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Big-spending Brazil battles inflation
by Staff Writers
Brasilia, Brazil (UPI) Feb 28, 2013

Japan factory output logs modest rise in January
Tokyo (AFP) Feb 28, 2013 - Japanese factories boosted output last month, ramping up output of cars, steel and electronics, figures showed Thursday, but the data fell short of expectations as the economy struggles to gain traction.

The official numbers come as the world's third-largest economy has served up mixed signals with output rising for two consecutive months but the trade picture cloudy on weak export demand.

Japan's economy shrank for a third straight quarter between October and December, leaving it mired in recession and highlighting the size of the job ahead for Prime Minister Shinzo Abe.

Abe, who came to power in December, has pledged to conquer the country's long-running deflation with big spending and aggressive monetary easing.

On Thursday he nominated Asian Development Bank chief Haruhiko Kuroda as the next governor of the Bank of Japan, a key post in Tokyo's bid to overhaul the limp economy.

The latest figures show Japan's factory output rose 1.0 percent from the previous month, weaker than a market estimate of a 1.5 percent expansion and lower than a revised 2.4 percent on-month increase in December.

The economy and trade ministry, however, hailed the data as a sign that things are turning around, saying in a statement that "industrial production has bottomed out and shows some signs of picking up".

Japan's manufacturers have been helped by a weakening in the yen over the past few months, after the unit hit a record around the 75-level against the dollar in late 2011 and remained strong through most of last year.

The dollar bought 92.57 yen in morning forex trade on Thursday.

A strong yen makes Japanese products less competitive overseas and shrinks the yen value of repatriated foreign income.

"Exports were still weak in January, so you can't really say whether Japan is clearly in recovery or not," Mizuho Research Institute economist Haruka Kazama told Dow Jones Newswires.

"But in terms of the outlook, if exports recover a bit more on the back of yen weakness, then production should show some more strength."

Japan's factory production slipped 0.3 percent in 2012 on-year, after a decline in 2011 when industry was hammered by the quake-tsunami disaster and Fukushima nuclear crisis.

Weakness in debt-hit Europe and a territorial spat with China, which sparked a consumer boycott of Japanese goods, has weighed on export demand.

Big-spending Brazil is battling renewed inflationary threats to its booming economy as state spending on World Cup and Olympics and related infrastructural projects kicks in.

Brazil will host FIFA World Cup next year and the Olympics in 2016. The twin endeavors have practically put the government's infrastructural development on an emergency footing.

Getting ready for the World Cup and an expected surge in international tourism during the tournaments and then the Olympics has spurred state spending on a vast scale. Government data on current spending remains scarce.

Responding to critics and media concerns, President Dilma Rousseff this week issued assurances she enforce policies that would keep costs and inflation in check. But the president's promise has met with widespread skepticism.

Rousseff singled out costs Brazil incurs in order to generate more business but also cited the government-led spending programs to improve the country's infrastructure.

Communications and infrastructural networks, including airports, roads, railways and ports are part of a vast program of spending that critics say is certain to offset any gains the government hopes to make through cost-cutting programs.

Brazil has no choice but to become more competitive and to reduce the costs of doing business, she said.

Exporters have long complained about the chronic congestion and inefficiency of Brazil's ports. Rousseff said she recognized many of the costs incurred in the country's port management were "unnecessary." Brazil cannot be competitive unless it addresses the problem of avoidable costs.

"Our country has to change and change in the direction of greater competitiveness," Rousseff said.

Inward flows of what critics call speculative investment damaged Brazil's export potential as the national currency real gained value against the U.S. dollar. Gains made in previous years in competitive exports of commodities are at risk of being lost or minimized, economists warn.

Critics say the country's infrastructural development is set to continue inflationary pressures.

Spending related to the sport events is compounded by the state-led oil industry's rush to exploit offshore and sublevel oil reserves. Several projects aimed at tapping into the offshore oil potential have set out multibillion-dollar spending programs.

Brazil aims to become the largest regional oil exporter in less than a decade. Economists warn oil prices may respond adversely to Brazil's entry with up to 6 million barrels a day of oil exports by 2020, unless there is a supply squeeze from other sources.

Brazil's offshore reserves are estimated to contain more than 100 billion recoverable barrels of oil equivalent.

The government has also laid out ambitious plans for social amelioration and poverty reduction programs, which will affect moves to keep inflation in check.


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Asia has the world's most billionaires: survey
Beijing (AFP) Feb 28, 2013
Asia has more billionaires than any other continent, a survey by a China-based wealth magazine showed on Thursday, apparently overtaking North America for the first time. There were 1,453 people around the world with a personal wealth of $1 billion or more as of January, said the Hurun Report, a luxury magazine publisher that compiled the list. Asia had 608 billionaires, North America 44 ... read more

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