Cambodia's financial system

Cambodia's financial system is segmented, not fully developed, and subject to government influence. The system has gradually improved its efficiency as a result of some privatization and consolidation since 2000. All 12 commercial banks are privately owned following the 46 percent sale of the Foreign Trade Bank of Cambodia to foreign investors, though the government still has a stake in specialized banking. The banking sector is market-oriented, and banks are well capitalized. Foreign presence in the sector has been growing and there are now three foreign bank branches and two foreign representative offices in Cambodia. Credit is allocated on market terms, but the government exercises influence over lending decisions. There is no stock market, but the government has announced plans to launch a stock exchange by 2009. The National Bank of Cambodia, which used to operate as a commercial bank as well as the central bank, is now solely a regulatory and supervisory agency.

Cambodia

Cambodia's economic freedom score is 56.6, making its economy the 106th freest in the 2009 Index. Its overall score is 0.8 point better than last year, primarily as a result of a much improved trade freedom score. Cambodia is ranked 21st out of 41 countries in the Asia–Pacific region, and its overall score is slightly lower than the regional average.

Cambodia has gradually moved toward a market-based economic system, experiencing solid economic growth in recent years. The country scores noticeably well in fiscal freedom and government size, and moderately well in monetary freedom. Low income and corporate tax rates contribute to a low overall tax burden, giving the country a high fiscal freedom score. Government spending is low, and with improved budget management, authorities aim to increase efficiency in the system and better allocate revenues.

Other institutional weaknesses still hold down Cambodia's overall economic freedom score, however. Business freedom, trade freedom, property rights, and freedom from corruption all receive notably low scores. The formal labor market is not fully developed, and its rigidity is partly responsible for the existence of an underground dual labor market. Pervasive corruption contributes to the high costs of entrepreneurial activity, and the weak rule of law in many areas makes it difficult to resolve commercial disputes.

Surprise fall in US home building

The construction of new homes and apartments in the US showed a surprise fall in October.

New US housing starts tumbled 10.6% to an annual rate of 529,000 homes - the lowest level since April.

The decline in construction was led by a fall in demand for both single-family and multi-family occupancies.

Separately, a report showed prices edging up in October. The consumer price index rose 0.3%, pushed up by higher energy prices.

'A weak number'

The housing figures are a blow to recent signs of recovery in the market.

David Resler from Nomura Securities in New York said they were "really disappointing".

"I had convinced myself that we had turned the corner on housing," he added. "I am no longer convinced. This is really a quite weak number."

Congress has voted to extend a tax credit of up to $8,000 for first-time buyers. It had been due to expire at the end of November.

Some analysts said that the uncertainty over whether it would be renewed could have held back construction.

'Whiff of inflation'

Meanwhile, the 0.3% rise in consumer prices was slightly more than expected.

Stuart Hoffman from PNC Financial Services said: "There's a whiff of inflation in that number and frankly it smells a lot like gasoline."

The core rate, which strips out food and energy, rose 0.2%. The US Labor Department said that more than 90% of that increase was down to a spike in prices for used cars and trucks, as well as new vehicles.

US consumer confidence edges up but remains subdued

US consumer confidence edged higher in November after a big drop in October, as fewer Americans felt the economic situation was likely to worsen.

The closely-watched Consumer Confidence Index from the Conference Board rose to 49.5 from a revised 48.7 in October.

But in a downbeat report, the board said income expectations were "very pessimistic" and consumers were in "a very frugal mood".

The figures cast doubt on how strong Christmas spending will be this year.

Consumer spending accounts for about 70% of overall economic activity in the US, so weak spending in the run-up to Christmas could have serious implications for the US economy.

A reading of 90 on the Confidence Index is the minimum to indicate a healthy economy.

'Strong bounce'

The "moderate improvement in the short-term outlook" was a result of fewer consumers expecting conditions to worsen, as opposed to more consumers expecting conditions to improve, said Lynn Franco at the board.

However, the number of people claiming that jobs are "hard to get" increased slightly.

Figures released earlier this month showed that the unemployment rate in the US rose to 10.2% in October, its highest rate since April 1983.

"Until the jobs market turns around, it's hard to see a particularly strong bounce in consumer sentiment," said Vassili Serebriakov at Wells Fargo.

The Conference Board figures were overshadowed by the latest GDP figures for the US economy between July and September, which were revised down to show growth of 2.8%, against the original estimate of 3.5%.

US consumer spending rises more than expected

US consumer spending rose more than expected in October, raising hopes that the economic recovery is continuing despite stubbornly high unemployment.
Spending by consumers increased by 0.7% compared with the previous month, said the Commerce Department, more than market expectations of a 0.5% gain.
The rise followed the 0.6% decline seen in September following the end of the US car scrappage scheme.
Consumer spending accounts for more than two-thirds of the US economy.

'Recovery contribution'

"Don't count consumers out, they are making a contribution to the recovery," said analyst Ken Mayland, president of ClearView Economics. The rebound in consumer spending came despite the most recent official figures showing that the unemployment rate in the US rose to 10.2% in October, the highest rate since April 1983.
The Commerce Department data showed that consumers increased their spending in October on both durable manufactured goods, such as cars and household appliances, and nondurables, such as food and clothes.

"Certainly everybody is looking for the consumer to begin step up here a little bit in the economy, so this is positive data," said Tim Ghriskey, chief investment officer at Solaris Asset Management.

The Commerce Department also revealed that sales of new homes rose at an annualised rate of 6.2% in October, boosted by people buying new property before the end of a tax credit.

US economic growth revised down

The US economy grew by far less than originally forecast between July and September, according to revised official figures.

The latest estimate said the economy grew at an annual pace of 2.8%.

That compared with the 3.5% the Department of Commerce initially forecast earlier this month.

The change in the gross domestic product figure came partly because imports, which count as negative, were higher than thought.

Imports increased at an annual rate of 21%, the biggest gain since the second quarter of 1985, and a big jump on the 16% first thought.

US GDP is expressed as an annualised rate, or annual pace, which shows what the annual rate would be if the latest change continued for the rest of the year.

Following the downward revision, the main US share index, the Dow Jones, ended Tuesday trading down 17 points or 0.2% to 10,434. Further hurdles

Economic growth, though, was helped by a substantial government spending plan, including a scrappage scheme to boost car sales, and higher investment in residential property. The figures still indicate the first quarterly growth in GDP since the second quarter of 2008, and appear to have put an end to the worst recession in the US for 70 years.

But some economists think there could be further setbacks.

"The consumer still isn't there. Other data suggest that the effect from 'cash for clunkers' and first-time home buyer credits are fading," said independent market strategist TJ Marta.

"This will be a muted, slow recovery and it will be strewn with setbacks."

The latest figures on the mood of the US consumer bear out this view. Shortly after the GDP numbers were released, the Consumer Confidence Board brought out a downbeat report.

Although its Confidence Index had risen, the board said income expectations were "very pessimistic" and consumers were in "a very frugal mood".

And the figures cast doubt on how strong Christmas spending will be this year.

Meanwhile, released minutes from the latest Federal Reserve meeting earlier this month showed that the central bank considers the US economic recovery to be durable.

However, at the same time it warned that unemployment will remain a problem.

Figures released earlier this month showed that the unemployment rate in the US rose to 10.2% in October, its highest rate since April 1983.

What is Dubai and who runs it?

From the pinnacle of the world economic boom to the brink of bankruptcy, Christopher Davidson of Durham University explains some of the background to the glittering city in the desert.

The inability of the government of Dubai to refinance the massive debts incurred by its largest state-owned company, Dubai World, has sent shockwaves throughout the world prompting many observers to ask not only how severe the economic crisis is, but also what exactly is Dubai and who is in control of it?

Although frequently described as a city state or even as a country in its own right, Dubai is a constituent member of the federation of United Arab Emirates along with six other emirates.

Only one of these, Abu Dhabi, possesses substantial oil reserves, and as such it has dominated most areas of federal politics - including foreign affairs and defence - since the UAE was formed following Britain's withdrawal from the Persian Gulf in 1971.