April 29 - May 05, 2002
WORLD GROWTH SET FOR RECOVERY
The world is set for a strong economic recovery
next year, according to a leading international organisation.
The OECD, which represents the world's 30 richest
countries, says that "confidence has returned more rapidly than
expected" to the world's economies, especially in the United
States, despite the 11 September terrorist attacks.
And it expects "growth momentum" to
return, with overall economic growth among rich countries rising from
1.8% this year to 3% in 2003.
But the recovery will be strongest in the United
States, where growth could reach 3.5% next year, weaker in Europe and
especially weak in Japan, whose economy is still declining.
And it warns that rising oil prices, or a sharp
rise in interest rates while consumers still have large debts, could
still derail the recovery.
The OECD warns that there are still risks for
policymakers, even in the United States, where the sharp cuts in
interest rates and increases in government spending helped make the
The "timing and speed" of the withdrawal
of these stimulants to growth remain crucial. Interest rates should
only be raised gradually, while the Federal budget should return to
surplus to ensure "a more balanced distribution of risks."
And it projects that the US will have an even
bigger trade deficit in 2003, which could put pressure on the dollar
and lead to foreigners withdrawing investment in the US, especially if
the stock market continues to fall.
And it warned that the growing trade gap could
exacerbate protectionist pressures, as evidenced by the current trade
war over steel imports.
EUROPEAN ECONOMY TURNS THE CORNER
The European economy is starting to recover,
powered by returning confidence and surging trade, the EU has said.
According to the European Commission's spring
economic forecasts, growth should start to accelerate in the second
half of this year.
"Private consumption holds the key for the
recovery gaining momentum," the Commission said, arguing that
much spending will have been postponed in the wake of 11 September.
In the meantime, the Commission warned that
unemployment — the EU's main economic problem — could rise.
Overall, the Commission now expects eurozone gross
domestic product (GDP) growth to slow to 1.4% this year, less than
half the average seen in the second half of the 1990s.
But growth should more than double to 2.9% in 2003.
This forecast is largely based on current
predictions that global trade should grow by 7% in 2003, a far
stronger performance than seemed likely late last year.
The combination of robust consumer spending and
lively global trade will have the disadvantage of blocking progress in
Eurozone inflation, although far from high at 2.2%
annually, is the main factor behind Europe's relatively high interest
The trickiest economic problem remains Germany,
which has slipped to the bottom of the European growth league.
Unemployment has risen beyond the 4 million mark,
contributing to a Europe-wide surge in joblessness.
The Commission now predicts that eurozone average
unemployment will rise to 8.5% this year, before settling back towards
8.1% in 2003.
High unemployment, which is almost twice as severe
in Europe as in the UK and United States, is the key issue in a number
of pending election battles around the continent, including Germany
US SIGNS AFRICAN TRADE DEAL
The US has signed a trade agreement with a regional
organisation of eight West African countries which it hopes will lead
to greater commercial ties between the two sides.
Officials in Washington said the deal would help
increase trade with the West African Economic Monetary Union (WAEMU)
— a group of countries who all use the west African CFA franc as
their national currency.
That in turn, they said, would create jobs and
investment and so act as a way of improving the lives of Africans.
Total two-way trade between the US and the WAEMU
last year rose by 12% to more than $760m (£524m).
But business executives in the US said there were
still many barriers to growth and investment.
KOIZUMI HEADS FOR SHOWDOWN
Japanese Prime Minister Junichiro Koizumi is
attempting to burnish his image as a reformer with controversial
proposals to deregulate the post office, long a pillar of support for
He intends to introduce four bills to parliament on
Friday that could eventually lead to privatisation of the post office.
Powerful members of Mr Koizumi's governing Liberal
Democratic Party are deeply opposed to the changes.
Just one year after being swept to office on a wave
of public euphoria, Mr Koizumi's political fortunes are at a low ebb.
His approval rating has fallen below 50%, and few
now see him as the man to rescue Japan from its political and economic
His proposals to deregulate the post office are
meant to send a signal that he has not given up on reform.
GORDON'S NEXT CHALLENGE BY STEVE SCHIFFERES
Now that the Budget is out of the way, the
Chancellor can turn his full attention to the question of the UK's
He has pledged to say by the middle of next year
whether he believes that the UK meets the economic tests that he has
set as a prerequisite for membership.
But many economists believe that the nature of Mr
Brown's latest Budget, which is relying on faster economic growth as
well as higher taxes to finance a big expansion of public spending,
may be incompatible with a push towards early euro entry.
Following eurozone rules could limit the
Chancellor's plans to boost public spending and lead to lower growth.
One reason that Mr Brown may be reluctant to join
the euro is the relative performance of the Bank of England and the
European Central Bank.
SINGAPORE TOPS HONG KONG FOR BUSINESS
The city of Hong Kong has lost its long-held
position as the best place to do business in Asia, according to a new
global league table comparing economies around the world.
Instead the rival city of Singapore is now ranked
higher in the annual survey complied by the business consultancy, the
Economist Intelligence Unit (EIU).
The EIU cited concerns over Hong Kong's political
environment, and worsening economic climate as reasons for downgrading
Hong Kong has dropped from fifth to eleventh place
in the global league table, while Singapore has taken over as the
highest ranked Asian economy in ninth place.
The results of this survey provide a rude shock for
Hong Kong which has for many years been ranked as the best business
location in Asia.
DHAKA CHARTS PLAN TO BOOST EXPORTS
Bangladesh's Export Promotion Bureau has charted a
plan for promoting the country's products in the world market, in a
bid to give a much-needed fillip to sluggish external trade, according
to official sources.
Amid a worldwide recession, the bureau will take
part in eight international trade fairs in countries that include the
U.S., Germany, Belgium, Japan and Malaysia, in the next fiscal year.
It will also hold nine single-country fairs in
Saudi Arabia, South Africa, Spain, the UK and the U.S. The plans were
approved at a meeting of the bureau's governing council headed by
Commerce Minister Amir Khosru Mahmud Chowdhury.
ARGENTINA BANKS TO RE-OPEN BRIEFLY
Banks in Argentina are to open for five hours for
limited operations on Friday for the first time this week.
They were closed after a series of court rulings
allowed Argentines to withdraw their cash, leaving some banks very low
But Congress has now passed a law making it more
difficult for people to get their money.
RUSSIA MOOTS NEW CASPIAN SHARE-OUT
Russia could seek to divide out the Caspian Sea's
oil and gas riches in a series of bilateral deals if an overall
settlement proves elusive, President Vladimir Putin has said.
His comments came a day after a presidential summit
of the five littoral nations broke up without agreement on sharing
On his way back to Moscow he also had talks in the
Russian port city of Astrakhan, urging military exercises centring on
the inland sea for the first time in a decade.
JAPAN UNEMPLOYMENT FALLS
Unemployment in Japan has fallen to its lowest
level in seven months, according to government figures.
The seasonally adjusted unemployment rate fell to
5.2% in March from 5.3% in both January and February and from a
50-year record of 5.5% in December, according to the Labor Force
London, the FTSE 100 index of leading shares had
dropped 1.7% to 5,128.2 by mid-morning, its lowest level since 1
March, though by 11.20 local time (1020 GMT) it had recovered slightly
to stand at 5134.4.
The automotive giant
unveiled a quarterly operating profit of 1bn euros (£616m; $893m) —
or 3.1bn euros when adjusted for various one-off items — compared
with a 600m-euro loss in the same period of 2001.
firm said profits for the three months to March were $4.2m (£2.9m),
up from $2.7m (£1.9m) the previous quarter.
giant AOL Time Warner has reported one of the highest quarterly losses
in history, after making a record $54bn (£37bn) write down. The firm
announced it had lost $54.2bn in the first three months of the year.
The company's losses
ballooned to $975m (£673m) from $192m a year earlier after sales fell
11% compared with a year earlier to $12.02bn.
reported pre-tax profits of £4.1m for its core UK operations for the
first three months of 2002, reversing losses of £37.2m in the same
period a year ago and beating analysts' expectations for profits of
DOW HOVERS ABOVE 10,000
The Dow Jones index of leading US shares has clawed
its way back after dipping below the key 10,000 mark for the first
time in nearly two months.
The Dow fell 1% during the first hour of trading on
Thursday to 9,930.51, dragged lower by disappointing company results.
Gold, seen as a safe haven during times of equity
market volatility, traded at a two-year high of $308 an ounce as
nervous shareholders looked for less risky investments.
JAPANESE GROWTH REVISED LOWER
The rate of economic growth in Japan fell 4.8%
during the last three months of 2001 compared with a year earlier,
according to revised gross domestic product (GDP) figures.
The revision, worse than the previous estimate of
4.5%, was due to weak investment by companies, sending a signal about
continuing problems ahead for the country's economy.
Growth slowed 1.2% during the three months to
December when compared with the previous quarter, the revised figures
The figures confirmed that the recession hit
economy shrunk from April to December, the worst nine month
contraction suffered by Japan yet. GDP fell 0.5% from July to
September, having fallen 1.2% during April to June.
ARGENTINA TAKES STEPS TO END CRISIS
Argentina's President Eduardo Duhalde has said that
his country's only way out of its worst economic crisis is to live up
to its international agreements and continue seeking help from the
International Monetary Fund (IMF).
He was talking after signing what some are
describing as a landmark agreement with the country's powerful
provincial governors to undertake reforms demanded by the IMF to
qualify for a bail out.
BROWN DEFENDS BUDGET'S PRUDENCE
Gordon Brown was upbeat on the future of the UK
economy as he testified to Parliament on his April Budget — which
raised taxes to fund improvements in the National Health Service.
He said he was confident that economic growth would
be stronger than previously thought, sticking to his forecast of
3-3.5% growth next year.
Mr Brown told the Treasury select committee that
the higher growth in 2003 would make it easier to raise taxes (such as
National Insurance) without jeopardising the economic recovery.
FACTORY GATE PRICES SOAR IN SOUTH AFRICA
The price of goods made in South Africa climbed
sharply last year, as the rapid fall in the value of the rand meant
businesses had to pay more for their materials.
The gain of 14.1% in the producer price index for
the 12 months to March is the biggest one-year rise since January
1991, according to Statistics South Africa.
It raises the spectre of a further rise in interest
rates, which the Reserve Bank of South Africa has already lifted by 2
full percentage points this year to 11.5%.
NISSAN HIRES 4,000
The Japanese car maker Nissan Motor has announced
plans to hire 4,000 new workers by March 2003.
"This is part of our strategy to ensure stable growth and
increased competitiveness," a spokesman said.