Headlines

Japan’s economy contracted more than the government initially estimated, highlighting the challenge for Prime Minister Shinzo Abe in steering the nation through the aftermath of a sales-tax increase, Bloomberg News reported. Gross domestic product contracted an annualized 7.1 percent in the three months through June, more than a preliminary reading of a 6.8 percent fall, the Cabinet Office said today in Tokyo. The median forecast of 25 economists surveyed by Bloomberg News was for a 7 percent drop.

Hungary’s central bank is ready to use part of the country’s foreign-currency reserves to help the government rid households of their costly foreign-currency mortgages, a top central bank official said over the weekend, The Wall Street Journal Emerging Europe Real Time blog reported. While ensuring that the reduction in the country’s foreign-currency reserves were gradual, the central bank would provide the foreign currency to retail banks so they could convert foreign-currency mortgages into the local currency, said Adam Balog, a deputy governor at the National Bank of Hungary.

In the aftermath of the country’s default, Argentine president Cristina Fernández’s approval ratings jumped as she defiantly stood up to Argentina’s “holdout” creditors, who rejected debt restructurings accepted by 93 per cent of bondholders after the country’s previous default in 2001 and then won a US court order to be paid in full, the Financial Times reported.

Prime Minister Antonis Samaras announced tax reductions on Saturday in a bid to appeal to Greeks weary of four years of austerity that have cut living standards and to gain political capital as the opposition pushes for early general elections, the International New York Times reported. Speaking in the northern port of Thessaloniki at an annual trade fair where Greek prime ministers traditionally set out their economic policy for the coming year, Mr. Samaras announced a 30 percent cut to a tax on heating oil.

Italy is pushing for new rules to monitor economic reforms across the eurozone, in an attempt to reassure other European countries of its commitment to tackling its biggest structural problems and rally them towards greater flexibility on budgetary policy. Pier Carlo Padoan, Italy’s finance minister, told the Financial Times that “benchmarks” to measure and compare structural reforms would be both “disciplining” and “confidence building”. “This would be extremely useful for Europe and for Italy,” Mr Padoan said.

Domingo Cavallo, the architect of Argentina’s first debt restructuring deal in 2001, has a solution for the country’s worsening debt drama: pay the holdouts, the International New York Times DealBook blog reported. “Argentina should comply with Judge Griesa’s decision,” Mr. Cavallo said on Wednesday at a conference to commemorate the 70th anniversary of the Bretton Woods system of global financial cooperation. Mr. Cavallo, who is also credited for slaying hyperinflation in Argentina in the early 1990s, was referring to the recent court decision by Judge Thomas P.

Turkey's banking watchdog placed Asya Katilim Bankasi AS under watch and armed regulators with broad powers over the beleaguered Islamic lender, The Wall Street Journal reported. The move brings the bank one step closer to state seizure, as capital outflows and a ratings downgrade exacerbate damages from a political fight embroiling the lender, which has fallen from the largest of Turkey's four Islamic banks in December to third in terms of assets.

An Italian court has upheld a ruling by a U.S. court for Italy's Parmalat to pay Citibank $431 million in damages in a case relating to the dairy group's bankruptcy more than 10 years ago, lawyers for the U.S. bank said on Thursday, Reuters reported. Parmalat collapsed in 2003 after the discovery of a 14 billion euro ($18 billion) hole in its accounts. At the time it was Europe's biggest bankruptcy and its demise wiped out the savings of more than 100,000 small investors.

Will rising defaults and stricter rules halt the breakneck growth of China’s shadow banks? When one of the country’s many trust companies, which sell high-yield investments, warned earlier this year of a looming default on one of its products, its clients reacted with anger and the wider market with alarm, The Economist reported. As panic spread, regulators orchestrated a bail-out of the product, reassuringly named “Credit Equals Gold #1”. But in recent weeks investors in its sibling, “Credit Equals Gold #2”, have met a crueler fate.

Australia has stepped up scrutiny of the tax practices of multinationals suspected of using complex accounting arrangements to minimize their liabilities, The Wall Street Journal reported. Tony Abbott's conservative government Thursday ordered aggressive audits and detailed investigations into their accounting, aiming to set an example for other wealthy nations at a meeting of Group of 20 finance ministers in Cairns later this month.