este tema?

Chronos Consulting has added over 6000 contractors so far in 2009 in Russia, Poland, Czech, Hungary, Romania, Spain, Venezuela, Mexico and Argentina. More details on www.chronosconsulting.com

By now I’m sure you’ve read, heard or seen Tweeted the announcement that Cisco, EMC and VMware have come together and created the Virtual Computing Environment coalition . So what does this announcement really mean? Here are my thoughts:

Greater Cooperation and Compatibility
Since these 3 top IT giants are working together, I expect to see greater cooperation between all three vendors, which will lead to understanding between what each vendor is offering. More important, though, is we’ll be able to have reference architecturethat can be a starting point to designing a robust datacenter. This will help to validate that an “optimized datacenter” is a solution that every customer should consider.

Technology Validation
With the introduction of the Xeon 5500 processor from Intel earlier this year and the announcement of the Nehalem EX coming early in Q1 2010, the ability to add more and more virtual machines onto a single host server is becoming more prevalent. No longer is the processor or memory the bottleneck – now it’s the I/O. With the introduction of Converged Network Adapters (CNAs), servers now have access to Converged Enhanced Ethernet (CEE) or DataCenter Ethernet (DCE) providing up to 10Gb of bandwidth running at 80% efficiency with lossless packets. With this lossless ethernet, I/O is no longer the bottleneck.

VMware offers the top selling virtualization software, so it makes sense they would be a good fit for this solution.

Cisco has a Unified Computing System that offers up the ability to combine a server running a CNA to a Interconnect switch that allows the data to be split out into ethernet and storage traffic. It also has a building block design to allow for ease of adding new servers – a key messaging in the Coalition announcement.

EMCoffers a storage platform that will enable the storage traffic from the Cisco UCS 6120XP Interconnect Switch and they have a vested interest in VMware and Cisco, so this marriage of the 3 top IT vendors is a great fit.

Announcement of Vblock™ Infrastructure Packages
According to the announcement, the Vblock Infrastructure Package “will provide customers with a fundamentally better approach to streamlining and optimizing IT strategies around private clouds.” The packages will be fully integrated, tested, validated, and that combine best-in-class virtualization, networking, computing, storage, security, and management technologies from Cisco, EMC and VMware with end-to-end vendor accountability. My thought on these packages is that they are really nothing new. Cisco’s UCS has been around, VMware vSphere has been around and EMC’s storage has been around. The biggest message from this announcement is that there will soon be “bundles” that will simplify customers solutions. Will that take away from Solution Providers’ abilities to implement unique solutions? I don’t think so. Although this new announcement does not provide any new product, it does mark the beginning of an interesting relationship between 3 top IT giants and I think this announcement will definitely be an industry change – it will be interesting to see what follows.

UPDATE – click here check out a 3D model of the vBlocks Architecture.

In a new piece of research from CB Richard Ellis, Prague and Warsaw come out as the two most promising CEE office markets for investors over the mid-term. While Prague has higher than comfortable vacancy at the moment, supply has been shut off. Warsaw, on the other hand, enjoys not only low vacancy but a still-robust Polish economy as well. Bratislava and Budapest are seen as market with higher vacancy levels where the pipeline continues to be added to.

In the run-up to the credit crisis, writes CBRE, the risk premium for investing in CEE fell to a mere 25 bps. This has since returned to what it describes as a more sustainable 100 bps. Intriguingly, the analysts say that the spread between CE weighted average prime yield and the 10-year Germany government bond “has reached levels not seen since 2005, making real estate more interesting as an asset class.”

With Western European yields bottoming out and the risk premium re-established, CBRE sees a situation where buyers and sellers can start talking again.

After months of uncomfortable alliance, Romania’s coalition government collapsed in October 2009, putting in question Romania’s ability to enact painful reforms required under its €20 billion (US$26.9 billion) IMF loan agreement. •President Basescu: “The [IMF] agreemeent for 2010 must be revised. It is clear that certain changes must be made, (…) because Romania will not be able to fulfill all its commitments by Dec. 31.” (AP, 10/27/09) •October 13: The Romanian lawmakers toppled the minority government in a no-confidence vote. The opposition parties called the vote after the Social Democratic Party (PSD) left the ruling coalition, leaving a weak minority government led by the Liberal Democratic Party (PDL). •Basescu, supported by the PDL, is favored to win the presidential elections scheduled for November 22, and some analysts suggest the no-confidence vote was partly motivated by the desire to undermine his election prospects. (NYTimes, 10/13/09) IMF Agreement at Risk? •In March, the EU, IMF and World Bank agreed to lend Romania €20 billion (US$26.9 billion) in return for severe cuts in public spending and wages. •Citigroup: An interim government “will not be able draft legislation including the 2010 budget and the passage of revised pension legislation, which was envisaged in the IMF program. This, in turns, complicates the conclusion of the second review of the IMF program scheduled for December involving a disbursement of around EUR 1.5bn.” (10/14/09) •Rozalia Pal of Unicredit Tiriac Bank: “In the near term we expect the IMF and European Union to take a wait-and-see approach and only see risk of a delay to the payment in December but do not expect a complete collapse of the program.” (Bloomberg) Economic Impact •Marko Mrsnik of S&P: “If this [political] situation leads to the government failing to adhere to the IMF-EU consolidation program, leading to a continued worsening of public finances and if there is a deterioration in the banking sector, then there are further downside risks to Romania’s credit rating”. (Reuters) •Kenneth Orchard of Moody’s: “The outlook remains stable. A certain amount of political noise is already factored into our rating.” (Reuters) Background •The Liberal Democratic Party (PDL) and the Social Democratic Party (PSD) formed a government with a two-thirds parliament majority in December 2008, but differences over fiscal policy and Presidential elections, scheduled for November 22, have been straining relations

Nouriel Roubini | Oct 28, 2009 From the International Herald Tribune:

Global imbalances — roughly defined, the different emphasis the world’s leading economies place on savings, spending and debt — is a phrase much used and little acted upon.

Well before the current financial crisis began, world leaders pledged to address this disconnect. At an International Monetary Fund meeting in 2007, for instance, representatives of the United States and the European Union agreed they should change economic incentives to encourage more savings and less spending; officials speaking for China, Japan and Germany, meanwhile, pledged to take steps to encourage spending. At the end of the day, nothing much happened, and these imbalances helped grease the skids for the global descent toward the economic abyss.

This might not be readily apparent from current numbers; in fact, the financial crisis has contributed to a significant narrowing of global economic imbalances. Consumers in so-called “deficit countries” — states like the U.S., Britain, Spain and the countries of Eastern Europe that have huge trade deficits — are saving more as the crisis has exposed the dangerous extent of their indebtedness. Meanwhile, in China and other large export-driven economies, fiscal stimulus spending and some other policy moves have encouraged more domestic consumption. The reduction in the U.S. current account deficit — the broadest measure of trade in goods and services — is particularly striking and serves as an example. This reduction holds true across other, less robust economies, too. Many of the emerging economies of Eastern Europe had easily financed wide deficits during the boom years. Now they find they are reducing private consumption in light of the lack of credit.

In more desperate cases like Ukraine and Kazakhstan, this has necessitated currency devaluation that boosts the costs of imports. Others, especially Eastern European countries in line for E.U. membership, have clung to their currency pegs. This leaves room for adjustment only via a sharp reduction in domestic demand.

Changing ingrained habits — whether the tendency is to be too thrifty, or too loose with money — is never easy. There is a powerful temptation to point at current trends and argue that rebalancing is taking place naturally. That would be a big mistake.

All evidence suggests that this rebalancing is temporary — the result of reactive policy measures among exporters and retrenchment among the profligate.

China, the world’s sovereign wealth machine over the past decade, is a case in point. My colleague, Rachel Ziemba, projects China’s current account surplus will likely narrow to $350-370 billion depending on the import trajectory, down from a record $420 billion in 2008. China’s trade surplus was just under $100 billion in the first half of 2009. A trade surplus of about $30 billion in the third quarter of this year is expected, which is well below 2008 levels. Increased spending at home rather than savings could further reduce the surplus. Yet with China reluctant to allow currency appreciation, reserve accumulation has resumed at a strong pace.

Although the export-oriented growth model has been shaken by the crisis, many countries seem reluctant to recalibrate. The beginning of inventory restocking has buoyed Asia significantly, as companies that cut back sharply have now increased output. Avoiding currency appreciation will exacerbate this trend, adding to reserve accumulation and distortions.

The most recent I.M.F. estimates — released in the October 2009 World Economic Outlook — suggest that imbalances could widen again but remain lower (as a share of G.D.P.) than their 2006 peak. Yet the dollar values of these imbalances could be very large. In the I.M.F.’s forecast, China’s surplus will widen again in 2010, even as a retrenched U.S. consumer remains weak.

So who offsets the U.S. deficit? The I.M.F. suggests a diffusion of imbalances, where surpluses of Germany and Japan will remain in shrinking mode even in 2010, while the deficits of Canada and Australia, as well as emerging economies like Brazil, will offset the growth of China’s surplus.

However, the I.M.F. five-year projections also show a widening current account surplus for the entire world. This could suggest that some of the underlying export assumptions are too optimistic given the growth estimates.

Global imbalances are back on the policy agenda with the G-20 agreeing to create a peer review of macroeconomic policies including imbalances to avoid another crisis. The details are limited so far, but focus once again on an agreement that the U.S. will consume less and save more; Japan, Germany and China will spend more and will reallocate investment away from the export sector.

These are the right goals, to be sure. But a joint communiqué from a nascent international organization isn’t much to hang the world’s hat upon. The I.M.F. needs teeth, perhaps along the lines of the W.T.O.’s authority to prod member states toward “out of court” settlements, in order to enforce these difficult political and economic goals.

These imbalances represent serious misallocations of capital in domestic economies that, projected globally, raise the risks considerably of future financial crises and asset bubbles.

While imbalances did not cause the current financial crisis — I believe lax regulation bears a far greater onus — these imbalances certainly helped create the conditions for this crisis. Easy money and low long-term interest rates created an incentive to invest in seemingly-safe high-yield assets. An orderly unwinding of imbalances might put a lid on global growth during the adjustment, but is fundamental to achieve sustainable global growth.

Nouriel Roubini is a professor of economics at the Stern School of Business, New York University.

Ukraine’s economy contracted by nearly 20% in Q1 2009 and 18% in Q2 2009 despite the IMF’s US$16.5 billion loan made in November 2008. The deteriorating political climate in the country had put the disbursement of this loan at risk but subsequent macro-economic policy compromises allowed the delivery of the second and third tranches •IMF has asked Ukraine to veto its wage and pension bill as a precondition to disbursing a US$ 3.4 billion loan tranche. Ukrainian parliament approved a bill raising minimum wages and pensions by 20% that will come into effect by the end of 2010. The bill would stretch the budget a cause for concern for the IMF. •Following the approval of the third tranche in July 2009, S&P raised Ukraine’s credit ratings outlook to positive but kept its foreign-currency rating at CCC+.(via Bloomberg) •July 28, 2009: IMF approved the immediate disbursal of the third tranche of US$3.3 billion, bringing total disbursements to around about US$10.9 billion. The IMF also modified the target fiscal deficit in light of the broadening deficit of Naftogaz, Ukraine’s natural gas company. According to the IMF, the Ukrainian economy has made progress through easing inflation and an improving current account but the sharp fall in output requires significant policy adjustments. •July 24, 2009: Ukraine’s parliament passed a law to increase the efficiency of vulnerable banks (Reuters). Doing so was a key step to obtaining the latest tranche of funds. •May 12, 2009: The IMF disbursed US$2.8 billion (second tranche) to Ukraine that had been frozen over over fiscal prudence and political stability concerns. The IMF also agreed to a budget deficit of 4% of GDP in 2009, compared to the previous target of 3% and the IMF’s desire for no deficit. Roman Olearchyk: Ukraine is expected to utilize half of the second US$2.8 billion tranche to finance the budget deficit and and the balance for currency stabilization. (via FT) •Alfa Bank: Ukraine’s positive trade balance in February, rise in expected FDI, investment prospects from the Euro 2012 football and successful bank bailouts may allow Ukraine’s external balance to “return to equilibrium without further tranches from the IMF.” (May 2009) Ukraine and IMF’s Conflicting Terms of Agreement •IMF agreed to grant a US$16.5 billion 24-month standby facility to Ukraine in November 2008. According to the IMF, the facility, which amounts to 800% of Ukraine’s IMF quota, will help “improve financial sector liquidity and solvency problems, by smoothing the adjustment to large external shocks and by reducing inflation.” •Ukraine received a first tranche of U$4.5 billion in November. However, disagreement between the IMF and Ukraine followed as the IMF sought a deficit free budget but Kyiv’s 2009 budget had a 3% deficit. Ukraine then turned to the U.S., Russia, China, Japan and the EU for loans to fill a shortfall in revenues for 2009. •ING: “Ukraine abolished three articles in the 2009 state budget decreasing the independence of the [National Bank of Ukraine] (NBU) and the obligation of the NBU to buy T-bills issued by the Ministry of Finance. As the government shows progress towards the resumption of the IMF loan, it will further reduce devaluation panic on the FX market as well as minimize fears that the NBU does not have enough reserves to support the hryvnia.” •In February 2009, Ukraine’s long-term foreign- and local-currency debt ratings were reduced one step by Fitch Ratings to B, which cited the risk of a banking and currency crisis from increasing stress in the financial system

With several years in the business already under his belt and a string of well-received vinyl releases, Kirkby’s Kev Willow (Kevin Williams) A.K.A The Prototype is beginning to make waves in the UK Urban scene.

Taking the production techniques he honed at some of the UK’s most notable Hard Dance labels, Kev’s sound is a blistering fusion of slick melodies, immaculate beats and eclectic basslines. Merging elements of Grime, Hip Hop and R’n’B with synth lines more commonly found in Trance and House, Williams is adding intricacy to the Urban genre without diluting its vibe or attitude.
Since the project’s inception in October 2008, this fresh, stylistic approach to the scene has earned The Prototype significant amounts of airtime on UK radio, as well as well-deserved recognition and reputation in his native Liverpool.
If you’d like to contact Kev with production/remix enquiries e-mail him at “the.prototype@live.com” 

 • Eastern European currencies weakened significantly in late 2008 and early 2009 due to dovish central banks, the region’s external financing gap and fears of a regional financial crisis. Currency volatility lessened significantly in summer 2009 amid stronger global sentiment and strong investor sentiment towards the CEE region. The rally in emerging market assets intensified in October 2009 and has led to generally stronger currencies in Central Europe. But Lars Christensen of Danske Bank believes that a correction in EMEA currency markets is on the horizon, noting that carry protection is disappearing (markets are pricing in aggressive rate cuts), and “some investors might begin to worry about the political situation across the region as elections in a number of Central and Eastern European countries are on the cards in 2010.”

RGE Monitor, Sept 1, 2009

 Overview: Croatia’s economy has entered recession as slowing credit weakens domestic demand, the Eurozone recession affects exports, and tourism revenue, which accounts for 20% of the country’s GDP, dwindles. The economy contracted 6.3% y/y in Q2 2009, after falling 6.7% y/y in Q1 09. Croatia’s hefty external debt (which stood at 94% of GDP in 2008) and large external financing needs (at around one-third of the country’s GDP) underline the country’s external vulnerabilities in an environment of limited capital flows. (See: Croatia’s Economic and Political Risks)

 IMF Loan In Sight?

• The government hopes to ride out the crisis without help from the IMF but Fitch notes that Croatia is facing large external financing gaps and may require IMF assistance.
• Bank Austria: “The only question is will the government muster the courage to cut spending on its own, or will it need to call in the IMF to help?”
• Peter Brezinschek of Raiffeisen said that Croatia will “definitely” need an IMF bailout, adding that there are “some indications there have been contacts” between the government in Zagreb and the IMF. (via Bloomberg)

 Growth Forecast

• 2008 Real GDP Growth: 2.5%
• 2009 GDP Growth Forecast: -4.9% (Bank Austria), -4.0% (cen bank),  -3.5% (IMF/Fitch) -4.8% (Erste), -3% (World Bank)
• 2010 GDP Growth Forecast:  -0.2% (Bank Austria),  0.3% (IMF/World Bank)

 Fiscal Position

• Due to the falling tax revenues and the slowing growth, the parliament in August revised the budget, assuming a budget deficit of 3.1% of GDP, compared to the previous target of 1.6%.
• In Q1 2009, revenues declined by 13.3% y/y and total spending increased by more than 10%. (EC)
• The government announced a third budget revision for the end of July or early August (EIU). A new “crisis tax” that is to be introduced in August could fuel public discontent. (EurActiv)

 Current Account

• The C/A deficit at around 11% of GDP in 2008 (cen bank via Bloomberg). It is expected to narrow to 6.5% of GDP as import growth slows. (IMF)
• In Q1 2009, “net FDI moderated significantly(-64% y/y), thus covering just above 20% of the 1Q C/A deficit.” (Erste) Strong FDI inflows (9.7% of GDP) in 2007 comfortably covered the C/A deficit.

 F/X 

• With roughly 2/3 of bank lending FX-linked, maintaining exchange rate stability is the main aim of monetary policy.
• After some volatility since the begging of the year, the exchange rate stabilized by July 2009. Depreciation pressures however might increase after the peak of the tourist season.

 Inflation

• Slowing domestic demand coupled with lower import prices will lead to a significant reduction in the average inflation rate to around 3.0% in 2009, compared to 6.1% in 2008. (Bank Austria, EC)

 Unemployment

• The unemployment rate stood at 14.4% in May. The 2008 unemployment rate was 8.4%. (EC)

 Politics

• Challenges for the government include the need to to unblock the stalled EU accession negotiations, speed up the judicial reform and fight the organized crime.
• Croatia joined the NATO alliance on Apr 1.

from RGE Monitor, Oct. 15 

Prospects for growth and recovery in Eastern Europe are likely to be uncertain over the next few years. EU newcomers will most likely have to rely upon a recovery of export markets to emerge from recession, says the World Bank. The positive Q2 GDP growth in Germany and France has brightened prospects that there will be a resurgence in Western European demand for Eastern Europe’s exports.
• Recovery in CEE is likely to take longer than in other emerging market regions (Asia and Latam) due to region’s high private sector indebtedness, says S&P (not available online).
• Erik Berglof, Chief Economist of EBRD: Recovery will be “fragile and patchy” and the speed/strength will differ by country, largely reflecting the degree to which their banking systems have been damaged by the crisis. (WSJ; October 15, 2009)
• Marcin Piatkowski: Divides Eastern European countries into three groups based on their distinct recovery prospects. (CEPA, September 1, 2009)
  • 1)Poland and the Czech Republic: “likely to benefit most from a global economic rebound, owing to competitive exchange rates, relatively sophisticated exports and strong domestic demand”
  • 2) Hungary, Romania, Slovakia, Slovenia: “Hungary and Romania boosted by depreciated exchange rates…and improved credibility supported by IMF programs. However, high external debt and tight fiscal policy will stunt their growth.” Slovakia and Slovenia, as Eurozone members, “will suffer from the strong euro, but benefit from the eurozone’s low interest rates and easy access to financing.”
  • 3) Baltic States and Bulgaria: These economies have the most dismal outlook “weighed down by large external debts, tight fiscal policy and uncompetitive exchange rates.”
• Marcin Piatkowski: “Threats to recovery will continue to lurk in the background as euro zone green shoots may prove as temporary as the ‘cash for clunkers’ program, rising unemployment reduces consumption, growing deficits weaken public finances and social discontent, particularly in the Baltic states, strengthens.”
• See related spotlight issue on Eastern Europe’s regional growth outlook

When?

• A sustainable, gradual recovery is assumed to set in only in H2 2010, in line with slowly improving external conditions (EBRD)
• Economic activity expected to contract in 2009 in all EU newcomers and to recover only modestly, and only in some countries, in 2010. The Baltic countries are expected to suffer the most severe contraction (World Bank)
• IMF: Results suggest that emerging Europe will recover in the medium term, although to growth rates that will be lower, in some cases substantially, than before the crisis
• While Asian and Latam countries could exit the distress period in about one year, the avg probability of exiting at the end of the second year in Eastern Europe is only about 30%; large variation among regions’ probability of exiting from the distressed state is mostly driven by stark differences in initial conditions (IMF)
• Only in three Eastern European countries does S&P (not available online) expect cumulative GDP growth to be positive in 2010 and 2011

Factors Affecting Recovery

• Since the crisis is truly global, the recovery of exports and financial flows is likely to be gradual only.
• Sluggish foreign demand is likely to remain limited by ongoing deleveraging. (IIF)
• “[G]overnments have run up big budget deficits with counter-cyclical spending. Fitch says in a report that the Czech, Hungarian and Polish authorities could all see their government debt stocks rise by about 10% of GDP in 2008-10.” (Wagstyl, FT; September 29, 2009)
• High interest rates in some countries, as well as increasing labor costs versus labor productivity in view of the weak currencies, could constrain recovery (Erste/ZEW survey)
• Banks are facing rises in non-performing loans.
• Unemployment is rising.

Which Countries are Best Positioned for Recovery?

• EBRD: Economies with relatively sound banking systems — such as Poland, Albania, Slovakia and Slovenia – are forecast to be among the best performers in 2010. (WSJ, October 15, 2009)
• Recovery prospects are strongest in those countries with “lower macro vulnerabilities, less extreme spare capacity (hence more contained unemployment, profitability, NPL and deflation risks)” and aggressive fiscal and monetary responses to the slowdown (e.g. Czech Republic, Poland). Baltic states and Hungary are facing more difficult recovery prospects. (Bank Austria)
• Economies which strongly adhere to fixed exchange rate regimes during the crisis (some of them by necessity being members of the EMU) will have a much more difficult task recovering. Not only have they missed out on real devaluations to strengthen their competitiveness, but they seem to be suffering from much stronger processes of deleveraging (World Bank)
• From the financial experts’ point of view, the Czech Republic and Poland feature the brightest business outlook for the coming six months. 48% and 46%, respectively, of the participants in the ZEW/Erste survey describe the recovery prospects of these economies as “high” or at least “rather high.” Experts are more doubtful about the Hungarian and Romanian economies, according to the ZEW/Erste survey. An absolute majority of the survey participants – 68% and 53%, respectively – say chances for a strong business revival in both countries are complex.

MG

Le invitamos a leer y comentar nuestra más reciente edición de ALERTA TEMPRANA, que toca el tema “El futuro del dólar en perspectiva” (click aquí). En la publicación se señala que como ha sucedido en ciertas épocas en el pasado, la economía norteamericana está enfrentando un periodo de pérdida de la confianza externa para el mantenimiento de activos en dólares y de generación de expectativas poco optimistas para los inversionistas domésticos y extranjeros.

Conozca el balance histórico del dólar frente a las otras monedas fuertes en el mundo, además del estado actual de la moneda norteamericana debido a su caída, y su posición con respecto al yuan.

Hoy, el valor del dólar continúa depreciándose lentamente, tanto a nivel global como para la propia economía estadounidense. Los efectos adversos desatados por la crisis financiera continúan afectando la economía norteamericana y pese a las estimaciones más optimistas, todo hace indicar que la situación no regresará a su situación pre-crisis con facilidad. Frente a éste escenario, ¿qué resultaría más recomendable?

Esperamos sus comentarios.

Chronos adds 350 new roles in CEE this week. See www.chronosconsulting.com. Romania, Czech, Hungary Poland and the Baltics.