Financial News

Chile’s central bank will probably keep its benchmark interest rate at a record low in a bid to safeguard a nascent economic rebound amid tame inflation.

Policy makers meeting today will keep the benchmark rate at 0.5 percent for a third month, according to all 10 economists surveyed by Bloomberg. Central bank President Jose De Gregorio last week said that the bank’s five-member board will likely maintain its current rate until the second quarter of 2010.

The bank’s president said he plans to hold borrowing costs down in an effort to stoke an economic expansion above 4.5 percent, which would likely push inflation back up toward policy makers’ 3 percent target. Prices fell 1.1 percent in the 12 months through September, the steepest decline since the 1930s, after the cost of energy dropped and the economy shrank.

“Inflation is negative and no one expects much inflation in coming months,” said Julio Espinoza, an economist at Banco Bice SA in Santiago. “If things change, the bank may raise rates sooner, maybe in March, but it’s difficult to see it happening before then.”

Beyond setting the benchmark rate today, board members may decide to shorten the maturity of cheap six-months loans the bank has been offering to lenders since July, according to economists including Espinoza and Jimena Zuniga at Barclays Capital in New York.

‘Extraordinary’ Measures

Trimming the duration of the longest loans available to 90 days or 150 days from the current 180 days would give De Gregorio greater freedom to act, Zuniga said.

The 180-day loans, for which the bank charges the overnight rate, represent a “commitment and conviction” that the rate will remain low, De Gregorio said in July. It would be bad business for the bank to raise its overnight rate while cheaper loans were still outstanding, he said.

“The withdrawal of the extraordinary liquidity measures will be sooner rather than later,” said Juan Eduardo Coeymans, an economics professor at the Pontifica Universidad Catolica de Chile. “When they start to raise the rate depends on the economy bad credit pay day loans.”

Chile’s economy shrank in the first two quarters of this year after prices for its exports, led by copper, plunged and domestic demand evaporated.

Companies reacted to uncertainty by running down their inventories to historical lows, selling stock and emptying warehouses, Finance Minister Andres Velasco said Oct. 6.

Trend, Targets

After ramping up the cost of borrowing to a 10-year high last year as inflation reached 9.9 percent, the central bank lowered its overnight rate by 7.75 percentage points this year, a reduction matched only by Turkey.

Chile’s consumer prices will probably fall 0.8 percent this year as gross domestic product contracts 1.6 percent, the government’s budget office said Oct. 7.

The shrinking economy has opened up a gap between actual output and potential output, the central bank argued in a monetary policy report last month.

Chile’s economy can probably grow 4 percent to 4.5 percent next year without generating inflation, so the bank will probably set policy to target a growth rate faster than that to help inflation return toward its target over the next two years, it said in the report.

“With negative inflation and trying to bring back inflation to our target, we have an extremely expansionary monetary policy,” De Gregorio said in Oct. 5 interview from Istanbul.

2010 Growth

Pushing for growth faster than 4.5 percent is the “only coherent way to close the quite substantial output gap and bring inflation back toward the target,” he said.

The economy may grow 5 percent in 2010 as companies ramp up hiring and output, Velasco said Sept. 30.

The central bank forecasts growth of as fast as 5.5 percent next year, which would be mostly due to its efforts to keep borrowing cheap, De Gregorio said. Recovering inventories aren’t a good engine for prolonged growth, he said.

Source

Prime Minister Vladimir Putin arrives in China today bidding to strengthen a relationship forged by Russian oil exports to Asia’s largest energy consumer.

Russia, which this year sealed Chinese oil contracts valued at $100 billion, is now negotiating an agreement that would make China OAO Gazprom’s biggest customer for natural gas. Its communist neighbor currently buys no Russian gas.

The two countries, which were on the brink of war 40 years ago despite a shared ideology, are deepening ties based on mutual economic gain. Bilateral trade totaled a record $56 billion in 2008, a six-fold increase in six years, according to Russia’s Federal Customs Service.

“Political ties are very good, probably the best since China’s communist revolution in 1949,” said Fyodor Lukyanov, the editor of Moscow-based Russia in Global Affairs magazine. “There’s never been such closeness in position on major international issues, and there are no more territorial disputes.”

China and Russia, the world’s third- and ninth-largest economies respectively, hold two of the five permanent seats on the United Nations Security Council as well as membership in the nascent BRIC group that also includes India and Brazil. The former foes, which share a border more than 4,000 kilometers (2,500 miles) long, broke a three-decade diplomatic deadlock in 1989 when then Soviet leader Mikhail Gorbachev visited Beijing.

Putin, 57, is set to meet with Chinese President Hu Jintao and Prime Minister Wen Jiabao in two days of talks that start tomorrow. He’ll also attend a meeting of the Shanghai Cooperation Organization, a regional group that also includes four former Soviet republics in Central Asia.

Oil Deal

Russia agreed in February to supply China with oil for 20 years in return for a $25 billion credit to state oil company OAO Rosneft and the government’s oil pipeline monopoly OAO Transneft. The total value of oil accords signed with Chinese companies this year amounts to about $100 billion, the Russian government said in a statement released before Putin’s trip.

Transneft plans to finish the first segment of its East Siberia-Pacific Ocean pipeline this year, enabling Russia to begin sending the fuel directly to China. Oil and other mineral products account for 56 percent of trade, with Russia currently making fuel deliveries by rail and through a pipeline that passes through Kazakhstan.

Gazprom, which aims to become a global energy company beyond its traditional markets in Europe, plans to build two gas pipelines to China that might one day deliver as much as 80 billion cubic meters annually, or more than half its current European exports. Gazprom and China National Petroleum Corp. last month initialed an accord in advance of Putin’s visit.

‘Ideal Outcome’

“The ideal outcome would be a similar deal to that agreed between China and Russia for oil,” Chris Weafer, chief strategist at UralSib Financial Corp low interest payday loans., said in a note to clients. “We could see a timeline not only for the pipelines but also for the development of the Kovykta gas deposit.”

Gazprom has not yet completed a deal to buy oil producer TNK-BP’s stake in Kovykta, an east Siberian field that holds enough gas to supply Asia for five years.

China, in its drive for new energy sources to fuel the world’s fastest-growing major economy, is also reaching out to landlocked Central Asian producers that until recently were dependent on Russia’s pipeline systems to bring their oil and gas to market. CNPC plans to finish building a gas pipeline to Turkmenistan, Central Asia’s largest gas producer, this year.

“Russia sees this as a foray into its traditional zone of interests,” Lukyanov said. “Russia tries to compensate its economic weakness with political initiatives. But China is hard to attract if it doesn’t see their necessity.”

Shanghai Group

The Shanghai Cooperation Organization, whose prime ministers meet in Beijing on Oct. 14, is at risk of becoming irrelevant unless it takes on a greater economic role, said Alexander Lukin, director of the East Asian Studies Center at the Moscow State Institute of International Relations.

“SCO doesn’t have the image of an organization that can make any economic difference,” Lukin said. China may lose interest in the group as a forum for doing business and give priority to developing bilateral relations, he said.

At the organization’s last meeting in June, Hu said China would supply member countries with $10 billion in credits to help weather the financial crisis. Besides Russia and China, the group comprises Kazakhstan, Uzbekistan, Kyrgyzstan and Uzbekistan.

North Korea

Putin comes to China a week after Wen, on a visit to Pyongyang, won a conditional agreement for North Korea to return to six-party negotiations, which include Russia, aimed at eliminating North Korea’s nuclear weapons program. Russia and China have been the reclusive regime’s closest partners during the past six decades.

While Russia and China face a “delicate balance” where their interests overlap in Central Asia, the two former Cold War rivals have more that binds than divides them, said Zhu Feng, a Beijing University professor who specializes on international security issues.

“The two countries are cautiously but passionately pushing ahead for greater cooperation,” Zhu said. “Oil shipments are a very strong economic bond.”

Source

The key informant in the U.S. tax evasion case against Swiss bank UBS AG faces prison next year, but his harsher-than-expected treatment by the U.S. Justice Department will undermine efforts to expose secretive offshore tax havens, lawyers and whistle-blower advocates say.

Bradley Birkenfeld, a 44-year-old U.S. citizen, has been hailed by his attorneys and prosecutors alike as pivotal to the tax case against UBS, his former employer.

The case centered on UBS’s private banking business and on wealthy Americans who used their Swiss accounts to hide money overseas to evade taxes. In August, UBS agreed to turn over 4,450 names of American clients with undisclosed offshore accounts to settle a civil suit by the U.S. government.

By coming forward in the summer of 2007 and volunteering insider information to the Justice Department, Birkenfeld exposed a “massive fraud scheme” that probably never would have been discovered otherwise, said Kevin Downing, a senior Justice Department trial lawyer who spoke at his sentencing in Fort Lauderdale on August 21.

Despite that praise, Birkenfeld, who pleaded guilty to a single fraud conspiracy count in June 2008 for helping a billionaire hide assets from the Internal Revenue Service, was sentenced to 40 months in prison and ordered to start serving his time no later than January 8.

Justice Department officials, in a claim disputed by Birkenfeld’s supporters, said the punishment was meted out because Birkenfeld had initially sought to conceal his personal involvement in tax fraud.

Lawyers and whistle-blower advocates have expressed outrage over the sentence. They said they had expected Birkenfeld to get off with just a fine and probation, given that his voluntary disclosure of UBS practices led the company to settle criminal charges by paying $780 million and promising to name thousands of suspected American tax cheats and exit the U on line pay day loans.S. tax-shelter business.

“By prosecuting Brad, it is going to greatly harm IRS efforts to encourage future whistle-blowers,” said Birkenfeld lawyer Dean Zerbe, former tax counsel for the Senate Finance Committee.

“The only people that are benefiting from sending Brad to jail are the Swiss bankers and their clients,” he added.

‘TERRIBLE MESSAGE’ TO WHISTLE-BLOWERS

Zerbe is pressing for Birkenfeld’s formal recognition under an IRS whistle-blower program and says his client could still collect millions of dollars for his cooperation from the government.

“There is no question that Brad is the most important tax whistle-blower ever,” said Zerbe, who helped write a 2006 law that boosted rewards for those giving key information in tax cases involving evasion of $2 million or more.

Birkenfeld’s sentencing was originally set for August 15, 2008, but was delayed three times as the Justice Department, citing his cooperation in the UBS investigation, called for more time to advance its ongoing probe.

Zerbe, however, said the Justice Department stopped seeking any information more than a year ago and had left Birkenfeld hanging in legal limbo ever since.

“June 10, 2008 is the last time that DOJ asked Birkenfeld any questions regarding UBS, Swiss private banking or his former U.S. clients with UBS,” said Zerbe. 

Read more

Coffee retailer Starbucks Corp is suing a former executive it accuses of violating non-competition and separation agreements when he went to work for rival Dunkin’ Donuts.

Seattle-based Starbucks said it is suffering ongoing harm as long as Paul Twohig, a former division senior vice president, remains employed at Dunkin’ Donuts, according to the complaint filed Monday in the U.S. District Court in the Western District of Seattle.

At the time of his departure from Starbucks in March 2009, Twohig was senior vice president, overseeing the coffee retailer’s Southeast Division. He was responsible for developing Starbucks brand for thousands of retail stores and formulating business plans to respond to competitors such as Dunkin’ Donuts, the complaint says.

The dominant coffee purveyor has been challenged by lower cost rivals such as Dunkin’ Donuts and McDonald’s Corp, which now offer similar fancy coffee drinks.

Starbucks wants Twohig to leave Dunkin’ Donuts and is suing for at least $75,000 bad credit pay day loans.

Twohig started with Starbucks in 1996 and left in 2002. He returned in 2004, signing a non-compete agreement, which prohibited for 18 months from working as a manager for any competitor with 50 miles of a Starbucks, according to the complaint. When he left, he received “substantial” severance and signed a separation agreement.

According to the complaint, Twohig in August asked to be released from the non-compete agreement so he could take a job with Canton, Massachusetts-based Dunkin’ Donuts. Starbucks refused.

Through an Internet search, Starbucks on October 3, learned Twohig had accepted a position with Dunkin’ Donuts.

Calls left at Twohig’s home were not returned.

(Editing by Lincoln Feast)

Read more

Chrysler Group has split its Dodge brand into an auto and a Ram truck unit, and said two recently appointed brand-level chief executives are leaving the company.

"The brand-focused strategy has been refined further with the unbundling of the Dodge brand which now consists of the Dodge Ram brand and the Dodge car brand organizations," Chrysler Group CEO Sergio Marchionne said in statement Monday. "This reorganization will allow us to protect and develop the unique nature of the product offerings within the Dodge Brand."

Under the management structure put in place by Marchionne after Chrysler exited bankruptcy in June, each division of Chrysler has its own president and CEO who is responsible for the individual business results of that unit. Each of those executives also has an additional company-wide responsibility, such as sales or marketing.

Chrysler’s lead designer, Ralph Gilles, has now been appointed president and CEO of the Dodge car brand. He will continue to lead product design for the automaker. Gilles joined Chrysler in 1992 and helped design many of the carmakers’ most iconic products, including the Chrysler 300 sedan.

Fred Diaz, Jr. has been named president and CEO of the Dodge Ram brand. He will also head the sales department at Chrysler Group. Diaz had been head of Chrysler Group’s Denver business center.

Marchionne created a similar management structure at the carmaker Fiat, which he also leads. Fiat now owns a 20% stake in the new Chrysler Group as part of a bankruptcy restructuring deal.

Two Chrysler brand CEOs are leaving the company as part of the reorganization. Peter Fong, who had been in charge of the Chrysler brand as well as sales for all the brands, "has resigned for personal reasons." Dodge brand CEO Mike Accavitti has left the company "to pursue other interests," the company said in an announcement.

In his role as head of Chrysler, Fong is being replaced by Olivier Francois. He also works for Fiat as head of the Italian automaker’s Lancia luxury brand and he will retain that job.

In addition to heading the Chrysler and Lancia brands, Francois will also be responsible for worldwide marketing for all the Chrysler Group vehicle brands as well as for all of Fiat’s brands.

Chrysler Group also appointed Joseph Veltri as head of product planning. 

Source

The U.S. job market strengthened in September for the first time since January of last year, suggesting a slow and rough road to recovery, a research group said on Monday.

The Conference Board, a private research group, said its Employment Trends Index edged up to 88.5 in September from an upwardly revised 88.2 in August, originally reported at 88.1.

The index is now down 15.6 percent from one year ago, the group said.

“While the employment numbers reported by the government last Friday were certainly disappointing, The Conference Board Employment Trends Index suggests that the trend of declining job losses will continue,” said Gad Levanon, senior economist at The Conference Board.

“But the road to recovery is definitely going to be bumpy and may last unusually long, given the depth of the recession we have experienced.”

Government data on Friday showed that U.S. employers shed a larger-than-expected 263,000 jobs in September, sending the unemployment rate to its highest level since 1983.

(Reporting by Camille Drummond; editing by James Dalgleish)

Read more

In the 1980s, when stocks mostly surged, a few mutual fund managers became the equivalent of rock stars.

Tops among them: Peter Lynch, who racked up average annual returns of a remarkable 29 percent over a 13-year run.

Lynch did it at Fidelity Magellan, which continued to grow after he left in 1990. What once was the world’s largest fund swelled from $13 billion to nearly $110 billion a decade later. Assets peaked three years after the fund shut its doors to new investors because it became so big it was hard to manage effectively.

So where is Magellan now? It’s at $24 billion, and struggling to draw investors who fled in droves after years of mediocre performance. Magellan is still big by any standard, but it’s merely Fidelity’s fourth-largest stock fund.
"I don’t worry about too many assets now," says current manager Harry Lange, who took over in late 2005.

Magellan reopened to new investors early last year, but those who gave it a try were disappointed. The fund’s 2008 plunge? Forty-nine percent — steeper than the market’s nearly 39 percent decline. Blame bad bets on dogs like AIG and Wachovia — financial companies that Lange held on to for too long.

But Lange is turning things around, thanks to a sharp departure from his predecessor’s style. Where Robert Stansky was criticized for too closely mirroring broader markets, Lange has tilted the fund heavily in favor of growth stocks — companies whose comparatively steep share prices are backed by expectations that earnings will keep growing rapidly. He’s eased out of cheaper value stocks with steadier earnings, and takes a go-anywhere approach in keeping with the fund’s namesake 16th century explorer. Nearly one-quarter of Magellan’s holdings are international stocks.

Many of the same bets on riskier stocks that weighed Magellan down last year are lifting it in 2009. It’s up 35.6 percent, easily topping the nearly 17 percent gain for its benchmark, the Standard & Poor’s 500, and beating nearly nine of 10 of its peer funds.

So is it time to climb back aboard Magellan? Only if you’re willing to commit to a fund whose penchant for racy stocks makes it unusually volatile.

This year, the fund expanded its already substantial stake in recently hot technology stocks — its second- and third-largest holdings are specialty glass maker Corning Inc. (up 62 percent this year) and semiconductor maker Applied Material (up 34 percent). It’s also favored hard-hit fare like home builder Toll Brothers (down 8 fast pay day loans.8 percent) and big banks — Magellan’s most recent list of top 10 holdings included Bank of America, J.P. Morgan Chase, Wells Fargo and Goldman Sachs.

Lange has turned Magellan into "a fund for optimists," according to Morningstar’s lead Fidelity analyst, Christopher Davis.

"If you look at its portfolio, it’s positioned for an economy that’s improving," Davis says, noting an absence of such defensive favorites as Wal-Mart and Procter & Gamble.

Lange says this year he’s slightly eased off his leaning toward growth stocks but still heavily favors the category. Though value stocks outperformed growth for an eight-year run after the dot-com bubble deflated early this decade, the pendulum swung back to growth last year — financial stocks that were hit so hard last year are mostly in the value category. Growth’s ranks include plenty of tech names that have recently fared well.

Lange still likes tech because of its big stake in emerging markets, where consumers in countries like China and India continue to drive growing demand for gadgets including mobile phones from makers like Nokia, Magellan’s top holding. He figures that trend will continue giving growth an edge over value. "I’m pretty confident that growth will be as strong in the next six to 12 months," Lange says. "There are a lot of people out there who think after that, it will be a sluggish recovery. I’m more bullish than that."

As for his fund’s choppiness, Lange acknowledges that with his growth-oriented style, "it’s pretty tough not to have volatility in these unusual times."

Even with this year’s strong results, winning back investors who fled Magellan has proved tough. Lange is still trying to shake the cumulative record of the last 10 years, a period when Magellan posted an average annual loss of 1.2 percent, slightly worse than most of its peers.

"This is not your grandfather’s Magellan fund," says Jim Lowell, a former Fidelity employee who runs an independent newsletter, FidelityInvestor.com, that evaluates the company’s funds.

Lowell currently recommends Magellan but says it’s no longer appropriate as a core retirement holding for investors who are looking for the broad exposure it once offered. Instead, Magellan is geared toward those seeking more growth exposure in an otherwise diversified portfolio.

Source

Loblaw Cos. Ltd. is taking direct aim at Wal-Mart’s price claims in the Ontario market, saying the food prices in its Real Canadian Superstores are now on par with the world’s biggest discounter.

To drive home the point with consumers, starting Friday, the flyers for the Ontario Superstores will be advertising new prices on some 2,000 items, roughly 10 per cent of the food in Superstores.

The program, called "rounding down," takes those prices down to the nearest dollar, or in some cases down several dollars, Loblaw’s chief operating officer Dalton Philips said in an interview yesterday.

"It’s a very aggressive price campaign," Philips said.

"We’re going head-to-head with Wal-Mart."

Wal-Mart countered later in the day, saying it stands by its commitment to provide "unbeatable prices" on a basket of goods.

"Anybody can at any given point in time lower the price on a specific product, but our commitment is unbeatable prices on a whole basket," Wal-Mart spokesperson Andrew Pelletier explained.

Wal-Mart Canada has been running its own price promotion campaign since early September, Pelletier noted, discounting both food and general merchandise items across the store to celebrate its 15th anniversary.

The move comes as glum economic news has more consumers shopping around for bargains, trading down to cheaper products and checking flyers for the best deals.

"The consumer has become very promiscuous," Philips said, referring to the lack of customer loyalty to a particular store or brand.

The question is whether its Real Canadian Superstores in Ontario have been reaping any of those benefits.

Built to compete with Wal-Mart as the global giant entered Canada’s supermarket business three years ago, Loblaw’s Superstores contain food and general merchandise.

The Ontario stores are modelled on a format that had been highly successful for the company in western Canada for more than 25 years online payday loans.

But the concept hasn’t translated well. Indeed, one of Galen Weston’s first decisions after taking the helm at Loblaw in September 2006 was to stop building more Superstores in Ontario until the company got the format right.

(It has since opened one in Milton and one in Peterborough, but they were both already in the pipeline.)

There’s a total of 37 now in Ontario.

Meanwhile, Wal-Mart has opened 42 combined food and general merchandise "supercentres" in Ontario and has plans to open or expand another 25 to 30 existing stores across the country this year.

Weston also acknowledged one of the company’s problems was that consumers perceived its stores to be more expensive than rivals, whether it was a Loblaw store competing with Sobeys, or a No Frills up against Food Basics.

The company has since invested millions in lowering prices, first in discount stores and then in its conventional stores.

Now, it’s tackling the Superstores in Ontario.

The big behemoths present a particularly difficult challenge in this market, analysts said. Unlike western Canada, where Loblaw didn’t operate any No Frills stores until recently, the Real Canadian Superstores were already the price leaders long before Wal-Mart entered the food business.

But in Ontario, the perception is No Frills is the price leader in food while Wal-Mart is ahead of the pack in general merchandise, leaving the Superstores without a strong image.

Pricing is just one of the areas Loblaw is addressing in the Superstores, Philips said.

The company is also adding more ethnic food and club packs to those stores in a bid to appeal to a wider customer base and help families shop on a budget, he said.

It’s also launching bulk bins, where customers can scoop up basic ingredients cheaply, as more consumers resort to cooking from scratch to cut costs, Philips explained.

Source

Bank of America Corp CEO Kenneth Lewis announced he was retiring, after months of being dogged by a series of government investigations into the company’s acquisition of Merrill Lynch last year that had become a major distraction for the biggest U.S. bank.

The reputation of the 62-year-old Lewis had been badly bruised by massive credit losses and the need for two government bailouts. But experts believe it was the intense scrutiny from federal regulators, state attorneys general and the courts that forced his hand.

“It’s a good thing for the company to make a clean break and move forward,” said Walter Todd, portfolio manager for Greenwood Capital Associates.

He added that regardless of the reality, “the perception is, everything that happened with the Merrill transaction was his fault, and for Bank of America to move beyond that, Lewis would have to go.”

Bank of America shares, which have shed 50 percent since the Merrill Lynch deal was announced on September 15, 2008, the same day Lehman Brothers declared bankruptcy, were up 2 percent in after-hours trading.

His retirement by the end of the year — which Lewis characterized as voluntary in a letter to employees — sets up a struggle within the bank’s ranks to be his successor, with six possible candidates seen vying for the job, including recently named wealth management chief Sally Krawcheck, consumer banking chief Brian Moynihan and Chief Financial Officer Joe Price.

His departure underlines the dramatic change there has been at the top of the nation’s banks in the past two years. Only Lloyd Blankfein, the head of Goldman Sachs Group Inc, and Jamie Dimon, CEO of JPMorgan Chase & Co, have survived. Some lost their jobs as their banks collapsed or were taken over. Others resigned or were forced out as results suffered.

Lewis’ planned retirement could raise new questions about the staying power of Citigroup Inc Chief Executive Vikram Pandit, who, like Lewis has been under pressure from regulators after his bank received a massive taxpayer bailout.

In addition to Krawcheck, Moynihan and Price, leading candidates to eventually replace Lewis include mortgage lending chief Barbara Desoer, investment banking chief Thomas Montag and Greg Curl, chief risk officer, said bank spokesman Bob Stickler.

LEWIS WOULD BUILD TOP U.S. BANK

Known as a dealmaker, Lewis built the largest U.S. retail banking franchise through aggressive acquisitions.

Yet his last deal appears to have been his undoing.

In September 2008, the bank announced a $50 billion buyout of Merrill Lynch & Co at the height of the financial crisis.

At the time, Lewis and the bank were heralded as saviors of the financial system.

But they began to draw public ire when questions arose in early 2009 about how the bank publicly disclosed roughly $3 billion in accelerated Merrill Lynch bonus payments and billions in Merrill Lynch losses during fourth quarter 2008 in advance of a shareholder vote on the deal. 

Read more

The International Monetary Fund will raise its 2010 growth forecast for the world economy to 3.1 percent from 2.5 percent to reflect improving economic conditions, a newspaper reported on Wednesday.

Citing unidentified sources at the IMF and the German government, German business daily Handelsblatt said the IMF had revised its global forecast for this year to a 1.1 percent contraction from a negative 1.4 percent before.

“The data is pointing upwards on a weekly basis,” it quoted one of the sources as saying. The IMF is due to update its forecasts in its World Economic Outlook to be released in Istanbul on Thursday.

The Handelsblatt also said the IMF had raised its forecasts for Germany’s gross domestic product to grow by 0.3 percent next year after previously predicting a 0.6 percent contraction.

Output in Europe’s biggest economy would shrink by 5.3 percent this year, less severely than the IMF’s previous forecast of a 6.2 percent decline, the newspaper said.

(Reporting by Jan Dahinten; Editing by Kim Coghill)

Read more