World economy is ‘teetering on brink’ of downturn: UN

World economy is ‘teetering on brink’ of downturn: UN 


UNITED NATIONS – THE world economy is ‘teetering on the brink’ of a severe downturn and will grow by only 1.8 per cent in 2008, the United Nations said in its midyear economic projections.

That’s down from a global growth rate of 3.8 per cent in 2007 – and the downturn is expected to continue in 2009 with only slightly higher economic growth of 2.1 per cent, the UN report said on Thursday.


The midyear update of the UN World Economic Situation and Prospects 2008 blamed the downturn on further deterioration in the US housing and financial sectors in the first quarter which ‘is expected to continue to be a major drag for the world economy extending into 2009.’ But the UN said developing countries won’t suffer as badly.


They should grow by 5 per cent this year and 4.8 per cent next year, compared to a robust 7.3 per cent in 2007.


The UN economists said the deepening credit crisis in major market economies triggered by the US-led slump in house prices, the declining value of the US dollar, persistent global imbalances, and soaring oil and commodity prices ‘all pose considerable risks to economic growth’ in both developed and developing countries.


‘The baseline forecast projects a pace for world economic growth of 1.8 per cent in 2008,’ the UN report said.


But it said the final figure will largely depend on developments in the United States.


Global growth this year could fall to 0.8 per cent if the US sub-prime mortgage market turmoil has a more serious impact on developing countries and countries in transition, the UN report said.


But if the monetary and fiscal measures the US government has take to stimulate the economy – including tax refunds and lower interest rates – boost consumer spending and restore confidence in the business and banking sector, the world economy would only slow to 2.8 per cent growth this year and 2.9 per cent in 2009, it said.


US economic growth to decline, slight recovery in 2009

The report, prepared by the UN Department of Economic and Social Affairs, forecast that US economic growth will decline from 2.2 per cent in 2007 to -0.2 per cent this year, with only slight recovery in 2009 to 0.2 per cent growth.


‘At issue is how deep and long this contraction will be,’ the report said. ‘As the housing slump continues and the credit crisis deepens, a broad array of … indicators are already hinting at a recession.’


It cited a decline in US employment, consumer confidence at its lowest level in a decade, household spending growth slowing sharply, and business equipment spending slowing alongside large inventories of housing and a 30 per cent decline in residential investment.


This strongly suggests ‘that the implosion of housing activity will not stabilise until 2009,’ the UN report said.


As for other developed countries, the UN forecast that Japan’s economic growth will decline from 2.1 per cent in 2007 to 0.9 per cent in 2008, and that Western Europe’s growth rate will drop from 2.6 per cent last year to 1.1 per cent this year.


Despite the slowdown in global economic growth in 2008, the UN said global inflation is expected to accelerate this year to 3.7 per cent.


The report said the recent sharp rise in commodity prices, and the continued rise in oil prices are key factors spurring inflation along with higher wages.


The growth of world trade also slowed from 7.2 per cent in 2007 to 4.7 per cent in early 2008, largely due to weak US demand for imported goods, it said.


The UN report said ‘a number of developed countries with some weight in the world economy like Japan, Germany, Switzerland, the Netherlands, Norway and Canada, as well as the emerging-market economies in East Asia and the main oil exporters have a decisive role in engineering a more balanced and sustainable path of economic growth.’


These countries ‘have much to gain’ from deploying some of their vast accumulated monetary reserves to improve infrastructure, social services, and further diversify their domestic economies, it said. — AP


Source: Straits Times

US April housing starts rise best since Jan 2006

US April housing starts rise best since Jan 2006


Construction starts on new US homes rose by a surprisingly strong 8.2 per cent in April and applications for new building permits turned up for the first time in five months, the Commerce Department said on Friday in a report showing the hard-hit housing sector still had some spring vigor.


Starts in April ran at a 1.032-million-unit annual rate, up from a revised 954,000-unit rate in March, while permits gained 4.9 per cent to 978,000 a year from a revised 932,000 in March.


Starts on multiple units buildings increase but single-family home starts fell.


Nonetheless, it was a significantly stronger overall performance than anticipated by economists surveyed by Reuters who had forecast April starts at a 940,000-unit rate and permits at 920,000 rate.


The jump in overall April starts was the biggest monthly increase since a 14 per cent rise in January 2006, while the gain in permits was the largest since a 6.7 per cent gain in December 2006.


The brighter picture on housing activity sent stock futures soaring and caused a pickup in the dollar’s value against other major currencies. Bond prices were broadly lower as investors bet it reduced chances for more cuts in official interest rates.


‘It’s a nice upside surprise,’ said Joe Manimbo, a currency trader with Ruesch International in Washington, DC.


‘Certainly it is the type of data that will back the view that US interest rates have bottomed, supporting the dollar.’


New-home building has been in decline for months, partly because many builders are saddled with big inventories of unsold homes. But in addition, a wave of foreclosures against existing homes has caused many lenders to stiffen terms for making mortgage loans for both new and existing homes.


The April building bounce occurred entirely in multiple-unit dwellings, while single-family home building declined to a rate of 692,000 from 704,000 – the lowest monthly rate since 604,000 in January 1991.


On Thursday night, housing industry sources indicated that leaders of the US Senate Banking Committee had reached a deal on a broad housing rescue plan in which mortgage giants Fannie Mae and Freddie Mac will support a federal mortgage insurance fund.


The US$300 billion fund would be run by the Federal Housing Administration and would offer loan guarantees to help refinance distressed mortgages, with borrowers agreeing to forgive portions of troubled loans. — REUTERS


Source: Business Times

UN slashes world 2008 growth forecast

UN slashes world 2008 growth forecast


UNITED NATIONS – The United Nations on Thursday 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 per cent in 2008, below its forecast of 3.4 per cent just four months ago and the 3.8 per cent 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 United States, 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 United States itself, the report issued by the UN Department of Economic and Social Affairs projected a GDP fall of 0.2 per cent this year, compared with its prediction in January of a 2 per cent rise.


The report stressed that all its figures could turn out to be higher or lower depending on how effective US monetary and fiscal stimulus measures were in combating the crisis.


‘Our basic analysis is that the problems have not bottomed out yet,’ said Rob Vos, a divisional director at the UN agency.


Asia slowdown

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 per cent from 8.5 per cent last year.


China would be hit by slowing exports, tightening monetary policy, appreciation of its currency and rising labour costs, the report said.


For the first time in five years the strongest growth – 6.4 per cent – was expected in the ‘transition’ economies of former Soviet and southeastern European states. Oil prices rising over US$120 a barrel have fuelled a major boom in Russia.


The report blamed continued economic decline in Myanmar – likely to be worsened by this month’s devastating cyclone – and slowdowns in Sudan and Ethiopia for a drop in the poorest countries’ growth to 5.2 per cent from 6.5 per cent last year.


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


World food supply rose by 5 per cent 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 US$95 a barrel this year and US$90 next year.


The report followed previous ones in calling for concerted international action to tackle financial problems, including requirements that banks and other institutions build up capital during upswings to cushion against possible future losses.


It also said the international reserve system should be switched from the dollar alone to a basket of currencies.


On food prices, it said the crisis had highlighted neglect of agriculture in many parts of the world and called on countries to invest in water supply, infrastructure, better seeds and fertilisers, education and research. – REUTERS


Source: Business Times

Allgreen to contest appeal related to Regent Garden

Allgreen to contest appeal related to Regent Garden


Allgreen Properties Limited said it would ‘vigorously contest’ the notices of appeal related to its Regent Gargen enbloc purchase that was served to the property developer on Friday.


‘Allgreen was served today with notices of appeal. This appeal is curious given that the sale and purchase of Regent Garden was completed earlier today. Allgreen intends to vigorously contest the appeal, and all claims and allegations made by the appellants,’ the developer said.


On April 16, 2008, Allgreen successfully obtained a High Court order for the enbloc deal for the 31-unit West Coast Road condominium, to go through.


The latest appeal is not expected to have any material impact on Allgreen’s earnings per share and net tangible assets per share for fiscal 2008. — BT newsroom


Source: Business Times

Genting forms JV to build cooling plant on Sentosa

Genting forms JV to build cooling plant on Sentosa


Genting International on Friday announced the formation of DCP (Sentosa) Pte Ltd, a joint venture between Resorts World at Sentosa, its indirect subsidiary, and Sentosa Leisure Management (SLM).


The purpose of the joint venture is to build and operate a district cooling plant on Sentosa Island to supply piped chilled water for the air-conditioning and other cooling requirements of the Resorts World at Sentosa integrated resort being developed by RWSentosa on Sentosa Island.


Excess capacity from the district cooling plant will be sold to other users on Sentosa Island.


RWSentosa and SLM own 80 per cent and 20 per cent of DCP (Sentosa) Pte Ltd, respectively. — BT newsroom


Source: Business Times

Reason HDB repairs take two months

Reason HDB repairs take two months 


WE REFER to Mr David Soh’s letter last Friday ‘Why so long for simple repair jobs?’, on why Marine Parade Town Council takes two months to complete simple projects such as repair, washing and repainting of the external walls of HDB flats.

The repairs and redecoration programme (R&R), which includes repainting of the blocks, is carried out every seven years. The scope of repainting works include inspection of external walls for signs of spalling or cracks, repair of the defects, washing and preparation of the wall surfaces, and the applying of three coats of paint to the external wall surfaces.


In between each of these activities, our Town Council’s supervising staff will check the contractors’ workmanship before they proceed to the next stage of work. Sometimes, allowances are also included in case of inclement weather. It takes two months to ensure quality and satisfactory completion.


We wish to assure residents that we will try our best to minimise the inconvenience caused, and seek their understanding. The work is aimed at improving the overall living environment.


We thank the writer for his feedback. If he has more suggestions or require further clarification, he may contact the Marine Parade Town Council on 1800-241 6487.


Png Chiew Hoon (Ms)

General Manager,

Marine Parade Town Council



Source: Straits Times

Bar raised; no gold BCA design awards

Bar raised; no gold BCA design awards




THE Building and Construction Authority (BCA) announced the results of its 2008 Universal Design Awards yesterday.


Out of 34 entries – one more than in the inaugural competition last year – three buildings garnered a silver award and six attained a bronze award.


Buildings were judged on six criteria – connectivity, accessibility, user-friendliness, safety, aesthetics and corporate philosophy. ‘No gold awards were given out because we have raised the bar,’ said assessment panel chairman Cheong Hee Kiat.


Prof Cheong explained that this year the judges went beyond surface compliance with the first four criteria, deciding that barrier-free access was the bare minimum. They looked for a corporate commitment to universal design, which broadly means ‘design that is friendly to all’, on the part of building owners, designers and developers.


BCA building plan and management director Wong Wai Ching said universal design is ‘an increasing concern against the backdrop of a greying population’, and encouraged the public to highlight the lack of friendly features through BCA’s feedback channels.


Alluding to a 1990 code that legally requires all new buildings to meet minimum accessibility standards, Mr Wong said: ‘Over the years we have been upgrading the barrier-free code to make more requirements mandatory.’


In that vein, BCA is looking at incorporating current universal design recommendations into the code when it next comes under review five years from now.


More owners and developers are using BCA awards to market their buildings, Mr Wong said. It is a ‘differentiating factor in a highly competitive market’, he believes.


The nine winners will receive their awards from National Development Minister Mah Bow Tan at the BCA Awards Night next Thursday


Source: Business Times

CDL reveals what it does for society and environment

CDL reveals what it does for society and environment




CITY Developments Ltd (CDL) yesterday launched its first annual report focusing on the property developer’s impact on the environment, such as energy usage and carbon emissions.


The 54-page voluntary report, one of the first of its kind for a Singapore public-listed company, also details CDL’s activities and performance on various social and environmental issues, including efforts to improve the efficiency of energy and water use at its property projects and to reduce the amount of waste it generates.


But profits still come first, managing director Kwek Leng Joo said at a media conference to launch the report yesterday.


‘Businesses are for profit. Companies are out there not primarily to do charity work, think about how they should protect the environment or how they should repay kindness to society,’ he said. ‘The primary obligations are to the shareholders and investors.’


A company needs to be profitable first ‘before it can even put itself in a position to talk about CSR (corporate social responsibility) or anything else’, Mr Kwek said.


Just a day earlier, CDL reported a 31 per cent jump in net profit to $165 million in the first quarter from a year earlier. And last year saw record revenue and profit for the second-largest developer here amid the boom in property prices.


But a public-listed company must also be sure that ‘whatever kind of business it is in is sustainable’, which is where CSR issues are relevant, Mr Kwek said.


As a major property developer, paying attention to environmental conservation and protection issues is necessary to ensure that its core business of developing and managing new projects is sustainable in the long term, he added.


According to the report, CDL invests 2-5 per cent of the construction cost of a project in environmentally friendly ‘green’ design and features.


The company said it aims to track and measure its social and environmental efforts and performance against international benchmarks, and is setting up a formal CSR committee comprising senior management that will report directly to Mr Kwek.


Zoe Knight, head of socially responsible investment research at Merrill Lynch, said the report is a ‘breakthrough’ for Singapore.


Other Singapore-listed companies that have published separate environmental impact reports include Singapore Airlines and Chartered Semiconductor Manufacturing.


Source: Business Times

Banyan Tree posts 38% Q1 profit jump

Banyan Tree posts 38% Q1 profit jump

Revenue boosted by strong growth in hotel investment and property sales




RESORT operator Banyan Tree Holdings has reported a 38 per cent increase in net profit to $15.4 million for its first quarter ended March 31.


Total revenue, including other operating income of $7.8 million, rose 34 per cent to $140.3 million, boosted by strong growth in hotel investment and property sales. Operating expenses increased 32 per cent.


Banyan Tree’s hotel investment revenue grew 18 per cent to $77 million on a better performance by its Laguna Phuket, Banyan Tree Bangkok and Angsana Velavaru resorts.


Revenue from sales of branded properties rose more than fourfold, boosted by Dusit Villas, Banyan Tree Lijiang Villas and Banyan Tree Bangkok Suites. Sales of unbranded properties grew 18 per cent.


The company said that a ‘substantial portion’ of $107.4 million of unrecognised revenue as of Q1 2008 would be recognised in FY2008.


Q1 earnings per share rose to 2.03 cents, from 1.47 cents a year ago.


‘Our Q1 2008 results have been in line with our expectations,’ Banyan Tree managing director Ariel Vera said at a results briefing. ‘Although we are in a period of uncertainty in the world economy and global financial markets, there has so far been no material negative impact on our hotel operations.’


Executive chairman Ho Kwon Ping noted a ‘slight softening’ of 5-10 per cent in corporate bookings and meetings, but said that this was ‘more than offset by growth in the leisure market’.


Banyan Tree hopes to grow its footprint by expanding its resort and hotel operations to new strategic locations. It will add 47 resorts to its network in the next four years, and expand its existing Banyan Tree Bangkok and Angsana Li Jiang resorts.


The company is also confident of raising US$400 million through its Indochina Hospitality Fund by the end of the year, after a successful roadshow in the Middle East.


Shares of Banyan Tree closed three cents higher at $1.40 yesterday.


Source: Business Times

Slower profit growth ahead, warn analysts

Slower profit growth ahead, warn analysts


Volatile markets, higher raw material costs and possible US recession could hurt bottom lines


CORPORATE Singapore enjoyed a sparkling first quarter despite the threat of a worldwide economic slowdown, spiralling inflation and a global credit crunch.


And while analysts warn that the road ahead will get rougher, results from the three months ended March 31 should help bolster confidence.


By 7pm yesterday – the 45-day reporting deadline – 312 companies had reported results for the three months ended March 31.


Their combined net earnings were up 17 per cent to $7.91 billion compared to last year, but 41 firms were in the red.


Although the year-on-year numbers were impressive, analysts point to a sequential slowdown in earnings growth relative to the previous quarter. And these figures are tipped to dip even more in the coming quarters.


‘The outlook appears cautious in most companies. We will be lucky if we can see growth of just under 10 per cent. The results are likely to be neutral to slightly negative in the coming quarters,’ NRA Capital managing director Kevin Scully said.


Factors such as currency volatility, a rise in raw material costs and an expected recession in the United States may dampen the bottom lines of companies in Singapore.


The numbers themselves pointed to some standout performers, particularly palm oil firms Wilmar International and Golden Agri-Resources.


They were fifth and second, respectively, on the profit chart.


Higher commodity prices enabled Wilmar to post a 590 per cent jump in profit to US$343 million (S$473.8 million).


A Goldman Sachs report on the firm noted: ‘Overall, no major change to our earnings estimates, but we see upside risks to our forecasts on potentially higher processing margins.’


Golden Agri’s profit shot up 102 per cent to US$442.8 million. However, this included a US$307 million net gain in the fair value of the company’s biological assets.


The property sector had a mixed outing. Some companies experienced a contraction because of the absence of one-off gains, while others were hurt by weaker market sentiment.


But there was cheer for City Developments (CDL), with profits up 31 per cent to $164.97 million despite a quiet market.


A DBS Vickers report noted: ‘CDL will continue to recognise revenue from its sold-out property developments, while enjoying positive rental reversions on its investment portfolio.


‘It’ll be a prime beneficiary when market sentiment recovers.’


The three local banks emerged almost unscathed from the global credit turmoil, with none disappointing in earnings.


But an economic slowdown in Singapore is likely to dampen loans growth and could result in a higher risk of defaults.


Likewise, analysts warn of a bumpy ride ahead for companies in the transport and technology sectors.


For example, soaring crude oil prices could hurt margins in transport firms while a slowdown in the United States would dampen business for technology players.


Mr Scully said: ‘The technology sector looked weak. We’re seeing some squeeze on margins and will probably see more profit warnings down the road.’


Source: Straits Times