Exports drop in May
Exports dropped significantly in May following two months of increases, adding to mixed signals about the strength of Europe’s biggest economy. The Federal Statistical Office yesterday said that exports were down 2.4 percent in calendar-adjusted terms compared with the previous month at 90.4 billion euros (US$116 billion). In year-on-year terms, exports were down 4.8 percent — led by a 9.6 drop in demand from other countries in the eurozone. The nation has so far has weathered the continent’s debt crisis relatively well — helped by its traditional export strength and a robust job market that is fueling domestic demand. The economy returned to modest growth in the first quarter after contracting during last year’s final three months, and is expected to pick up further.
Central bank expects growth
The Bank of France yesterday said it expected the struggling economy to do slightly better in the second quarter than previously expected, forecasting growth at 0.2 percent. The bank had previously forecast second-quarter growth at 0.1 percent. The economy entered recession in the first quarter of this year, contracting by 0.2 percent after shrinking by the same amount in the last quarter of last year.
Floods to cost US$4.5bn
A leading insurance company says last month’s floods across central Europe will likely cost insurers up to US$4.5 billion. The Elbe, the Danube and other rivers overflowed their banks in early last month following persistent heavy rain, causing extensive damage in parts of Germany, the Czech Republic, Austria, Slovakia and Hungary. Swiss Re yesterday estimated that the total losses for the insurance industry will be between US$3.5 billion and US$4.5 billion. It put its own exposure at about US$300 million. The company said that “effective local prevention measures,” such as mobile flood barriers that were put up in the Czech capital, Prague, spared many regions from major losses.
San Miguel, ANA hold talks
San Miguel Corp, the Philippines’ largest company and owner of a 49 percent stake in Philippine Airlines Inc, held talks with ANA Holdings Inc about investing in the flag carrier. The discussions were preliminary, San Miguel said in a stock exchange filing. Ryosei Nomura, an ANA spokesman, confirmed the talks and said no decision has been made. San Miguel paid US$500 million for the stake in April last year. San Miguel is in talks with ANA and Emirates Airline on a strategic partnership in the carrier, the Philippine Daily Inquirer reported on Sunday. Emirates has not approached San Miguel, according to the statement from San Miguel, which came in response to the Inquirer report.
Softbank rating cut
Softbank Corp, led by billionaire Masayoshi Son, had its credit rating cut to junk by Standard & Poor’s after winning approval by the US Federal Communications Commission (FCC) of its US$21.6 billion bid to buy Sprint Nextel Corp. The rating was cut to “BB+,” the highest non-investment grade, from “BBB,” with a stable outlook, S&P said in a statement yesterday. The FCC announced on Friday that the deal is in the public’s interest, giving Son a position in the US market. A lower credit rating indicates a higher risk of a default and can raise borrowing costs.