RTC Director

Larry Summers pulls out of US Federal Reserve race

Former US Treasury Secretary Larry Summers has withdrawn his candidacy to succeed Ben Bernanke as head of the US central bank, the Federal Reserve. 

In a letter to President Barack Obama, quoted by the Wall Street Journal, Mr Summers said any confirmation process for him was likely to be "acrimonious".

Mr Summers was one of the front-runners for the post, along with current Fed vice-chairman Janet Yellen.

The dollar fell in Asian currency trading as markets reacted to the news.

Mr Obama said he had accepted Mr Summers' decision.

The president said in a statement: "Larry was a critical member of my team as we faced down the worst economic crisis since the Great Depression, and it was in no small part because of his expertise, wisdom, and leadership that we wrestled the economy back to growth and made the kind of progress we are seeing today."

Mr Obama added that he would always be grateful to Mr Summers for his "tireless work and service on behalf of his country" and looked forward to continuing to seek his guidance and counsel in the future.

The dollar fell 0.4% against the pound and the yen and 0.5% against the euro, with markets drawing the conclusion that Mr Bernanke's eventual successor might be slower to end the Fed's programme of monetary stimulus than Mr Summers would have been.

"I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interests of the Federal Reserve, the administration or ultimately, the interests of the nation's ongoing economic recovery,'' Mr Summers wrote in his letter to the president.

This was seen as a reference to the opposition that his candidacy faced from some influential members of Mr Obama's Democratic Party, including some members of the Senate Banking Committee.

Mr Summers was Treasury secretary during the Clinton administration from 1999 to 2001 after spending four years as deputy. Before that, he was chief economist of the World Bank from 1991 to 1993.

He served President Obama as director of the National Economic Council in 2009 and 2010.

Mr Bernanke's term as Fed chief is due to expire at the end of January next year. If Ms Yellen is chosen to succeed him, she will be the first woman to hold the post.

by RTC Director

Portugal's economic progress under review

Representatives from the International Monetary Fund, the European Commission and the European Central Bank have begun their latest audit of Portugal's economic health.

A raft of reforms was promised by Portugal's leaders in return for its May 2011 bailout.

The visit from the so-called troika will determine whether the country receives its next instalment of bailout funds.

It is expected to meet the criteria.

The visit was originally expected to take place in July of this year, but was postponed following a political crisis.

There are fears that Portugal's economy remains volatile, and borrowing costs have climbed again in recent months.

The yield on a benchmark 10-year Portuguese government bond soared above the 7% barrier earlier this summer. That is the level at which other European countries have sought a bailout.

However, while unemployment in Portugal is amongst the highest in the eurozone, especially amongst the young, the country reported growth of 1.1% for the second quarter of 2013, after a boost to its export market.

Portugal received 78bn euros ($102bn; £67bn) in May 2011, in return it began a tough austerity programme.

The Portuguese government says it is on track to emerge from the bailout programme in June 2014.

by RTC Director

Koreas restart operations at Kaesong industrial zone

The Kaesong industrial complex in North Korea is reopening, five months after it was closed due to political tensions with the South.

More than 800 South Koreans are due to cross to the jointly-run centre.

Seoul has also sent negotiators who will discuss ways to attract foreign investment and ensure future stability.

The zone, just inside North Korea, is home to 123 South Korean factories that employ more than 50,000 North Koreans.

It is the last functioning inter-Korean joint project and a key source of revenue for Pyongyang.

The North removed all of its workers in April after its third nuclear test on 12 February sparked tensions on the Peninsula and led to expanded UN sanctions.

Shortly afterwards, South Korea and the US launched annual military drills, further angering Pyongyang.

The two Koreas have held multiple talks over reopening the Kaesong complex and finally reached a deal last month.

Under a five-point accord, the site will become open to foreign investors, making it harder for North Korea to unilaterally close it again.

South Korean firms will also be exempt from taxes for the rest of the year, to offset losses incurred while the complex was closed.

But some local businessmen remain worried about the risks of doing business with Pyongyang.

"Honestly, I still feel a bit nervous, because you never know whether the North will change its mind in the future," a textile company manager told the French news agency AFP.

"Who knows if a crisis like this won't happen again?" he said.

by RTC Director

Japan halts last nuclear reactor at Ohi

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Spain's public debt reached a record high in June, the country's central bank said.

The figure has risen to 942.8bn euros (£792.5bn; $1.3 trillion), equal to 92.2% of the country's entire economic output, the bank said.

This is nearly 15% higher than the same period last year and above the Spanish government's target limit of 91.4%, despite severe public spending cuts.

Austerity measures have led to street protests as unemployment now tops 26%.

Prime Minister Mariano Rajoy's government is aiming to reduce public spending by 150bn euros between 2012 and 2014, but rising unemployment and the consequent benefit payments, is making this target difficult to reach.

The bank believes public debt could top 100% of gross domestic product over the next three years, its highest level in more than a century, as the government struggles to revive the country's flagging economy.

The government has been under pressure to tighten safety standards to allay public fears.

Analysts say it will take around six months to clear all of the safety checks and legal hurdles involved in a restart.

So far, power companies have applied to restart about a dozen of Japan's 50 reactors.

Prime Minister Shinzo Abe wants to see the reactors back on line, as they are a vital part of his plan to turn the economy around.

Since the Fukushima disaster, Japan has been forced to import huge amounts of coal, liquid natural gas and other fuels.

Mr Abe's government blames these imports for the huge trade deficits posted by Japan since 2011.

The average household electricity bill has risen by 30% since Fukushima, denting the government's attempts to boost consumer spending. 

But continuing problems at the Fukushima plant have hampered the government's attempts to win public support for a return to nuclear.

In the latest setback, operator Tokyo Electric Power Co (Tepco) said earlier this month that radiation levels had risen around tanks used to store water that has been flushed through the damaged reactor buildings.

Tepco had earlier said highly contaminated water had leaked from a storage tank.

by RTC Director

Spanish public debt reaches record level

Spain's public debt reached a record high in June, the country's central bank said. 

The figure has risen to 942.8bn euros (£792.5bn; $1.3 trillion), equal to 92.2% of the country's entire economic output, the bank said.

This is nearly 15% higher than the same period last year and above the Spanish government's target limit of 91.4%, despite severe public spending cuts.

Austerity measures have led to street protests as unemployment now tops 26%.

Prime Minister Mariano Rajoy's government is aiming to reduce public spending by 150bn euros between 2012 and 2014, but rising unemployment and the consequent benefit payments, is making this target difficult to reach.

The bank believes public debt could top 100% of gross domestic product over the next three years, its highest level in more than a century, as the government struggles to revive the country's flagging economy.

by RTC Director