April 01 - 07, 2002

THREE US TEXTILE STATES SEEK PROTECTION

The governors of the three largest textile-producing states in the United States have called for federal action to stem rampant layoffs and plant closings they blame largely on competition from cheaper Asian imports.

South Carolina Governor Jim Hodges, Georgia Governor Roy Barnes and North Carolina Governor Mike Easley called on Friday for aggressive enforcement of trade agreements and a cash infusion from Washington to retrain laid-off workers who have been losing their jobs as US consumers and merchants snap up Asian textiles.

Textile executives also blamed trade agreements that they say favour foreign countries with cheap labour.

The comments were made at a small college campus in Dallas, North Carolina during what was dubbed a "textile summit." State officials were joined by about a dozen experts who shared prescriptions to help the hemorraghing of the textile industry.

They called for more federal money to research new textile technologies, guarantee bank loans to textile companies and attract new industries to economically depressed areas.

"Every day, every month that we delay, another plant closes and more jobs are lost," Easley said. "Equity demands that the government act to help textile workers."

North Carolina, South Carolina and Georgia together account for about two-thirds of the US textile work force. The Carolinas have lost nearly 200,000 textile jobs since 1997, leaving some rural counties with unemployment rates nearly triple the national average.

The governors acknowledged they have little control over the industry's fate. But they said they hope to compel the Bush administration to aid the struggling industry, just as it has helped the steel and airline industries in recent months.

AID RETURNS TO ARGENTINA

Argentina has received its first financial assistance since its economy went into full-scale meltdown late last year.

The Inter-American Development Bank, the biggest lender for development purposes in Latin America and the Caribbean, has redirected $694m (£487m)to Argentina to help the near-crippled country rebuild its social services.

Officially, unemployment in Argentina is affecting about a quarter of the workforce and nearly half the population is regarded as below the poverty line.

The nightmare state of the country's books means the government has had to quadruple some export taxes on commodities to bring them in line with the plummet in the value of the peso.

With no money expected any time soon from the International Monetary Fund, although a team is due in Buenos Aires next week for talks, the IADB — an altogether separate institution — said Argentina could wait no longer.

"Because of the precarious social conditions, we can no longer delay making all possible resources available to the population and in this way open spaces for relief and hope," said IADB President Enrique Iglesias in a statement.

While the IADB money is peanuts compared to the $25bn or so Argentina is hoping to raise from the International Monetary Fund, it makes possible a vital $1bn social fund the government is setting up.

The fund aims to:

Improve aid to destitute families, Provide emergency medical and sanitation help, Payments to encourage parents to keep their children in schools, and Rebuild social infrastructure and housing in deprived areas.

The loan is desperately needed because Argentina has been cut off from outside funds since it defaulted on $141bn in external loans in December.

UK GROWTH BELOW TARGET

The service sector performed poorly in the last quarter Economic growth in the UK in 2001 was slower than expected, official figures show.

Gross domestic product (GDP) growth was 2.2%, lower than the 2.4% predicted by government statisticians last month, and below what chancellor Gordon Brown forecast in his pre-budget statement.

The figures slipped below the government's target range of 2.25 - 2.75%, on which it bases its plans for public spending and taxation.

GDP growth for the final quarter of 2001 was unchanged from the previous quarter at 1.6%, — the first time that has happened in the UK for 10 years.

A single quarter of static growth does not mean the UK is in recession. This is officially defined as two successive quarters of declining output.

Growth levels were hit by a worse than expected performance from the service sector, which accounts for 80% of the UK's GDP.

US GROWTH REVISED UPWARDS

The US economy ended 2001 in much better shape than previously feared despite fears of lasting damage from the events of 11 September, new numbers show.

And with two surveys in three days indicating that consumers are ready to keep spending, economists are optimistic that the start of 2002 could prove to be booming.

Growth in the economy was 1.7% during the last three months of last year, the Commerce Department said.

The figures revise the earlier estimates, which suggested first 0.2% then 1.4% growth in the quarter.

Growth for the whole year is now set at 1.2%, the most sluggish performance in a decade.

But the fourth quarter now appears to have been the best three-month period of the year, and a rapid turnaround from the 1.3% contraction seen between June and September.

JAPAN, CHINA TO SIGN SWAP ACCORD

Japan and China will sign a currency swap agreement to avoid financial crises, news reports said on Saturday.

"Under the agreement, to be signed by the Bank of Japan Governor Masaru Hayami and People's Bank of China Governor Dai Xianglong ..., Tokyo will supply Beijing with yen in exchange for yuan if China's balance of payments deteriorates sharply.

China will supply Japan with yuan for yen under similar circumstances," the Nihon Keizai Shimbun newspaper said.

"The loan ceiling is equivalent to three billion dollars," the report said, without citing sources.

RUSSIA OVERTAKES SAUDI ARABIA IN OIL PRODUCTION

Russia has overtaken Saudi Arabia as the world's number one oil producer for the first time since the 1980s, highlighting the potential long-term challenge the country represents to the mainly Arab oil cartel Opec.

Russia pumped 7.28 million barrels of oil a day in February, compared to Saudi Arabia's 7.19 million barrels per day, according to statistics just released by the Paris-based International Energy Agency (IEA).

The two countries were neck and neck the month before.

Russia may not hold onto its position at the top of the table for long, with the Saudi oil kingpin able to boost its production by up to 50 per cent and Russian oil firms currently pumping near full capacity. But the 11-member Organization of Oil Exporting Countries, which has been locked in a battle of wills with Russia since late last year to get it to support global oil prices by cutting exports, has reason to be nervous.

EU DRAWS UP LIST TO RETALIATE

EU member states were on Friday examining a list of US-made products that could be hit with hefty tariffs in retaliation for the the Bush administration's decision to slap tariffs on imported steel.

Copies of the list — drawn up by the European Commission — have been given to the governments of the 15 EU member states, the commission's trade spokesman Anthony Gooch said.

Gooch did not reveal the content of the list. But a source familiar with the issue said it included textile products, steel and citrus fruits.

If approved by the member states, the list will be sent immediately to the World Trade Organization (WTO) in Geneva, where the EU has already lodged a formal protest against the US move.

JAPAN, KOREA TO LAUNCH FREE TRADE STUDY

The South Korean and Japanese leaders on Friday launched a study into setting up a free trade zone, but analysts warned the single market dream was a long way off.

South Korean President Kim Dae-Jung and Japanese Prime Minister Junichiro Koizumi announced the official launch of the joint government study after a summit.

Industrialists in the two countries have been pressing for moves toward a joint market with 170 million consumers and gross domestic product totalling some five trillion dollars.

BP AND SINOPEC LAUNCH $2.7B CHINA PLANT

Oil titan BP and China's Sinopec Corp launched a massive $2.7 billion petrochemical complex, hoping slumping product prices would recover by 2005 when the plant goes into operation.

The complex, BP's largest single petrochemical investment in the world, would begin pumping out 900,000 tonnes per year (tpy) of ethylene long after the global petrochemical industry emerged from the painful downturn of the past two years, executives said.

BP and Sinopec officials estimated China would still need to import 40 per cent of its ethylene by 2005 — versus about half now — boding well for the complex's ethylene-based products.

BP holds 50 per cent in the joint venture company, Shanghai Secco, while Sinopec has 30 per cent and its subsidiary Shanghai Petrochemical owns 20 per cent.

IMF APPROVES $365M LOAN FOR IVORY COAST

The International Monetary Fund (IMF) has approved in principle a $365m (£256.6m) loan to Ivory Coast to reduce poverty, provided the government constrains public sector wage demands.

Acting IMF chair Anne Krueger said she was encouraged by the government's discipline in macroeconomic management and its commitment to free-market structural reforms.

But she warned wage demands by public sector workers may adversely affect the implementation of the programme.

TURKEY AND GREECE SIGN PIPELINE DEAL

The Turkish and Greek governments have signed an agreement to build a natural gas pipeline from east to west.

Once the 285-km pipeline is built, Turkey will supply Greece with 500,000 cubic metres of gas a day.

Thursday's agreement is a sign of the strengthening ties between two countries which were once fierce regional rivals and have several times in the last few decades come close to war.

LOW-COST AIRLINE

Goodjet, a new Swedish discount airline due to start operations at the end of April, has said it expects to make a profit in its first year in the air and might float on the stock market.

It will be the first Swedish low-cost carrier to compete with SAS, the flag carrier of Sweden, Denmark and Norway.

GOLD RISES ABOVE $300

Gold prices have hit a seven-week high after a surprise rally pushed it above the $300 an ounce barrier.

On Wednesday, gold prices drifted just below the $300 mark until news of a further suicide bombing in Israel heightened fears of fresh waves of violence in the region and drove the price higher in US and Asian trade.

BROWN UNVEILS HELP FOR SMALL FIRMS

Chancellor of the Exchequer Gordon Brown is to outline a package of measures designed to encourage the creation of small businesses — especially in deprived areas.

He will signal, in a speech on Thursday to the Transport and General Workers' Union's Manufacturing Matters conference in Leeds, that wealth creation is central to government aims.

It follows the announcement on Tuesday of up to £1bn in tax breaks for big businesses, including a major tax credit for research and development.

TAIWAN DENIES CHINA STEEL CHARGE

Taiwan's biggest steel producer has hotly denied allegations by the People's Republic of China that it is dumping cold-rolled steel at artificially cheap prices on the mainland market.

Beijing is concerned that with the US slapping tariffs of up to 30% on steel to protect its own underperforming firms, other countries could flood its market as they look for new outlets.

Russia, South Korea, Ukraine and Kazakhstan are also under suspicion.

The worry is that the US's decision to ditch its free-trade rhetoric and protect its own back yard will trigger new tariff walls elsewhere.

Europe is already asking the WTO for permission to impose its own "safeguards", in the fear that steel barred from entering the US market will be redirected across the Atlantic.

SRI LANKA SUFFERS TRADE SLUMP

The government has published a pro-growth budget Sri Lanka's trade deficit has narrowed sharply, as the economy continued to shrink after contracting last year for the first time since World War II.

The central bank said the deficit in January narrowed to $131m (£92m) from $228m a year earlier, as imports dropped and export rose slightly.

The government, which presented a growth-oriented budget last week, expects the deficit to expand slightly for the whole of 2002, to $1.25bn from 1.16bn in 2001.

AFRICA HONES PLANS TO ATTRACT INVESTMENT

African leaders have agreed on an ambitious set of yardsticks by which the continent can gauge its own performance on good governance and economic reform.

The aim is to underpin the promises which constitute Africa's side of the deal on the proposed "Marshall Plan for Africa" — the New Partnership for Africa's Development (Nepad).

If the plan gets off the ground, the hope is to generate $64bn in inward investment a year, boosting continent-wide annual economic growth to 7%.

GERMAN BUSINESS CONFIDENCE GROWS

A key indicator of German business confidence has raised hopes that Europe's largest economy has seen the worst of the current downturn.

The business climate index prepared by Germany's Ifo economics institute rose to a level of 91.8 this month, from 86.4 in January.

"Under normal conditions, the upswing should set in now," said Ifo economist Gernot Nerb, although he cautioned that more evidence was needed before making a firm prediction.

The index figure hit an eight-year low of 84.7 after the 11 September attacks on the US.