China could overtake US by 2020: PWC

AFP – China could overtake the United States to become the world’s largest economy as early as 2020, a top business consultancy said on Thursday, underlining the “seismic change” in global economic power.

PriceWaterhouseCoopers (PWC) also said in its report that by 2030 the top 10 world economies could be China, followed by the United States, India, Japan, Brazil, Russia, Germany, Mexico, France and Britain.

The current 10 largest economies, according to 2008 data from the International Monetary Fund, are the United States, Japan, China, Germany, France, Britain, Italy, Russia, Spain and Brazil.

“These projects suggest that China could be the largest economy in the world as early as 2020 and is likely to be some way ahead of the US by 2030,” John Hawksworth, head of macroeconomics at PWC, said in the report.

“India could grow even faster than China after 2020, however, and will also move rapidly up the global GDP (gross domestic product) rankings” because of its younger and faster growing population as opposed to China, he added.

The report also pointed to an increasing share of global GDP taken up by China and India, compared to the United States and the European Union.

The proportion in 2010 will be 20 percent for the US, 21 percent for the EU, 13 percent for China and five percent for India, PWC said.

But by 2030 that will have changed to 16 percent for the US, 15 percent for the EU, 19 percent for China and nine percent for India, it added.

Jim O’Neill, chief global economist for US investment bank Goldman Sachs, forecast last November that China will overtake the United States by 2027 — 14 years earlier than a previous Goldman Sachs forecast of 2041 made in 2003.

O’Neill coined the term “BRICs” to refer to the four emerging market powerhouses Brazil, Russia, India and China, which have since formed an informal grouping to discuss global issues and economic policies.

The Group of 20 (G20) developed and emerging economies last year took over from the traditional Group of Seven (G7) — Britain, Canada, France, Germany, Italy, Japan and the United States — as the main forum for economic talks.

Small businesses on front line in Obama’s jobs fight

A chart showing monthly US unemployment since Oct 2008. With unemployment fast becoming one of US President Barack Obama's biggest domestic challenges, focus is shifting from "too-big-to-fail" manufacturing and financial giants to struggling small businesses.

A chart By AFP showing monthly US unemployment since Oct 2008. With unemployment fast becoming one of US President Barack Obama's biggest domestic challenges, focus is shifting from "too-big-to-fail" manufacturing and financial giants to struggling small businesses.

The City & My Life|AFPWith unemployment fast becoming one of US President Barack Obama’s biggest domestic challenges, focus is shifting from “too-big-to-fail” manufacturing and financial giants to struggling small businesses.

After months of high-level intervention to save mega-firms like General Motors and Goldman Sachs, Obama’s economic team is now looking at small firms amid discouraging indicators about their health.

This week the White House received word that the official US unemployment rate passed the symbolic 10 percent mark to 10.2 percent in October, the highest level in 26 years.

Obama called the figure “sobering” and quickly said his administration was considering steps to spark job growth and to “increase the flow of credit to small businesses.”

ADP, a data monitoring firm, this week reported more bad news: that three quarters of jobs lost between September and October in the private sector were in firms with fewer than 500 employees.

Hit with a double whammy of wizened access to bank lending and reduced consumer spending, small business bankruptcies in September increased by 44 percent versus the same month in 2008, according to Equifax, another data monitoring firm.

While it is unclear what form Obama’s small-business assistance might take, some lawmakers have lobbied for a small-business tax credit that would rally firms to hire staff.

The scale of Obama’s task could hardly be larger. According to government figures, in 2003 firms with fewer than 500 employees accounted for 97 percent of US exports.

The US Census Bureau says firms with one to four employees make up the largest section of the country’s 25 million-plus companies.

And the stakes were made clear last week when CIT, a multi-billion-dollar lender to small and medium-sized companies, filed for bankruptcy.

On receiving that news, traders around the world expressed their concern by dumping the dollar, sending the currency plummeting against the euro and yen.

But if the scale of the problem is overwhelming, then so too is the depth.

Mark Zandi, chief economist at Moody’s Economy.com, a ratings agency, warned in a blog that small firms were still “struggling to obtain credit,” and were dependent on dysfunctional financial markets.

Hoping that small firms might soon be taking on more hires, Zandi warned that “a more worrisome possibility is that firms are so shell-shocked that they won’t resume hiring.”

But Zandi also offered a glimmer of hope for Obama, stating that a small-firm recovery could spur on the wider economy.

In an article which appeared in The New York Times he pointed out that companies with fewer than 20 employees created 40 percent of new jobs during the last economic boom, between 2003 to 2007.

Fed holds rates, says economy picking up

The US Federal Reserve Building is seen from the air over Washington, DC. The US Federal Reserve held its near-zero interest rate policy Wednesday and said the economy had "continued to pick up" since September.

The US Federal Reserve held its near-zero interest rate policy Wednesday and said the economy had ''continued to pick up'' since September.

AFP – The US Federal Reserve held its near-zero interest rate policy Wednesday and said the ailing economy had “continued to pick up” since September.

The policy-setting Federal Open Market Committee (FOMC), headed by Fed chairman Ben Bernanke, said after a two-day meeting that “although economic activity is likely to remain weak for a time,” its policy actions would support economic recovery.

The committee held the federal funds rate at zero to 0.25 percent and said it expects “exceptionally low levels of the federal funds rate for an extended period.”

Microsoft cuts 800 more jobs

A Windows 7 is for sale at an electronics store in Los Angeles, California. US computer software giant Microsoft said Wednesday that it is cutting 800 more jobs in addition to the 5,000 layoffs announced previously.

A Windows 7 is for sale at an electronics store in Los Angeles, California.

AFP – US computer software giant Microsoft said Wednesday that it is cutting 800 more jobs in addition to the 5,000 layoffs announced previously.

“Earlier this year, we announced that in order to reduce costs, increase efficiency and prioritize our focus areas, we would eliminate approximately 5,000 positions by June 2010,” a Microsoft spokesman said.

“Today, we are eliminating around 800 positions spread across multiple businesses and locations and have completed our reduction plan sooner than we had anticipated 11 months ago,” the spokesman said.

“At the same time, we continue to hire in priority areas, but also understand that continuing to manage our businesses closely, as we always do, can mean additional headcount adjustments,” the spokesman added.

Johnson & Johnson to cut more than 7,000 jobs worldwide

 

Johnson & Johnson's products are seen in New York. Johnson & Johnson, a leading US health care products company, said it will slash between six and seven percent of its global workforce, more than 7,000 jobs, to cut costs.

Johnson & Johnson, a leading US health care products company, said it will slash between six and seven percent of its global workforce, more than 7,000 jobs, to cut costs.

AFP – Johnson & Johnson, a leading US health care products company, said Tuesday it will slash between six and seven percent of its global workforce, more than 7,000 jobs, to cut costs.

 

The global restructuring is expected to generate up to 1.7 billion dollars in annual savings when it is fully implemented in 2011, the company said in a statement.

In 2010, the cost savings would be roughly 800 to 900 million dollars.

Johnson & Johnson said it expects to take a pre-tax restructuring charge of 1.1-1.3 billion dollars in the current fourth quarter.

J&J, which makes drugs, consumer products and medical devices, has about 117,000 employees worldwide, which would bring the number of jobs to be eliminated to a range of 7,000 and 8,200.

The global restructuring moves are “designed to strengthen the company’s position as the world’s leading global health care company,” the New Brunswick, New Jersey-based firm said.

“The associated savings will provide additional resources to invest in new growth platforms.”

The maker of a wide range of products, including Neutrogena skin care products, Band-Aid wound strips and migraine prescription drug Topamax, repeated its 2009 full-year earnings guidance of 4.54 to 4.59 dollars per share.

“Johnson & Johnson has long adhered to a broad-based operating model and set of sound management principles that have driven our success,” said William Weldon, J&J chairman and chief executive.

“Today, we are announcing a series of actions and plans designed to ensure that our company remains well-positioned and appropriately structured for sustainable, long-term growth in the health care industry.”

The company noted the job cuts would be subject to any consultation procedures on the plans in countries where required.

New suicide hits France Telecom

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The French telecoms giant France Telecom has suffered a new tragedy, with a 25th worker committing suicide because of stress. The latest victim was a 48-year old engineer, who took his life at home in the Breton town of Lannion. He had been on sick leave, depressed at missing out on promotion.

“That was just the latest of a series of problems he had suffered,” said union spokesman Gilles Falcon. “It’s all part of the the way working practices at the company are being systematically destroyed.”

France Telecom is accused of putting pressure on its workforce by introducing performance targets and forcing employees to change jobs regularly.

“Now, more than ever, we have to take steps to halt this hellish downward spiral,” said France Telecom CEO Didier Lombard. “We must do something to stop this wave of suicides which is hurting the company.”

Most of the 25 victims have blamed pressure at work for their decision to commit suicide. One man who killed himself in July wrote of overwork and “management by terror”. He left a note saying, “I am killing myself because of France Telecom, that’s the only reason.”

G20 has tough agenda in Pittsburgh

Leaders of the world’s 20 top economies gather today in the US city of Pittsburgh to grapple with the aftermath of the worst global downturn in generations.

Security concerns and that other problem when world leaders come to town – traffic snarlups – have meant a strong police presence as the city prepares to be the centre of world attention for two days.

It is also an opportunity for interest groups to get their messages across.

Pittsburgh once known as the “Steel City” has had to reinvent itself to prosper – an apt venue for the summit.

As that is what has been happening to economies since the G20 last met in London.

Central this time is the US plan to correct the world’s economic imbalances between big exporting countries and debt-laden nations. There is also the EU blueprint for a banking super-watchdog to regulate financial markets.

But some say consensus on both is unlikely.

David Smick – economic strategist said: “ I think they are arriving in Pittsburgh with kind of a self-satisfied smugness.It’s a you know, “we’ve brought the world economy and financial system back from the brink, but they haven’t dealt with the fundamental problem that got us into this difficulty in the first place.

They’re approaching this summit with, -how can we avoid talking about the obvious so we can get out of town quickly and have a nice photo opportunity?”

The other major issue is global warming. There has been little progress on how much industrial nations should contribute to helping developing nations cut their dependency on fossil fuel – a major cause of greenhouse gasses.

Those negotiations will be closely followed by Greenpeace who are making sure climate change remains a top priority.