Competitive horizon
A study carried out by CCW Research suggests that China will invest substantially in information technology (IT) over the next three years. The market research organization claims that spending will increase by an annual rate of 10 percent, reaching US$4.65 billion by 2008. The country’s financial sector will account for the bulk of this spending, with domestic banks needing IT system upgrades as part of the shift towards becoming more client-oriented. Likewise, CCW also points out that investment is needed to establish an efficient IT infrastructure to collect data generated by the expansion of China’s credit cooperatives. A report published by the China Daily (www.china.org.cn) also notes that rapid expansion within the insurance sector will demand enhanced IT systems,while the securities sector is expected to increase IT spending for the first time since 2002.
Busy 2006 expected in African mines
New government legislation and strong commodity prices will see many South African mining companies expand during 2006, a report published by All Africa (www.allafrica.com) claims. The increase in gold and diamond prices seen in 2005 brought gold to its highest level for 18 years, and these prices are set to be consolidated this year. The report also claims that several leading companies in South Africa, Zambia and the Democratic Republic of Congo are planning to embark on new projects in the copper, coal,uranium and platinum sectors. It is expected that the government will grant many new mining license applications in 2006, when the much-anticipated Mineral and Petroleum Royalty Bill will also be published. The new bill will determine the amount of royalties that each sector will have to pay the government.
Cautious optimism for German economy
The International Monetary Fund (IMF) predicts that the economy in Germany will grow by 1.5 percent this year, up from the 0.9 percent recorded in 2005. This figure is broadly in line with government expectations. However, the IMF believes that reforms are urgently needed in order for the economy to grow more strongly. The organization points out that an increase in consumer spending is needed to balance performance in exports, the main growth driver. The report, as published by Turkish Press (www.turkishpress.com),notes that regulations are hampering the labor, product and services markets and deterring efforts to reduce the high levels of unemployment in the country. Reducing this figure would increase tax revenues from wages, while simultaneously reducing the amount of unemployment benefits paid. Such developments are vital for Germany’s longer-term prospects and ability to reduce its fiscal deficit, which is forecast by the IMF to run at 3.7 percent of GDP over the next two years.
Sweet or sour?
According to an article published by the New Zealand Herald (www.nzherald.com), sugar prices in Brazil this year could rise to their highest levels since 1982. Much of this is due to higher international demand and the country’s intention to combat rising oil prices by producing ethanol, an alternative fuel made from sugar. It is forecast that the country will produce a record 16.6 billion liters of the fuel in the year ending September. The surge in international requirements coincides with reduced levels of production in many other regions. Demand in the USA is significantly up, but hurricane damage to domestic crops has led to a greater dependence on imports. A drought in Thailand compounds the problem, as does a World Trade Organization ruling to limit exports from the EU countries to 1.27 million tons per year. Likewise, lower than usual rainfall levels means that output from Pakistan is expected to fall to between 2.8 and 3.0 million tons from the 3.2 million tons produced in 2005.
