The Sunmmit Surprises!

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After 18 disappointing Summits, Europe leaders finally agreed to what seems like a lasting solution to the long debated debt crisis in the 17-member bloc. In doing this, ailing banks would be recapitalized with funds intended to bail out indebted governments – a move to “break the vicious circle” of bank bailouts, piling debt on already stressed governments. Also at the Summit held last week, an agreement was reached to establish a united supervisory mechanism for Eurozone banks as well as a long-term framework toward tighter budgetary and political union.

The decisions reached, would help moderate Spain and Italy borrowing costs that have risen to near unsustainable levels despite efforts to cut spending and labour market reforms. The significance of bank recapitalization was evident in Spain’s €100billion rescue fund for its troubled banks, previously a bailout loan. The prospect of having the debt on government’s books spooked investors into demanding higher interest rates to reflect risk of a Spanish default. European Union leaders also agreed to a growth package worth €120 billion to create jobs and encourage growth. This comes after surging borrowing costs and ensuing debts crisis stirred up concerns over possible collapse of the Currency Union which risk damaging the global economy. Skepticisms exist whether the moves will be enough to fix Europe’s debt crisis, especially as the amount of money available to help in the crisis — some €500 billion — is dwarfed by the amount of debt across the continent. Italy alone has outstanding debt of €2.4 trillion.

U.S. Durable Goods Orders Up 1.1% in May 2012
U.S. new orders on durable goods increased to $2.3 billion in May 2012 – a 1.1% growth over April figures, a Commerce Department report reveals. Economists had expected a more conservative 0.4% growth rate. The May figure, which reversed two consecutive months of decline, was largely driven by expansion in the transportation sector after a sharp 3.7% drop recorded for March. The report also showed an unrevised GDP growth of 1.9% in Q1 2012 compared to 3% recorded in Q4 2011. The unrevised pace of growth came in line with expectations. The downward revisions to exports, consumer spending, and private investment were offset by upward adjustment to offshore fixed investment and a downward review on imports.

India is Nigeria’s largest export market
India has become Nigeria’s largest export market – overtaking the United States of America (the nation’s top export market since 1964). According to the Bureau of statistics, Nigeria-India bilateral trade reached $5.15 billion in Q1 2012. Exports to India reached $4.2 billion, compared to $3.7 billion credited to the US in the review period. Total value of Nigeria’s exports stood at $30 billion. Netherlands trailed the US with $2.9 billion, followed by Spain with $2.4 billion and Brazil, $2 billion.

Nigeria's President , Dr. Goodluck Ebele Jonathan

Nigeria's President , Dr. Goodluck Ebele Jonathan

Nigeria’s export to India is mostly crude oil and cashew nuts while India’s exports to Nigeria are pharmaceutical goods, machinery, electronics and rice. India may emerge Nigeria’s largest trading partner in Q2 2012, if the growth momentum in bilateral trade is sustained as industry watchers anticipate.

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