ECONOMY

In Brief

Premium on government debt highest in 10 years The premium demanded by investors for holding Greek government debt hit its highest in nearly a decade yesterday, as the political situation in the country remained tense after a week of rioting in the capital. The cost of insuring against the Greek government defaulting on its debt also rose, as the political turmoil forced market participants to shy away from Greek government bonds in favor of «safer» more liquid assets. «There has been a flight to quality by investors to Germany and also (owing to) the troubles in Greece, driving the yield spread wider,» said Peter Mueller, interest rate strategist at Commerzbank in Frankfurt. «Even if you don’t believe that Greece could end up exiting the euro, you will not want to take on risk and so spreads will widen,» he said. The spread of 10-year Greek government bond yields over benchmark German Bund yields spread to 218 basis points from 216 basis points on Friday, Reuters data showed. (Reuters) Bulgarian economy grows but forecast cut The Bulgarian economy notched up surprisingly strong growth in the third quarter, official data showed yesterday, but the International Monetary Fund nevertheless slashed its forecast for Bulgarian growth next year. According to data published by the National Statistical Institute, Bulgaria’s gross domestic product (GDP) expanded by 6.8 percent on a 12-month basis in the period from July to September. That was substantially higher than an initial estimate of 5.6 percent growth published last month and appears to indicate that Bulgaria is not yet feeling the pinch of the global economic downturn. «Bearing in mind the planned 6.5 percent annual growth this year and the global catastrophe expected to hit Bulgaria, this is a very welcome figure and much more than we expected,» said Deputy Economy and Energy Minister Yavor Kuyumdzhiev of the third-quarter GDP data. (AFP) Ethiopian exports Frankincense exports from Ethiopia, which vies with Somalia as the world’s largest producer of the aromatic resin, rose 6.5 percent in the last marketing year after demand from importers such as China and Greece increased, the country’s Agriculture Ministry said. Ethiopia exported 4,234 tons of the crop in the marketing year ending July 8, up from 3,976 tons the previous year, the ministry said last week. (Bloomberg) Consumption up Romania’s final consumption growth accelerated to 13.7 percent in the third quarter of this year from 9 percent in the same period of 2007, powered by rampant domestic spending, National Statistics Board data showed yesterday. So far this year, the new European Union member state has suffered minimal damage from the global financial crisis, avoiding the economic pain already plaguing Western Europe and many of its former Soviet bloc peers in the east. But with European demand slowing and global cash shortages likely to curb investment, most economists are predicting a sharp slowdown in 2009 to around 4 percent from this year’s roughly 9 percent expansion. (Reuters)