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Section 2: Economic events
Archived Content
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Canada
China National Petroleum signed a memorandum of understanding with Saskatchewan to evaluate investments in natural gas, heavy oil and carbon capture projects. China Investment agreed to pay $817 million to take a 45% stake in an oilsands project owned by Penn West Energy and agreed to pay $435 million for a 5% interest in Penn West. Korean National Oil applied to Alberta to triple the capacity of its BlackGold thermal oilsands project near Conklin to 30,000 barrels a day.
World
Following downgrades on the sovereign credit ratings of Spain, Portugal and Greece, the EU pledged a $670 billion (US) financial backstop so that no member of the EU will be allowed to default on its debt. However, the recipients must follow strict IMF-monitored fiscal adjustment and structural reform programs. Austerity measures to cut spending and ease budget deficits were enacted by several countries. Britain announced $9.5 billion (US) of immediate spending cuts in the current fiscal year and a freeze on civil service recruitment; Spain will cut 15 billion euro in spending by 2011, reduce civil service salaries by 5% and cut public investment by 6 billion euro; Greece approved pension reform, a public sector pay freeze, tax hikes on fuel, cigarettes and alcohol, and a one-time tax on highly profitable companies to reduce its budget deficit to 2.6% of GDP by 2014; France will freeze all spending except pensions and interest payments between 2011 and 2013 and cut state operating costs by 10% over the same period; Ireland has implemented three austerity budgets since October 2008 with tax increases in the first two and spending cuts of 4 billion pounds in the most recent, along with a cut in public sector pay; Portugal enacted 5% pay cuts for senior public sector staff and increases in the VAT sales tax, income tax and profits tax ranging from 1 to 2.5%; Italy set budget cutbacks of 24 billion euro for 2011-12, froze civil servant salaries for three years and cut wages for senior officials. The measures prompted government worker protests and one day strikes in Greece and Spain.
An explosion at a BP offshore oil drilling platform off the Louisana coast led to an ongoing oil spill in the Gulf of Mexico of up to 19,000 barrels a day. By month end the spill was still uncontained, prompting the US government to shut all deepwater operations in the Gulf, including operating wells. The oil slick covers a surface area of between 6,500 square kms and 24,000 square kms and is threatening the fishing industry and tourism.
South Korea’s business group Samsung announced it will invest $20.3 billion in health care and green energy over the next decade creating 45,000 jobs.
China ordered banks to raise their deposit reserve requirement ratio half a percentage point for the third hike this year.
