World Bank Sees Stronger Growth as Rich Economies Expand

BY ANNA YUKHANANOV for Reuters

The rosier outlook suggests the world economy is finally breaking free from a long and sluggish recovery after the global financial crisis.

The poverty-fighting institution predicted global gross domestic product will expand 3.2 percent this year, from 2.4 percent in 2013, according to its twice-yearly “Global Economic Prospects.” In the bank’s last forecast in June, it expected global growth to reach 3 percent in 2014.

The bank said the global economy had come to a “turning point,” as fiscal austerity and policy uncertainty no longer weighed as heavily on most richer economies. The bank expected stronger growth in the United States in particular, of 2.8 percent in 2014, from 1.8 percent last year.

“For the first time in five years, there are indications that a self-sustaining recovery has begun among high-income countries – suggesting that they may now join developing countries as a second engine of growth in the global economy,” the bank’s chief economist Kaushik Basu said in the report.

The bank again shaved its forecasts for developing countries, to 5.3 percent for 2014, from the 5.6 percent it predicted in June.

Emerging markets have grown at their slowest pace in a decade for the past two years, after chalking up growth rates of around 7.5 percent before the global financial crisis hit in 2008.

Andrew Burns, the report’s lead author, said frothy growth before the crisis reflected cyclical factors.

“We’re moving into a new phase where developing countries are growing at a rate much closer to their underlying sustainable rate of growth,” he told reporters.

The World Bank on Tuesday raised its forecast for global growth for the first time in three years as advanced economies started to pick up pace, led by the United States.

SMOOTH UNWINDING

As advanced economies strengthen, countries may begin pulling back from the massive monetary stimulus launched at the height of the crisis. The U.S. Federal Reserve has started winding down its monthly asset-purchase plan this month, though it expects to keep interest rates low for at least another year.

The World Bank said it expects rates around the world to inch up gradually, causing minimal disruptions for developing countries as capital inflows slow down.

“Whatever drag this implies for developing country growth is more than offset by the additional export demand due to stronger high-income country growth,” the report said.

However, if rates jump suddenly, countries with high debt levels or large current account deficits such as Thailand and Malaysia would be most vulnerable.

The bank said that while risks to its global outlook, including a sharp rebalancing in China, a protracted recovery in the euro zone, and fiscal policy uncertainty in the United States, have not been eliminated, they have subsided.

Top List of Economically Free Countries of 2013

beckeThe United States came in at number 12. The U.S. was ranked number 6 when President Barack Obama took office in 2009.

Slipping: U.S. Fails to Crack Top 10 List of Economically Free Countries

The economic freedom index, which is jointly published by the Wall Street Journal and the Heritage Foundation, ranks the top 10 countries based on the average of 10 separate measurements, including government spending, fiscal freedom, trade freedom and freedom from corruption.

America’s spot on the 20th annual index is an “unfortunate but foreseeable slide,” said Heritage President and former U.S. Senator Jim DeMint.

“It should stun everyone,” he said, noting that the U.S. has even managed to fall behind Estonia on the index.

America’s place on the index has declined steadily for the past seven years, resulting in its status as “mostly free.” The decline is due mostly to poor showings in “fiscal freedom, business freedom and property rights,” according to the index.

“Fortunately despair will never be part of what we do here at the Heritage Foundation,” DeMint said. “We’re continuing to work on those factors, those inputs, that change the total output of economic growth.”

Hong Kong, Singapore, Australia, Switzerland, New Zealand and Canada, on the other hand, all rank “free.”

Slipping: U.S. Fails to Crack Top 10 List of Economically Free Countries

America’s fall to 12th place comes even as economies in the Asia-Pacific region report slight improvements.

Lastly, the “communist nations North Korea and Cuba brought up the rear of the index. Several war-torn countries, such as Syria and Afghanistan, were not ranked,” the Washington Examinerreported.

11 Reasons 2014 Will Be A Breakout Year For Women Entrepreneurs

There is room for improvement, but the U.S. ranked #1 among 17 countries on having the conditions that foster high potential female entrepreneurship, according to Gender-Global Entrepreneurship Development Index (GEDI). These conditions include entrepreneurial environment, entrepreneurial eco-system and entrepreneurial

Some of the 11 reasons women entrepreneurs will crack glass in 2014 are common to all women and others are unique to entrepreneurs.

1. Women have the right stuff
Women make better leaders than men, according to research conducted by Zenger Folkman. “They build better teams; they’re more liked and respected as managers; they tend to be able to combine intuitive and logical thinking more seamlessly; they’re more aware of the implications of their own and others’ actions; and they think more accurately about the resources needed to accomplish a given outcome,” said Jack Zenger and Joseph Folkman in Forbes. Women on the Women Presidents’ Organization (WPO) 50 Fastest Growing Women-Owned/Led Companies in North America know that you have to nurture your staff in order to sustain rapid growth. That growth doesn’t happen without employees who are willing and able to deliver excellent products and great customer service.

Twenty-first-century leadership skills, such as cooperation, communication, and sharing are more commonly associated with women, according to John Gerzema and Michael D’Antonio, authors of The Athena Doctrine: How Women (and the Men Who Think Like Them) Will Rule the Future. Luan Cox, Crowdnetic, is helping pioneer a new industry, crowdfinancing. She’s working with all the players in the industry to provide the data it needs to be transparent and accountable. Cristina Mariani-May, Banfi Vintners, a family winery, credits her success to her ability to build relationships by listening.

2. The proof is in the pudding
Two research reports find that women deliver better company performance.

Venture-backed companies that include females as senior executives are more likely to succeed than companies with only men in charge, according to Women at the Wheel: Do Female Executives Drive Start-Up Success? a report by Dow Jones VentureSource.

VC firms that invest in women-led businesses performed better than all men-led businesses, according to the SBA Office of Advocacy.

3. Diversity improves performance and increases innovation
Organizations that are the most inclusive of women in top management achieve 35% higher return on equity (ROE) and 34% better total return to shareholders versus their peers – and research shows gender diversity to be particularly valuable where innovation is key, according to research conducted by Illuminate Ventures.

4. Untapped spending power
Women shouldn’t rush out and buy products made by women just because we’re the same sex. However, women understand other women. That insight gives us an edge in developing products that better meet our needs. With 80% of consumer spending controlled by women, and women having considerable influence on spending categories that are considered the domain of men, such as autos and electronics, that is a whole lot of purchasing power for products and services developed by women.

5. Women use the power of their portfolios
While the percent of women angel investors is still small — 22% — it jumped 50% from 2011 to 2012, according to the Center for Venture Research. Angel investors are accredited wealthy individuals.

6. Men are bullish on women
It’s not just Warren Buffett who is bullish on women. Vivek Wadhwa , academic, writer, and entrepreneur is a vocal critic of the underfunding of women-led companies by Silicon Valley and a supporter of women-led businesses. He is crowd-creating and funding a book about women’s global participation in the innovation economy. Male angel investors, such as Adam Quinton, recognize that the failure of the angel market in general to invest in promising women-led companies provides greater opportunity for him.

7. Women are building a vibrant and layered ecosystem
There are tons of networking groups to choose from. Some are general in focus and have been around for a long time, such as the National Association of Women Business Owners. Others, such as Women 2.0, are focused on specific types of women, such as those starting technology companies. One of the newest to the scene is digitalundivided, which is focused on women of color working in the digital space.

8. Women are shedding their cloak of invisibility
Last year was the first time that two American-born non-celebrity entrepreneurs — Sara Blakely and Tory Burch — made the 2013 FORBES World’s Most Powerful Women list. One of the selection criteria is media presence. Pretty impressive when you consider they’re competing with the likes of Hillary Clinton, Oprah and Sheryl Sandberg.

9. Women are starting to blow out their networks
Women are beginning to get the importance of networking: The bigger and more diverse your network the more likely your business is to break revenue barriers. I’ve written about some exceptional women networkers and the tactics they use. Using social networks isn’t just one of my favorite ways to build your network. With money drying up for small businesses during the financial crisis, Dara Albright of Crowdnetic, knew innovation was needed and she wanted to be a part of it. She used LinkedIn to meet people who would eventually become the movers and shakers in the crowdfinance industry. She launched NowStreet, which is a media and event company specializing in crowdfinance. The company was bought last year by Crowdnetic.

10. Women never stop learning
Every entrepreneur I know has built a successful business on the many varieties of learning available. Admitting that you don’t know everything — and never will — is key to growth. Interestingly, self development is one of those areas in which women outshine men, according to Zenger Folkman’s research. Women share, and some women who have built $10 million plus businesses shared their secrets. You can learn a lot from trailblazers. Women listen, read business books and publications, and attend professional development training, etc. We are also learning to seek outside counsel from mentors, sponsors and advisors, and participate in peer advisory groups.

11. Some women use failure as a launching pad to success
Women tend to be perfectionists. Speaking about failure goes against our grain. But, the truth is, no one will succeed all the time. We learn more from our failures than our successes. Kudos to Sallie Krawcheck for publicly talking about being fired from two big jobs. Even better, she didn’t hide afterwards. She picked herself up, dusted herself off, and bought 85 Broads – a networking organization for women who want to advance their careers.

You can help shatter the glass ceiling for women entrepreneurs by providing expert advice, opening your Rolodex, and even your wallet.
By Geri Stengel for Forbes magazine
To read the whole article go to: http://www.forbes.com/sites/geristengel/2014/01/08/11-reasons-2014-will-be-a-break-out-year-for-women-entrepreneurs/

Weekly overview: International Economic Trends

Myanmar score progress on Business Environment

Apart from the sky-high property prices and poor legal and regulatory frameworks, The International Business Times reported that Myanmar is apparently making good progress in terms of fostering a conducive business environment.

On 8th January, the global risk analysis firm Maplecroft published a “good business environment” list highlighting Senegal, Guatemala, Mozambique and Rwanda, along with Myanmar, as the countries with the greatest improvements over the last five years.

The International Times wrote that all five nations are commended for their progress“in encouraging foreign investment, including moves to strengthen corporate governance, reduce regulatory hurdles, combat corruption and improve rule of law.”

Myanmar, in particular, has come a long way from its position as the riskiest nation in 2012. It was singled out as the nation with the most significant improvements from a year ago owing to key reforms from its civilian government, which only took over  the country’s leadership reins from the military in 2011.

The International Times added that reform steps by the civilian government “included enhancing investor protection and implementing a new foreign investment law in March 2013, which began to tackle important issues such as foreign ownership limits and land leasing rules”.

According to Maplecroft, Myanmar’s reforms have been so effective that if it continues to keep to up its reform-momentum over the next one to three years, the country might even be removed from the “extreme risk”  category.

Singapore-listed companies with significant economic exposure to Myanmar, such asYoma Strategic Holdings(SGX: Z59) andInterra Resources (SGX: 5GI), might stand to benefit from increased economic activity in the nation as it develops.

Slight growth in European Union

According to Eurostat, the statistical office of the European Union (EU), GDP growth of the 17 members of the Eurozone fell by 0.3% during the third quarter of 2013, compared to the same period last year. By contrast, GDP growth across the whole of the 28-member EU grew by 0.2% year-on-year for the third quarter of 2013.

The Eurozone’s year–on-year decline in GDP for the third quarter of 2013 was less than the 0.4% contraction which had previously been predicted by Eurostat. GDP rose by 0.1 % in the Eurozone in the third quarter of 2013, as compared to the second quarter.

Nevertheless, Bloomberg reported that European stocks had posted its first full-weekly gain of 2014, “as data showed U.S. and German unemployment fell and Ireland returned to the bond market after completing a bailout program”.

The Stoxx Europe 600 Index (comprising 600 different large, mid, and small cap companies in 18 European countries) climbed 0.7 percent to 330. This is the highest that the Stoxx has reached since May 2008, according to the Bloombergreport.

The European Central Bank has pledged to keep interest rates low, and that has been seen as a strong force that helped the index to gain 17% in 2013, “its best year since 2009”.

In a sound bite provided by Bloomberg in the same report, Michael Kapler, an equities portfolio manager at Mittelbrandenburgische Sparkasse in Potsdam, Germany, said that “In an environment of low interest rates at least in Europe, supportive central banks like the ECB, and better economic data coming out of Europe and the U.S., there’s a good chance markets will head higher in the next few months.

Retail investors who are interested and wish to take advantage of the seemingly-improving economic climate in Europe can do so through the locally traded Lyxor Europe 10US$ (SGX: JC5).

Weekly Update: Top 5 International Business News Trends

1. U.S. deficit falls to $680 billion. The federal government’s latest annual deficit is the smallest it’s been since 2008, according to Treasury Department data released Wednesday. http://money.cnn.com/2013/10/30/news/economy/deficit-2013-treasury/index.html

2. Islamic world slipping behind economically, Pakistan PM warns. Economic and intellectual stagnation has left Islamic nations incapable of punching their weight in the wider world, the prime minister of Pakistan has warned. http://www.telegraph.co.uk/news/worldnews/asia/pakistan/10411814/Islamic-world-slipping-behind-economically-Pakistan-PM-warns.html

3. Is Puerto Rico the next Detroit? Puerto Rico has been called the next Detroit and the next Greece. It’s buried in debt and possibly teetering on the edge of bankruptcy. http://money.cnn.com/2013/10/31/investing/puerto-rico-hedge-funds/index.html

4. US criticizes Germany and China policies.The US has criticized Germany’s economic policies, saying that its export-led growth model is hurting the eurozone and the wider global economy. http://www.bbc.co.uk/news/business-24753267

5. Russia to invest $1.5 bn into new domestic energy projects in Ecuador, making the South American country a key partner in the region, President Vladimir Putin said at a meeting with Ecuadorian President Rafael Correa in Moscow. http://rt.com/business/russia-invest-ecuador%20energy-956/