Finance and Economic

The chief executive officer of Chrysler and Fiat said Monday he and Canadian authorities have begun talking about purchasing Canada’s 1.7 percent ownership in Chrysler.

The Canadian federal government and provincial Ontario governments received 1.7 percent of Chrysler two years ago as part of a bailout that also provided $1.7 billion in loans to help the Detroit company survive.

Chrysler, already controlled by Fiat, recently paid back the last of the money it borrowed from the Canadian and American governments. Fiat then began the process of buying the shares owned by the U.S. government.

Chief executive Sergio Marchionne joined Canadian Finance Minister Jim Flaherty at a Chrysler Canada casting plant in Toronto on Monday to announce the loan repayment.

Marchionne said that he and Flaherty discussed buying Canada’s shares and said they are quite willing to consider purchasing them.

Unlike with the shares owed by the U.S. government, the company has no right to compel the Canadian government to sell.

Flaherty said Ottawa will wait to see how the stock transfer process unfolds in the United States before deciding whether Canada will also sell its shares guaranteed pay day loans.

The Turin, Italy-based automaker said Friday it will buy the U.S. government’s six percent stake in Chrysler under a process that was put in place in 2009 when Chrysler virtually shut down while in bankruptcy court.

Fiat initially received a 20 percent stake in Chrysler in 2009 for providing Chrysler with management expertise and technology.

Since then Fiat has been increasing its holdings in Chrysler and will soon control more than half of the company.

Fiat has helped change the corporate strategy of Chrysler, brought new fuel-efficient vehicles quickly to market and made the company cut costs and operate more efficiently.

The future looks brighter for the company, which has cut thousands of jobs in the United States and Canada in its bid to survive bankruptcy.

In Canada, the company employs 9,000 people and has major assembly plants in Windsor, a southwestern Ontario border city, and Brampton, a community northwest of Toronto.

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The Obama administration declined to brand China a currency manipulator while saying the world’s fastest-growing economy is making “insufficient” progress on letting the yuan rise.

The U.S. “believes that progress thus far is insufficient and that more rapid progress is needed,” the Treasury Department said yesterday in a report to Congress on foreign- exchange markets. The yuan’s real exchange rate remains “substantially undervalued” and the department “will continue to closely monitor the pace” of appreciation.

The report, originally due in April, follows Treasury Secretary Timothy F. Geithner’s push for a stronger yuan. Lawmakers including Senator Charles Schumer, a New York Democrat, say the exchange rate gives China an unfair advantage in the global marketplace. In talks this month between the world’s two largest economies, China agreed on the upward direction of the currency, while differing with the U.S. on the pace.

“We have differences on the degree of appreciation,” Deputy Finance Minister Zhu Guangyao said May 10 in Washington. China’s economy will expand 9.6 percent in 2011 and 9.5 percent next year, according to International Monetary Fund projections released last month.

The Treasury Department backed away from the “nuclear option” of calling China a currency manipulator, said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. The Group of 20 nations are “going to have something to say on the global imbalances later this year, so it is better to decide these matters in a world forum rather than for the U.S. to take unilateral action.”

Congressional Criticism

Rupkey said in e-mailed comments that the “late afternoon release before Memorial Day weekend appears well-timed in order to miss congressional criticism. Nice timing, as a war of words helps no one.” The report was released at 4 p.m. yesterday.

The Treasury said “no major trading partner” of the U.S. met the legal standard of improperly manipulating its currency. “Exchange-rate flexibility must play an important role in rebalancing China’s economy towards domestic demand-led growth,” the department said.

China has allowed the yuan to appreciate by 5.1 percent against the dollar from June 2010 through the end of April 2011, or at a rate of about 6 percent per year in nominal terms, the Treasury said. Since inflation in China is higher than it is in the U.S., the yuan has been rising against the dollar at an annual rate of about 9 percent on a real, inflation-adjusted basis.

Yuan’s Increase

By acknowledging the yuan’s increase since last year while criticizing the “limited progress,” the U.S. “once again takes a calibrated approach to Chinese currency policy,” Eswar Prasad, a senior fellow at the Brookings Institution in Washington and a former IMF official, said in an e-mail.

The yuan completed its second consecutive weekly gain on speculation that policy makers will tolerate appreciation to tame inflation. The People’s Bank of China set the currency’s reference rate 0.04 percent stronger at 6.4898 per dollar yesterday, the highest level since July 2005.

The yuan strengthened 0.02 percent this week to 6.4917 per dollar as of the 4:30 p.m. close in Shanghai, according to the China Foreign Exchange Trade System. It was little changed yesterday and touched 6.4858 on May 26, the strongest level since 1993. The yuan isn’t allowed to move more than 0.5 percent either side of the central bank’s daily fixing.

Hampers Progress

“China’s consistent, large reserve accumulation prolongs a substantial undervaluation and hampers progress toward global rebalancing,” the Treasury said. “It is in China’s interest to allow the nominal exchange rate to appreciate more rapidly, both against the dollar and against the currencies of its other major trading partners.”

China purchases foreign currencies to suppress the value of the yuan. It accumulated $3.04 trillion of foreign-currency reserves as of March, an increase of 24 percent over a year earlier. Its reserves are the world’s largest, accounting for 31 percent of the total.

The Treasury “continues to make the right call on China’s currency policy,” Erin Ennis, vice president of the U.S.-China Business Council, said in a statement yesterday. The council thinks the Obama administration “approach of employing multilateral and bilateral engagement with China is the most useful way to make progress on the exchange-rate issue.”

Stronger Yuan

The council’s members as of April 21 included Apple Inc. (AAPL); Chevron Corp. (CVX); Citigroup Inc. (C); JPMorgan Chase & Co. (JPM); and Bloomberg LP, the parent of Bloomberg News, according to the group’s website.

The Treasury reiterated its view that a stronger yuan would help China contain inflation. Consumer prices in China rose a more-than-estimated 5.3 percent in April from a year earlier.

If China fails to let its currency rise, it faces the risk of higher inflation, an “excessively rapid expansion of domestic credit, and upward pressure on property and equity prices, all of which could threaten future economic growth,” according to the report.

“China’s real effective exchange rate — a measure of its overall cost-competitiveness relative to its trading partners — has appreciated only modestly over the past decade,” the Treasury said.

The report was due on April 15. The previous report, due on Oct. 15, 2010, was released on Feb. 4.

International Meetings

In delaying the April report, the Treasury on April 8 cited a series of coming international meetings. In addition to the U.S.-China Strategic and Economic Dialogue, the delay also encompassed meetings of Group of 20 finance ministers, the World Bank and the IMF.

In February, the Obama administration also declined to brand China a currency manipulator while saying the No. 2 U.S. trading partner made “insufficient” progress on allowing the yuan to rise.

The Obama administration and U.S. lawmakers have said China’s currency policy gives the nation’s exporters an unfair competitive advantage. U.S. concerns have grown as China’s rising economic power put the economic relationship off balance.

Schumer and Senator Jeff Merkley, an Oregon Democrat, called May 6 for a “rebalancing” in the U.S.-China economic relationship. The two lawmakers, who had just returned from a trip to China, said the Chinese need to open their financial sector, address “abnormally low deposit and lending rates” and allow broader market access to foreign firms.

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The first thing Silvia Huelves was told when she started studying architecture was that she should take up Chinese or Japanese _ she was not going to build anything in Spain any time soon.

It wasn’t criticism of her skills but a reflection on the state of the country, where the jobless rate among 16-24-year-olds is a staggering 45 percent and a construction sector slump caused nearly two years of recession.

Now the young people are protesting, roughing it out in improvised camps in the hearts of Spain’s main cities to bring attention to their plight. While they’re angry about lots of things, bleak job prospects and having to live with Mom and Dad well into adulthood are high on the list.

Huelves, a 19-year-old with a big smile, said her professors make no secret of the dire state of things.

“You go in and the first thing they say is ‘forget about it, you are never going to build buildings,’” she said. “They say architecture is really cool and well-rounded and useful for a lot of things, but you are not going to build buildings.”

Construction is no doubt the hardest hit sector in Spain’s battered economy as it tries to recover from a burst real estate bubble. But in almost any line of work Spain’s young people face a dark outlook. The jobless rate in the under-25 age bracket makes the national unemployment rate of 21.3 percent seem mild by comparison. Widen the bracket to the age of 29 and the rate is still a stunning 35 percent.

To voice their discontent, young people have been coordinating over the past two weeks via social media like Twitter and Facebook to set up huge camps in city centers. The camp in Madrid features makeshift clinics and libraries with grungy sofas as well as stands with donated apples and bananas, juice and baguette sandwiches.

“More than anything, this is about being fed up. We are absolutely fed up,” said Maria Martinez, 32, sitting in a lounge chair under blue sheeting protecting the Madrid camp from a blazing midday sun.

Martinez considers herself relatively lucky because she has been jobless for only about two months and has worked since age 17, mainly in factories and offices. But it was always for low wages, sometimes with no benefits and always getting part of her pay under the table.

Martinez rattled off other gripes _ conservative politicians who watched Spain’s real estate market heat up and took credit as GDP rose nicely, banks that helped and profited by providing streams of easy credit, and the current Socialist government that presided over the bubble’s loud pop in 2008, with its disastrous impact on the country.

“I am the first one to acknowledge we have reacted late and we have been asleep for a long time,” Martinez said.

Another jobless protester, Pablo Luna, 27, has a degree in history, just finished a Masters in journalism and says he has zero prospects for work. He said it is virtually unheard of for people to complete their studies and go right into work in their field.

“Of the people I know, no one has done it,” said Luna, an articulate man with a thick, dark, wild pony tail and the rich voice of a radio announcer. “I should be out looking for a job. But my heart tells me I should be here now.”

Much of the problem lies with rigid rules governing Spain’s labor market, in particular the high cost of laying off established, older and less productive workers under legislation that goes back 30 years, said Gayle Allard, a labor market expert at IE Business School in Madrid.

With employers wary of giving new hires open-ended contracts with full benefits, younger workers often end up with temporary ones, sometimes lasting just a few months. In the good days, companies would roll those contracts over, but since recession hit many have just let them run out.

This makes the Spanish jobless rate highly vulnerable to swings in the economy, as nearly a third of all workers have temporary contracts. The jobless rate has more than doubled in about three years, with young people who often earn just euro1,000 ($1,400) a month taking a particularly hard hit.

In the 27 countries of the European Union, as of March of this year the jobless rate for under-25’s averaged about 21 percent, less than half of Spain’s, according to the statistical agency Eurostat. Even the rate in bailed-out Greece is lower, at 36 percent.

Last year the Spanish government passed labor market reforms designed to make it cheaper and easier for businesses to lay off workers and more expensive to use temporary contracts. The idea was to encourage hiring and make employment more stable.

But Allard says the changes are timid and that today’s young Spaniards _ even with foreign language and computer skills _ are still effectively shut out of the labor market.

The effects go beyond protests and rallies to shape the structure of the country’s society.

Spain has one of Europe’s lowest birth rates _ 1.4 children per woman of childbearing age _ in part because it takes so long for young people to get out of their parents’ house, establish a career and start families.

Until that happens, life for many young Spaniards is a sort of limbo.

“They cannot become productive. They cannot use their skills. They cannot save. They cannot invest in housing. They are not accumulating wealth that they can leave off in the future,” said Allard, an American who has lived in Spain for 25 years.

“These kids are paying our pensions and they are not going to have been able to save anything. It is really scary,” Allard said.

Arcadi Oliveres, an applied economist at Autonomous University in Barcelona, said that compared with other European countries Spain offers comparatively little vocational training as an early alternative to going to jam-packed universities.

The result is that Spain churns out legions of university-trained scientists _ who end up unemployed and eventually work in vocational jobs anyway, Oliveres said.

“Unlike a structure that is pyramid-shaped in other countries, here there is a real inflation of university graduates,” Oliveres said. “As a labor market model it is a bit anomalous.”

At the medical school in Madrid Complutense University, 21-year-old Maria Perez is two weeks away from graduating with a degree in podology and she is far from thrilled. Of her immediate circle of 20 friends and close acquaintances, she says three have jobs.

“There is not a lot of reason to celebrate because you know you are going to keep living with your parents and end up working in a grocery store,” she said.

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SAN FRANCISCO

Purchases of new houses probably held close to a record low in April, showing the real-estate market remains a weak link in the U.S. expansion, economists said before a report today.

New homes sold at a 300,000 annual pace last month, the same as in March, according to the median forecast of 75 economists surveyed by Bloomberg News. Purchases sank to a 270,000 pace in February, the weakest in 48 years of data.

The prospect that foreclosures will keep driving down property values means that buyers may continue to shun new houses in favor of previously owned dwellings, hurting builders like D.R. Horton Inc. Unemployment at 9 percent, stagnant wages and credit restrictions add to the headwinds, signaling a housing recovery will take years to unfold.

“Until that overhang of existing homes works its way down, new-home sales will remain depressed and construction as well,” said Steve Blitz, a senior economist at ITG Investment Research Inc. in New York.

The Commerce Department’s report is due at 10 a.m. in Washington. Estimates in the Bloomberg survey ranged from 280,000 to 320,000.

Stocks of homebuilders have underperformed the broader market. The Standard & Poor’s Supercomposite Homebuilders Index has fallen 1.4 percent so far this year, compared with a 4.7 percent gain for the S&P 500 Index. (SPX)

‘Struggle’ Through 2012

Demand for new houses will remain weak into next year, said Bill Wheat, chief financial officer of Fort Worth, Texas-based D.R. Horton, the second-largest U.S. homebuilder by revenue. “We feel it could still be a struggle in 2012.”

Builders are cutting back as a result. Housing starts fell 11 percent in April to a 523,000 annual pace, the second-weakest reading since April 2009’s record low, figures from the Commerce Department showed last week.

One reason for the slump is growing interest from investors in buying distressed properties. Previously owned homes sold at a 5.05 million annual rate in April, down 0.8 percent from the prior month, data from the National Association of Realtors showed May 19. All-cash deals accounted for 31 percent of transactions, and distressed properties, including foreclosures and short sales, made up 37 percent, the group said.

The supply of existing houses will probably remain an issue for builders. CoreLogic Inc. in March estimated about 1.8 million homes were more than 90 days delinquent, in foreclosure or bank-owned, a so-called “shadow inventory” set to add to the unsold supply of 3.87 million previously owned homes already on the market.

Sinking Share

As distressed transactions have played a bigger role, new- home sales have shrunk as a share of total sales. They accounted for 5.6 percent of the market in March, down from 16 percent at their peak in July 2005.

Foreclosures have weighed on home prices. The S&P/Case- Shiller index of property values in 20 cities fell 3.3 percent in February from a year earlier, the biggest 12-month decrease since November 2009, the group said last month. The gauge is down 33 percent from its July 2006 peak.

In addition to the drop in values, persistent joblessness may be keeping potential buyers away. The 9 percent unemployment rate last month, almost two years into an economic recovery, compares with an average of 4.8 percent in the three years before the recession began.

That’s helping damp wages. Average hourly earnings for all workers rose 1.9 percent in April from a year earlier compared with a 3.4 percent gain in the 12 months through December 2007, when the recession began, according to Labor Department data.

Douglas Yearley Jr., chief executive officer at Toll Brothers Inc. (TOL), the largest U.S. luxury-home builder, last week said the spring home-selling season has been “disappointing” and that “people are still scared.”

Bloomberg Survey ==================================================== New Home New Home Richmond Sales Sales Fed ,000’s MOM% Index ==================================================== Date of Release 05/24 05/24 05/24 Observation Period April April May —————————————————- Median 300 0.0% 9 Average 301 0.2% 8 High Forecast 320 6.7% 11 Low Forecast 280 -6.7% 1 Number of Participants 75 75 11 Previous 300 11.1% 10 —————————————————- 4CAST Ltd. 303 1.0% — ABN Amro 306 2.0% — Action Economics 295 -1.7% — Aletti Gestielle 310 3.3% — Ameriprise Financial 305 1.7% 6 Banesto 300 0.0% — Bank of Tokyo- Mitsubishi 310 3.3% — Bantleon Bank AG 310 3.3% — Barclays Capital 305 1.7% — BBVA 295 -1.7% 11 BMO Capital Markets 300 0.0% 10 BNP Paribas 310 3.3% — BofA Merrill Lynch 315 5.0% — Briefing.com 290 -3.3% — Capital Economics 300 0.0% — CIBC World Markets 300 0.0% — Citi 290 -3.3% — ClearView Economics 300 0.0% — Commerzbank AG 300 0.0% — Credit Agricole CIB 303 1.0% — Credit Suisse 290 -3.3% — Daiwa Securities America 320 6.7% — DekaBank 290 -3.3% — Desjardins Group 290 -3.3% — Deutsche Bank Securities 300 0.0% — DZ Bank 280 -6.7% — Exane 310 3.3% — Fact & Opinion Economics 300 0.0% 8 First Trust Advisors 310 3.3% — FTN Financial 295 -1.7% — Goldman, Sachs & Co. 285 -5.0% — Helaba 295 -1.7% — HSBC Markets 300 0.0% — Hugh Johnson Advisors 280 -6.7% — Ibersecurities — — 1 IDEAglobal 310 3.3% — IHS Global Insight 286 -4.7% — Informa Global Markets 295 -1.7% — ING Financial Markets 300 0.0% 8 Insight Economics 300 0.0% — Intesa-SanPaulo 310 3.3% — J.P. Morgan Chase 305 1.7% — Janney Montgomery Scott 300 0.0% — Jefferies & Co. 295 -1.7% — Landesbank BW 290 -3.3% — Manulife Asset Management 305 1.7% — Maria Fiorini Ramirez 305 1.7% — MET Capital Advisors 310 3.3% — MF Global 285 -5.0% — Mizuho Securities 303 1.0% — Moody’s Analytics 290 -3.3% — Morgan Keegan & Co. 310 3.3% — Morgan Stanley & Co. 310 3.3% — National Bank Financial 300 0.0% — Natixis 307 2.3% — Nomura Securities 305 1.7% — OSK Group/DMG 300 0.0% — Parthenon Group 295 -1.7% — Pierpont Securities 315 5.0% — PineBridge Investments 312 4.0% 11 PNC Bank 295 -1.7% — Raymond James 305 1.7% — RBC Capital Markets 310 3.3% — RBS Securities 300 0.0% — Scotia Capital 310 3.3% — Societe Generale 287 -4.3% — Standard Chartered 310 3.3% — State Street Global Markets 300 0.0% 9 Stone & McCarthy Research 305 1.7% — TD Securities 290 -3.3% 5 UBS 280 -6.7% — University of Maryland 300 0.0% — Wells Fargo & Co. 310 3.3% — WestLB AG 306 2.0% — Westpac Banking Co. 300 0.0% 10 Wrightson ICAP 300 0.0% 10 ====================================================

To contact the reporters on this story: Bob Willis in Washington at sbwillis@bloomberg.net

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Polish central bank Governor Marek Belka said inflation in the eastern European country will peak within two months and a surprise interest rate increase in May isn’t a start of “a new trajectory” in monetary tightening.

“We are really very close to the peak” of consumer-price growth, Belka said in an interview in the Kazakh capital Astana today. The rate increase wasn’t to signal “a new trajectory of interest rate increases. It’s simply that we want to implement our strategy faster.”

The central bank unexpectedly raised its benchmark seven- day rate by a quarter-point to 4.25 percent on May 11. The bank sought to pre-empt pressure on prices as consumer spending is picking up. The inflation rate rose to a 2 1/2-year high of 4.5 percent last month.

Wage growth is accelerating in Poland, the European Union’s largest eastern member which escaped a recession altogether during the credit crisis. The Polish central bank raised borrowing costs three times since January as policy makers across the globe struggle to curb inflation.

The rate move probably changed perceptions of how fast prices are going to rise and will “moderate” economic growth in Poland, Belka said cash advance. Imported inflation is also eroding the purchasing power of consumers, he said.

‘Hysteria Is Over’

Following the rate increase “we are observing a certain attenuation of inflationary expectations.” Belka said. “The hysteria is over.”

The inflation rate may drop “close” to the central bank’s target of 2.5 percent late next year, Belka said. The rate has been above the bank’s goal for seven months.

Government efforts to limit public spending may help combat inflation in the country, he said.

Even so, Belka said he has “some doubts” the government will be able to reduce the budget deficit to 2.9 percent of gross domestic product as planned next year.

The central bank took the government’s pledge “seriously” that it will implement “additional measures if necessary” to cap expenditures, he said.

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ST. CHARLES

Singapore raised its growth forecast for 2011 after the island’s economy expanded the most in Southeast Asia last quarter, sustaining pressure on the central bank to allow the currency to appreciate.

Gross domestic product will increase 5 percent to 7 percent this year, from an earlier forecast of 4 percent to 6 percent, the trade ministry said today. The economy expanded 22.5 percent in the three months through March from the previous quarter, compared with a preliminary estimate of 23.5 percent.

Singapore’s expansion has fueled a surge in the cost of living that helped propel opposition parties to a record share of the vote in this month’s election. The report spurred a third straight day of gains in the local dollar, bringing the advance against its U.S. counterpart to 13 percent over the past year as policy makers use currency appreciation to temper inflation.

“Domestic and external demand remains strong and we’ll probably continue to see more gains in the Singapore dollar this year,” said Kit Wei Zheng, a Singapore-based economist at Citigroup Inc. “Consumer price inflation may have peaked but pressures in the pipeline will remain elevated.”

The Monetary Authority of Singapore said last month it would allow further gains in the currency in the third tightening of monetary policy in a year. Global central banks are raising interest rates, removing excess cash from their financial systems or allowing their currencies to appreciate as rising oil and commodity prices fuel inflation.

Best Performer

The Singapore dollar is the best performer in Asia outside Japan in the past 12 months. The currency rose 0.5 percent to S$1.2377 against its U.S. counterpart as of 9:49 a.m. local time.

The island’s expansion came even as the GDP of Japan, the island’s seventh-biggest trading partner, shrank at a more-than- estimated 3.7 percent pace in the first quarter, according to a government report today.

Singapore’s government has boosted financial services and tourism to reduce its reliance on exports. Companies from Singapore Airlines Ltd. (SIA) to hotel operator Shangri-La Asia Ltd. have benefited from record tourist arrivals. Genting Singapore Plc (GENS), one of the two casino operators in the city, turned to a first-quarter profit of S$305.4 million ($247 million) in the three months ended March 31 as sales almost tripled to S$922.6 million.

Global Recovery

While Japan’s GDP is shrinking, economies from Germany and China to Brazil have sustained their economic rebounds. Singapore’s trade ministry said today advanced economies “remain on a path of modest recovery,” citing an improving labor market in the U.S., rising exports and household spending in the European Union and “healthy” growth in emerging Asia.

“The global recovery story remains largely intact and Singapore is a beneficiary of that expansion,” Selena Ling, head of treasury research at Oversea-Chinese Banking Corp. in Singapore, said before the report. “While inflation has probably peaked, the economic environment may get a bit more challenging in coming quarters payday advance.”

Singapore, located at the southern end of the 600-mile (965-kilometer) Malacca Strait, benefited from improving overseas demand for manufactured goods as the global economy recovered from the 2009 slump.

The Southeast Asian nation’s economy grew a record 14.5 percent in 2010. Singapore’s economic performance will probably stay at “high levels” for the rest of 2011, spurring inflationary pressures even as the island tightens monetary policy, the central bank said last month.

Labor Market

A “tight” labor market will add to business costs, the trade ministry said today. Cost pressures may build up further and impact business activity, Kwek Mean Luck, a deputy secretary at the Ministry of Trade and Industry, said in Singapore today.

Prime Minister Lee Hsien Loong’s government is distributing cash to its citizens and giving out utility rebates to limit the effect of price increases. The country held elections this month, and the ruling People’s Action Party was returned to power with the smallest percentage of popular votes since independence in 1965 as citizens complained about the rising cost of living.

Inflation may have peaked and a stronger currency has helped damp price gains, central bank Managing Director Ravi Menon said yesterday. Singapore’s monetary policy remains appropriate and the central bank still expects inflation to average 3 percent to 4 percent this year, Ong Chong Tee, deputy managing director at the Monetary Authority of Singapore, said at a press briefing today.

Property Curbs

Central banks in Vietnam, India and Malaysia raised borrowing costs this month to curb price increases. Malaysia reported yesterday that inflation accelerated to a two-year high.

In Singapore, where demand for private homes and mortgages has boosted earnings for companies including lender DBS Group Holdings Ltd. and real-estate developer City Developments Ltd., policy makers have introduced measures to curb property speculation.

The revised economic expansion in the first quarter compares with the 22 percent median forecast of nine economists in a Bloomberg News survey. Compared with a year earlier, the economy grew 8.3 percent last quarter, the ministry said. That’s higher than the growth rates of Malaysia, Indonesia, Vietnam and the Philippines, and exceeds the 2.7 percent pace estimated for Thailand in a Bloomberg News survey.

Singapore’s manufacturing will be bolstered by new plants in the chemicals industries and higher production by biomedical companies, while economic growth will spur lending and insurance, the trade ministry said in a statement today.

Growth Risks

Risks to growth include “continued concerns of sovereign debt sustainability in Europe, further increases in global oil prices arising from the political turmoil in the Middle East and North Africa region, and a prolonged disruption of industrial activities in Japan,” it said.

Neighboring Malaysia, Singapore’s biggest trade partner, reported yesterday growth slowed to 4.6 percent last quarter as manufacturing and services moderated.

“Local manufacturers could be affected should the disruption supply from Japan persist into the second half of 2011,” the Singapore trade ministry’s Kwek said.

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NEW YORK

Israel has agreed to transfer to the Palestinians cash it withheld after the rival Palestinian factions signed a unity pact.

Israel collects tax funds and customs fees from Palestinians who work in Israel on the Palestinians’ behalf. It is supposed to transfer the money to the Western-backed Palestinian Authority.

But it held up the transfer this month, saying it feared money would reach militants in the Hamas-ruled Gaza Strip.

Earlier this month, the Palestinian Authority signed a unity deal with the Iranian-backed Hamas, which has killed hundreds of Israelis.

Israel had come under heavy international pressure to release the funds.

The Finance Ministry said Monday the exact sum transferred would be determined in a meeting with Palestinian officials.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

JERUSALEM (AP) _ The military says Israel’s frontiers are quiet after a violent day of border breaches, though security forces remain on alert for more violence.

Police, meanwhile, say they arrested an unarmed man from Syria who tried to make his way out of the Golan Heights into Israel.

Police spokesman Micky Rosenfeld says the man was stopped in a taxi driven by a Palestinian from east Jerusalem at the exit of the Golan village of Majdal Shams.

Rosenfeld says police carried out house-to-house searches in Majdal Shams all night looking for some of the hundreds of people from Syria who burst through a border fence into the village Sunday.

Other Arab protesters marched on Israel’s borders with Lebanon and Gaza.

The protests sparked clashes that killed at least 15 people.

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