BUSINESS WEDNESDAY, APRIL 2, 2014 Crimea spurs German rethink on energy policy

BERLIN: Current tensions with Russia over Ukraine must be found.Last week, Chancellor would constitute a clear ‘yes’ to the use of fracking,” last week, while Gabriel suggested there was “no sen- have turned the spotlight on Germany’s heavy said the Ukraine crisis would lead to “a new look at said one of Merkel’s former ministers, the conserva- sible alternative” to Russian gas. The issue is suffi- dependence on Russian gas and are pushing Europe’s energy policy as a whole.” Some people have inter- tive Peter Ramsauer. And “that, in turn, would beg the ciently important to be on the agenda of an energy biggest economy to reconsider its entire energy poli- preted this seemingly anodyne remark as a hidden question, why not tap our own domestic resources,” summit yesterday evening between Merkel, Gabriel cy. It is currently Germany’s aim to be able to meet as call to reconsider Germany’s plans and targets for the he said. and the heads of Germany’s 16 regional states. Berlin much as 80 percent of its energy needs from renew- energy transformation, formulated by Merkel herself With parliament yet to give its green light to the is counting on a deep reform of its system of subsi- able sources such as wind and solar power by 2050. three years ago. Others suggest that the remarks- general use of fracking, the technology’s advocates, dies for clean energy, currently the cornerstone of the The country is also committed to phasing out nuclear made in the presence of Canadian Prime Minister above all industry, never tire in pointing to the com- country’s energy transition. power completely over the next decade or so. Stephen Harper-could herald an about-face on the paratively high cost of energy in Europe. A corresponding draft law, one of Merkel’s key And gas — 35 percent of which Germany imports highly controversial technology of fracking. That, they argue, is due to the fact that fracking is projects during her third term in office, is to be from Russia-should act as a good stop-gap until the not currently allowed. And they hope that the current approved by cabinet on April 9. But the draft has country’s renewable capacity is fully in place. But with Fracking in spotlight debate over Germany’s dependence on Russia gas come under heavy scrutiny on the part of the regional the crisis over Ukraine and the threat of a tit-for-tat At a joint news conference, Harper said that will advance their cause. states who take issue with subsidy cuts. battle of sanctions, Germany may have to reconsider Canada was prepared to export its natural gas. But But Economy and Energy Minister “We mustn’t expect all differences to be ironed its energy policy. that could prove problematic in a country where and Environment Minister Barbara Hendricks, both out” yesterday, said Merkel’s spokesman Steffen Some, like the environmentalist Greens party, there is deep popular and political-opposition to centre-left Social Democrats, have firmly shut the Seibert. Gabriel wants substantial reductions in subsi- insist the country should step up its renewable drive hydraulic fracturing for shale oil and gas. “If the chan- door on such a prospect. dies for renewables, so as to bring down consumers’ while others insist that alternative sources of gas cellor is eyeing imports from North America, that “In no case do we want fracking,” Hendricks said electricity bills. — AFP Japan shoppers see first sales tax rise in 17 years Shoppers make last-minute dash to stores

TOKYO: Prices rose across Japan yesterday as a controversial sales tax rise came into effect, with everything from beer to washing machines costing more, sparking fears a drop in consumer spending will derail a nascent economic recovery. Tokyo hiked the levy to 8.0 percent from 5.0 percent as it looks to control a public debt mountain, but corpo- rate Japan’s concerns were highlighted by a closely watched survey of business sentiment showing bosses are cautious about the future. In a country beset by years of deflation, critics warn that already thrifty consumers JAKARTA: Laborers work on a building under construction in Jakarta yesterday. Indonesia swung to a would snap their wallets shut. Millions of higher-than-expected trade surplus in February as a jump in palm oil prices and slowdown in imports shoppers made a last-minute dash to stores boosted Southeast Asia’s top economy, official data showed yesterday. — AFP in recent weeks, while nervous retailers are now watching for signs of falling sales. The last time Japan rolled out a higher sales levy, TOKYO: People shop at the Itoyokado supermarket in Tokyo yesterday. Prices rose across Indonesia swings to trade in 1997, it was followed by years of deflation Japan yesterday as a controversial sales tax rise came into effect, with everything from and tepid growth, although other factors, beer to washing machines costing more, sparking fears a drop in consumer spending will including the Asian financial crisis, were also derail a nascent economic recovery. — AFP surplus on palm oil prices blamed. Among those waking up to the high- er prices was 18-year-old university student JAKARTA: Indonesia swung to a higher-than-expect- percent in February due to cheaper food costs, the Hibiki Ishida, who was not impressed when ed trade surplus in February as a jump in palm oil data showed, continuing a recent downward trend he bought his favorite chewing gum yester- keeps rates on prices and slowdown in imports boosted Southeast after a surge last year sparked by a fuel price hike. day. “I get this gum every morning and I know Asia’s top economy, official data showed yesterday. However, the figure is still above the central bank’s the price is 120 yen ($1.15),” he said. The surplus of $785.3 million came after a $431 mil- target of 3.5-5.5 percent. The data is positive news for “But I handed 120 yen to the shop clerk hold ahead of polls lion deficit in January caused by a controversial ban on the economy after speculation the US Federal Reserve today and she told me it was now 123 yen- mineral ore shipments that hit exports. Economists would start to wind down its economic stimulus pro- that unnerved me.” Others, like a 20-year-old MUMBAI: India’s central bank kept key interest led by conservative hawk Narendra Modi, win- had expected a surplus of around $420 million. gram prompted huge falls in the Jakarta stock market graduate surnamed Yoshida-who is set to rates steady yesterday in a widely anticipated ning the elections which end in May. Foreign Inflation also eased in March, and both indicators and rupiah last year. start a new job and live on her own-have move less than a week before the start of nation- investors have driven up the Indian stock market add to signs in recent months that the economy has Both the currency and stocks have also recently been planning for the hike, with some help. al elections. After a meeting in the financial capi- in recent months, expecting a more business- stabilised after being hard hit by emerging market tur- regained strength but the central bank warned last “My mother has given me lots of daily tal Mumbai, the Reserve Bank of India (RBI) said friendly government to take over from the scan- moil last summer. The price of crude palm oil rose month economic growth was still at risk of further stuff like tissue paper and plastic cling wrap,” the benchmark repo rate, at which it lends to dal-tainted Congress party. Congress has about four percent in February, according to data from tapering and a slowdown in China. she said. commercial banks, would remain at 8.0 percent. become deeply unpopular after a decade in the national statistics agency. Analysts have said the bank may face pressure to “So I can survive for the time being.” The “At the current juncture, it is appropriate to power over a string of corruption scandals and Indonesia is the world’s biggest producer of the cut rates from the present 7.5 percent in coming rise has presented a huge challenge for Prime hold the policy rate, while allowing the rate the slowing economy, which is expanding at its commodity, which is used in numerous everyday months, as the country holds nationwide legislative Minister Shinzo Abe since he swept to power increases undertaken during September 2013- slowest rate in a decade. Despite the economic goods from biscuits to shampoo. Imports fell nearly 10 and presidential elections. Slightly offsetting the news, in late 2012 on a ticket to drag the world’s January 2014 to work their way through the slowdown, economists do not foresee rate cuts. percent on year to $13.78 billion, the data showed. HSBC’s manufacturing purchasing managers index-a number-three economy out of a cycle of economy,” RBI governor Raghuram Rajan wrote “We are staring at a long pause (on rates). “The trade surplus was beyond our expectation and gauge of manufacturing activity-narrowed further in falling prices and tepid growth. in his statement. The RBI last raised rates on Uncertainty on inflation will keep RBI on its toes we believe it was helped by the high (palm oil) prices March to 50.1, from 50.5 in February, with the bank January 28, the third hike since September last and prevent rate cut even in if industrial slow- and a decline in imports,” said Bank Central Asia econ- blaming a slowdown in domestic demand. A figure Nervous retailers year as part of its battle against high inflation. down sharpens,” Baroda’s Nitsure said. omist David Sumual. above 50 points to growth while anything below indi- Yesterday, defending the rise-which could Most economists had predicted yesterday’s Some believe the rate cycle in India has not Inflation eased to 7.32 percent in March from 7.75 cates contraction. — AFP be followed by another, to 10 percent-Abe decision as India’s most widely watched inflation yet peaked. “I am not sure 100 percent that we pointed to spiralling healthcare and social measure-the Wholesale Price Index-fell to a are in a pause,” said senior economist Arun Singh welfare costs, which are straining the public nine-month low of 4.68 percent in February from US business information group Dun & purse in a rapidly ageing society. The rise “is from 5.05 percent a month earlier. Rajan Bradstreet. “Upside risks to inflation are clearly meant to offset increases in social security remained concerned by retail inflation, however, visible. The RBI is focused on controlling inflation costs over the years and to maintain the due to the possibility of a weaker-than-normal and it has already said price rise needs to be con- country’s trust”, he told reporters, adding that monsoon and adjustments to state-controlled trolled for sustainable growth. So, further tight- the battle to defeat years of growth-sapping prices of agricultural commodities. Economists ening cannot be ruled out.” deflation would continue. had underlined that India’s parliamentary elec- India’s economy is likely to grow at between But a Kyodo news agency poll earlier this tions, set to begin next Monday, would make 5.0-6.0 percent in 2014-15 but faces downside year said about three quarters of Japanese the RBI cautious about making any changes to risks, the central bank said. India’s equity markets felt no impact from the growth efforts, which its policy. “RBI is facing a lot of uncertainties. The reacted little to the RBI decision with the bench- included an unprecedented monetary easy question of whether we will get a stable govern- mark index of the Bombay Stock Exchange con- program by the Bank of Japan (BoJ) that ment or not is yet to be answered,” Rupa Rege tinuing to hover 0.21 percent or 47.97 points helped sharply weaken the yen and boost Nitsure, chief economist at Bank of Baroda, told lower at 22,340.45 points. company profits. Retailers launched special AFP. Opinion polls point to the main opposition India’s currency and bond markets were deals to keep customer traffic steady, such as Hindu nationalist Bharatiya Janata Party (BJP), closed for a holiday. — AFP offering more points on shopping cards or promising a boost to the quality-and in some cases, volume-of their pricier products. “There is a risk that my sales will drop,” said Masayuki Komatsubara, who runs a small Tokyo shop that sells seaweed and other dried food products. “I’m going to try to find cheaper stuff with the same quality...so that KARACHI: A Pakistani stockbroker watches latest share prices on a digital board during a trading my prices don’t rise too much.” Grocery store session at the Karachi Stock Exchange (KSE) in Karachi yesterday. The benchmark KSE-100-Index giant Inageya said it had to temporarily shut closed at 27565.50, with increase a 405.59 points at the end of the day. — AFP half its 130 locations yesterday, after technical problems tied to adjusting cash registers for the rate hike. Earlier in the day, a closely watched BoJ survey showed that business Australia keeps rates confidence soared to a more than six-year high in the January-March quarter. However, companies were cautious about the future as the survey of more than 10,000 MUMBAI: Reserve Bank of India (RBI) Governor Raghuram Rajan announces the first on hold at 2.5% firms pointed to luke-warm investment and bimonthly monetary policy statement at the RBI headquarters in Mumbai yesterday. slumping sentiment for the April-June quar- Rajan announced yesterday that the key policy rate will remain unchanged since retail inflation still remains “sticky” but introduced steps to increase liquidity and contain SYDNEY: Australia’s central bank yesterday kept while the unemployment rate-currently at 6.0 per- ter. volatility in the money market, according to a local news agency. —AP interest rates at a record low 2.5 percent for a sev- cent and already the highest in a decade-was “Firms are cautious about the future enth straight board meeting amid only tentative expected to rise “a little further in the near term”. course of the economy as the impact of the signs that the non-mining economy is improving. Looking ahead, Stevens said “continued accom- tax hike remains uncertain,” said Hideki The central bank indicated a “period of stability” modative monetary policy should provide support Matsumura, an analyst at Tokyo’s Japan in the cash rate as the commodity-powered nation’s to demand, and help growth to strengthen over Research Institute. German jobless rate transition away from its reliance on the mining sec- time”. “Inflation is expected to be consistent with While Toyota, Panasonic and other major tor struggles to take hold. the 2-3 percent target over the next two years,” he companies are boosting wages for the first “In the board’s judgment, monetary policy is added. The Australian dollar fell slightly after the time in years, exports are still struggling and continues to ease appropriately configured to foster sustainable announcement to 92.71 US cents, down from 92.81 Japanese factories logged a surprising drop growth in demand and inflation outcomes consis- US cents just before the data was released. “The in February output. FRANKFURT: Unemployment in Germany, In unadjusted terms, the German jobless tent with the target,” the bank said in a statement most important thing to note, in our view, is that Tokyo’s bid to stoke lasting inflation Europe’s largest economy, continued to ease in total fell by 83,100 to 3.055 million and the that was similar to a month ago. Governor Glenn the mining investment slowdown has barely start- appear to be taking hold which, together March, as the labor market benefits from the unadjusted jobless rate was fell to 7.1 percent Stevens said consumer demand had firmed “slight- ed,” said Capital Economics analyst Daniel Martin. with higher prices due to the tax rise, has improving economic outlook, official data from 7.3 percent, the office calculated. “The ly”, foreshadowing a solid expansion in housing “The government’s survey of investment intentions exacerbated concerns that the economy showed yesterday. German economy got off to a good start in construction, while business conditions and confi- suggests that mining investment will fall sharply in could lose its momentum. The government The number of people registered as unem- 2014,” said labor office chief Frank-Juergen dence had also improved and exports were rising. FY 2014/15 after year of strong gains. has launched a special budget to help count- ployed in Europe’s top economy fell by 12,000 Weise. But at the same time, resources sector invest- “So while there have been a few encouraging er any slowdown while some are looking to to 2.901 million, after adjustment for seasonal “Against the backdrop of the Crimea crisis, ment spending was set to decline significantly. “At signs in other areas of the economy over recent the BoJ’s easing campaign to help soothe the blips, the Federal Labor Office said in a state- short-term economic expectations have this stage, signs of improvement in investment months, such as the housing and retail sectors, it is impact of a fall in consumer demand. ment. Analysts had been projecting a smaller become somewhat cloudier, but remain at a intentions in other sectors are only tentative, as still far too early to say that the rebalancing will go “I believe in three months’ time we will be decline of about 7,500. The unemployment very good level,” Weise said. “On the labor mar- firms wait for more evidence of improved condi- smoothly.” Most economists saw nothing in the lat- saying the impact on the economy from the rate, which measures the number of people ket, the increase in employment is continuing tions before committing to expansion plans,” he est comments from the RBA to change their fore- tax increase wasn’t that bad,” Yuki Endo, an looking for work relative to the total of people and has even gathered momentum recently, said. casts for the cash rate with the next move widely economist at Hamagin Research Institute, in jobs or unemployed, was unchanged at 6.7 due not least to the very mild winter weather. Public spending was also set to be subdued tipped to be a rise, but not until early 2015. — AFP told Dow Jones Newswires. “The economy percent in seasonally-adjusted terms in March, Prospects are looking better for the unem- will overcome the tax hike.” — AFP the Federal Labor Office said. ployed,” Weise said. — AFP