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Sri Lanka’s economy may expand at a faster pace this year than previously estimated as the nation rebuilds after ending a 26-year civil war, central bank Governor Nivard Cabraal said.

“We could be looking at something like 4 percent to 5 percent growth on the basis of war coming to an early end,” Cabraal told Bloomberg Television in an interview from Sri Lanka today. The Central Bank of Sri Lanka in April predicted the $32 billion economy would grow 2.5 percent, the slowest since 2001.

Sri Lanka’s central bank today cut the reverse repurchase rate, one of two benchmark rates, to 11.5 percent from 11.75 percent to revive an economy ravaged by the global recession and conflict. President Mahinda Rajapaksa is seeking international assistance to rebuild the nation after the army crushed the Liberation Tigers of Tamil Eelam this month.

“We do see a new momentum for our economy and at the same time we have created sufficient space to take a little more liberal view with the monetary policy,” Cabraal said. Inflation is under control and “we are on the threshold of a new era” with war being “a thing of the past.”

The central bank’s repurchase rate was left unchanged at 9 percent, and the so-called penal rate on reverse repurchase transactions was removed, according to a statement on the Colombo-based bank’s Web site today business cards template.

Lower borrowing costs are “important to speed up the reconstruction work and to boost local economic growth,” said Bimanee Meepagala, an analyst at Eagle NDB Fund Management Co. in Colombo. “Reconstruction, a larger area to cultivate and fish, and brighter prospects for tourism will enable the economy to post strong growth despite slowing external demand.”

IMF Loan

Sri Lanka said in March it’s in talks with the International Monetary Fund for a $1.9 billion loan to repay debts and rebuild the country.

“We already had indications from the managing director of the IMF that they would be resolving this issue very soon,” Cabraal said. “That will give us the added anchor for the development work that we are going to do.”

The Central Bank of Sri Lanka will intervene in foreign- exchange markets only to reduce excessive volatility as it seeks to maintain stability in the currency, he said.

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Canada’s recession, likely its deepest since the Great Depression, may also be its shortest.

Rising home and car sales, unexpected gains in building permits and employment, easing credit conditions and higher commodity prices signal Canada’s slump may be nearing an end. Eight of 11 economists surveyed by Bloomberg this month predict the economy will return to growth next quarter.

“It doesn’t feel quite like it’s over yet, but people are breathing a little bit better,” said Russ Girling, president of pipelines at TransCanada Corp., the country’s biggest pipeline company, which recorded a 12 percent rise in revenue in the first quarter.

All but one of the country’s five post-World War II major recessions have lasted at least one year, with the shortest in 1957 at nine months, according to Philip Cross, who tracks the country’s business cycles for Statistics Canada.

Canada’s economy contracted at a 3.4 percent pace in the last quarter of 2008 and growth in the first quarter may shrink at a 7.3 percent rate, the Bank of Canada estimates.

The U.S. recession started in December 2007, according to the National Bureau of Economic Research, the arbiter of U.S. business cycles. Statistics Canada, which defines a major recession as a slump where both employment and output post annual declines, has yet to date the start of Canada’s recession, Cross said. The Bank of Canada has said the country entered into a recession in the fourth quarter of last year.

No Bailouts

While Canada has suffered from falling U.S. demand for exports, the country’s banks have largely avoided credit losses. No government money has been given to any of Canada’s 21 banks since global credit seized up in August 2007. The U.S. government oversees about $200 billion in investments in banks through the taxpayer-funded Troubled Asset Relief Program.

Canada’s housing market has also held up better than in the U.S., where prices declined 18.6 percent in February from a year earlier, according to the S&P/Case-Shiller index of 20 major cities. Average resale home prices in Canada dropped at less than half that pace during the same period, according to the Canadian Real Estate Association.

“We may not be in a recovery, but I think we might be in a position where it’s not getting worse, where it’s truly plateauing,” Prime Minister Stephen Harper said in a May 8 interview, adding he’d like another “month or two” of data before coming to that conclusion.

Canada’s benchmark Standard & Poor’s/TSX Composite Index has posted a 50 percent gain in U.S. dollars since its low on March 9, compared with the 34 percent gain for the Standard & Poor’s 500 Index over the same period payday loans in 1 hour.

Recession

Economists surveyed by Bloomberg earlier this month said they expect Canadian growth to rebound at an annual pace of 0.5 percent in the third quarter and by 2 percent in the fourth quarter.

“In February, the rapid decline in demand had come to an end and by April, the rapid declines in employment had come to an end,” Cross said. “Was that a temporary end or not? We don’t know.”

While Canada’s jobless rate is at a seven-year high of 8 percent, the economy in April created new jobs for the first time in six months and sales of existing homes rose the most in more than five years. Credit markets are also improving. The Bank of Canada’s composite index of financial market conditions is at its strongest since September.

Improved credit markets have allowed companies like Enbridge Inc., the biggest transporter of oil to the U.S. from Canada’s oil sands, to move ahead with the new debt sales to finance operations. Enbridge sold C$400 million of bonds last week.

‘Cross Our Fingers’

“Our approach is to watch for windows when we think there are opportunities to raise capital funds,” said Richard Bird, Enbridge’s chief financial officer. “This is a window and let’s cross our fingers and hope that it’s a trend.”

A quick end to the recession would raise pressure on the Bank of Canada, led by Governor Mark Carney, to say it no longer plans to keep its benchmark lending rate near zero through June 2010. The country’s central bank projected last month the economy will contract four consecutive quarters, bringing it closer to the average length of the last five major recessions.

“The Bank of Canada will have to revisit their own view of what they will do with interest rates,” said Paul-Andre Pinsonnault, an economist at National Bank Financial. “GDP will be stronger than what they are looking for.”

A quick end to the recession doesn’t guarantee a strong rebound. DBRS Ltd., a rating company, predicts an L-shaped recovery for Canada, which it defines as “a prolonged period of flat or slowly improving performance.”

“The earliest I can see an improvement is in October or November,” said Jacques Plante, chief financial officer of Hart Stores Inc., a discount retailer. “I can’t imagine we’ll have anything positive this summer.”

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Argentine data due this week may cement forecasts that gross domestic product is heading for its first contraction since 2002 as a global financial crisis and June mid-term elections cause companies to delay investment.

South America’s second-biggest economy will shrink 2.5 percent in the second quarter from a year earlier, said Juan Pablo Fuentes, an economist at Moody’s Economy.com in West Chester, Pennsylvania. It would be the first drop since a 3.4 percent GDP decline in the final quarter of 2002.

“Argentina’s economy has been slowing since the second half of 2008,” Fuentes said in a telephone interview. “A drop in domestic demand, consumption and investment will be reflected in a contraction starting in April.”

The National Statistics Institute will release industrial output for April on May 22, giving economists and analysts an indication of how the economy fared in the first month of the second quarter. The agency will release economic activity for March on May 21.

Argentina’s economy has already shown signs of weakness stemming from the global financial crisis. Economic activity expanded at the slowest pace since 2002 in January and February.

April’s new-vehicle sales fell 33 percent from a year earlier, and industrial production declined 0.9 percent in March after shrinking 1.5 percent in February and 4.4 percent in January.

Farm Output

A drop in agricultural output is also hurting growth.

The worst drought in 70 years will cause the soybean crop, which is now being harvested, to drop to 32.8 million metric tons from a record 48 million tons a year ago, according to the Buenos Aires Cereal Exchange.

Output from the current corn harvest will decline to 12.7 million tons from 21 million tons in 2008, the exchange said in a May 13 report.

Dry weather will also lead farmers to cut wheat planting to 3.7 million hectares (9.1 million acres), the smallest area since the exchange began collecting such data in 1910, the report said.

The approach of the June 28 elections is dragging on the economy by discouraging both investment and consumer spending, said Mariano Lamothe, an economist at Abeceb.com, a research company in Buenos Aires. President Cristina Fernandez de Kirchner is seeking to keep her majority in Congress.

“Everybody is waiting to see how the government will react to the election results,” Lamothe said in an interview online pay day loans. “They want to see if the government will create more uncertainty.”

Shrinking Economy

The economy, which has expanded at least 7 percent a year since 2003, may contract 3 percent in the second quarter and 0.5 percent to 2 percent over the whole year, Lamothe said.

Fernandez used her dominance of Congress to nationalize about $24 billion in private pension funds last year and to take over the country’s biggest airline, Aerolineas Argentinas SA.

She described the measures as an effort to extend the policies of her husband and predecessor Nestor Kirchner, which she said helped spur the six years of growth.

Kirchner, who is running for a seat in the lower house, said on April 28 that if Fernandez loses her majority the country may slip back into a financial crisis. In 2001, the government limited bank withdrawals and defaulted on $95 billion in debt, before abandoning its one-to-one peg with the U.S. dollar in early 2002.

Such talk prompted Mario Nollmann, owner of Nollmann SA, a 73-year-old factory that makes electrical components and circuit boards, to put off plans to move to a bigger plant.

“I’m worried,” Nollmann, 72, said in a telephone interview from his factory in Buenos Aires. “I heard a speech that says that after the elections we could fall again into chaos, so I prefer to wait and see.”

In April, he suspended overtime for his 110 employees as sales fell 30 percent from a year earlier.

Markets Last Week

Last week, the yield on Argentina’s benchmark 8.28 percent dollar bonds due in 2033 rose 170 basis points, or 1.7 percentage points, to 22.15 percent, according to Bloomberg data. The bond’s price slid 3.25 cents to 52 cents on the dollar.

The Buenos Aires benchmark Merval stock index fell 4.1 percent to 1,438.64. Grupo Financiero Galicia SA (GGAL AR), which controls the nation’s third-biggest private lender, rose 12.8 percent. Pampa Energia SA (PAMP AR), Argentina’s biggest energy holding company, declined 2.8 percent.

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In another sign the company is preparing for a possible bankruptcy filing within the next two weeks, General Motors has agreed to speed up payments to 1,500 suppliers who provide it with the parts it needs to make cars in North America.

The company typically pays its suppliers during the first week of every month. The next payment was originally scheduled for June 2. But GM spokesman Dan Flores said the June payment has been moved up to May 28 to help its suppliers in the face of current "market uncertainty."

That uncertainty is due to the fact that under bankruptcy law, once a company has filed for bankruptcy court protection, it is not allowed to make payments to people or entities it owes money while a judge sorts out how much to pay each creditor.

Thus the five-day difference in payment could make a great deal of difference to the suppliers, since GM (GM, Fortune 500) faces a June 1 deadline from the Treasury Department to win concessions from its bondholders and unions, and to make other structural changes.

If it can’t win agreement from those groups, the company may file bankruptcy on June 1, an option that CEO Fritz Henderson said is "probable" given the difficulty in getting agreements from the various groups, particularly its bondholders.

GM is paying its North American direct material suppliers — those that will get the early payment — about $25 billion a year for auto parts, steel and other commodities that go into a vehicle. That works out to a bit more than $2 billion a month.

The exact amount that will be paid on May 28 was not immediately available.

Flores said the early payments were approved by the Treasury Department.

Kimberly Rodriguez, head of the auto practice at accounting firm Grant Thornton who works with many auto parts makers, said that GM needed to agree to the early payments now to make sure that suppliers kept shipping parts ahead of the June 1 deadline.

She said with suppliers already suffering from a bankruptcy at Chrysler LLC and its 60 day shutdown that started May 4, they didn’t have the cash to risk continued shipments to GM if they couldn’t be sure of being paid what they are owed in June.

"Cash and timing of payments is everything right now," she said.

The promise of early payment ahead of the bankruptcy deadline is crucial for GM’s current plans to keep making vehicles in the coming weeks easy payday loans. It has already announced an extended shutdown of up to 11 weeks at 12 of its 15 U.S. assembly lines. While four of those lines have already started their extended shutdown, the rest aren’t due to be idled until June.

Since the auto industry operates on a "just-in-time" basis without a backlog of auto parts at the assembly plants, even a brief disruption of supply can shut down production. On the day it filed for bankruptcy, Chrysler LLC had to shut several of its plants within hours of the filing due to suppliers cutting off shipments.

"There’s very specific production plans going into the bankruptcy. If it happens a couple of weeks too soon, it’s very problematic," said Rodriguez. "If they’re trying to have a controlled bankruptcy, they can’t afford a production disruption. Surprises don’t work very well in this industry. This is money well spent for GM."

There is a good chance that most of these suppliers would eventually have gotten the full amount of money they were due on June 2, even if there was a bankruptcy before then. If a bankruptcy judge judges a creditor to be a critical supplier, payments to that company can be made. Few of the parts being sold to GM by these suppliers can be purchased elsewhere.

But that is still a relatively slow process that could have delayed payments to the already cash-strapped supplier industry. Rodriguez said even a two week delay in the payment could have forced some auto parts companies out of business.

In addition to the "critical supplier" designation by the bankruptcy court, the Treasury Department announced a payment guarantee program in March to help GM and Chrysler suppliers weather the current crisis.

That program charges suppliers who are worried about being paid 2% of what they are owed by the automakers to guarantee payments - like an insurance policy. Suppliers can also pay 3% to get nearly-immediate payment from Treasury rather than waiting for the automaker..

Flores said about 120 of its suppliers, representing about a quarter of GM’s parts purchases, have signed up for the government program, and another 110 have applied to be part of the program. 

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Hong Kong’s economy shrank by the most since at least 1990 as exports tumbled and unemployment climbed, increasing pressure on the government to spend more to revive growth.

Gross domestic product shrank a seasonally adjusted 4.3 percent in the first quarter from the previous three months, the government said today at a press briefing. It forecast a full- year contraction of as much as 6.5 percent, which would be the biggest decline since data began in 1962.

The worst financial crisis since the Great Depression has choked off demand for Chinese exports shipped through Hong Kong. Financial Secretary John Tsang said last month that he will take more measures to spur growth if necessary after cutting taxes, suspending property rates and boosting infrastructure spending.

“Political pressures are now building and a supplementary budget now looks very likely by early June, mainly through more temporary tax cuts and cash subsidies,” said Kevin Lai, senior economist at Daiwa Institute of Research in Hong Kong.

The fourth straight quarterly contraction, after a 1.9 percent drop in the last three months of 2008, was the biggest since Bloomberg data began in 1990. The median estimate of 4 economists surveyed by Bloomberg News was for a 2.6 percent decline.

On a year-on-year basis, gross domestic product fell 7.8 percent, after dropping 2.6 percent in the fourth quarter, the government said.

Bleaker Forecast

Hong Kong’s economy will probably shrink 5.5 percent to 6.5 percent in 2009 and inflation will likely be 1 percent, according to the government forecast published today. That compares with February’s estimate of a 2 percent to 3 percent contraction and 1.6 percent inflation.

The government’s efforts to counter the slump include spending HK$1.6 billion ($206 million) on a program aimed at creating 62,000 jobs and internships. Chief Executive Donald Tsang pledged this week an extra round of “relief measures” within a month.

Hong Kong’s fiscal reserves stood at HK$494.4 billion at the end of March and the city had a HK$1.4 billion budget surplus for the year ended March 31, rather than the deficit the government had forecast.

“Given the strength of the fiscal reserves, Hong Kong has a lot of bullets and can achieve a faster economic recovery,” said Lai high risk personal loans.

Merchandise exports fell 22.7 percent in the first quarter from a year earlier after dropping 4.9 percent in the fourth quarter, the government said today.

Flu Threat

“Hong Kong had the sharpest drop in exports since the 1950s, which also weighed heavily on local employment and consumer spending,” said Joanne Yim, chief economist at Hang Seng Bank Ltd. in Hong Kong. “The recent outbreak of the swine flu also warrants close monitoring.”

The authorities have reported two confirmed human cases of H1N1 swine flu this month.

Household consumption declined 5.5 percent in the first quarter from a year earlier after falling 4.1 percent in the fourth quarter, while business investment fell 12.6 percent after dropping 17.8 percent, the government said.

The jobless rate climbed to 5.2 percent in the three months to March 30, the highest level in three years. It has risen every month since September.

Cathay Pacific

Cathay Pacific Airways Ltd., Hong Kong’s largest carrier has cut passenger capacity and asked staff to take unpaid leave on weaker demand for travel. Banks such as HSBC Holdings Plc, UBS AG and Nomura Holdings Inc. have slashed jobs across Asia, including in Hong Kong.

The 1,872 bankruptcy petitions filed in March were the most since SARS, according to the Official Receiver’s Office.

Still, investors are betting that a stimulus-driven revival of the Chinese economy may help Hong Kong to make a comeback. The Hang Seng Index has gained about 17 percent this year, after a 48 percent decline in 2008.

Hong Kong’s slump contrasts with Indonesia’s report today of a 4.4 percent increase in gross domestic product in the first quarter from a year earlier. Indonesia has been less affected than its Asian neighbors by the global slump because it isn’t as reliant on exports. Singapore’s economy shrank the most since at least 1975 in the first quarter.

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Cash-strapped cities and states will get a $5 billion boost from Citigroup.

The bank announced Tuesday that it will lend up to $5 billion to states and local governments, municipal agencies and universities and nonprofit hospitals to help finance construction and other capital projects. The money can fund the construction of schools, airports, roads, hospitals and other infrastructure projects.

Municipalities can also use the three-year loans to refinance existing variable-rate debt. Only those with AA rating can access the funds.

The initiative is part of four lending programs Citi unveiled in a report on how it’s using government bailout funds. The Treasury Department has pumped $45 billion into the troubled institution. Citi now has $1.6 billion in outstanding loans to municipalities.

State and local governments, which depend on debt to fund capital projects, have suffered as the credit crisis pushed up interest rates to unaffordable levels. Many, such as California, had to put work on hold until they could once again access the bond markets.

Nearly one in two city finance officers reported difficulties in gaining access to credit and bond financing, according to a National League of Cities February report.

Rates have come down and financing is getting easier to obtain, but it’s still not normal yet, said Sujit CanagaRetna, senior fiscal analyst at the Council of State Governments, a research group.

This credit crunch comes on top of a general fiscal crisis that’s gripping state and local governments, which are struggling to balance their budgets amid declining tax revenues car insurance.

Citi’s financing won’t help public officials cover their daily operating expenses, but it will help jumpstart some projects that have idled and lower the pricetag of some borrowing, experts said.

While most municipalities favor issuing bonds over taking loans, they can put the money to work. Citi said it has made proposals to potential borrowers for more than half the funds. While the rates depend on many factors, the loans might carry a floating 1.5% rate, rather than a variable rate of up to 4%.

"Anything that will drive down the cost of capital is advantageous for state and local governments," said Bart Hildreth, director of the Kansas Public Finance Center.

Since $5 billion is not a lot of money to spread around for construction projects, most recipients will likely use it to refinance existing debt, he said. Some might use it to get infrastructure programs off the ground before issuing bonds to cover the bulk of the costs.

States and cities are already working to spend $27 billion on highway infrastructure, as well as billions more for airports, schools and public transit, as part of the $787 billion federal stimulus package.  

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Japan’s corporate bankruptcies rose for an 11th month in April as companies struggled to obtain funds, indicating unemployment may increase.

Bankruptcies climbed 9.4 percent from a year earlier to 1,329 cases, Tokyo Shoko Research Ltd. said in Tokyo today.

Bank of Japan Governor Masaaki Shirakawa said last week that funding conditions for companies remain “severe.” The jobless rate, which advanced at the fastest pace in four decades in March, will probably rise further as more companies go out of business, weighing on consumer spending and prolonging the recession.

“Companies, especially small ones, are still having trouble securing funds because of weak demand,” said Azusa Kato, an economist at BNP Paribas in Tokyo. “The major concern for increasing bankruptcies is higher unemployment, which could sap consumers’ ability to support the economy.”

Chuo Corp., a yarn maker, and Life Stage Co., a condominium developer, filed for bankruptcy last month, taking the number of publicly traded business failures to 16 this year. A record 33 companies went out of business in 2008.

“As profits worsened, we couldn’t escape from tight funding conditions” even after cutting jobs and wages, Chuo said in a statement.

Rising Unemployment

The companies that went out of business last month employed 11,537 workers faxless payday loan. Japan’s unemployment rate climbed to 4.8 percent in March from 4.4 percent in February, the biggest increase since 1967.

Prime Minister Taro Aso plans to spend 3 trillion yen ($32 billion) from his $15.4 trillion yen stimulus package unveiled last month on measures including financial support for small and midsized companies, which employ 70 percent of Japan’s workforce.

He also expanded the ceiling on an emergency credit program to 30 trillion yen from 20 trillion yen. Some 492,000 small and midsized companies have applied for 10.1 trillion yen of funds under the program as of May 8, according to the National Federation of Credit Guarantee Corporations.

The 9.4 percent increase in bankruptcies was the slowest in five months, in part because the program may be helping some companies stay afloat, said Nobuo Tomoda, manager of information and publications at Tokyo Shoko. Still, he added, demand is so weak that companies may struggle to cope with rising debt and bankruptcies are likely to keep climbing.

Pioneer Corp. is preparing to apply for public funds, company President Susumu Kotani said last month. The maker of car audio equipment and navigation systems is forecasting its sixth year of losses and plans to cut 9,800 jobs.

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Toyota Motor Corp, the world’s biggest automaker, forecast a much deeper-than-expected annual loss of $8.6 billion as sales tumble, keeping dozens of its factories underused.

Toyota (TM) booked a $6.9 billion loss for the January-March fourth quarter and cut its annual dividend for the first time since at least 1994, when it changed its reporting period.

The global downturn that has battered demand for cars and pushed U.S. rival Chrysler into bankruptcy, has hit Toyota badly as it went from rapid expansion to overcapacity almost overnight. The Japanese giant posted its first-ever consolidated operating loss last year after a record profit the year before.

While the entire industry is caught in the slump and manufacturers are selling cars that have piled up in stockyards, Toyota has been especially vulnerable due to its exposure to the United States and Japan, where sales have plunged to multi-decade lows. Customers, fearing for their jobs, are putting off big-ticket purchases.

"My first impression is bad. Toyota’s outlook was worse than I had expected. The company expects a really tough time for the first six months," said Naoki Fujiwara, a fund manager at Shinkin Asset Management.

"I expect the bottom for the auto industry is the April-June period, followed by a slow recovery.

For the year to next March, the maker of the Prius hybrid car forecast an operating loss of ¥850 billion, more than double the average forecast in a survey of 20 analysts by Thomson Reuters and larger than the ¥700 billion loss predicted earlier on Friday by the Nikkei newspaper.

On a net basis, Toyota sees an annual loss of ¥550 billion.

Toyota said it expected its global sales to fall about 14% to ¥6.5 billion in 2009/10. It forecast ¥830 billion in capital spending, down from ¥1.3 trillion a year earlier.

Toyota reported a January-March operating loss of ¥682.5 billion ($6.93 billion), versus a ¥396.7 billion profit a year earlier and a consensus estimate for a loss of ¥689 billion in a survey of 21 analysts polled by Thomson Reuters faxless cash advance.

Its net loss was ¥765.8 billion, swinging from a profit of ¥316.8 billion in the same period a year ago.

Domestic rival Honda Motor Co. (HMC) last week forecast a small profit for this year thanks to its relatively healthy motorcycle business.

But many others are in dire straits, running dangerously low on cash to stay solvent.

General Motors Corp. (GM, Fortune 500) on Thursday reported a first-quarter net loss of $6 billion and said it burned through more than $10 billion as it relied on a federal bailout to ride out the sharp sales decline that overwhelmed its cost-cutting efforts.

GM’s quarterly revenue was almost halved to $22.4 billion as the company cut production by about 900,000 vehicles and worked to run down costly inventories in the United States and Europe.

Japan’s Fuji Heavy Industries Ltd, in which Toyota owns a 16.5% stake, on Friday posted an operating loss of ¥5.8 billion in 2008/09 and expects that loss to swell to ¥35 billion this year citing weak global car sales.

Toyota is hoping the launch later this year of the third-generation Prius will ease some of its sales slide and production cuts. At the same time, though, it has decided to cut the price of the popular model to bring it closer to Honda’s new Insight hybrid.

Toyota is reducing overhead costs after putting a third of its 74 global assembly lines on single shifts. It has said it wants to cut fixed costs by 10%, or roughly $5 billion, this financial year, partly through work-sharing, salary cuts and other measures. It also plans to slash capital spending by delaying expansion projects until demand recovers.

It cut its annual dividend to ¥100 for the year just ended from ¥140 in 2007/08.

Shares of Toyota have risen 39% in the year to date, underperforming a 47% rise in Tokyo’s transport sub-index. 

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The Bank of England will have a difficult time tearing itself away from its so-called quantitative easing program of printing money to aid the economy, former policy maker DeAnne Julius said.

“Quantitative easing is a bit like having a love affair,” she said while speaking on a panel hosted by Fathom Financial Consulting at Cass Business School in London today. “Any fool can get into one, but getting out of one gracefully is actually quite a feat.”

Bank of England policy makers have said that their emergency plan to buy assets with new money can be quickly reversed. The U.K. central bank yesterday extended the facility by two-thirds to 125 billion pounds ($188 billion) as it fights Britain’s biggest recession in a generation, saying that the timing of an economic recovery is “highly uncertain.”

Julius said it would be hard to know when to stop the money-printing program and reversing it may be as politically difficult as tightening the government’s budget. Charles Goodhart, also a former MPC member, disagreed with Julius.

“I think DeAnne is having the wrong kind of love affairs,” Goodhart said on the panel check cash advance. “Exiting QE is as easy as falling off a log, but fiscal policy can’t be turned around that easily.”

Chancellor of the Exchequer Alistair Darling said last month that this year’s budget shortfall will reach 12.4 percent of gross domestic product, the largest among Group of Seven countries. Net debt will touch 1.4 trillion pounds by 2014.

Bank of England Governor Mervyn King said March 24 that policy makers take seriously the possibility that they may have to raise interest rates “quickly and sharply” if needed to reverse quantitative easing.

The central bank would sell the assets it had been buying and start raising interest rates if necessary, Goodhart said. He said the bank should print as much money as needed to achieve a targeted level of credit growth.

Sushil Wadhwani, another former MPC member on the panel, said he was “skeptical” that quantitative easing would be effective, regardless of its scale.

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Taiwan’s exports fell at a slower pace in April as Chinese demand for electronic products provided some relief for the recession-stricken economy.

Overseas shipments slid 34.3 percent from a year earlier, following a 35.7 percent drop in March, the Ministry of Finance said in Taipei today. The median estimate of eight economists surveyed was for a 28.3 percent decline. The island posted a trade surplus of $2.14 billion as imports slumped 41.2 percent.

Exports, which account for about 70 percent of the economy, may resume growing later this year as China implements stimulus measures and U.S. consumers increase spending. Taiwan Semiconductor Manufacturing Co., the world’s largest custom- chipmaker, last week forecast second-quarter revenue that beat analysts’ estimates on optimism Chinese sales will pick up.

“The worst of the export declines are over, but we’re likely to still see year-on-year declines until at least the third quarter,” said Tony Phoo, an economist at Standard Chartered Plc in Taipei. “It’s too early to say the economy is already in a recovery.”

Signs of a revival are emerging in China and the U.S., Taiwan’s biggest overseas markets.

China’s 4 trillion yuan ($585 billion) stimulus package is spurring domestic consumption and supporting the region’s exports. Manufacturing expanded for a second month in April, and new loans more than tripled in the first quarter.

U.S. Consumers

In the U.S., consumer confidence rose to a seven-month high in April, buoyed by record-low mortgage rates, cheaper gasoline and surging stock prices even as unemployment rose.

Shipments to China slid 34.6 percent from a year earlier, less than March’s 44.4 percent decrease, the ministry said. Exports to the U.S. declined 33.7 percent, compared with a slump of 22.2 percent in the previous month. Sales to Europe fell 37 percent after they dropped 36.6 percent in March.

“The worst of the export slump is over,” Lin Lee-jen, director of the Finance Ministry’s statistics bureau, said at a news briefing in Taipei credit report. “We expect the decline in exports to continue to ease.”

Lin said she expects improving ties with mainland China will also help exports. Relations between China and Taiwan have warmed since President Ma Ying-jeou took office last May, abandoning his predecessor’s pro-independence stance.

South Korea, Japan

Exports are beginning to improve elsewhere in Asia. South Korea’s shipments rose 9.3 percent last month from March, according to Bloomberg calculations based on their value. Japan’s exports increased in March from February, the first month-on-month gain since May 2008.

Taiwan Semiconductor said last week that sales this quarter would total NT$71 billion ($2.1 billion) to NT$74 billion, compared with analysts’ estimates for NT$52.4 billion.

Hon Hai Precision Industry Co., which makes iPhones for Apple Inc., and AU Optronics Co. increased factory workers in Taiwan and in mainland China in March to fill orders.

Exports of electronic products including semiconductors slid 21.3 percent last month after falling 33.6 percent in March, today’s report showed.

Overall shipments abroad slid 36 percent in the first four months of 2009 compared with the same period a year earlier. The value of exports fell to $14.85 billion last month from a year ago, and imports declined to $12.71 billion.

The figures were released after the close of trading on the stock exchange. The Taiex stock index climbed 0.1 percent, taking this year’s increase to 43 percent. Taiwan’s dollar rose 0.1 percent against the U.S. currency.

Taiwan’s policy makers are trying to spur an economy that shrank a record 8.36 percent in the fourth quarter of 2008.

The central bank cut its interest rate to a record-low 1.25 percent in February. The government plans stimulus spending of NT$858.5 billion over four years on infrastructure works, tax cuts and consumer grants.

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