Wednesday 19 September 2012

Who Control's the Economy?

FREE MARKET ECONOMY

A market economy based on supply and demand with little or no government control.

BRAZIL- Characterized by large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil's economy outweighs that of all other South American countries, and Brazil is expanding its presence in world markets. Since 2003, Brazil has steadily improved its macroeconomic stability, building up foreign reserves, and reducing its debt profile by shifting its debt burden toward real denominated and domestically held instruments. After strong growth in 2007 and 2008, the onset of the global financial crisis hit Brazil in 2008. Brazil experienced two quarters of recession, as global demand for Brazil's commodity-based exports dwindled and external credit dried up. However, Brazil was one of the first emerging markets to begin a recovery. In 2010, consumer and investor confidence revived and GDP growth reached 7.5%, the highest growth rate in the past 25 years. Rising inflation led the authorities to take measures to cool the economy; these actions and the deteriorating international economic situation slowed growth to 2.7% for 2011. Despite slower growth in 2011, Brazil overtook the United Kingdom as the world's seventh largest economy in terms of GDP. Urban unemployment is at the historic low of 4.7% (December 2011), and Brazil's traditionally high level of income equality has declined for each of the last 12 years. Large capital inflows over the past several years have contributed to the appreciation of the currency, hurting the competitiveness of Brazilian manufacturing and leading the government to intervene in foreign exchanges markets and raise taxes on some foreign capital inflows.

MIXED ECONOMY
An economy in which exists a mixture of free enterprise and government control.

JAPAN- The Japanese economy was a technologically advanced economy in the post war years following World War II. They achieved this with the coming together of government-industry cooperation, a strong work ethic, mastery of high technology and a small defence allocation. Kieretsu was the name given to the close interlocking of manufactures, suppliers and distributors. Japan's industrial sector is heavily dependent on imported raw materials and fuels. A tiny agricultural sector is highly subsidised and protected, with crop yields among the highest in the world. Japan imports about 60% of it's food, has the largest fishing fleets accounting for nearly 15% of the global catch. A sharp downfall in business investment and global demand for Japan's exports in late 2008 pushed Japan further into recession. Government stimulus spending helped the economy recover in late 2009 and 2010.  In 2011 Japan stood as the forth-largest economy in the world after China (2nd) and India (3rd). A massive earthquake in March 2011 which disrupted manufacturing and recovery cost ranges from $235 billion to $310 billion will have a big impact on Japan's economy and industrial performance. Persistent deflation, reliance on exports to drive growth, and an ageing/shrinking population are examples of long-term challenges that Japan's economy may face.

COMMAND ECONOMY
An economy where supply and price are regulated by the government rather than market forces.


CUBA- The government continues to balance the need for loosening its socialist economic system against a desire for firm political control. The government in April 2011 held the first Cuban Communist Party Congress in almost 13 years, during which leaders approved a plan for wide-ranging economic changes. President Raul CASTRO said such changes were needed to update the economic model to ensure the survival of socialism. The government has expanded opportunities for self-employment and has introduced limited reforms, some initially implemented in the 1990s, to increase enterprise efficiency and alleviate serious shortages of food, consumer goods, services, and housing. The average Cuban's standard of living remains at a lower level than before the downturn of the 1990s, which was caused by the loss of Soviet aid and domestic inefficiencies. Since late 2000, Venezuela has been providing oil on preferential terms, and it currently supplies over 100,000 barrels per day of petroleum products. Cuba has been paying for the oil, in part, with the services of Cuban personnel in Venezuela including some 30,000 medical professionals.

Monday 10 September 2012

Sugar Saves ABF Empire!

Associated British Foods empire covers agriculture through to fashion with sales of £11.1 billion and 102,000 employees in 46 countries. This year there was a bump in the road due to a manufacturing operation in an Australian meat factories which is one of many of the companies assets. This cost the company a £100 million non-cash charge which I presume the money lost lies in equipment which had to be written off.

At the start of the year, ABF predicted a really good year but due to their profit losing £100 million they had to rethink their forecast. This change was to adjust for the impairment mentioned above but they insist due to strong performance in the sugar division they will be massively ahead of the previous year financially.  Their net-debt decreased to £1.2billion from £1.3billion, so they are not borrowing as much money.

ABF still look like they are on fire considering they brought a new company Elephant Atta for £34 million in cash and are still able to reduce their dept. By them paying in cash it is highlighting that they are generating enough money to be able to do these big deals without increasing their net-debt.

There was a surprise outcome with Primark's profits considering the recession across the Euro Zone, probably due to the low cost products. But overall I think ABF need to thank the sugar division which has covered the £15 million investment in Mali and reconstructing costs.

Issues in the Euro Zone could affect the strong prices of sugar in Europe. Maybe Associated British Foods need to start thinking up new plans and breakthroughs as the ongoing price demand for sugar might not stay as strong in the near future.

The New Lesson

Fist Lesson of Economics, which consisted of Mr Mason's interrogation of each one of our personalities and a quick 7 question test to see how much we knew about economics already.. My score was interesting. From the Interrogation you learnt interesting facts about your fellow pupils which you may have not known before, such as one likes to listen to Japanese music.

To gain a lot from Economics you have to know whats going on around you in the business world, so have to independently study which consists of watching the news and reading the Financial Times at home. I am looking forward to the challenge ahead because it is a complete unknown subject to me so need to catch up with the more experienced class mates.