ECONOMY

In Brief

Largest fall in industrial output since 2001 Greece’s industrial output plunged 6.6 percent year-on-year in May, hurt by weaker manufacturing and lower mining and power production, the National Statistics Service (NSS) said yesterday. In the year to May, Greece’s industrial output was down 2.4 percent compared to the same period a year ago, NSS said. One economist said it was the sharpest fall since December 2001. NSS officials cited a 12-day transport strike by truckers, high oil prices and a tainted seed-oil scandal that shut down manufacturing of by-products like margarine and other processed foods. Manufacturing output fell 7.9 percent. «The truckers’ strike and high fuel costs hurt the economic climate, reflected in a drop in sales of about 11 percent at local soft drink producers,» an NSS official said. Coca-Cola Hellenic bottling, the world’s second largest Coke bottler, last month cut 2008 earnings guidance after a worse than expected performance up to May. (Reuters) Romania’s January-May trade deficit up 10.7 pct BUCHAREST (Reuters) – Romania’s January-May trade deficit widened by 10.7 percent on the year to 8.8 billion euros ($13.8 billion), keeping a trend seen so far this year, data by the National Statistics Board (INS) showed yesterday. The external deficit fuelled by a vast trade gap is Romania’s main economic headache, sparking talk of risks to the country’s stability in the wake of global financial woes. But export growth has picked up in recent months, while import growth slowed down, on the back of a weaker leu currency compared to last year’s levels. Some analysts also said this reflects a positive structural change in the Romanian economy. Inflation rises Romania’s annual inflation edged up to 8.6 percent in June from May’s 8.5 percent chiefly because of rising food costs, the National Statistics Board (INS) said yesterday. In a Reuters poll of analysts, the mid-range forecast showed annual inflation at 8.6 percent, matching the two-year high hit in March and compared with 8.5 percent in May. The INS said prices rose 0.3 percent on the month in June, with food price growth slowing down to 0.3 percent from 0.5 recorded in May. Fresh fruit recorded the steepest rise among foodstuffs of 7.8 percent, followed by edible oil with 2.3 percent. (Reuters) Rate hike Turkey’s central bank is expected to raise key interest rates by 50 basis points at its monthly meeting next week, tightening monetary policy in a bid to curb inflation. In a Reuters poll of 16 economists, 11 predicted a 50 basis point hike while five forecast a 25 basis point rate hike. In June, the central bank revised its inflation targets up to 7.5 percent for end-2009, 6.5 percent for end-2010 and 5.5 percent for end-2011. The previous target for next year was 4 percent. This year’s official target is still 4 percent but current inflation exceeds 10 percent. TEB chief economist Selim Cakir said he expected annualized inflation to hit its peak in August and then decelerate. «The central bank may be conservative, taking into account risks in the global markets and political uncertainties. We expect a 50 basis points hike to send the message to the markets that it focuses on new inflation targets,» Cakir said. The bank’s overnight borrowing rate currently stands at 16.25 percent and its lending rate at 20.25 percent. (Reuters)