Daily Sources 4/27

1. BANK OF JAPAN CUTS GDP FORECAST TO 3.3% CONTRACTION, GLOBAL LNG EXPORTS DOWN

Michiyo Nakamoto at the Financial Times reports that the Bank of Japan has forecast GDP to fall by 3.3% in the fiscal year beginning April 1.

"In spite of the worsening plight of the world’s second largest economy, the government’s efforts have boosted the popularity of Taro Aso, prime minister. Mr Aso’s approval rating fell to single digits earlier this year but a poll by the Nikkei business daily, published yesterday, found his rating had risen 7 percentage points from March to 32%.

Setting out its revised GDP forecast, the government said it expected exports to fall 27.6% this year and industrial production to decline 23.4%. It had earlier predicted declines of 3.2% and 4.8% in exports and production, respectively."

Dinakar Sethuraman at Bloomberg reports that JPMorgan released a study showing that global LNG exports fell by about 5.5% in the first two months of 2009.

"Last year, LNG exports declined about 2.9% to the equivalent of 23.08 billion cubic feet a day of natural gas, the US bank said.
...
'The decline in global LNG exports in 2009 is driven by reduced exports by six of the 14 largest exporters--Algeria, Nigeria, Qatar, Indonesia, Egypt and Equatorial Guinea,' JPMorgan said in the report. 'Producers are making individual decisions to reduce supply in the face of a weak global gas market.'"

Industrial production accounts for a considerable share of natural gas consumption, in the US in 2007 34% of the natural gas consumed in the country was for industrial uses.

2. SWINE FLU SPREADS TO EUROPE

Der Spiegel reports that the EU's health chief has warned travelers not to visit the US or Mexico except in cases of extreme urgency.

"The disease arrived in Europe as Spanish authorities said on Monday that a male patient had tested positive for the virus and 17 other people were under observation. The man was responding to medication and his infection wasn't life-threatening, Spanish Health Minister Trinidad Jimenez said."

3. POLAND TO DELAY ADOPTION OF THE EXCHANGE RATE MECHANISM

In an interview with Agnes Lovasz of Bloomberg, the Polish Deputy Finance Minister Dominik Radziwill indicated that Poland was unlikely to join the pre-euro adoption exchange rate mechanism in the first half of 2009, though Warsaw still expects to join the eurozone by 2012.

"The Polish zloty is 'too volatile' to consider entering the exchange-rate mechanism 'seriously,' Ludwik Kotecki, another of the country’s nine deputy finance ministers, said on April 1."

In yesterday's interview Radziwill indicated that Warsaw did not intend to use the $20.5 billion flexible credit line it applied for from the IMF earlier this month.

4. PEACE IN SWAT FAILS

Nahal Toosi at the Associated Press reports that the Pakistani military has started a push into southern Swat after the Taliban sent troops to occupy Buner, the province just South. The Taliban has responded by calling the peace deal establishing sharia in Swat "worthless" and the peace talks between Islamabad and the organization have been suspended. In today's Informed Comment, Juan Cole argues that the take on the situation in Pakistan is hugely overblown, noting:

"[T]he Pakistani military is not 'unable' to stop the Taliban in the North-West Frontier Province. The Zardari government is just not desirous of alienating the Pushtuns by being heavy-handed. They only sent in 250 special ops troops to deal with Buner, which is a very light touch for an army with lots of artillery, tanks and fighter jets.

Pakistan now is not like Russia in 1917. Its two main political parties are of old standing, have contested many elections, have millions of supporters and canvassers. The main threat to the PPP government is parliamentary--that it will be unseated by the Muslim League if it fails a vote of no contest and there are new elections."

Prof. Cole's post is worth reading in its entirety.

5. DC MEETING OF BIGGEST EMITTERS TAKES PLACE TO JUMP START DECEMBER COPENHAGEN TALKS

Deborah Zabarenko and Jeff Mason at Reuters report that the Obama Administration pledged to work with the other largest greenhouse gas emitters to reduce their carbon footprints.

"The major economies represented at the meeting include Australia, Brazil, Britain, Canada, China, the European Union, France, Germany, India, Indonesia, Italy, Japan, Korea, Mexico, Russia, South Africa and the United States.

Obama aims to cut US emissions by about 15% by 2020, back to 1990 levels. The European Union and many environmentalists want the United States to go further."

The meeting was scheduled with the idea of jump starting the environmental talks prior to the conference taking place in Copenhagen in December.

"[Secretary] Clinton touched on a major sticking point in international talks--the role that big developing countries should play--by admitting US mistakes in allowing its own emissions to skyrocket.

'As I have told my counterparts from China and India, we want your economies to grow ... We just hope we can work together in a way to avoid the mistakes that we made that have created a large part of the problem,' she said."