Monday, December 30, 2013

BBC News - France's 75% tax rate gains approval by top court

France's highest court has approved a 75% tax on high earners that is one of President Francois Hollande's signature policies.
He is ZlatanZlatan Ibrahimovic is one of the top players bought in by wealthy owners at Paris Saint-Germain, who are currently top of Ligue 1
The initial proposal to tax individual incomes was ruled unconstitutional by the Constitutional Council almost exactly one year ago.
But the government modified it to make employers liable for the 75% tax on salaries exceeding 1m euros (£830,000).
The levy will last two years, affecting income earned this year and in 2014.
Football clubs in France threatened to go on strike earlier this year over the issue, saying many of France's clubs are financially fragile and say the plans could spark an exodus of top players who are paid huge salaries.
The Qatari-owned Paris Saint-Germain has more than 10 players whose pay exceeds 1m euros, including the Swedish striker Zlatan Ibrahimovic.
There has also been a chorus of protest from businesses and wealthy individuals who have condemned the tax - including film star Gerard Depardieu, who left the country in protest.
Polls suggest a large majority in France back the temporary tax.
Unlike many other countries in Europe, France aims to bring down its huge public deficit by raising taxes as well as some spending cuts.
The highest tax rate in the UK is 45% and is applied to individuals.

Friday, December 27, 2013

Bloomberg News - Indian Probes Risk Revival of $160 Billion Projects: Commodities

The decision by India’s top investigating agency to probe a third billionaire-led mining deal in six months puts at risk government efforts to revive $160 billion of stalled projects.
The Central Bureau of Investigation said on Dec. 23 it started probing Anil Agarwal, who runs the country’s biggest aluminum and copper producer. It alleged irregularities in his 2002 purchase of the state’s 26 percent stake in Hindustan Zinc Ltd., a producer of zinc used in making metals and chemicals.
The investigations will restrain new investment just as the government of Prime MinisterManmohan Singh seeks to build infrastructure and revive growth from a 10 year-low, according to Rakesh Arora, Macquarie Capital Securities (India) Pvt.’s head of research. Increased scrutiny of dealmaking in India’s mining industry may lead investors to fund projects in other nations where regulatory risk appears lower, he said.
“This will certainly stall or at least delay investments in such projects as corporates will be wary of possible overhang following an approval,” Arora said yesterday in a phone interview. “CBI has clearly overstepped with such probes and government should come out strongly to support its stimulus measures.”
The sentiment clashes with that of the Federation of Indian Chambers of Commerce and Industry. It said India has started the process of removing hurdles for 255 stalled projects worth 10 trillion rupees ($161 billion) by expediting approvals, according to a Dec. 20 statement by the group that cited Ajit Kumar Seth, the nation’s cabinet secretary.

Probe of Privatization

The CBI is inquiring how Hindustan Zinc (HZ), owned by Sesa Sterlite Ltd., was privatized without the approval of parliament, which created the company in 1966 through an act.
Hindustan Zinc didn’t comment on the probe in its response to questions from Bloomberg on Dec. 23, saying only that the company’s reserves and resources rose to 348 million metric tons from 143.7 million tons at the time of the government share sale. Pavan Kaushik, a spokesman at Agarwal-controlled Vedanta Resources Plc (VED), didn’t respond to two e-mails or a text message in the past day seeking comment.
In June, the CBI began investigating Naveen Jindal, who controls Jindal Steel & Power Ltd. and is India’s second-richest lawmaker, and in October it turned its sights on mining tycoon Kumar Mangalam Birla, in both instances for allegedly benefiting from unjustified allocations of coal-mining permits.

May Elections

“There’s a feeling that with repeated episodes of a trust deficit between industry and government, the business sentiment and the investment environment would be vitiated,” Naina Lal Kidwai, country head of HSBC Holdings Plc and president of the Federation of Indian Chambers of Commerce and Industry, said after the first two probes were announced. “India could slip further from the growth trajectory that is so necessary for us to maintain.”
Singh’s administration faces elections in May amid a slowing pace of approvals and a series of environment-related bans on mining that undercut India’s traditional advantages with investors of being a democracy with more than a billion consumers.
Agarwal has faced a series of setbacks in his bid to build a mining and energy empire in India. Last month he said he regretted investing $8 billion in an aluminum complex in the eastern state of Odisha that has languished because of a shortage of raw material.
“I could either invest in Vedanta Aluminium or I could have bought Asarco,” Agarwal said in a Bloomberg Television interview broadcast Nov. 29, referring to U.S. copper miner Asarco LLC. “If you ask me today, I regret it.”
Buyout Delay?
The CBI inquiry will mean a delay in Agarwal’s plans to buy the government’s remaining stake in Hindustan Zinc and unlisted aluminum producer Bharat Aluminium Co., said Giriraj Daga, a Mumbai-based analyst at Nirmal Bang Equities Pvt. Full control of the zinc unit would mean access to $3.8 billion in cash and equivalents, crucial for managing Vedanta’s debt of $15.7 billion, according to data compiled by Bloomberg.
Hindustan Zinc, which fell 2.2 percent in Mumbai after the announcement, declined 1 percent to 133.25 rupees at the close today. Sesa Sterlite, Agarwal’s biggest India-listed company, lost 2.3 percent on Dec. 24 and rose 0.9 percent today, taking its year-to-date increase to 3.1 percent, still lagging behind the benchmark index’s 9.1 percent gain. Jindal Steel and Power lost 42 percent this year.
“The government share sale in Hindustan Zinc now looks unlikely this fiscal year, which is a setback for Vedanta and its Indian unit Sesa Sterlite,” said Daga at Nirmal Bang Equities. “They have a large debt repayment obligation in coming years.”

Hindalco Involvement

Birla, being probed for his role in the allocation of a coal mine to aluminum producer Hindalco Industries Ltd. in 2005, has said he would look overseas for investments. He said in March he would invest in Brazil and Indonesia as frequent policy changes discourage companies from spending in Asia’s third-biggest economy. The 46-year-old, worth $8.6 billion, also controls India’s biggest cement producer and the world’s biggest supplier of aluminum for beverage cans.
“The country risk for India just now is pretty elevated and chances are that for deployment of capital, you would look to see if there is an asset overseas,” Birla said in March. “We are in 36 countries. We haven’t seen such uncertainty and lack of transparency in policy anywhere.”

Birla Defense

On Oct. 16, the CBI recovered 250 million rupees in cash from Hindalco’s New Delhi office, saying the amount was unaccounted for, according to a Press Trust of India report. On Oct. 18, Birla met Finance Minister Palaniappan Chidambaram and revenue secretary Sumit Bose, chief of all taxation departments of the country.
“Nothing wrong has been done,” Birla said that day.
Hindalco had announced investments in three projects on vacant land in the country at cost of about $5.5 billion, with expectations of surpassing 1 million tons of smelting capacity by 2011. While a large part of the investments have been made, the projects have been delayed by at least two years and the company’s smelting capacity stands at less than half the target.
In the past two decades, the government assigned 289 blocks bearing an estimated 43.3 billion tons of coal without auction to companies including Jindal Steel, Hindalco and their rivals, according to the nation’s auditor. That may have cost the exchequer 1.86 trillion rupees, the Comptroller and Auditor General said on Aug. 17 last year.

Headquarters Searched

The CBI in June registered a case against Jindal and his company Jindal Steel, and searched the company’s New Delhi headquarters and Jindal’s residence. Jindal, a member of the ruling Congress party, is scouting for iron ore and coal mines in Africa and Australia.
The company plans to set up mid-sized power plants in Africa, while cutting back investment plans by 40 percent for the next two years in India because of delays in getting coal mines, Managing Director Ravi Uppal said in August.
“The problems relating to coal, iron ore and other commodities are all homegrown,” said Juergen Maier, a fund manager in Vienna at Raiffeisen Capital Management, which oversees about $1.1 billion in emerging-market assets. “The best hope for India lies in the end of the current government, which has brought everything to a standstill.”

Thursday, December 19, 2013

BBC News - Eurozone ministers agree banking deal

Eurozone finance ministers have agreed on a long-awaited pact on how to deal with failing banks in the region.
European finance ministers in Brussels Europe's finance ministers have expressed their optimism over the outcome of the talks
It aims to create a 55bn euro ($75bn; £46bn) fund - financed by the banking industry, over the next 10 years.
The fund would be backed by a new agency, which will decide on how to deal with failing banks.
European leaders - who meet at a summit on Thursday and Friday - want to sign off on a deal so that this banking union can start in 2015.
The deal is part of wider efforts by the region's economies towards building a banking union as they look to avoid taxpayer-funded bank bailouts.
However, there is still disagreement over how banks will be wound up or re-capitalised in the early years while the new arrangements for banking union are taking shape.
Bridge financing could come either from the member states or from the eurozone's own rescue fund, the European Stability Mechanism. However, Germany has been insistent that eurozone money should not be used to shore up failed banks.
Chris Morris, the BBC's Europe correspondent, said the agreement was "on paper, probably the biggest centralisation of power in the eurozone since the launch of the euro. But some people say they are creating banking union in name only.
"There are different countries coming at it with different points of view," he said.
Three pillars
The proposed banking union consists of three parts or the so-called three pillars.
These are a common banking supervisor - the European Central Bank (ECB), which will be given the power to monitor the health of, and the risks taken, by all the major banks within the eurozone.
According to an EU proposal, the ECB will "have direct oversight of eurozone banks, although in a differentiated way and in close co-operation with national supervisory authorities".
It will also intervene if any of the banks gets into trouble.
The second part is the Single Resolution Mechanism. This means that if a bank anywhere in the eurozone gets into trouble, the process of bailing it out - or even letting it go bust - would be managed by a common "resolution authority".
The final pillar of the proposed unions involves a common deposit guarantee, which means that anyone with an ordinary bank account anywhere in the eurozone would have their money - up to a limit of 100,000 euros (£84,000; $138,000) - guaranteed by a common eurozone fund.
However, BBC business editor Robert Peston said national governments have not completely handed over power to determine the fate of any future struggling bank.
He said: "It is striking that finance ministers have not wholly delegated the decision-making on whether to close or take over an ailing bank to a new resolution board they are creating.
"They have reserved powers to determine the fate of struggling banks for themselves - which does not augur well for the most speedy action in a crisis."
'Stable growth'
Once EU leaders agree a deal, the proposal will go to the European Parliament for what are also expected to be tough negotiations on the final form of banking union.
The 17-nation eurozone is moving to strengthen its banking sector by introducing common rules and protections.
The move has come after the recent crisis forced a number of European governments to spend large sums of money supporting banks whose lending had turned bad.
Over the main years of the crisis, European governments spent 1.5 trillion euros (£1.3tn; $2tn) propping up the banks.
The idea of a banking union is to make huge taxpayer-funded bank bailouts a thing of the past.
"If we continue... on the path toward banking union then we will be able to continue the stabilization of the European currency as the basis for a return to stable growth in Europe," said Wolfgang Schaeuble, Germany's finance minister.

Tuesday, December 17, 2013

BBC News - Portugal passes 'troika's' bailout review of its economy

Portugal has moved a step closer to exiting its bailout programe after the international lenders that saved the country from bankruptcy approved a review of the economy six months early.
Anti-austerity protesters outside the Portuguese parliament in Lisbon
Portugal's austerity cuts have sent protesters onto the streets of Lisbon
The European Union and International Monetary Fund have been monitoring the country's economic reforms, a condition of the 2011 78bn-euro (£66bn) bailout.
Portugal hopes to leave the bailout agreement in the middle of next year.
At the weekend Ireland became the first eurozone country to exit its bailout.
The troika - the EU, IMF and European Central Bank - have carried out ten reviews of the economy to ensure that budget cuts and economic restructuring are implemented.
"The lenders agreed that our targets were met and our objectives are within reach," said the country's finance minister Maria Luis Albuquerque. "It was a very smooth evaluation... that envisages the end of the bailout programme on the agreed date" in mid-2014, she said.
Growth expected
An exit from the bailout would give Portugal back its financial independence, allowing the country to borrow on the financial markets.
During Portugal's recession, borrowing on the capital markets was effectively closed as the interest rate being demanded was seen as unsustainable.
Portugal has so far received 71.4bn euros of the 78bn euros which the troika agreed to lend the country in May 2011.
The country's economy is forecast to return to growth of 0.8% next year after falling 1.8% this year.
The troika said in a statement: "Further signs of recovery have emerged since the last review. Growth is broadly in line with projections, while unemployment has fallen by more than expected."

Sunday, December 15, 2013

Bloomberg News - China Manufacturing Index Unexpectedly Drops

A Chinese manufacturing index unexpectedly fell to a three-month low as output gains eased and employment weakened, suggesting the world’s second-largest economy is vulnerable to a slowdown.
The preliminary reading of 50.5 for aPurchasing Managers’ Index (EC11CHPM) released today by HSBC Holdings Plc and Markit Economics compares with a final figure of 50.8 in November and the 50.9 median estimate in a Bloomberg News survey of 11 analysts. A number above 50 indicates expansion.
Chinese stocks extended losses as the manufacturing report underscored the Communist Party’s warning last week that the economy faces “downward pressure.” Weaker manufacturing may test the President Xi Jinping’s resolve to push through policy changes such as reducing local-government debt and industrial overcapacity.
“The reading confirms our view that Chinese GDP growth is already decelerating,” said Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong. He forecasts 7.2 percent gross domestic product expansion in 2014, compared with 7.7 percent this year.
China’s benchmark Shanghai Composite Index (SHCOMP) was down 1.4 percent at the 11:30 a.m. local-time break.
Separately today, large Japanese businesses pared their projections for capital spending in the fiscal year ending March 2014, according to a quarterly Bank of Japan report. Markit will also release PMI gauges for the euro area, France, Germany and the U.S.

Flash PMI

Today’s China report, known as the Flash PMI, is based on 85 percent to 90 percent of responses to surveys sent to more than 420 manufacturers. The final reading will be released on Jan. 2.
The National Bureau of Statistics and China Federation of Logistics and Purchasing will release their own survey of purchasing managers on Jan. 1. The gauge’s November reading was 51.4, the same as October, which was an 18-month high.
Qu Hongbin, HSBC’s chief China economist in Hong Kong, said in a statement today that the December figure is still higher than the average reading in the third quarter, “implying that the recovering trend of the manufacturing sector starting from July still holds up.”
Measures of new orders and export orders strengthened, while input prices increased at a slower rate, according to today’s report. The data were collected from Dec. 5-12, compared with last month’s survey from Nov. 12-19.
Wang Tao, chief China economist at UBS AG in Hong Kong, said the figures shouldn’t be “over-interpreted,” in part because of the earlier dates, as she maintained her forecasts for 7.6 percent GDP growth this quarter and in 2014.

Export Skepticism

Weakness in today’s manufacturing data adds to concerns that November’s official export numbers may have been inflated, said Tim Condon, head of Asia research at ING Groep NV inSingapore, who previously worked for the World Bank. Outbound shipments rose 12.7 percent last month from a year earlier, according to customs data last week.
Top party and government officials held the annual Central Economic Work Conference last week to map out policies for next year. A report issued after the meeting said policy makers will try to stabilize expansion, restructure the economy and promote reforms.

Maintain Continuity

Leaders also pledged to maintain continuity and stability in macroeconomic policies in 2014 and stick to a prudent monetary policy and proactive fiscal policy. They also vowed to tackle local government debt.
Separately, the State Council said it will expand the over-the-counter stock market to ease financing difficulties for small and medium-sized enterprises and expand channels for private investment. Such businesses may find it difficult to get loans from banks who prefer to issue credit to state-owned companies.
Higher costs and wages in China are prompting some companies to set up manufacturing in neighboring Asian economies. Samsung Electronics Co., the world’s biggest smartphone maker, is building a $2 billion plant in Vietnam that may make 120 million handsets a year by 2015, according to two people familiar with the company’s plans who asked not to be identified because the matter is private.

Friday, December 13, 2013

BBC News - Mexico's Congress approves measure to open oil resources

Mexico's Congress has approved a measure to open the state-run oil fields to foreign investment for the first time in 75 years, following a vote by the Senate earlier this week.
Woman with pig mask
Many supporters of the state-run oil firm Pemex have protested the measure
The programme would let private firms explore and extract oil and gas with state-run firm Pemex, and take a share of the profits.
The measure must now be approved by 17 of the country's 32 federal entities.
Mexico nationalised its energy industry in 1938.
Thursday's vote to approve the measure lasted hours and was reported to be heated.
Mexico's President President Enrique Pena Nieto has said the move is necessary to modernise Mexico's energy sector and increase oil production, which has dropped from 3.4 million barrels per day in 2004 to the current rate of 2.5 million barrels per day.
Most observers expected that the signature reform of Mr Pena Nieto's presidency would pass.
However, the left-wing Democratic Revolution Party said it was a submission to US oil companies, and protest camps were set up outside the Senate.
They said the move strikes at the heart of Mexico's identity.
In 1938, then-president Lazaro Cardenas nationalised the oil industry, which had been operated by foreigners up to that point, asserting that Mexico had a right to its mineral wealth.

Thursday, December 12, 2013

Reuters News - UK economy set for fastest growth in seven years in 2014 - BCC

A shopper walks past an empty retail unit in Nottingham, central England, June 6, 2013. REUTERS/Darren Staples
A shopper walks past an empty retail unit in Nottingham, central England, June 6, 2013.

(Reuters) - Britain's economy will expand at its fastest rate in seven years in 2014, thanks to strengthening household consumption, but high household debt will slow growth in 2015, the British Chambers of Commerce (BCC) said on Thursday.
The business group forecast economic growth to rise to 2.7 percent in 2014, an upgrade from the forecasts of 2.2 percent it made as recently as August.
Output should pass its pre-recession peak in the second half of the year, more than six years after the financial crisis began, the BCC said.
The group also raised its estimate of 2013 growth to 1.4 percent from 1.3 percent but reduced the 2015 forecast by 0.1 percentage point to 2.4 percent, saying high household debt would limit consumption.
BCC Director General John Longworth warned that recovery could not come from households and an accelerating housing market alone, echoing comments earlier this week from Bank of England Governor Mark Carney.
"We have to find ways of boosting business investment and exports, as rebalancing oureconomy is critical to our long-term economic future," Longworth said. "Young, growing firms, and many SMEs, continue to struggle with lack of access to available credit, while consumers are getting the support they need to buy homes."
The BCC expects business investment to fall by 5.3 percent in 2013, then recover to rise 5.7 percent in 2014 and a similar amount in 2015, as companies take confidence from a stronger economy.
The BCC also said unemployment would fall to 7 percent - the level at which the Bank of England has said it would start to think about raising interest rates - in the third quarter of 2015, one quarter earlier than previously forecast, but it urged the BoE to make sure the recovery was firmly established.
The group foresees the first BoE rate rise in the fourth quarter of 2015.

Wednesday, December 11, 2013

BBC News - US Congress cross-party budget deal reached

A cross-party Congressional budget committee convened after an October government shutdown has reached an agreement to fund federal services.
Congressman Paul Ryan (left) and Senator Patty Murray (right) Senator Patty Murray (right) and Congressman Paul Ryan (left) were picked to head a cross-party budget committee in the wake of an October government shutdown
The proposed deal finances the government for two years and reduces the federal deficit by $23bn (£14bn).
It also avoids another government shutdown on 15 January when government funding is scheduled to run out.
The new deal "cuts spending in a smarter way," Republican Congressman Paul Ryan said on Tuesday.
The budget deal also offsets $63bn in previously enacted automatic military and domestic spending cuts triggered in January when Democrats and Republicans failed to reach a budget compromise.
Mr Ryan and Democratic Senator Patty Murray, the respective chairs of the House and Senate budget committees, were called on to reach a cross-party budget deal in the wake of October's partial government shutdown over federal spending.
"We have broken through the partisanship and gridlock," Ms Murray said of the new deal.
Mr Ryan said he was optimistic the new budget agreement could pass both sides of the highly politically divided Congress.
The measure is expected to come to a vote before the House recesses for several weeks beginning on Friday.
According to the Congressional budget chairs, the new deal does not raise taxes but requires newly hired federal workers to make larger contributions to their pensions.
A federal airport security fee adding $5 to the cost of a typical return flight is also included.
Nature of compromise
Following the announcement on Tuesday, Republican House Speaker John Boehner called the "modest" cross-party deal a "positive step forward".
US President Barack Obama issued a written statement labelling the agreement "balanced" and "designed in a way that doesn't hurt our economy".
"This agreement doesn't include everything I'd like - and I know many Republicans feel the same way. That's the nature of compromise," he said.
But, "because it's the first budget that leaders of both parties have agreed to in a few years, the American people should not have to endure the pain of another government shutdown for the next two years," he added.
Government officials say the deal, totalling an estimated $85bn over the next decade, aims to carve $20bn out of the nation's $17 trillion debt.
Political rancour
The deal is expected to pass both houses of Congress, despite attempts by Conservative groups to persuade Republicans to oppose it.
Democratic lawmakers have also expressed frustration over a failed bid to extend benefits for people unemployed longer than 26 weeks.
That program will expire on 28 December, cutting off benefits to more than one million individuals.
But many have praised the cross-party deal as a crucial step forward after political rancour led to a 16-day government shutdown in October which halted many federal services across the country.
The manoeuvre is said to have cost the US economy $24bn, as projected by financial services company Standard & Poor's.
Under a temporary deal reached to end that political standoff, the newly-formed budget conference committee was given until 13 December to come up with a new deal or face triggering further automatic spending cuts.

Those cuts, estimated at $20bn, would come largely from the Pentagon, according to media reports.

Tuesday, December 10, 2013

Bloomberg News - Pimco’s El-Erian Sees Faster Global Growth as U.S. Offsets China

The world economy will enjoy faster growth next year, as improvement in the U.S. and the euro area offsets slowdowns in China and Japan, said Mohamed El-Erian, chief executive officer of Pacific Investment Management Co.
The Newport Beach, California-based asset manager said the world economy is likely to expand 2.5 percent to 3 percent in 2014, up from 2.3 percent this year. U.S. growth will accelerate to 2.25 percent to 2.75 percent from 1.8 percent.
“The U.S. economy is healing,” he said in an interview yesterday. “Household balance sheets are in a better place.”
Pimco, which manages $1.97 trillion in assets, sees Chinese growth slowing to 6.75 percent to 7.25 percent from 7.8 percent over the last 12 months, according to El-Erian. Japan’s economy will expand 1 percent to 1.5 percent, down from 2.4 percent in 2013.
He said it’s virtually certain the Federal Reserve will begin moderating its asset purchases by the end of March, with a 50-50 chance of a move next week. He said the Fed is likely to couple any tapering announcement with a cut in the interest rate it pays on banks’ excess reserves and a strengthened commitment to keep monetary policy easy for an extended period.
The euro-area’s economy will expand by 0.25 percent to 0.75 percent in 2014, after contracting 0.4 percent this year, he said.

Job Market

The Pimco executive said he was heartened by the broad-based improvement in the U.S. job market last month. Payrolls increased by 203,000, while the unemployment rate fell to 7 percent from 7.3 percent in October, the Labor Department reported on Dec. 6. The employment-to-population rate also rose while hourly earnings increased.
“The breadth of improvement was notable,” El-Erian said.
The Fed’s “hyperactive” monetary policy has given the U.S. economy time to mend after its deepest recession since the Great Depression, according to El-Erian.
The Fed is buying $85 billion of bonds per month. It has also promised to keep its target for the federal funds rate near zero at least as long as unemployment remains above 6.5 percent and forecast inflation is not above 2.5 percent.
“You’re looking at a transition where the Fed will remain engaged but will alter its policy mix,” by gradually reducing its bond buying while strengthening its forward guidance on short-term interest rates, he said.
He said he expects the Fed to cut the 0.25 percent rate it pays commercial banks on excess reserves as part of that transition. While such a move wouldn’t have a “dramatic impact,” it would underscore the Fed’s commitment to keeping rates low, he said.

Mushrooming Reserves

Banks’ reserves have mushroomed as the Fed purchased securities from them in its bid to lower long-term interest rates. Banks currently have more than $2 trillion in extra cash at the Fed, according to data from the central bank.
Even as the economy improves next year, it won’t achieve “escape velocity,” according to El-Erian. The big missing ingredient is stepped-up capital spending by companies.
“We have yet to see business investment really pick up,” he said. “Companies still prefer to use their excess cash for financial engineering” such as buying back shares or boosting dividends.
By Rich Miller

Monday, December 9, 2013

BBC News - European Central Bank keeps rates at record 0.25% low

The European Central Bank (ECB) has kept its benchmark interest rate at a record low of 0.25%.
ECB headquarters
The ECB's move came as no surprise to analysts
The decision follows its surprise cut from 0.5% in November.
ECB president Mario Draghi said the decision to keep the rate at its current level reflected the fact that the eurozone's economy remained "subdued".
The eurozone - the 17 countries that use the euro currency - grew by 0.1% in the July-to-September period.
This compares with 0.3% growth in the previous quarter.
In a news conference following the announcement, Mr Draghi confirmed the ECB's forward guidance that the interest rate would remain at the same level or lower for the foreseeable future.
Prices remained "subdued", he said, despite the recent increase in the eurozone inflation rate from 0.7% to 0.9%.
"Our monetary policy decisions are taking time to make their influence felt," he said.
The ECB has reduced its benchmark interest rate consistently since 2008, when it stood at 3.75%, in response to the region's sustained debt crisis and contracting economy.
This refinancing rate determines what banks pay to borrow from the ECB and influences borrowing costs for businesses and consumers.

Friday, December 6, 2013

Reuters News - With song and sadness, South Africans mourn Mandela

File photo of Nelson Mandela smiling at a news conference ahead of the second 46664 concert near the small Southern Cape province town of George. REUTERS-Mike Hutchings-Files
1 OF 18. File photo of Nelson Mandela smiling at a news conference ahead of the second 46664 concert near the small Southern Cape province town of George.

(Reuters) - South Africans united in mourning for Nelson Mandela on Friday, but while some celebrated his remarkable life with dance and song, others fretted that the anti-apartheid hero's death would make the nation vulnerable again to racial and social tensions.
As the country's 52 million people absorbed the news that their beloved former president had departed forever, many expressed shock at the passing of a man who was a global symbol of reconciliation and peaceful co-existence.
South Africans heard from President Jacob Zuma late on Thursday that the statesman and Nobel Peace Prize laureate died peacefully at his Johannesburg home in the company of his family after a long illness.
Despite reassurances from public figures that Mandela's passing, while sorrowful, would not halt South Africa's advance away from its bitter apartheid past, some still expressed unease about the absence of a man famed as a peacemaker.
"It's not going to be good, hey! I think it's going to become a more racist country. People will turn on each other and chase foreigners away," said Sharon Qubeka, 28, a secretary from Tembisa township as she headed to work in Johannesburg.
"Mandela was the only one who kept things together," she said.
Flags flew at half mast as South Africa entered a period of mourning leading up to a planned state funeral for its first black president next week.
Trade was halted for five minutes on the Johannesburg stock exchange, Africa's largest bourse, out of respect.
But the mood was not all somber. Hundreds filled the streets around Mandela's home in the upmarket Johannesburg suburb of Houghton, many singing songs of tribute and dancing.
The crowd included toddlers carrying flowers, domestic workers still in uniform and businessmen in suits.
Many attended church services, including another veteran anti-apartheid campaigner, former Anglican Archbishop of Cape Town Desmond Tutu. He said that like all South Africans he was "devastated" by Mandela's death.
"Let us give him the gift of a South Africa united, one," Tutu said, holding a mass in Cape Town's St George's Cathedral.
An avalanche of tributes continued to pour in for Mandela, who had been ailing for nearly a year with a recurring lung illness dating back to the 27 years he spent in apartheid jails, including the notorious Robben Island penal colony.
U.S. President Barack Obama and British Prime Minister David Cameron were among world leaders who paid tributes to him as a moral giant and exemplary beacon.
The loss was also keenly felt across the African continent. "We are in trouble now, Africa. No one will fit Mandela's shoes," said Kenyan teacher Catherine Ochieng, 32.
For South Africa, the death of its most beloved leader comes at a time when the nation, which basked in global goodwill after apartheid ended, has been experiencing labor unrest, growing protests against poor services, poverty, crime and unemployment and corruption scandals tainting Zuma's rule.
Many saw today's South Africa - the African continent's biggest economy but also one of the world's most unequal - still distant from being the "Rainbow Nation" ideal of social peace and shared prosperity that Mandela had proclaimed on his triumphant release from prison in 1990.
"I feel like I lost my father, someone who would look out for me," said Joseph Nkosi, 36, a security guard from Alexandra township in Johannesburg.
Referring to Mandela by his clan name, he added: "Now without Madiba I feel like I don't have a chance. The rich will get richer and simply forget about us. The poor don't matter to them. Look at our politicians, they are nothing like Madiba."
The crowd around Mandela's home in Houghton preferred to celebrate his achievement in bringing South Africans together.
For 16-year-old Michael Lowry, who has no memory of the apartheid system that ended in 1994, Mandela's legacy means he can have non-white friends. He attended two schools where Mandela's grandchildren were also students.
"I hear stories that my parents tell me and I'm just shocked that such a country could exist. I couldn't imagine just going to school with just white friends," Lowry said.
Shortly after the news of Mandela's death, Tutu had tried to calm fears that the absence of the man who steered South Africa to democracy might revive some of the ghosts of apartheid.
"To suggest that South Africa might go up in flames - as some have predicted - is to discredit South Africans and Madiba's legacy," Tutu said in a statement on Thursday.
"The sun will rise tomorrow, and the next day and the next ... It may not appear as bright as yesterday, but life will carry on," Tutu said.
Zuma and his ruling African National Congress face presidential and legislative elections next year which are expected to reveal discontent among voters about pervasive poverty and unemployment 20 years after the end of apartheid.
But the former liberation movement is expected to maintain its predominance in South African politics.
Mark Rosenberg, Senior Africa Analyst at the Eurasia Group, said that while Mandela's death might even give the ANC a sympathy-driven boost for elections due next year, it would hurt the party in the long term.
He saw Mandela's absence "sapping the party's historical legitimacy and encouraging rejection by voters who believe the ANC has failed to deliver on its economic promises and become mired in corruption."
Mandela rose from rural obscurity to challenge the might of white minority rule - a struggle that gave the 20th century one of its most respected and loved figures.
He was among the first to advocate armed resistance to apartheid in 1960 but was quick to preach reconciliation and forgiveness when the white minority began easing its grip on power 30 years later.
He was elected president in landmark all-race elections in 1994 after helping to steer the racially divided country towards reconciliation and away from civil war.
Mandela was awarded the Nobel Peace Prize in 1993, an honor he shared with F.W. de Klerk, the white Afrikaner president who released him in 1990. Reacting to his death, the Nobel Committee said Mandela would remain one of the greatest ever prizewinners.
In 1999, Mandela handed over power to younger leaders better equipped to manage a modern economy - a rare voluntary departure from power cited as an example to African leaders.

This made him an exception on a continent with a bloody history of long-serving autocrats and violent coups.