by Edward Hugh: Barcelonabr /br /“For Austria, the actual crisis is yet to come. The decline of the eastern European economy will hit Austria in 2009".br /Peter Eigner, Professor of economic history at the University of Vienna”br /br /br /The yield difference, or spread, between 10-year Austrian securities and benchmark German bunds has been rising substantially of late, and hit 137 points on Feb. 18, the widest yet recorded (see chart below). At the same time Austria now has a higher default risk than those Mediterranean "laggards" Italy, Portugal and Spain, at least according to credit-default swap prices as quoted by CMA Datavision. Austrian swaps were trading at 253.3 basis points on March 3, compared with 17.5 points 12 months ago. That means it costs 253,300 euros a year to protect 10 million euros from default for five years. br /br /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/SbFfRtpHzcI/AAAAAAAAM9E/eiB4kvwG70A/s1600-h/austria+bund.png"img id="BLOGGER_PHOTO_ID_5310130193561013698" style="DISPLAY: block; MARGIN: 0px ...

by Edward Hugh: Barcelona"The Kazakh government is ready to step in,'' Kazakhstan's Prime Minister Karim Masimov said this morning in a telephone interview with Bloomberg "The Kazakh banking system with the support of the government and central bank will fulfill all obligations to international investors.....We have our own specific plan to survive without any external support....I don't think we need support from the International Monetary Fund or overseas.'' Well that is good news, so at least we know that one of the CIS and CEE economies won't be looking to the IMF for bail-out support in this crisis which is presently growing by the day. So Kazakstan, that country which is reputedly host to reserves of approximately 95% of the elements in the periodic table, with a population of around 15 million housed on a surface area greater than the whole of Western Europe, is going to be able to look after itself. But hang on a minute, just where is Kazakhstan, and just what have they been getting up to over there, and why the hell should I take Karim Masimov's word for it, when just about all the other Iceland Look-alike show contestants seem to be saying the same? After all, didn't those extermely bright and able young people over at RBC Capital Markets in Toronto say in a report only last week that, along with Latvia, the country's $100 billion oil-led economy is among the most vulnerable to the present global credit crisis and the skid-row economic trajectories that go with it simply because of its excessive reliance on short-term foreign borrowing. And isn't it the case that the cost of protecting Kazakhstan government debt against default has more than doubled this month - to over 1,000 basis points (or 10%), the level for borrowers that investors term ``distressed,'' according to CMA Datavision credit-default swap prices. Only Ukraine, which as we know is already seeking IMF support, is classified as being a bigger risk among European emerging-market governments. Surely all those highly dedicated, bright, and extremely able young people who are doing all that trading know what they are about, don't they?

by Edward Hugh: BarcelonaThe medium-term outlook is sensitive to external developments and policy responses. A benign external environment, featuring even higher steel prices and FDI, could produce growth in excess of 7 percent, but inflation could prove hard to control under a peg. Under an adverse external outlook, by contrast, the peg could lead to external sustainability problems.IMF 2006 Article IV Consultation Staff Report (February 2007)Ukraine's economy is in trouble, there is no doubt about it. The cost of protecting debt against a sovereign default by Ukraine's government soared to a record on Friday, following the arrival of a twin storm of both political and financial uncertaintly. The Ukraine president Viktor Yushchenko announced earlier in the week (only to be challenged on Saturday by his perpetual rival Julia Tymoshenko) that he was going to call what would be the country's third parliamentary elections ...

India's inflation jumped in the week ending 24th May to 8.24 percent, the fastest pace since August 2004, adding pressure on the central bank to raise interest rates. Wholesale-price gains accelerated for a seventh straight week, after increasing 8.1 percent in the previous week, the commerce ministry said in a statement in New Delhi today.

Reserve Bank of India governor Yaga Venugopal Reddy said yesterday that prospects of more food output this year and curbs on farm exports will boost supplies and help tame inflation, playing down chances of higher interest rates. Still, India's benchmark 10-year bond yield was unchanged at 8.23 percent, the highest in a year, after the inflation data. Inflation was mainly driven by higher costs of fuel, power and light, basic metals including steel and food grains.India, which imports 70 percent

...

Thailand's economy grew at the fastest pace in seven quarters towards the end of last year as exports of rice, automobiles and computer chips all steadily rose. Southeast Asia's second-biggest economy expanded 5.7 percent in the fourth quarter, accelerating from a revised 4.8 percent in the third quarter, the government said today in Bangkok. Exports grew by 24 percent, almost double the pace of the third quarter, even as the baht's rise to a decade-high made them more expensive. Exports, which account for about 60 percent of the economy, accelerated from a 12.6 percent year on year rate of increase in the third quarter, according to central bank data. Exports reached a record $14.6 billion in November as demand from China and eastern Europe offset waning orders from the U.S. and Japan. Quarter on quarter gross domestic product expanded by 1.8 percent in the fourth ...