Business Pivot Point

In terms of manufacturing competence around the world China has got the first place. The second place was ranked by India and the third place was given to south Korea according to the report.Global competitiveness index of 2010 was conducted, which is in partnership with Deloitte Touche Tohmastu and US council of competitiveness.
Within a decade we will be able to see a new manufacturing competitiveness along with a shift in a regional manufacturing. The rapidly growing Asian market will mainly involve three countries like India,China and South Korea said the report of manufacturing competitiveness. Topping of China is not amazing as China is paying a lot of attention over the past ten years.
The new entry of India in the second place in the manufacturing is surprising and the entry will even make strong foothold in the coming years. The main reason behind India’s positioning is due to the intelligent scientists, researchers and engineers followed by a good number of English speaking people which attracts the manufacturers. Many capabilities like engineering designs ,software development products followed by low cost are the integral part of manufacturing process.
The increasing competitiveness of China is primarily due to the resolve of the government there in uplifting the standard of living of the billion plus citizens.

The European union countries depend on tourist travelers for their daily income and most of the countries have been facing reduced foreigners’ visit to their countries due to the global economic turmoil.
These countries are already seeing a big increase in unemployment and that is only set to remain at elevated levels for few more quarters as there are no signs of any revival in foreign tourists arrival.
With the US economy in deep trouble and Japan also nowhere near recovery, we can expect the European union countries to struggle for the rest of 2010 at least.

The Chinese markets are ruling at 14 month low this week, due to increased selling pressure from the foreign institutional investors. The Foreign investors are being forced to sell profitable investments across the globe first to protect their profits, and hence China is the best choice.
The Chinese government is only expected to start loosening the bank financing to individuals and corporates in the coming months, to overcome the economic losses mounted on it by the European crisis. That could indeed help China to recoup good part of the export loss and also strengthen the domestic market.
So if you have guts, you can put part of your investment in the Chinese market , say experts. And China is the only market to have provided over 10% return annually for the last ten years, with no match from any other country in the world. And it has the largest working population in the world, and the demographics are economy friendly.
So there are enough reasons for the Chinese economy to pick up further in the coming months. In the last four years, China has become the largest mobile market / the largest car market in unit terms / the largest exporter in the world after US / the largest export market for most of the Asian countries ahead of US and Europe.

Germany’s chancellor has insisted that Europe’s leaders are making good progress in talks with the US about how to bolster fragile economic growth.

Angela Merkel told journalists at the G8 summit in Canada there was “mutual understanding” with President Barack Obama over deficit reduction plans.

The G8 leaders will be joined later by China and other rising economic powers for the G20 summit.

Dominating the agenda are the global economic situation and banking reform.

The twin summits, being held in and near Toronto, have come at a time when the world’s largest economies are divided over whether to pursue austerity measures to cut deficits, or continue public spending to stimulate economic growth.

Mr Obama is worried that a series of deep budget cuts announced by European countries may delay global recovery.

Chancellor George Osborne increased VAT from 17.5% to 20% and cut welfare spending as he moved “decisively” to tackle Britain’s record debts.

Child benefit and public sector pay will be frozen and 25% cut from public service spending - but alcohol, tobacco and fuel will escape tax hikes.

Unveiling his first Budget to MPs, Mr Osborne said “tough but fair” action on debt was “unavoidable”.

But Labour said it was “reckless” and would “throw people out of work”.

The Hungary government pulled down the entire European and also the US markets on Friday, by making the unexpected statement on the precarious financial position of their country. The government spokesperson had said on Friday that the country is almost in a Greece-like situation and a default is not ruled out.
It took four or five hours for the new Hungary government to understand the dangers of making such irresponsible statement. So it put a team to do a thorough but quick review of the real financial situation. The team has now confirmed that the financial situation is bad but manageable.
The new statement is expected to bring some solace to the financial markets when they open up on Monday morning, though it may not be good enough to recover the entire loss sustained on Friday alone.
The new Hungary government is now planning to bring in tougher austerity measures to keep the budget deficit within the agreed norm.

The fall of Euro in the first two weeks of May 2010 was due to the Greece and the third week fall was attributed to the Spain factor.
And things were indeed slowly limping back in the right direction only for few days last week, and pat came the bomb shell from the new Hungarian Government.
It announced that the earlier regime had underestimated the government fund position, and in reality, the country is bankrupt and it may have to go for massive restructuring.
And that news was enough for the world markets to drown yesterday, with the Europe markets losing anything between 2% to 4%.
Also the US markets tanked by over 3.5%, as the last month Jobs data painted a dismal picture.
Nothing seems to be going right for the global economy for the time being, and the European problem is only becoming murkier by the day.

There is more good news for the US investors. The closing of the housing tax benefit scheme by June 2010, has forced many people to go in for house purchase during the month of May. So the latest reading of housing construction shows a record increase in new house construction not seen since 2000.
That is indeed good news, and now the government needs to work out some scheme to keep up the pace moving steadily in the medium term. While there could be a small drop in the new home purchases in the next one or two months, due to the non-availability of any tax benefit, a proper strategic approach by the government along with the US FED on key policy matters could well help the US housing sector to get onto decent recovery over the medium term.

The European union is a cluster of countries with varying history and even contains some members who were totally out of sync with the original group of European nations. And while the European common currency , EURO, was formed nearly a decade back, the European Union majors ensured that there are strong rules in place.
But they failed in implementing the rules effectively. For example, the rule was that each member country would not allow the budget deficit to go beyond a 3% of the GDP and the borrowings would also be kept at a certain level. But in reality, almost every member country has been casually overshooting the budget deficit figure, and the four weaker countries , namely Portugal / Spain / Ireland / Greece, have been running deficits at three or four times of this agreed limit.
That is the reason why these countries are now unable to get out of the debt trap, and the EU is also being forced to pump good money behind these troubled countries.
And over the coming months, the EU may realize that it is not possible to keep on pumping in borrowed good money, behind countries without hope. So expect the breakup of the EU in the coming months of years, say experts.

The US housing sector has been seeing marginal increase in the number of units sales in the last few months, thanks to the massive $8000 stimulus credit announced by the US administration. The US government has been keeping this scheme in some form or the other for the last 12 months, and that seems to have only helped the industry to avoid falling badly.
But with the scheme getting over next month, it is now distinctly possible for the housing prices to fall once again for the next few months continuously.
Also there is a higher probability for the housing number sales to crash in the coming months, as the scheme is not there anymore, and whoever wanted to buy would have done so already. Also the US banks have seized record homes due to loan repayment defaults and that number is going to only go up in the coming months as unemployment levels are still very high.
So expect the US housing sector to see a downturn for the next few months at least, say experts.