Asia Seen Weathering Any US Recession

Asia would be able to weather any recession in the United States, analysts say, because rising trade and investment within the region make it less dependent on the U.S. economy than in the past. While a severe downturn in the United States would drag on Asian growth by eroding demand for exports, a rapidly growing middle class is fueling orders for automobiles, electronics and housing -- much of which will be supplied from Asia itself.

Voracious demand for oil, iron ore and other commodities to build roads, sewage systems, and office buildings -- especially in the booming economies of China and India -- will also help sustain the region through any U.S. slowdown.

The U.S. economy is not that important anymore. Excluding Japan, 43 percent of Asia's exports go to other nations in the region, Lehman Brothers calculates -- up from 37 percent in 1995.

China and India represent a bigger presence on the world stage than just a half dozen years ago. China, in particular, has "more it can bring to buffer whatever happens in the U.S.

A drop of 1 percentage point in U.S. economic growth would shave 1.3 percentage points from China's growth rate due to lower exports, Citigroup says.

Since China is growing so fast, that isn't likely to make much of a dent. China's economy will still expand 11 percent this year, slightly slower than in 2007, Citigroup projects. Lehman Brothers forecasts 2008 growth will drop to 9.8 percent.

But some economist cautioned that growth in China and India could not make up all the slack of a U.S. downturn.

Asian stock markets -- many of which had stellar runs last year -- have tumbled in recent weeks amid worries that a slowdown in the U.S. will hurt corporate profits.

AP

Tata unveils the Nano, world's cheapest car

Tata Motors Ltd unveiled the world's cheapest car on Thursday(10th jan), which cld bring car ownership closer to millions of consumers. The 4-seater Nano, with an engine around 625cc, will have a dealer price of 100,000 rupees ($2,500) -- about half the cost of the cheapest car availble on today's market.

Let me assure you and our critics the car we have designed will meet all safety norms and all foreign environmental criteria," Chairman Ratan Tata said as he proudly unveiled what had been dubbed the "People's Car" at the Auto Expo in New Delhi.

Tata said the car would have a rear-mounted engine and travel 20 km per litre. It would be offered in a basic model and two deluxe variants. The proof of the pudding will be in driving it, but visually it looks pretty good," said an auto analyst. "The pricing was a bit of a surprise. I thought it would be a bit higher."

Tata has said it will initially produce about 250,000 Nanos and expects eventual annual demand of 1 million units.

Global car makers -- initially sceptical that Tata could produce such a low-cost car -- are now scurrying to make their own versions to meet the needs of cost-conscious consumers in emerging economies such as China, India and Russia.Ford this week said it would build a small car in India within two years, while the alliance of Nissan Motor and Renault, which has made a big success of its no-frills Logan sedan, plans a $3,000 car with Bajaj Auto. Volkswagen, Toyota, Honda and Fiat have also said they are looking at small cars for emerging markets where strong economic growth has made car ownership a reality for millions.

Rising Rupee hutrs exports- Pharma ( case -I)

The weakening dollar has taken a serious toll on India's pharmaceutical exports, which generate revenues estimated at around Rs20,000 crore and have been a key source of foreign exchange for the country.
Pharma exports have seen a drop of 20% in value during the April-June quarter with total exports, at Rs5,054 crore, not only missing the 14% growth that the industry had expected, but falling well below the year-ago period's Rs6,069 crore in export revenues. The quarter marked the first time in five years that pharmaceutical export revenues have declined. With the rupee, which has appreciated by 12% in the last six months, staying strong, India is likely to miss its export target for the year by more than 25%, predicts industry lobby, Pharmaceuticals Export Promotion Council, or Pharmexcil.

It's time for the industry as well as government to devise some mechanism to help exporters balance the revenue loss. It could be either an interest subsidy or an aid to explore non-conventional markets for encouraging non-dollar currency exports though it might not work in long run. Cipla Ltd, the largest drug exporter from India, says its export revenue in the first six months have shown a 10-11% decline due to a weak dollar.

Shifting the focus to other markets will not be of much help to these companies as majority of the export markets still trade in dollar terms. Though cost savings on imports and foreign spend would help balance the cost, a 12% rupee appreciation will remain an impact on their topline.
India's domestic pharmaceuticals market, valued at $8.16 billion (Rs37,528 crore then) in 2006-07 by sales, grew at an annual rate of 12.4% in the past five years even as exports grew at a higher rate of 20% to reach $6.15 billion. While the domestic market is expected to scale up to $14.5 billion by 2011-12 at an annual growth rate of 16%, exports were projected to increase much faster, at 35%, and reach $25 billion in the same period. That would have meant exports contributed some 63% to the sector, up from 43% in 2006-07, according to a previous projection by Pharmexcil.

The rupee-dollar equation is now expected to impact the industry beyond exports. Indian drug makers are anticipating potentially huge opportunities for their generics business outside the country as patents are set to expire on at least half a dozen blockbuster drugs by 2012. But they are unlikely to meet their revenue targets, despite massive capacities being built both in India and abroad, in part because of the appreciating rupee.