NEWS,18.12.2012

Global jobs crisis recovery to 'take five years' - UN

Global economic growth is expected to remain sluggish in the coming year and will be insufficient to pull countries out the unemployment crisis many are facing, the United Nations said in a report released today.It said under policies now in place it may take at least five years to recover from the job losses in Europe and the United States in the 2008-2009 recession."A worsening of the euro area crisis, the 'fiscal cliff' in the United States and a hard landing in China could cause a new global recession," said Rob Vos, head of the UN Development Policy and Analysis Division. "Each of these risks could cause global output losses of between 1% and 3%," he said. US President Barack Obama, a Democrat, is working with Republicans to avert steep tax hikes and deep spending cuts duet to take effect next month. Known as the "fiscal cliff," the measures could trigger another recession.The global economy is expected to grow at 2.2% in 2012, 2.4% in 2013 and 3.2% in 2014, the United Nations said in a report titled World Economic Situation and Prospects 2013.It said that 2.4% "world gross product" growth in 2013 would be "well below potential.""This pace of growth will be far from sufficient to overcome the continued jobs crisis that many countries are still facing," the United Nations said."With existing policies and growth trends, it may take at least another five years for Europe and the United States to make up for the job losses caused by the Great Recession of 2008-2009," it added.

Hopes rise for US fiscal cliff deal

The differences over how to resolve the fiscal cliff narrowed significantly on Monday night as President Barack Obama made a counter-offer to Republicans that included a major change in position on tax hikes for the wealthy, according to a source familiar with the talks.The move, which the source stressed was not Obama's final offer, was welcomed, albeit withreservations, by a spokesman for Republican House of Representatives Speaker John Boehner, who met earlier in the day with Obama as the two hammered out a way to avert steep tax hikes and indiscriminate spending reductions set for the beginning of 2013.Considerable work remains as both sides now try to bridge the gaps between them and then sell a package to their respective allies in the US Congress.In its most dramatic change in position yet, the White House proposed leaving lower tax rates in place for everyone except those earning $400 000 and above, the source said on condition of anonymity. That's up from the $250 000 threshold the president has been demanding for months, but still far from Boehner's preference of $1m. Obama also moved closer to Boehner on the proportion of a ten-year deficit reduction package that should come from increased revenue, as opposed to cuts in government spending. Obama is now willing to accept a revenue figure of $1.2 trillion, down from his previous $1.4 trillion proposal.Boehner's latest proposal calls for $1 trillion in new tax revenue, which would come from raising rates and limiting deductions that the wealthiest can take. Some of the savings in spending proposed by Obama would come from reducing the size of cost-of-living increases for all but the most "vulnerable" recipients of the Social Security retirement program, the source said, through the use of a different formula to calculate the regular raises called "chained Consumer Price Index." Obama and Boehner remained apart on the politically explosive issue of how and when to raise the government debt ceiling to permit the government to borrow more money.Boehner has proposed a one-year boost in the debt ceiling, tied to spending cuts. Obama, as of Monday night, was pushing for a two-year increase, potentially a major concession that many congressional conservatives may find hard to swallow since they have used it to extract spending cuts from the White House.Missing entirely from Obama's offer was an extension of the so-called "payroll tax holiday," which comes to an end on January 1 with an immediate negative impact on wage earners. Introduced by Obama two years ago as an economic stimulus, the tax holiday reduced an employee's share of the payroll tax from 6.2% to 4.2%. Because the tax supports the Social Security programme, however, there have been divisions in both parties over continuing the holiday.Because the details were incomplete and specifics vague, particularly on such issues as cutting the Medicare, the government health insurance program for seniors, it was uncertain how much resistance might come from Congress.But the source stressed that Monday's offer was by no means the final one from the White House.The response from Boehner's spokesman was also a positive signal. "Any movement away from the unrealistic offers the president has made previously is a step in the right direction," the spokesperson said, emphasising that differences remain on spending levels in particular."We hope to continue discussions with the president so we can reach an agreement that is truly balanced and begins to solve our spending problem." The rapid developments on Monday evening put a deal realistically within reach.Obama and Boehner held talks at the White House earlier on Monday, and aides from both parties said they were optimistic an agreement was shaping up. Rank-and-file Republicans, however, could have trouble with the tax increases on the wealthiest Americans that are likely to be part of any deal, while Obama could have a tough time selling spending cuts to his fellow Democrats. Investors were cheered earlier on Monday, before news broke of Obama's counter-offer, by signs of progress and the Standard & Poor's 500 index of US stocks rose 1.19%. Economists warn that going over the fiscal cliff could push the economy into recession. Senate Democratic leader Harry Reid said his chamber will wrap up work on the issue after Christmas." It appears that we're going to be coming back the day after Christmas to complete work on the 'fiscal cliff,'" he said on the Senate floor.Boehner faces a crucial test on Tuesday morning when he is expected to brief his party's lawmakers in the Republican-controlled House. He is not expected to bring any deal up for a vote unless a majority of the 241 House Republicans support it. Republicans have campaigned for decades on a promise to keep taxes low, but Boehner in recent days has edged closer to Obama's demand to raise tax rates on top earners. In return, Obama could back a measure that would slow the rate of growth of Social Security benefits by changing the way they are measured against inflation, according to a Senate Democratic aide.If there are no strong objections, he could try to finalise the deal with Obama on Wednesday, a Republican aide said.Both sides declined to say what Boehner and Obama discussed at the meeting, which was also attended by Treasury Secretary Timothy Geithner.The White House said Boehner's latest proposal does not meet its standards."Thus far, the president's proposal is the only proposal that we have seen that achieves the balance that is so necessary," White House spokesperson Jay Carney said at a news briefing.Republicans understand that the clock is ticking and they are confident that Boehner will get a deal they can support in the coming days, a senior House Republican aide said.Republicans want substantial spending cuts in return for increased tax revenue, but any proposal to trim popular benefit programs like Medicare will face fierce resistance from liberal Democrats, whose votes will be needed to get a deal passed. Obama could also face strong opposition from Democrats if he agrees to Boehner's proposal to slow the growth of Social Security benefits by changing the way the cost-of-living increases are measured against inflation, an approach that could save $200bn over 10 years. Obama also wants to head off another confrontation over the US debt limit, which will need to be raised in the coming months. Republicans insist that any increase in the government's $16.4 trillion borrowing authority must be paired with an equal reduction in spending.

Coal set to overtake oil as top fuel

Oil prices rose on Tuesday as hopes grew of a US deal to avert a "fiscal cliff" of tax hikes and spending cuts in the United States, the world's biggest consumer of crude, analysts said.New York's main contract, light sweet crude for delivery in January, increased by 49 cents to $87.69 a barrel.Brent North Sea crude for February advanced 58 cents to $108.22 per barrel in London midday deals."Crude oil prices rebounded on Tuesday amid hopes about the US budget details after the meeting between US President (Barack) Obama and House Speaker John Boehner provided some optimistic signs about the US economy, showing potential for a rebound in the US oil demand," said Sucden brokers analyst Myrto Sokou.Obama hosted top Republican lawmaker John Boehner in the White House for 45 minutes on Monday in the latest effort to keep the US economy from going over the fiscal cliff.The meeting follows news that Boehner had changed his position on not allowing any more taxes, saying at the weekend that he would agree to some hikes for people earning more than $1m.Originally Obama insisted higher taxes kick in for households earning more than $250 000, but has since offered to increase the threshold to $400 000.Analysts say the development shows the outline of a tentative deal is being formed.Elsewhere on Tuesday, a report said coal was set to surpass oil as the world's top fuel within a decade, driven by growth in emerging market giants China and India, with even Europe finding it hard to cut use despite pollution concerns."Thanks to abundant supplies and insatiable demand for power from emerging markets, coal met nearly half of the rise in global energy demand during the first decade of the 21st century," said Maria van der Hoeven, head of the International Energy Agency.Economic growth is expected to push up further coal's share of the global energy mix, "and if no changes are made to current policies, coal will catch oil within a decade", she said in a statement.The latest IEA projections see coal consumption nearly matching oil consumption in four years time, rising to 4.32 billion tonnes of oil equivalent in 2017 against 4.4 billion tonnes for oil.That has consequences for climate change as coal produces far more carbon emissions responsible for global warming than other fuels.

Indian central bank holds rates

India's central bank kept interest rates on hold on Tuesday, ignoring government pressure to reduce borrowing costs, but said it was shifting its focus towards boosting a flagging economy, raising the odds of a rate cut as early as January.The Reserve Bank of India (RBI) reiterated guidance from its last policy meeting in October that it was likely to resume monetary policy easing in the January-March quarter, as inflation pressures are expected to ease in the next few months.Wary of stubbornly high inflation, the RBI has kept its key policy rates on hold since a 50 basis point cut in April, in contrast to other big emerging market central banks in China, Brazil and South Korea that have been more aggressive in easing policy to support growth.On Tuesday, the central held the repo rate at 8% and also kept its cash reserve ratio (CRR) for banks steady at 4.25%, its lowest level since 1974. The CRR is the share of deposits that lenders must keep with the central bank."In view of inflation pressures ebbing, monetary policy has to increasingly shift focus and respond to the threats to growth from this point onwards," the central bank wrote in its mid-quarter monetary policy review.A Reuters poll last week showed 37 of 41 economists had expected the RBI to hold the policy repo rate steady, while respondents were roughly evenly split over the likelihood of a cut in the CRR.A lower-than-expected headline inflation reading in data released on Friday, after the polling was completed, had been seen in some quarters as raising the chances of a rate cut."Whatever the RBI spelt out in October seems to have got support from the inflation trajectory," said Abheek Barua, chief economist at HDFC Bank, in New Delhi. "Net of the base effect, we see the current trend continuing and a case for a rate cut strengthening, which they could do in January."The central bank has repeatedly resisted pressure from the finance ministry to cut rates to prop up an economy that has posted GDP growth below 6% for the past three quarters and is on track for its weakest annual performance in a decade in the fiscal year ending March.Whilst such a growth rate is still robust by the standards of developed economies, it is worryingly sluggish for a country that aspires to annual expansion of at least 8.5% to provide jobs for it burgeoning population."I think it is good that RBI sees there is room to ease and clearly they are taking a decision, keeping in mind their main job is combating inflation," said Raghuram Rajan, chief economic adviser to the finance ministry. "But they also have some incentive to seek growth in the country." The 10-year bond yield fell 3 basis points to 8.14% from levels before the decision, reflecting somewhat heightened expectations of a rate cut early in 2013. The benchmark stock index was flat."Liquidity conditions will be managed with a view to supporting growth ... thereby preparing the ground for further shifting the policy stance to support growth," the RBI said.The Congress-led minority government, faced with threats of sovereign rating downgrades due to a widening fiscal deficit, is trying to pass key reform bills allowing greater access to foreign investors in the retail, banking and insurance sectors.Appreciating the government's recent policy initiatives, the central bank said such moves along with further reforms should boost business activity and investment climate.Standard & Poor's last week issued another warning to India's credit rating, saying a wide fiscal deficit and a heavy debt burden were the most significant rating constraints. The wholesale price index (WPI), India's main gauge for inflation, softened to a 10-month low of 7.24% in November. It has remained above 7% for the past three years."Signs in softening RBI guidance is apparent as focus has shifted to growth, and odds for a rate cut in the January-March quarter are likely to gather considerable momentum here on," said Radhika Rao, an economist at Forecast Pte in Singapore."Barring a sharp acceleration in December WPI, we look for a 50 basis points reduction in Q1 2013, possibly front-loaded in the January meeting."

Saudi follows SA ban on Brazil beef

Saudi Arabia has suspended imports of Brazilian beef, Brazil's agriculture ministry said on Tuesday, and became the largest country to stop purchases after confirmation of a 2010 case of atypical mad cow disease.The decision, confirmed by a ministry press official in Brasilia, follows Egypt's ban of beef on Monday from Parana state, where a cow that died two years ago had developed atypical bovine spongiform encephalopathy (BSE), or mad cow disease. Egypt will continue to import from other states. Between January and October, Saudi Arabia imported 31,300 tonnes of beef, putting it among the top 10 largest importers from Brazil, the world's largest beef exporter. But top buyers Russia, Hong Kong and Egypt - which took more than half of the 896,000 tonnes of beef that Brazil has exported this year through September continue to import its beef, suggesting the impact could be limited. Prior to Saudi Arabia, only Japan, China and South Africa had halted imports of all Brazilian beef since Brazil announced on Dec. 7 that a 13-year-old cow that died in 2010 in Parana tested positive for the protein linked to the development of BSE.The countries are all minor importers of Brazilian beef.The cow, which was kept for breeding purposes, never developed BSE and died of other causes. But it tested positive for the causal agent for BSE, a protein called a prion, which can arise spontaneously in elderly cattle.A similar case of atypical BSE occurred in the United States in April. Like the Brazilian cow, that animal never entered the food chain and there was no major effect on U.S. beef exports.Brazilian companies like JBS SA, the world's biggest meats producer, as well as rival Minerva SA and food processor Marfrig Alimentos SA have played down the impact of the case on their operations.After it confirmed the case of atypical BSE, the World Animal Health Organization issued a statement maintaining Brazil's status as a low-risk country for mad cow disease."This classification has been followed by important countries, blocks and consumers," Minerva said in a statement on Tuesday, adding that sales to Saudi Arabia accounted for approximately 2.5% of gross sales so far this year.

NEWS,12.12.2012

UN condemns North Korean missile launch

The UN Security Council has condemned North Korea's missile launch and will continue discussions on how to respond to Pyongyang's violations of a UN ban on North Korean ballistic missile development, the council president said."Members of the Security Council condemned this launch, which is a clear violation of Security Council resolutions 1718 and 1874," Moroccan UN Ambassador Mohammed Loulichki, president of the Security Council this month, told reporters."Members of the Security Council will continue consultations on an appropriate response," he said after a closed-door meeting on the North Korean missile launch.Loulichki recalled the council's April 2012 warning to Pyongyang that the council would act in the event of any further rocket launches.UN Secretary-General Ban Ki-moon also strongly condemned the launch as a "provocative act" in breach of Security Council resolutions banning Pyongyang from developing ballistic-missile and nuclear technology.Several council diplomats said they hoped the 15-nation body would consider adopting a binding resolution, possibly expanding existing UN sanctions against Pyongyang."We support a strong reaction by the council, it's a clear violation," French UN Ambassador Gerard Araud told reporters before the council meeting. "But we have to see what our friends want.""We do consider it logical to sooner or later have a resolution," he added.British Ambassador Mark Lyall Grant echoed that sentiment: "In our view (the council) should react, it should react quickly, and it should react strongly to this provocation."A senior Western diplomat said on condition of anonymity that the United States, Europe, Japan and South Korea were among those who would like to see UN sanctions expanded.That could include adding more entities to the UN blacklist, banning travel and freezing assets of individual North Korean officials and tightening the cargo-inspection regime.Whether or not the council can agree a resolution - with or without expanding the sanctions will depend largely on China and its diplomatic ally on the Security Council, Russia. Both nations have veto powers and tend to support each other and vote the same way on issues important to either of them.China traditionally acts as the protector of neighbouring North Korea on the Security Council."Exactly what the Chinese will be prepared to accept in form and substance is not yet clear," the diplomat said. He hoped they could have a resolution agreed by the end of next week.North Korea successfully launched a rocket on Wednesday, boosting the credentials of its youthful new leader, Kim Jong-un, who took power a year ago, and stepping up the threat the isolated and impoverished state poses to opponents.The rocket, which North Korea says put a weather satellite into orbit, has been labelled by the United States, South Korea and Japan as a test of technology that could one day deliver a nuclear warhead capable of hitting targets as far away as the continental United States.It was Japan that first appealed to the Security Council to take up the issue of North Korea's missile launch.Ban, a former South Korean foreign minister, expressed concern that the launch could negatively impact prospects for peace and security in the region.A statement issued by his office said the launch was "a clear violation of Security Council resolution 1874, in which the Council demanded that the DPRK not conduct any launch using ballistic-missile technology."The statement said Ban had urged North Korea's leaders not to launch a missile but "instead to build confidence with its neighbours while taking steps to improve the lives of its people.""The Secretary General is concerned about the negative consequences that this provocative act may have on peace and stability in the region," the statement said, adding that Ban was in touch with "concerned" governments.North Korea followed what it said was a similar successful launch in 2009 with a nuclear test that prompted the UN Security Council to stiffen sanctions that it originally imposed in 2006 after Pyongyang's first nuclear test.

Euro zone recovery hopes fade further into 2013

Chances of a recovery for the euro zone economy have faded further into 2013, according to a poll of economists who say the recession has deepened over the last three months. Huge questions over the health of some of the region's biggest economies make any kind of major rebound for the euro zone extremely unlikely next year. That may have to wait until 2014, and quite possibly later. The currency union will see no better than stagnation early next year, before finally achieving paltry growth of around 0.2% in the second quarter, today's poll of more than 70 economists showed.The outlook represents a new low since started polling on the 2013 outlook in January. No economist in the survey now believes the euro zone economy grew in the current quarter.Overall, economists expect a full year average growth rate of zero for next year.The region as a whole is reliant on Germany as the biggest driver of economic growth, and the signs from there have been ominous."Key German surveys have shown few signs of recovery in Q4 so far and industrial production collapsed by 2.6% in October," said Philip Shaw, chief economist at Investec, in a research note."Hence the upturn is further away than seemed to be the case and we have slashed our 2013 euro area GDP forecast to -0.4% from 0.3% previously."Economists now believe the economy has shrunk this quarter by 0.3% rather than the 0.2% forecast last month, which would mean the recession has deepened from the 0.1% decline reported for the third quarter.Despite a clear consensus on the poor health of the economy, respondents were split right down the middle over what else the European Central Bank will do about it, if anything.Thirty-nine economists think it will hold its main refinancing rate at its current record low of 0.75% through the first quarter of next year, while 38 believe the ECB will cut it to 0.5%.That analysts are so divided is little wonder as the ECB's Governing Council members are similarly split."At least one member of the Governing Council has voted for a rate cut, which ECB President Mario Draghi said could happen if the outlook deteriorates further," said Azad Zangana, economist at Schroders, who thinks the ECB is more likely to stay on hold.Whatever the ECB eventually decides to do, inflation looks unlikely to stand in its way.The poll showed inflation falling beneath the bank's 2% target ceiling in the second quarter next year, where it looks set to stay through to midway next year.Economists put only a median 25% chance on Greece leaving the euro zone next year, echoing the findings of an October poll which found that just eight of 34 fund managers foresaw such an event.

IEA sees sluggish oil demand in 2013

Global oil demand will be sluggish throughout 2013 as economic expansion remains tepid and oil supply levels comfortable, which could alleviate oil price pressures on consumers, the West's energy agency said on Wednesday."Global demand growth is expected to stay relatively sluggish through 2013, based on the continued assumption of tepid global economic expansion," the International Energy Agency said in a monthly report.It forecast global oil demand growth for 2013 at 865 000 barrels per day, 110 000 bpd higher than in its previous report, taking consumption to an average of 90.5 million bpd.On the supply front, the IEA said spectacular growth in US production on the back of a boom in shale oil will be one of the top developments for the market in 2013.The United States will contribute around two thirds of an aggregate increase of 890 000 bpd in non-OPEC output in 2013, for  a total of 54.2 million bpd, IEA said."If confirmed, this would be the fourth-largest annual growth for nonOPEC supplies in the last decade. In fact, growth could exceed expectations in the US if prices remain high and if producers of light tight oil are able to find economic transport options for their incremental barrels," it said.The IEA also said its estimate of demand for OPEC oil was unchanged for 2013 at 29.9 million bpd, much lower than the group's current production of 31.22 million in November.It said, however, that it did not expect OPEC ministers, who were meeting in Vienna on Wednesday, to decide on any production cuts but that they would probably roll over their current 30 million bpd target, given relatively robust oil prices."Indeed, Brent futures prices are on track to surpass 2011 record levels this year, buoyed by heightened political risks in key producing countries, both in OPEC and nonOPEC countries," it said.The IEA said it believed Iranian production had edged lower in November, down 20 000 bpd to 2.70 million bpd, and that preliminary shipping data indicated volumes may fall further in December due to international sanctions.Shipments of Iranian crude, based on arrival data, fell to multi-year lows of 1.07 million bpd in September but recovered to 1.3 million in November as reduced oil buying from China and India was offset by a rise in purchases from Malaysia, Taiwan and the UAE, the IEA said."Iranian crude exports are expected to turn lower next month and into the New Year - reaching a level closer to 1 million bpd - as EU and Asian countries reduce further their crude imports from Iran in order to secure continued access to the US financial system," it said.The IEA expected top global exporter Saudi Arabia to cut shipments in coming months due to increased demand for crude supplies at its domestic and international refinery operations.It said it believed Saudi Arabia's output edged higher in November, by 100 000 bpd to 9.9 million, significantly higher than data given by Saudi Arabia to OPEC earlier this week showing output of 9.49 million.The IEA said that, although on the surface the oil market appeared calm, recent data showed radical structural changes including an apparent acceleration in the eastward shift of global oil demand growth.In the third quarter of 2012, European oil demand went through its steepest year-on-year contraction since the 2008/2009 financial crisis, while Asian oil demand remained robust.Oil demand by the European members of the OECD plummeted by 895 000 bpd in the quarter to 13.8 million bpd due to a combination of near record product prices and a weak economy."The last time European oil demand nosedived as it did this summer, international oil prices had been in freefall. Not only are crude prices holding up, but European consumer prices hovered near record highs this summer, buoyed in part by a weakening currency. This was likely part of the reason for the dip in demand," the IEA said.It also noted that five of the world's top 10 oil consumers were now nonOECD countries. While the United States still leads the top 10, Brazil, Russia, India, China and Saudi Arabia together took five of the next six spots, the IEA said.

Eurozone recovery hopes fade further

Chances of a recovery for the eurozone economy have faded further into 2013, according to a poll of economists who say the recession has deepened over the last three monthsHuge questions over the health of some of the region's biggest economies make any kind of major rebound for the eurozone extremely unlikely next year. That may have to wait until 2014, and quite possibly later.The currency union will see no better than stagnation early next year, before finally achieving paltry growth of around 0.2% in the second quarter, Wednesday's poll of more than 70 economists showed.The outlook represents a new low since started polling on the 2013 outlook in January. No economist in the survey now believes the eurozone economy grew in the current quarter.Overall, economists expect a full year average growth rate of zero for next year.The region as a whole is reliant on Germany as the biggest driver of economic growth, and the signs from there have been ominous."Key German surveys have shown few signs of recovery in Q4 so far and industrial production collapsed by 2.6% in October," said Philip Shaw, chief economist at Investec, in a research note."Hence the upturn is further away than seemed to be the case and we have slashed our 2013 euro area GDP forecast to -0.4% from +0.3% previously."Economists now believe the economy has shrunk this quarter by 0.3% rather than the 0.2% forecast last month, which would mean the recession has deepened from the 0.1% decline reported for the third quarter Despite a clear consensus on the poor health of the economy, respondents were split right down the middle over what else the European Central Bank will do about it, if anything. Thirty-nine economists think it will hold its main refinancing rate at its current record low of 0.75% through the first quarter of next year, while 38 believe the ECB will cut it to 0.5%.That analysts are so divided is little wonder as the ECB's Governing Council members are similarly split."At least one member of the Governing Council has voted for a rate cut, which ECB President Mario Draghi said could happen if the outlook deteriorates further," said Azad Zangana, economist at Schroders, who thinks the ECB is more likely to stay on hold. Whatever the ECB eventually decides to do, inflation looks unlikely to stand in its way.The poll showed inflation falling beneath the bank's 2% target ceiling in the second quarter next year, where it looks set to stay through to midway next year.Economists put only a median 25% chance on Greece leaving the eurozone next year, echoing the findings of an October poll which found that just eight of 34 fund managers foresaw such an event

China's drugs market to grow by $165bn

Drug companies are spending record amounts on acquisitions in emerging markets, with China the most attractive target nation, reflecting sharply rising sales of western medicines in the country.Overall expenditure by both overseas and domestic pharmaceutical companies in emerging markets has reached $20bn so far this year, up two-thirds on the 2011 total, according Thomson data. An analysis of year-to-date deals by law firm Freshfields Bruckhaus Deringer, published on Wednesday, showed China accounted for $6.8bn of the total.Spending by overseas acquirers alone in key growth markets is running at $3.5bn so far this year, an increase of 95% on 2011.The sharp upturn in emerging market activity contrasts with an overall decline in pharmaceutical mergers and acquisitions (M&A) worldwide to $146bn from $225bn last year.After a flurry in 2011, which took deal-making back to pre-recession levels, drug companies been wary of hitting the takeover trail in a big way in Western markets in 2012."Instead, pharma investments in fast growing economies are gathering steam," said Freshfields corporate partner Jennifer Bethlehem. "While M&A is an expensive remedy, 'pharmerging' markets are obvious investment choices for cash-rich drug companies." Emerging markets are expected to account for the bulk of growth in the global pharmaceuticals market in the next few years, as sales in Europe and United States slow due to a wave of patent expiries. China's drugs market, in particular, is forecast to grow by 15-18% annually to between $155bn and $165bn by 2016, making it the world's second-largest market after the US, according to consultancy IMS Health.Freshfields said it expected investment in China's pharmaceuticals sector to pick up further in 2013, following a smooth transition of political leadership in the country.

Mild pick-up for US economy next year

The US economy is expected to remain sluggish next year, despite widespread expectations for more monetary stimulus from the Federal Reserve later on Wednesday, a poll showed. Most consensus forecasts for the first half of 2013 were downgraded to their lowest since began polling for this period more than a year ago. The forecast for the current quarter was slashed again.That underscores a very fragile world economic outlook, given sharp slowdowns in many big emerging economies such as Brazil and India and only a tentative sign of re-emergence of China's economic growth engine."Too much of the global economy is stumbling to support export demand," said Carl Riccadonna, senior US economist at Deutsche Bank. "It's Europe, it's recession in Japan, (and) softer growth out of China for much of the year.""US exports are likely to pose a drag on growth in the current quarter, which is something we haven't see since the collapse in trade during the recession," he said.Much depends on whether politicians can sort out a deal to avoid the "fiscal cliff", a series of automatic tax hikes and spending cuts next year. Uncertainty around that has already damaged business confidence and curtailed hiring.Indeed, the poll showed growth is expected to have slowed to just 1.2% on an annualised basis in the quarter that ends this month, down sharply from 1.6% in the November poll, and well below the economy's potential.Weak exports have dragged on growth, not to mention superstorm Sandy, which hit the US east coast in October and shut down most of New York City and surrounding area for days, damaging business and infrastructure.The outlook for all of 2013 has been chopped to 1.9%, far below the Fed's September prediction of 2.5%-3.0%, and also the lowest consensus for 2013 polled so far this year.Despite a third round of bond purchases from the Federal Reserve to boost the jobs market, employment expectations remained tepid. The consensus for average monthly non-farm payrolls growth was mostly unchanged at 127 000 for the first three months of 2013.That comes despite a strong majority of forecasters, 47 of 51, expecting the central bank to buy more US Treasuries when its Operation Twist program expires at the end of December.The Fed is expected to buy $45bn of Treasuries every month in addition to the already-announced purchases of $40bn every month in mortgage-backed securities. But these new purchases will further expand the Fed's balance sheet. The poll also showed the Fed is likely to continue its monetary stimulus for at least a year, making for an additional $1 trillion of purchases. The Fed has bought bonds worth $2.3 trillion in two prior rounds of quantitative easing.A majority, 31 of 49, also expect the Fed eventually to adopt numerical thresholds for inflation and unemployment, similar to results of a survey taken last week.So far, markets have been sanguine that Washington will avoid the fiscal cliff. US stocks have erased all their losses after the November 6 presidential election and the S&P 500 is up almost 1% so far this month.But signs from lawmakers have been mixed with nothing concrete to indicate a deal will be reached by the end-of-the-year deadline.US House of Representatives Speaker John Boehner offered no signs of progress on Tuesday but said he remains hopeful that both sides would reach an agreement.But Senate Democratic leader Harry Reid said it would be difficult to get a deal before Christmas.If a deal is not reached it could lead to $600bn being sucked out of the economy in 2013 in what is essentially a self activating austerity program built into current law.