India’s economy slows down greatly

China and India are amongst the fastest-growing economies in the world; however, the recession reached their economy, as well. In their case the expected figures for the growth of GDP decreased greatly. Economists say that interest rates should be cut and the demand for export will be likely to decrease in the future. Even the primary sector, agriculture, will face a fall in its growth. 

But what exactly do the figures tell us? Well, the country’s stock exchange index, the so-called Sensex fell back by 2%. The Gross Domestic Product growth was almost 10% lower than that of the last year. Although predictions were made that the economy would see a 7% expansion, analysts and economists say that a modified analysis should be made considering the current circumstances. 

The main problem is that India’s economy is largely driven by domestic demand. As the demand is problematic and it is decreasing everywhere, it can only worsen the situation for India, too. Just because the governments try to create some stimulus towards the demand, it does not necessarily mean that it is going to be the solution to the problem. The chief economist of the Mumbai Bank of Baroda, Rupa Rege Nitsure, told BBC that the plans the governments had in mind had not restored the business confidence so far. More effective decisions must be made to see some progress. 

Source: http://news.bbc.co.uk/2/hi/business/7914123.stm

Botswanan diamond affected by recession

It seems that wherever we are and whichever industry we deal with, all of them will be affected by the ongoing global crisis sooner or later. This is exactly what has happened recently to Debswana, a company that produces diamond in Botswana. The firm, owned by the government and a company called De Beers, is about to shut down two of its mines as there is no adequate demand which would satisfy the firm’s supply. 

The closure of these two mines will affect approximately 600 hundred employees. The good news is that these employees, for whom redundancy is inevitable, will either be given another job at the company or be offered a very early, therefore voluntary, retirement. As De Beers said to BBC: "These actions are being taken to mitigate the effects of the global downturn by reducing production during 2009 to align with demand, conserving cash for the company, protecting employment and maintaining readiness for an eventual upturn in the market.” 

De Beers is considered as the “diamond giant” in the diamond industry since it is the world’s largest diamond producer in terms of value. However, in their statement they said that the production of Debswana fell by 4% last year as more and more people are cutting their spending on luxury products. It seems that the recession caught up with the “rich and famous”. 

Source: http://news.bbc.co.uk/2/hi/business/7906425.stm

Russia decreases budget of 2014 Winter Olympics

According to BBC Russia decided to decrease its budget for the 2014 Winter Olympics as it was necessary because of the economic downturn the country was suffering from. The country was among those who had been hit hard by the global crises. 

15% less money will be available to host the Winter Olympics as Deputy Prime Minister Dmitry Kozak said that it was possible to find a way to save more than 8 billion dollars on the upcoming project. The government wishes to save money on all the major construction projects that are to be completed in the near future. 

According to the Russian media companies had already been reluctant to invest into these projects even before the announcement of the Deputy Prime Minister. Tender deadlines had already been extended to fight the lack of interest of several companies. 

To begin the constructions lands need to be acquired, however, the owners of these real estates are not willing to give in as they do not find the prices offered by the government appropriate. 

In the battle of hosting the upcoming event the Austrians lost, yet, Salzburg said that if the city of Sochi is unable to fulfil the necessary requirements and meet deadlines then they are willing to carry out all the constructions required. 

Source: http://news.bbc.co.uk/2/hi/europe/7894644.stm

Germany hit by economic slowdown

Germany's economy shrank by 2.1% in the fourth quarter of 2008 compared to the previous quarter, its worst quarterly performance since 1990. 

This was the third consecutive quarterly drop in Europe's biggest economy, according to the initial data from the Federal Statistics Office. 

Year-on-year, it shrank by 1.6%, after growing by 1.4% in the third quarter. 

Companies have cut investment and exports have dropped as the world economy slows down.

The figures were worse than the 1.8% anticipated by analysts and many are gloomy about the prospects for 2009. 

"This shows things went downhill sharply at the end of the year," said Juergen Michels, an economist at Citigroup. 

"We'll likely head down again the first and second quarter." 

"This number makes it plain that we're in a very serious recession - the most serious since World War Two. It's no surprise that exports and investment have tumbled," said Dirk Schumacher at Goldman Sachs, adding that the rise in inventories did not bode well for the first quarter. 

The situation "can hardly get worse," said Carsten Brzeski at ING Financial Markets. 

"The German industrial production has run out of steam with companies working only off their backlogs. Foreign demand has plummeted over the last months," he added. 

Source: http://news.bbc.co.uk/2/hi/business/7887659.stm

Switzerland to make decision on free movement

In Switzerland people will go to the voting booths to make a decision on whether to allow EU citizens to enter the Swiss labour market in the future or not. 

As a result of a negative outcome (i.e. the majority of the voters say "no") of the vote it will be hard for non-Swiss workers to find a job in Switzerland and even crossing the Swiss borders would take more paperwork. 

Even though Switzerland is not part of the 27-nation bloc it was among those countries who introduced the free movement of labour. Since its introduction the number of people entered the Swiss labour market has reached one million. 

A not-favoured outcome can put Switzerland's relationship with the EU at risk as the Swiss have always been tied to the European economic and monetary union politically as well as economically. 

Swiss officials say it is a matter of life now. Cheap labour is always favoured, however, in the period of a recession they cannot allow to employ foreign workers as it can result in the loss of jobs for many Swiss citizens. 

They claim that low-paid workers did good when the country enjoyed an economic boom, but it was a long time ago. 

Brussels has already warned Switzerland about the poll. According to BBC the Swiss are very well aware of the fact that "one in every two Swiss francs is earned through trade with the EU, and one in every three Swiss jobs depends on that trade." 

Source: http://news.bbc.co.uk/2/hi/europe/7877218.stm

Ford to make 850 workers redundant

According to BBC car manufacturer Ford is also affected by the recession that started in the US more than a year ago. 

UK operations will soon have to be carried out with a staff that will consist of 850 fewer workers. As it was claimed the firm expects these redundancies to be met voluntarily. 

The problem is that Ford promised to increase the payments by 5.25%. Yet, as the GMB union stated, "they are going back on the agreement." 

Most of the redundancies will concern the plant in Southampton, while the rest will affect sites in the following regions: Basildon, Brentwood and Dunton, in Essex, Daventry in Northamptonshire, Halewood on Merseyside and Bridgend in south Wales. 

One can wonder whether the sudden change of Ford's decision will result in people's taking industrial action or not. 

According to Justin Bowden, GMB union officer, "Ford of Europe made a profit in excess of £1bn in 2008." 

That is why the workers expected to be paid more as this success can only be associated with the workers' contribution as well as the rate of inflation. Contribution or not, Ford does not seem to give in. 

Representatives of Ford said that only the "unprecedented" economic situation is to blame for this situation. As John Fleming, Ford of Europe chairman and chief executive, said: "As demand across the industry continues to fall, we are facing some immediate and major challenges." He thinks these decisions have to be made quickly as only those quick enough to make up their minds can survive the recession. 

Source: http://news.bbc.co.uk/2/hi/uk_news/england/hampshire/7870823.stm

Unemployment rate at its peak

The ongoing recession worsened the unemployment rate in the European Union, which was 8%, the highest in two years. More and more firms make a certain amount of their employees redundant and it is expected that they continue to give their workers a sack until the very end of 2010. 

It is interesting to see that while unemployment is perhaps the only issue that causes a significant threat to the nations of the EU, the other major economic issue, inflation, that usually accompanies unemployment, fell to 1.1%, the lowest in 10 years. 

Spain is affected by the recession the most in terms of unemployment, whose figure was more than 14%, while the Netherlands and Austria are the least (the figures were 2.7% and 3.9%, respectively). 

The central bank of the European Union, the so-called European Central Bank, is expected to cut the interest rates of the eurozone to give a boost to the economies and try to bring the inflation rate closer to the designated 2%. The decision on the cut will be made next week. 

Unemployment rate rose to 7.4% for the 27-nation bloc last December. 

Source: http://news.bbc.co.uk/2/hi/business/7860469.stm