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EC: GDP growth to reach 6% y/y in 2006, slow down to 4.7% y/y in 2008. The European Commission (EC) has revised upwards its projection for the Czech Republic ’s GDP growth rate in 2006 and 2007 from 5.3% and 4.7% y/y to 6% y/y and 5.1% y/y, respectively. Nevertheless, country’s economic expansion is somewhat to decelerate to 4.7% y/y in 2008. In the forecasted period GDP will be mainly driven by accelerating private consumption supported by growing households’ incomes and buoyant credits, as well as by the gross fixed capital formation increase backed by sustained FDI inflows. At the same time, the net exports contribution to overall growth is to gradually decline because of stronger imports fuelled by households’ consumption and higher investments. Labour market development in the country has remained favourable thanks to the robust economic growth and thus the EC projects that unemployment rate is to continue its declining path at faster than previously forecasted paces to 7.4% in 2006, 7.1% in 2007 and to 6.9% in 2008, which the entry into force of new legislation promoting job search will contribute to. In addition, the recent wages’ hikes have been in line with labour productivity growth, providing for low inflation environment. Thus, the Commission preserved its estimation for inflation in 2006 and 2007 and the inflation in these respective years is to be 2.5% and 2.7%, while accelerating to 2.9% y/y in 2008. At the same time, the EC has revised upwards its expectation for the general government deficit because of budgetary execution revision, higher gross fixed capital and other capital expenditure – the deficit is projected to reach 3.5% of GDP in 2006, up from 3.2% of GDP according to previous projections, to 3.6% of GDP in 2007, up by 0.2pps compared to the Spring forecasts, while in 2008 its share in GDP is to reach 3.2% thanks to policy change assumption and continuing robust growth. EC commissioner Joaquin Almunia has commented that the Czech excessive deficit cutting measures are not ambitious, which might result of starting excessive deficit procedure against the country in March.

Indian companies express interest in Morocco. Moroccan Minister of Economic and General Affairs, Rachid Talbi Alami is currently on a three day visit to India , to promote Morocco as an investment destination. The minister reported that some leading Indian companies have expressed interest in investing in Morocco . Leading Indian companies including Aditya Birla Group, Bharat Heavy Electicals Ltd., Tata Motors, Bharat Earth Movers Ltd (BEML) and Tata Consultancy have been invited to attend a major conference to be held in Morocco in December.

CNB decided to leave rates unchanged at October sitting with 5-to-1 majority. The Czech National Bank ( CNB ) Governing Board with majority of 5 against 1 vote decided to keep interest rates flat at 2.5% at its last monetary session at end-October, reports the national bank in Minutes of the Board. Central bankers agreed that as a factor in favour of stable rates were the favourable inflationary developments with the latest consumer price inflation data being lower than and close to the CNB target band thanks to oil prices standing at below their long-term average as well as the recently observed CZK strengthening. Central bankers have revised downwards the short-term inflation outlook due to lower expected growth in food and fuel prices, as well as the lower than expected impact on prices on part of the higher excise duty; still, board members were concerned about the future development of regulated prices which are expected to pick up in 2007, thus pulling inflation upwards to the upper boundary of the inflation target tolerance band at end-2007. The latter would possibly lead to gradual tightening of monetary policy, the minutes read. Furthermore, the Board discussed the new forecast, according to which the economic expansion is to decelerate from above 6% y/y in 2006 to 5% y/y in 2008 with the economic growth structure changing as the main driving force of GDP growth - net exports will be gradually replaced by accelerating households’ consumption being positively influenced by favourable labour market developments, consumer optimism and growing lending. Gross fixed capital formation will also remain major growth factor. The changed economic expansion structure would also put some upward pressure on inflation, thus reasoning the expected interest rate hike. Moreover, inflation might increase thanks to higher economic growth abroad, in the euro area in particular, with the uncertainty being linked to whether this expansion would be driven by cyclical or structural factors. Still, if the euro area potential growth appears higher than expected, the need for ECB to raise rates would decrease, which in turn would have anti-inflationary effect in the Czech Republic , the minutes read. Meanwhile, the central bankers also discussed the fiscal policy and the existing uncertainty with regard economic fundamentals behind the planned overshooting of the 2006 state budget target.

Tax revenues rise real 20% y/y in October. The tax revenues increased by real 20% y/y to RON 6.5bn (EUR 1.8bn) in October. Revenues were RON 47.6bn (EUR 13.4bn) in whole Jan-Oct and they increased robustly by real 15.4% y/y. Half of the growth (7.5pps) was due to the higher consumption that pushed the VAT collection by real 16% up in Jan-Oct. VAT collection was 47% of total tax collection in Jan-Oct this year, roughly the same share as in the same period of last year. The revenues collected from income tax have increased more steeper, by real 33% y/y and made a significant 4.5pps contribution to the total 15.4% y/y advance in tax revenues. The total revenues to the general government budget increased by 22% y/y to RON 81.6bn (EUR 22.9bn) in Jan-Oct. The growth was around 15% y/y in real terms.

Morocco’s travel earnings increase 25.8% y/y in Jan-Sep. Office des Changes reported that travel earnings for Jan-Sep 2006 have increased 25.8% y/y to reach MAD 40.40bn (USD 4.6bn). Travel earnings for Jan-Sep 2006 have increased 59.8% y/y, as compared to the average revenues of January to September of 2001 to 2005. However, during Sep 2006 travel earnings have declined 7.8% y/y to MAD 3.55bn.

APV allegedly to modify tender for advisor in sale of majority stake in FHB. The tender for advisor in the sale of 50%-plus-one-share stake in Land Credit and Mortgage Bank (FHB) could be modified after the official decision of the government for the privatisation, MTI News Agency reported quoting sources from the finance ministry. We recall that on Oct 24 the State Privatisation and Holding Company (APV) announced a single-round closed tender for advisor, in which five undisclosed entities were invited. According to the requirements of the procedure, the winner was supposed to prepare plans for the sale of the stake to professional or institutional investor along with an option to organise a domestic public share offering. However, government’s official decision stipulates that the stake would be sold only to a strategic investor. According to FinMin’s spokesperson Ferenc Pichler, there are several options including the announcement of entirely new tender for consultant or modification of the current one. Local media speculates that one of the most likely purchasers of the FHB stake is insurer Allianz, which has recently boosted its shareholding in the lender to 8%. The previous Socialist-led government mulled the privatisation still in 2005, but the sale was cancelled just a week after it was announced.

Philippines President appreciates Moody's upgrade in outlook. Moody's Investors Service has upgraded its outlook on the Philippines from negative to stable as a result of the country's success in reducing fiscal deficits and dependence on external financing. The budget deficit in the first nine months of this year has been limited to PHP 50.4bn (USD 1.01bn), or just 40% of the target limit of PHP 125bn for the whole year. President Gloria Arroyo appreciated the and said that this is the result of the tough decisions taken by her to reform the economy. Central Bank's Governor Amando Tetangco stated that the upgradation reflects the optimism of the financial markets and of investors regarding the economy.

Kazkommertsbank places GDRs at upper end of price range. The largest Kazakh bank Kazkommertsbank reported that it placed its GDRs at USD 18.5 per unit, which is at the very top of the expanded price range, set at USD 13-18.5 per GDR. During conditional trading, GDRs’ price went up to USD 20.25 per unit. Unconditional trading is to start on Nov 8. During the offering on LSE Kazkommertsbank capitalization stood at USD 5.3bn. The core shareholders of the bank Central Asian Investment Company and its CEO Nurzhan Subkhanberdin sold 45.7mn GDRs (1 GDR represents 2 shares) and raised USD 845mn. The funds are to be used to buy 103.5mn new shares after their issue on the local stock exchange. Kazkommertsbank was founded in 1990. It focuses mainly on corporate clients, but intends to expand to middle-class retail customers as well. Kazkommertsbank assets amounted to USD 10.56bn as of Jul 1, marking growth of 18% ytd in H1/06. The other Kazakh largest banks, namely Bank TuranAlem, Halyk Bank, ATF Bank, CenterCredit Bank and Alliance Bank also think about IPO on the international markets.

Reserve Bank of India: Inflation is under control. The Financial Express reported that though prices have risen by 5.26% in the week ended October 14, the Reserve Bank of India (RBI) maintains that inflation has been kept under control in the 5%-5.5% range in H1/2006-07. In its mid-term review released on Monday, RBI said that although inflation has been contained, there are concerns over persisting inflationary pressures. Title: India, WPI Oct 21 Items 14-Oct-06 21-Oct-06 % Change over previous week WPI 208.2 208.4 0.1% Primary Articles 212.4 212.9 0.2% Food Articles' group 216.1 217.1 0.5% Non-Food Articles 186.3 186.1 -0.1% Source: Government of India

People's Bank of China increases bank deposit reserve ratio by 50 basis points. According to People's Daily , the People's Bank of China announced on last Friday that the deposit reserve ratio of banks would be increased by 0.5 pps with effect from Nov. 15. This increase will not apply to rural cooperative banks and credit cooperatives. The central bank had already raised the bank deposit reserve ratio by 0.5 pps; each in July and August. The latest increase will amount to a total hike of 1.5 pps in the current year. With this decision, banks will be required to deposit 9% of their reserves with the central bank. The hike is part of the central bank's efforts to improve the liquidity management of commercial banks and to ensure the stable growth of money and credit, and to promote all-round economic development.

‘Memorabilia’ of failed hedge fund Amaranth for sale on Ebay.

Some things cannot be taught. Class, for example. You either have it or you don’t. What does “class” mean to you? To me, it implies doing the right thing; and there’s an element of humility. Financiers are wealthy but rarely classy.