Business Briefs

WASHINGTON – The United Nations has sharply curtailed its forecast for world economic growth this year because of worsening US housing and credit markets.

In a midyear update of its annual economic survey, the world body predicted a rise in global gross domestic product of just 1,8% in 2008, below its forecast of 3,4% just four months ago and the 3,8% achieved in 2007.

The revision was due to “further deterioration in the housing and financial sectors of the United States in the first quarter of 2008; this is expected to be a further drag for the world economy, extending into 2009,” the 15-page report said.

A housing bubble burst last year in the US, where a crisis over “subprime” – or risky – mortgages spread financial turmoil around the globe. That turbulence, the weakening US dollar, global imbalances and soaring oil and food prices meant that “the world economy is teetering on the brink of a severe global economic downturn,” the report said.

In the US itself, the report issued by the UN department of economic and social affairs projected a GDP fall of 0,2% this year, compared with its prediction in January of a 2% rise.

The UN update also saw slowdowns not just in Western Europe and Japan, but also in the dynamic economies of East and South Asia, where growth would fall to 5.9% from 8.5% last year. China would be hit by slowing exports, tightening monetary policy, appreciation of its currency and rising labor costs, the report said.

For the first time in five years the strongest growth – 6.4% – was expected in the “transition” economies of former Soviet and south-eastern European states. Oil prices rising over $120 a barrel have fueled a major boom in Russia.

The UN said world food commodity prices, after increasing by one quarter last year, had reached an annual inflation rate of 57% in March and were expected to go on rising this year and stay high next year before dropping.

World food supply rose by 5% last year but still fell short of rising demand, due to natural disasters and to rising incomes leading to extra demand for meat. The report predicted the global economic slowdown would cause oil prices to fall to $95 a barrel this year and $90 next year.

 

Intermarket and parallel rates edge closer

HARARE – THE interbank rate is edging closer to the parallel market rate as the local dollar continues to weaken against the greenback and other major currencies.

The interbank offer price opened on Monday at Z$259,350,000/US$1 after touching an intraday peak of Z$230,000,000/US$1 on May 16. On the parallel market the Zimbabwe dollar was quoted at $280million – $290milllion.

The rates are expected to continue firming in the short-to-medium term because of the absence of a regular supply of foreign currency to meet the country’s import cover of over USD300m per month. First quarter export earnings showed a 13,3% decline, meaning free funds will continue to play an important role in the market.

The parallel market will continue to offer higher rates because of fragile supply in the official foreign exchange market. Until bureaux de changes are reintroduced, the parallel market will continue to be driven by buyers seeking free funds.

Mining revenues boosted by platinum

HARARE – Platinum production in Zimbabwe increased by 4,6% to 50,421 oz in the first quarter of 2008 via ongoing investment by Impala Platinum and Anglo Platinum.

Anglo Platinum began a platinum extraction project at its Unki mine, adding to the increased production of the precious metal.

Zimbabwe’s mining industries have been dogged by speculation surrounding a controversial mining rights bill and the figures are welcome news to the sector.

“These figures have brought some good news at last about Zimbabwe’s mining sector which is currently weathering a storm owing to the government’s policies,” said an official from the Reserve Bank of Zimbabwe.

Zimbabwe has the second largest platinum reserve in the world, but political issues have meant some investors are unwilling to consider the prospect of spending in an unstable climate.

Delta still cracking ahead

HARARE – Beverage manufacturer Delta’s financial results for the interim period ending March 31, 2008 show $675,4 trillion turnover up 180 016% from $375 billion achieved during the same period last year. Adjusted operating income, excluding fair value adjustments and investment realisation, grew by 236 998% to $343 trillion.

The group declared a $25 250 dividend per share, up 180 257% on prior year.

Exports rose 79 797% to $22,7 trilion, however, Delta reported that, during period under review, the comparable total volume of all beverage products was 24% lower due to shortages of raw materials.

 

Dragline breakdown halts coal production

HWANGE – Zimbabwe and Sub-Saharan Africa’s major coal producer, Hwange Colliery Company, faces a marked cut in production and subsequent export shortfalls, after one of its key machines, the dragline, broke down.

 Used to expose coal seams at the open cast mine, it broke down on May 15 and the company will have to import spare parts from South Africa. Due to lack of foreign currency, however, it appears repairs might be prolonged.

Hwange Colliery, the largest coal producing company in Africa, operates opencast mining, underground mining, coal processing, a coke plant and has substantial reserves.

 The break down of machinery and lack of spares has seen the company failing to cope with demand. A staff exodus has also hit the company in recent years, as experienced workers, especially artisans, continue to leave for greener pastures in countries such as Botswana, South Africa, Namibia and Switzerland.

 Exports have averaged 20 000 tonnes of coal per month to countries such as South Africa, China and several other countries in both East and North Africa, generating foreign earnings of an estimated R100 million per month. – CAJ News.