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South African policy makers are looking at whether they should maintain stimulus measures as the economy hasn’t been as affected by the global recession as other countries, central bank Deputy Governor Xolile Guma said.

“Certainly in South Africa, we’ve been taking a look at it, because we were not affected as seriously as other people,” Guma said in an interview with Bloomberg News in Sydney yesterday, without being more specific.

South Africa’s economy grew an annualized 0.9 percent in the three months through September amid a manufacturing rebound, after shrinking in the previous three quarters. The central bank kept its benchmark interest rate unchanged at 7 percent last month in a decision that wasn’t supported by some members of the Monetary Policy Committee who called for a rate cut.

Group of Seven finance ministers pledged last week to press ahead with economic stimulus measures even as investors intensify their focus on mounting budget deficits.

“We need to continue to deliver the stimulus to which we are mutually committed and begin looking at exit strategies to move to a more sustainable fiscal track,” Canadian Finance Minister Jim Flaherty said Feb. 6 after chairing a meeting of counterparts and central bankers from the G-7 in Iqaluit, Canada.

South Africa’s economy “has emerged from the recession and I presume that will continue going forward in the absence of any external shock, which isn’t anticipated,” Guma said.

Rand Policy

Africa’s biggest economy will probably expand 2 percent this year and 3 percent in 2011, Governor Gill Marcus said Jan. 26. That is higher than the National Treasury’s forecast of 1.5 percent growth this year.

Guma also said that while the rise in South Africa’s currency is a “matter of concern” for parts of the nation’s economy, “the policy of the bank is not to intervene in order to establish any particular rate for the rand.”

The rand traded at 7.7169 against the U.S. dollar on Feb. 5, according to Bloomberg data. The currency has gained 28.5 percent in the past year, eroding earnings for exporters.

Guma is among global policy makers visiting Sydney this week to attend a symposium organized by the Reserve Bank of Australia to celebrate its 50th anniversary. The Basel, Switzerland-based Bank for International Settlements is also hosting a meeting of central bank officials in Sydney this week.

Guma said participants at the BIS meeting will review current developments in the global economy.

Difficult Period

“The international economy is emerging from a very difficult period, and one must hope that there will be no shocks, certainly not of the magnitude that we’ve had to deal with recently,” he said.

He also said fallout from concerns about deficits in some European countries “could be quite serious.”

“That could be a fairly serious problem, not only for the EU region, but in terms of the possible domino effects.”

Global stocks plunged last week while bond default risks soared after Greece’s biggest union approved the second mass strike this month and tax collectors began a 48-hour walkout, showing that Prime Minister George Papandreou’s parliamentary majority may not be enough to implement his plan to cut the European Union’s largest deficit.

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Bank of Japan Deputy Governor Hirohide Yamaguchi defended the central bank’s self-imposed limit on bond purchases after a lawmaker suggested it could buy more debt to fight deflation.

“This isn’t just something we uphold to keep our backyard tidy,” Yamaguchi told parliament in Tokyo today. “Should people mistakenly start to think we are financing government debt, that could create turbulence in financial markets.”

The central bank currently keeps its total government bond purchases below the amount of banknotes in circulation. Yamaguchi was responding to a question from ruling Democratic Party of Japan lawmaker Motohisa Ikeda, who asked whether abandoning that rule would enhance the bank’s policy tools to defeat falling prices.

Finance Minister Naoto Kan has been calling on the central bank to do more to fight deflation, pressure Governor Masaaki Shirakawa has responded to by saying there’s no “magic” solution for stamping out falling prices. The central bank currently purchases 1.8 trillion yen ($20 billion) of government bonds each month, an amount that Shirakawa said cannot be increased much more.

We have the rule “because it’s important we make our intentions clear to ensure market stability,” Yamaguchi said.

The government has called on the central bank to take action because the scope of further fiscal stimulus has been limited by a swelling debt load. Standard and Poor’s last month lowered its outlook for the nation’s AA sovereign debt rating, citing Prime Minister Yukio Hatoyama’s failure to come up with policies to contain the largest debt burden in the industrialized world.

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The top-grossing movie in the world, Avatar, is on screens now, and it clearly identifies the most evil force in the universe. It’s business.

"There’s only one thing the shareholders hate more than bad publicity," says the smarmy manager of an unnamed company’s mining operations on the planet Pandora in Avatar, "and that’s a bad quarterly report." Slaughtering hundreds of peace-loving Pandorans may generate some nasty press, but he decides to do it anyway — in the name of profit.

That portrayal — echoed in the Oscar contender Up in the Air – may seem cartoonish, but it’s in line with the popular mood, which is why President Obama knew he was on safe ground when he recently derided "fat-cat bankers."

Polling shows that America and the developed world still loathe business two years after the U.S. recession began; a 2009 survey by the Edelman PR firm says that only 30% of Americans (and 13% of Brits) think the reputation of large global businesses is good. Now Congress is weighing a "Wall Street tax" meant to penalize the financial services industry for its transgressions, and Britain and France already have enacted high taxes on bonuses.

None of those sanctions will achieve their goals, because the intended victims can evade them or pass along the costs; they’ll just throw a bit of sand in the gears and impose a burden of inefficiency on everyone.

Instead, these moves are all about payback: Voters love them because they punish the sector of society that so many blame for the recession and their own poor financial state. Unhappiness with the current state of affairs is entirely rational, but …

Blaming business is not only nuts, but also dangerous.

It’s nuts because if you really want to name those who caused the recent recession, the list is long: stupid and shortsighted companies for sure, but also a government that encouraged and mandated risky lending as well as millions of people who willingly took on mortgages they never should have.

More important, it’s dangerous because it’s a delusional response to a far larger issue. As miserable as this recession has been, the hard reality is that even when it’s over (and it may be over already), most Americans won’t be any better off than they were a decade ago, nor will their prospects be bright. Hanging business from the rafters won’t do a thing to help.

The real problem for most Americans isn’t the recession.

It’s the more ominous fact that average household income hasn’t budged for the past 10 years. That’s true in every income quintile of the population, even the top.

And for the bottom 60%, that stagnation has lasted twice as long. Most of the country has just been treading water over a period that spans expansions and recessions, bull and bear markets, and Republicans and Democrats in charge.

Just try finding the bad guy in our real-life movie. The advent of a large-scale global labor market means that millions of Americans are competing for jobs with Chinese, Indian, and other workers, pushing our high pay down. Social trends have led to more single-parent and typically lower-income households. Perhaps most important, America no longer boasts a world-beating education system that turns out masses of graduates who can support an ever-rising living standard.

Who’s the villain?

It isn’t a few evil people or any one sector. It isn’t the rich; the gains of the top 1% needn’t cause declines at the bottom. Our society isn’t behaving villainously at all. It just isn’t adapting to a changing world. Don’t despair; we can return to a rising standard of living. We’ve done it before. But we’ll never do it as long as we refuse to face the real reasons that so many Americans are in economic trouble.

How to raise living standards

1. Increase accountability and pay in public schools. We can turn out better graduates by realizing that principals and teachers respond to the same incentives as the rest of us.

2. Embrace high-performing immigrants. They don’t steal American jobs; they create them and make the U.S. more competitive.

3. Lower the U.S. business tax rate and end corporate welfare. That will help make U.S. companies more globally competitive and aid American workers. 

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After months of speculation and hype, Apple unveiled a portable device Wednesday called the iPad that will attempt to usher in a new era of touch-screen tablet computing, filling a gap between smart phones, laptops and eBook readers.

Apple’s CEO Steve Jobs unveiled the iPad to a rapt audience, calling it "the most advanced technology in a magical and revolutionary device."

He said the iPad bridges the divide between laptops and smart phones, giving people a unique experience. The iPad "is so much more intimate than a laptop," he said, "And it’s so much more capable than a smartphone."

He said the device — half an inch thick and weighing 1.5 pounds — would be available within 60 days starting at $499 for a 16 gigabyte Wi-Fi model, with larger storage sizes and 3G wireless data connectivity through AT&T taking the price up to $829.

In form and function, the device resembles a large iPhone or iPod Touch with a large 9.7-inch high-definition, LED-backlit screen and a 10-hour battery life. The iPad will offer a scaled-up iPhone experience complete with the iPhone operating system and access to almost all of Apple’s 140,000 iPhone apps.

But the device breaks new ground for Apple in that it will include a new Apple iBook store, pitting Apple directly against Amazon’s Kindle service.

The device offers access to Apple’s iTunes catalog of music, movies and TV shows. The iPhone’s browser is expanded for the iPad as are a number of other basic functions. Apple also created iPad versions of popular iWork suite productivity applications Keynote, Pages and Numbers, which will sell for $9.99 each.

Apple, however, passed on a camera for the iPad, ruling out the possibility of video conferencing. There is no Adobe Flash support so web video viewing is limited. And despite the larger screen, Apple has not enabled app multi-tasking.

Applications will play a large role in the success of the iPad, just as it helped propel the iPhone and iPod Touch. Jobs said almost all 140,000 apps will be able to run in a scaled-up, full-screen version on the iPad or in its original form.

Stephen Wildstrom, an independent technology analyst said the iPad feels like an offshoot of Apple’s Macbook laptop line, focusing on portability, rather than the outright mobility of the iPhone. He said Apple has a chance to lead a fledgling category with its strong combination of hardware and software.

"The iPad can succeed without hurting anything existing today," he said. "The iPhone didn’t kill the smart phone industry, it expanded the market. Here, they’re creating a new market."

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Financial and energy stocks helped push the Toronto stock market slightly higher Monday.

The rise followed a three-session losing streak brought on by Chinese moves to slow bank lending, proposals to curb risk-taking by U.S. banks and doubt over whether U.S. Federal Reserve chairman Ben Bernanke would be appointed to another term.

The S&P/TSX composite index rose 11.08 points to 11,354.51, after tumbling almost three per cent last week.

The Canadian dollar was unchanged at 94.51 cents US.

There is still lots of uncertainty about President Barack Obama’s plans to tighten regulation over the U.S. banking sector. And China’s moves to raise banks’ reserve requirements in a move to curb lending continued to depress mining stocks.

But investors felt better about Bernanke’s reappointment Monday after two key Democratic senators said they would support giving him another four-year term. Presidential adviser David Axelrod added that Bernanke has enough votes to win reappointment.

The steep losses last week and the lack of strong buying enthusiasm Monday made investors wonder if a correction was taking hold after a strong run of gains going back to early March 2009.

“It tells me the correction (that started last week) is not over,” said Paul Thornton of Investor Boot Camp Online.

“When we look at some of the individual stocks, key stocks in the market, many of them are going lower. So the correction is not over and it almost looks like any attempts at a rally are going to get sold into. Which isn’t great.”

The tech sector was the leading component, up about one per cent ahead of earnings coming out after the close from Apple Inc.

Celestica Inc. (TSX:CLS) was up 23 cents to $9.86 ahead of earnings coming out Wednesday.

The energy sector rose 0.57 per cent as the March crude contract on the New York Mercantile Exchange rose 72 cents to US$75.26 a barrel after sliding about four per cent last week as China’s credit-tightening moves raised demand concerns. Canadian Oil Sands Trust (TSX:COS.UN) advanced 26 cents to C$28.59.

The proposed new banking regulations punished bank stocks around the world and pushed the TSX financial index down about 3.2 per cent last week. But the sector revived somewhat Monday, rising 0.47 per cent.

“The banks have so much pricing power that they will earn their way through,” said Jennifer Radman, associate portfolio manager at Caldwell Securities.

“They’ve certainly earned their way through most of their credit losses and those aren’t going to be as scary as people once thought they might be. They’ll be all right.”

Scotiabank (TSX:BNS) gained 48 cents to $45.08 while TD Bank (TSX:TD) climbed 71 cents to $62.46.

The base metals sector moved down 0 payday loans in one hour.6 per cent on top of last week’s slide of about six per cent as China’s move last week raised concerns about economic growth in that country _ and demand for commodities. The March contract for copper rose five cents to US$3.39 and Teck Resources (TSX:TCK.B) climbed 37 cents to C$39.14 but Labrador Iron Mines Holdings (TSX:LIM) fell 85 cents to $5.60.

The gold sector dipped 1.38 per cent even as the February gold contract on the Nymex gained $6 to US$1,096.50 an ounce. Barrick Gold Corp. (TSX:ABX) faded 59 cents to C$38.07.

The TSX Venture Exchange was off 2.82 points to 1,546.85.

New York indexes eked out a small gain amid data showing that sales of previously occupied homes took the largest monthly drop in more than 40 years last month, plunging far deeper than expected after legislators gave buyers extended time to use a tax credit.

The U.S. National Association of Realtors said sales fell 16.7 per cent in December against expectations of a 10 per cent drop.

The Dow Jones industrial average moved 23.88 points higher to 10,196.86 after falling just over four per cent last week. The Nasdaq composite index climbed 5.51 points to 2,210.8 while the S&P 500 index gained 5.02 points to 1,096.78.

Corporate earnings will be front and centre this week with dozens of reports from nearly all sectors scheduled for release, including Apple Inc., Johnson & Johnson, Amazon Inc. and AT&T Inc.

The earnings season also gains momentum in Canada where market heavyweights such as grocer Metro Inc. (TSX:MRU.A), Canadian National Railways (TSX:CNR), Canadian Pacific Railway (TSX:CP) and Potash Corp. (TSX:POT) deliver earnings this week.

In corporate news, Kingsway Financial Services Inc. (TSX:KFS) has agreed to sell its shares of Jevco Insurance Co. to Westaim Corp. (TSX:WED) of Toronto in a proposed deal worth about $263 million. Kingsway shares jumped 33 cents or 21.7 per cent to $1.85 while Westaim jumped 7.5 cents or 17.24 per cent to 51 cents.

The Toronto Stock Exchange said it was reviewing the shares of Montreal-based toy maker Mega Brands (TSX:MB) for possible delisting, and the company had 120 days to regain compliance with listing requirements. Mega Brands is in the midst of a recapitalization plan that eliminates nearly $300 million of debt. Its shares lost four cents to 62 cents.

DualEx Energy International Inc. (TSXV:DXE) stock lost more than half its value Monday after the company announced it would abandon its Al Tayr 101 well in Syria after an unsuccessful testing program. The stock fell 23 cents or 54.12 per cent to 19.5 cents with almost four million shares traded on the TSX Venture Exchange.

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U.K. retail sales rose less than economics forecast in December as price increases squeezed spending during the holiday season, casting doubt on the strength of a domestic recovery.

The volume of sales rose 0.3 percent from November after dropping by the same margin the previous month, the Office for National Statistics said today in London. The median forecast was for a 1.1 percent gain, according to a Bloomberg News survey of 27 economists. Retailers raised prices by 1.2 percent in December, the biggest gain for the month since 1998.

The report suggests consumers reined in spending at the peak of the Christmas shopping period as the economy struggled to shake off the longest recession on record. That may dent Prime Minister Gordon Brown’s prospects as he tries to attract voters and win an election by June.

“This puts downward pressure on expectations for next week’s gross domestic product release,” said David Tinsley, an economist at National Australia Bank in London and a former central bank official. “In 2010, consumers’ backs will be up against the wall.”

The U.K. will be the first G-7 nation to report fourth- quarter GDP figures on Jan. 26, with economists forecasting a return to growth. The economy probably expanded 0.4 percent in the period, a Bloomberg survey showed.

‘Sorely Tried’

The pound dropped immediately after today’s release, before rebounding. It traded at $1.6219 at 9:57 a.m. in London after earlier falling 0.2 percent. The yield on the benchmark two-year government bond declined 5 basis points to 1.157 percent today.

By value, retail sales rose 3.6 percent from a year earlier, the biggest December increase since 2006.

Non-store retailing, which includes Internet and mail order, led the increase in sales with a 2.8 percent gain on the month, the statistics office said. Food sales gained 0.3 percent. Sales at department stores dropped 1 percent on the month.

Bank of England Governor Mervyn King said this week U.K. households’ patience may be “sorely tried” in the coming years as pay growth stays weak online cash advance. Though quarterly economic growth rates “may soon turn positive,” he said, “unemployment is likely to remain high.”

William Morrison Supermarkets Plc, the U.K.’s fourth- largest supermarket chain, said yesterday its market will probably remain “challenging” this year. Marks & Spencer Group Plc, the U.K.’s largest clothing retailer, reported on Jan. 6 a holiday sales gain that some analysts said missed estimates.

‘Double Dip?’

There are some signs of optimism for consumers. While six consecutive quarters of economic contraction have destroyed more than half a million jobs, unemployment fell in December at the fastest pace since April 2007.

“There’s still the concern the economy might go in to a double dip, and that the improvement in unemployment may be a temporary blip,” George Buckley, an economist at Deutsche Bank AG in London, said. “The spike in inflation last month is also a risk to spending.”

Brown whose Labour Party trails the Conservatives by about 10 percentage points in polls, has vowed to delay cutting spending to reduce the budget deficit until the recovery is established. The election must be held by June.

Consumers will have to battle headwinds from faster inflation. The U.K. consumer price index jumped in December by 1 percentage point to 2.9 percent from a year earlier, the biggest increase since records began in 1997, as oil prices rose and a 2008 cut in sales tax wasn’t repeated.

Faster price gains present a challenge to Bank of England policy makers, who must decide next month whether to extend their 200 billion pound ($325 billion) bond-purchase plan as they assess new quarterly forecasts on growth and inflation. The panel will have spent the maximum allowed by the Chancellor before their Feb. 4 meeting.

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Japan will implement rules that tighten lending restrictions for Aiful Corp. and other consumer finance companies set to take effect in June, though enforcement may be eased to aid borrowers, a government official said.

The Financial Services Agency may consider changes to rules for implementing a law that puts a ceiling on the amount of loans a borrower can take, said Kenji Tamura, the third-ranking political appointee at the regulator. The law also calls for a 20 percent cap on interest rates lenders can charge customers.

“We’re working on the assumption that the law will be fully implemented,” Tamura said in an interview in Tokyo yesterday. “Postponing the lending cap would require a change to the law, and that’s not under consideration.”

Promise Co., Acom Co. and Aiful, Japan’s three largest consumer lenders by assets, have jumped more than 50 percent in the past month in Tokyo trading amid speculation the government may relax legislation to revive an industry hobbled by more than 4.4 trillion yen ($48 billion) in losses since a 2006 crackdown on lending practices.

“Many investors believe that a relaxation in the rules will mean a big change and move the market,” said Wataru Ohtsuka, a Tokyo-based analyst at Nomura Securities Co. “It is difficult to assess the impact any relaxation of rules may have for the four big consumer lenders, but it won’t be so big.”

Lenders Fall

Promise led Japan’s consumer lenders lower in Tokyo, sliding as much as 6.7 percent to 1,005 yen, and traded at 1,011 yen as of 12:50 p.m. Acom fell as much as 2.1 percent and Aiful declined as much as 1.7 percent. The Topix consumer finance index fell 1.8 percent.

Legislators in December 2006 gave consumer lenders three and a half years to cap rates and to limit each borrower’s outstanding debt to no more than a third of their annual income. Lenders had previously charged as much as 29.2 percent interest.

Rules providing exemptions from loan caps for owners of small companies is one area where rules could be relaxed, Tamura said, citing the need to address funding difficulties in a stagnant economy.

The regulator announced Nov. 13 the establishment of a project team to examine possible changes to how the law should be implemented, as mandated by the 2006 legislation. Tamura, 41, one of five members of the team, has been tasked with holding hearings on how new regulations should be enforced.

‘50-50 Chance’

Tamura last month submitted a report on the hearings to Kouhei Ohtsuka, deputy minister at the agency. Tamura said he would like the project team to begin discussions as early as this month on the need for revisions to ordinances. There is a “50-50 chance” that there won’t be any changes to current decrees, Tamura said.

Shizuka Kamei, Japan’s financial services minister, said at a press conference today he hadn’t received the project team’s report. While there is high demand for loans, the current circumstances don’t necessitate changing the planned legislation, he said.

Government and private financial institutions should do more to meet funding needs and he wants to consider allowing Japan Post Bank Co. to meet emergency funding needs for individuals, he added.

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Almost 3 million homeowners received at least one foreclosure filing during 2009, setting a new record for the number of people falling behind on their mortgage payments.

RealtyTrac, the online marketer of foreclosed homes, reported that one in 45 households — or 2,824,674 properties nationwide — were in default last year. That’s 21% more than in 2008, and more than double 2007’s total.

The dramatic, sustained increase occurred despite efforts, such as President Obama’s Home Affordable Modification Program, to reduce foreclosure filings.

"As bad as the 2009 numbers are, they probably would have been worse if not for legislative and industry-related delays in processing delinquent loans," said RealtyTrac CEO James Saccacio in a prepared statement.

There was at least one bright spot in the report: In spite of a 21% increase in filings, the number of homes actually repossessed was 871,086 — up just 1.1% above 2008’s total.

"That was driven primarily by short-term factors: trial loan modifications, state legislation extending the foreclosure process and an overwhelming volume of inventory clogging the foreclosure pipeline," said Saccacio.

Filings peaked in July with more than 361,000 homes receiving notices. After that, filings dropped four straight months.

Much of that is attributable to the government-led efforts to modify loans to make them affordable, though it is still uncertain whether the efforts have forestalled — or just delayed — foreclosure guaranteed personal loan approval.

By early December more than 680,000 borrowers had gotten temporary workouts but only a few thousand had been permanently modified.

That leaves Saccacio a bit pessimistic about the future. "In the long term, a massive supply of delinquent loans continues to loom over the housing market," said Saccacio. "And many of those delinquencies will end up in the foreclosure process in 2010."

Pain central

The four states with the most foreclosure filings — California, Florida, Arizona and Illinois — accounted for a full 50% of the nation’s properties receiving notices.

Nevada recorded the highest rate of foreclosures, at 10%, followed by Arizona, at 6.1%; Florida, 5.9%; and California, 4.75%.

But some states where foreclosure hit hard early are now faring better. Indiana foreclosures fell by 9.9%, Ohio by 10.5% and Rhode Island by 23.6%.

California, by far the most heavily populated in the union, posted the most filings with 632,573, up 20.8% from 2008. Golden State cities have also recorded some of the steepest declines in home prices, with values falling 50% or more in some Central Valley cities. 

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St. Louis-area casinos saw their business grow in 2009, but all of the gains were concentrated in two casinos.

Revenue at the region’s six casinos climbed nearly 2 percent for the year to $1.05 billion, despite a tough economy that had gamblers nationwide holding their wallets tighter. In December, casino revenue grew 1.7 percent, according to Missouri and Illinois gambling regulators.

The growth was not spread evenly. Lumière Place, the 2-year-old casino in downtown St. Louis, was responsible for all the gains and more, as it has come up to full speed and benefited from tourism downtown. Ameristar in St. Charles saw business grow 1.5 percent on the year and passed Harrah’s in Maryland Heights to become the region’s biggest casino by revenue.

The region’s other four casinos all saw business fall, led by the ailing President Casino on the Mississippi River. Both Illinois casinos — the Casino Queen in East St. Louis and the Argosy Casino-Alton — continued their long slides. Both have seen business fall steadily since the smoking ban took effect in Illinois and voters removed loss limits at Missouri casinos. Harrah’s saw revenue basically unchanged on the year, down 0.1 percent.

A seventh casino, River City in south St. Louis County, is set to open in March.

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The nascent recovery in the world’s developed economies is at risk from rising joblessness, weak banks and high oil prices, said Angel Gurria, Secretary General of the Organization for Economic Cooperation and Development.

Bank lending in Europe and the U.S. is still slower than usual and economic acceleration “still seems weak, fragile,” Gurria said. Even so, the OECD has no plans to update its 2010 forecast of 1.9 percent growth in its member countries, Gurria, 59, said in a phone interview today from Mexico City.

Gurria’s comments come after John Lipsky, the first deputy managing director at the International Monetary Fund, said in a Bloomberg Radio interview on Jan. 6 that the IMF may raise its 3.1 percent forecast for global growth this year later this month.

“There are still negative risks such as the rise in oil prices,” Gurria said. “You have the problem of how to resolve the matters of mortgages and the banking system in general. Then there’s a very significant unemployment problem, which will probably keep rising in 2010.”

Major central banks have no need to remove monetary stimulus, Gurria said.

The Bank of England yesterday left its interest rate unchanged at a record low of 0.5 percent and kept its asset purchasing program at 200 billion pounds ($320.5 billion).

The European Central Bank may wait before changing in its monetary policy too, he said.

‘Shock Absorber’

“The margin we have in employment and utilized capacity acts as a shock absorber,” he said. “We’re still in the phase of worrying about the recovery, not yet in the stage of worrying about inflation.”

The OECD today said its leading economic indicator rose to the highest level in two years, suggesting the economy is recovering after the worst recession since World War II.

The measure increased 1 point in November to 102.3, 8.2 points more than the reading of November 2008 and the highest since December 2007 instant payday loans completely online.

The Paris-based OECD said in November it expected the economies of its 30 members to expand 1.9 percent this year and 2.5 percent in 2011. In June it had forecast 0.7 percent growth for this year.

‘Modest Growth Rates’

“What we see not just in 2010, but 2011 as well and going forward in following years is that we generally forecast pretty modest growth rates,” he said. “That suggests we need to focus on public policy and coordination with the aim of increasing that growth potential.”

Gurria, 59, was Mexico’s chief negotiator when it issued so-called Brady bonds, named for then-U.S. Treasury Secretary Nicholas Brady, to replace $48 billion of defaulted bank loans the country couldn’t pay.

A decade later as finance minister from 1998 to 2000, he earned Latin America’s first investment-grade credit rating from Moody’s Investors Service by using the proceeds from rising oil prices to pay off the last of the Brady debt.

Since taking over the Paris-based OECD in June 2006, he has pushed expand the group’s membership to include emerging markets such as Chile.

Chile is due to become the Paris-based group’s first South American member at a ceremony in Santiago on Jan. 11.

Estonia, Israel, Russia and Slovenia are on the short list to join and the group has opened talks with Brazil, which has adopted some of its rules, as well as China, India, Indonesia and South Africa.

The OECD, founded in 1961 from the organization formed to administer Marshall Plan aid after World War II, promotes dialogue among states to try and coordinate domestic and international policies.

Joining the group “confirms the positive perception in the world about the achievements and advances of our country,” Chilean Finance Minister Andres Velasco said today in an e- mailed response.

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