World economy to shrink below zero: IMF chief

The world economy is likely to shrink to "below zero" this year, in what many are now referring to as the "Great Recession". "The IMF expects global growth to slow below zero this year, the worst performance in most of our lifetimes," IMF Managing Director Dominique Strauss-Kahn told African political and financial leaders in the Tanzanian capital.

"Continued de-leveraging by world financial institutions, combined with a collapse in consumer and business confidence is depressing domestic demand across the globe, while world trade is falling at an alarming rate and commodity prices have tumbled" Strauss-Kahn added.

As advanced countries focus on problems in their own economies, Strauss-Kahn called on the international community not to forget Africa, where regional growth is expected to slow sharply to 3 percent this year, half the rate of the past five years.

Strauss-Kahn warned the projection for 3 percent "may be too optimistic".

"Even though the crisis has been slow in reaching Africa's shores, we all know it is coming and its impact will be severe," he said. "We must ensure that the voices of the poor are heard. We must ensure that Africa is not left out," he added.

He said the crisis threatens to unravel Africa's economic and social success over the last decade and that millions of people will be thrown back into poverty.

"This is not only about protecting economic growth and household incomes - it is also about containing the threat of civil unrest, perhaps even war. It is about people and their futures," he added.

He said the combined impact of economic and financials shocks on Africa's growth will be severe. Financial flows are becoming more scarce, trade financing even scarcer and more expensive and foreign investment in Africa's stock and bond markets has fallen, he added.

"As growth around the world has almost come to a halt, demand for Africa's products is plunging. Tourism revenue is likely to decline as consumers around the world are tightening their belts," Strauss-Kahn said.

Reuters

Is Piramal healthcare on sale!!!!!!!!!!

Piramal healthcare, india’s fifth largest pharmaceutical company by revenues (Rs 2,873 crore in FY 2007-08), may sell its branded generics business, Healthcare Solutions, to focus on contract research and manufacturing services (CRAMS). This is contrary to the perception that promoter Ajay Piramal is selling the entire company.
Its being remoured that Piramal appointed Zurich-headquartered Credit Suisse to look for prospective buyers. UK drug giant GlaxoSmithKline (GSK), France’s Sanofi-Aventis and Germany’s Merck KGaA are believed to have shown interest.

Recent media reports suggested that Piramal was in talks for the sale of the entire company. However, Piramal denied this in a 7 February communiqué: “Certain sections of the media have been speculating about a potential sale of the company.

Healthcare Solutions that recorded revenues of Rs 1,291 crore in fiscal 2008, or about 40 per cent of the company’s total revenues, includes a portfolio of products in therapeutic segments ranging from respiratory and anti-infectives to diabetes, marketed only in India.

According to a recent McKinsey study, the Indian market is likely to triple to $20 billion by 2015. While Sanofi-Aventis and Merck have a relatively small presence in India, GSK is one the largest companies in the domestic market after Ranbaxy Laboratories and Cipla. However, GSK’s sales have witnessed poor growth over the last year, at just 2 per cent to Rs 1,752 crore in 2008.

Piramal started investing in Crams, a market estimated at about $800 million in India and growing at 40 per cent every year, almost a decade ago and has made several acquisitions abroad, including Pfizer’s Morpeth plant in the UK in 2006 and Avecia’s custom manufacturing business in 2005, to expand its customer base. The group still needs to transfer more business to India to improve the overall margins of that business.” The process may take longer than expected.

BW