03 - 09, 2002
ANALYSTS DROP JAPAN TO 'LATVIA STATUS'
Rating agency Moody's has downgraded state bonds
issued by Japan — the world's second biggest economy — to the same
status as those from Latvia and Poland.
Moody's researchers blamed the downgrade, by two
notches, on concerns over the government's ability to solve Japan's
"The Japan government's current and
anticipated economic policies will be insufficient to prevent
continued deterioration in Japan's domestic problems," Moody's
The levels of debt the government has run up, after
years of attempting to kick-start economic revival through large
infrastructure projects, meant it was testing new economic frontiers,
Friday's report said.
"Japan's general government indebtedness...
will approach levels unprecedented in the post-war era in the
developed world, and that as such Japan will be entering 'uncharted
The news came as official data showed that the
number of unemployed Japanese workers hit 3.75 million last month, up
270,000 from a year before.
The figure represented the 13th successive monthly
rise in unemployment, and defied a more optimistic outlook by many
analysts, including those at the Bank of Japan, over the country's
But many economists restated on Friday that they
expected an export led recovery to ease unemployment problems.
"We believe in general the Japanese economy
hit the bottom in the first quarter of this year," Junichi
Makino, senior economist at Daiwa Institute of Research, said.
"It usually takes three to four quarters for
unemployment rate to come down after the overall economy bottoms
"We believe, by the end of this year, we will
start seeing clear signs of the unemployment rate coming down."
EU JUST AVOIDS RECESSION
The European Union avoided recession during the
winter depths of the economic downturn, official statistics have
The overall EU economy, which declined by 0.2% over
the last three months of 2001, grew by 0.2% in the first three months
of the year, European Commission economists said.
A second successive quarter of contraction would
have signalled that the 15-member EU had officially entered recession.
The Commission also revised its forecast for growth
in the current quarter up from 0.3-0.6% to 0.4-0.7%.
This would put Europe on course to meet its
estimated growth of 1.4% over the year as whole. But Thursday's report
also revealed the challenge the EU faces in matching the recovery of
the US, where growth hit 1.4% over the first three months of the year
The figures will add to the dilemma facing the
European Central Bank which announces its latest decision on interest
rates in exactly one week.
With inflation still above its target level of
2.0%, there has been speculation — reinforced by comments by some
ECB board members — that interest rates will soon have to go up.
But the weakness of the European recovery, and
uncertainty about the prospects for the rest of the world, could make
this a risky strategy.
EU economists credited the area's return to
positive growth largely to a strong performance by the construction
sector, where output rose by 1.0% in the January to March period.
The financial services and business activities
sector was the second strongest, recording growth of 0.5%.
Exports, which slid by 1.3% during the last three
months of 2001, rose by 0.6% in the first three months of this year.
CHINA SEEKS WTO RULING ON LEGALITY
China on Monday became the latest country to ask
the World Trade Organization (WTO) to rule on whether US steel tariffs
conform to international trade rules, the WTO said.
Following similar moves by the European Union,
South Korea and Japan, Beijing has lodged a request with the
Geneva-based WTO to set up an expert panel to examine the up-to-30-per
cent US tariffs on some imported steel.
A WTO spokesman said China had asked for its
request to be considered by the WTO's dispute settlement body on June
Pressure is mounting on the United States. Japan
and South Korea said last week they would join the European Union in
calling for a WTO panel to rule on the three-year tariff program.
Although Washington blocked an EU request for the
establishment of a panel on Wednesday, the EU announced it would
present the request again on June 3 when the US will have no right to
ARGENTINA SCRAPS KEY ECONOMIC LAW
Argentine senators have ditched a controversial law
which has been putting off international lenders.
The International Monetary Fund has made abolition
of Argentina's so-called economic subversion law a condition for
lending to the cash-strapped nation to restart.
The country urgently needs new money — as much as
$9bn is sought — after its economy's four-year tailspin resulted in
a default on $141bn of existing loans in December.
The 1974 law, which gives judges wide powers to
investigate banking practices, led to fears that financiers could be
scapegoated for the country's financial crisis.
AUSTRALIA AND THAILAND AGREE TALKS
Another block has been laid in the construction of
Asia's economic powerhouse, with steps to free trade between Australia
The two countries have agreed to start talks on a
rolling programme of breaking down barriers to commerce.
The proposal, covering commerce between the nations
currently estimated at $3.4bn a year, could end up as Thailand's first
bilateral trade deal.
Australia has a longstanding agreement with New
Zealand, with a deal with Singapore set to be finalised in October,
and moves afoot to boost "co-operation" with Vietnam.
The announcement also progresses moves towards
liberalising commerce in the Asia-Pacific region, which accounts for
almost half of world trade and output.
LONDON TECH INDEX HITS ALL-TIME LOW
British hi-tech shares have plumbed new depths as
the depression about when technology earnings might recover deepened.
By the close of trading on 30 May, the TechMARK 100
index — the main gauge of tech stocks on the London Stock Exchange
— was at 990.86, off 13.62 points on the day.
The finish was by some distance the lowest on
record, less than half the 2,421.3 at which it ended its first day in
The recent slide is hardly surprising, given the
presence in the index over the past year of firms such as Marconi,
Colt Telecom and Telewest.
In early 2000, just before the hi-tech bubble
burst, the Techmark traded as high as 5,800.
DOLLAR SINKS TO 15-MONTH LOW VS EURO
The dollar sank to 15-month lows against the euro
and a six-month nadir against the yen on Thursday as fresh losses on
Wall Street kept the US currency pinned against the ropes.
The single European currency jumped to 0.9400
dollars — its highest level since February 2001. It later slipped
back to stand at 0.9374, against 0.9260 late on Wednesday in New York.
Meanwhile, the dollar tumbled to 122.85 yen — its lowest level since
November — before partially recovering to 123.06, still well down on
Wednesday's level of 124.39.
GOLD PRICES HIT 5-YEAR HIGH
Gold soared to its highest level in nearly five
years on Wednesday as investors scrambled into the ultimate safe haven
asset to protect themselves from a possible India-Pakistan war and a
Gold was set or "fixed" in London at
$327.05 a troy ounce, its highest fixing level since October 16, 1997.
The "fix" is a price set by market makers
with the London Bullion Market Association in a wood-panelled room at
merchant banker and bullion house N.M. Rothschilds. It tracks
movements in the 24-hours a day spot market.
Gold's advance crowned a 17 per cent rally in the
bullion price since the start of this year which has sent global
equity stocks from Canada to South Africa soaring to new highs.
Spot gold closed in London at $324.50/325.00 an
ounce, up from Tuesday's New York close of $324.10/324.60.
AUSTRALIAN INTEREST RATES 'TO SOAR'
Interest rates may have to rise by two percentage
points in Australia to cut the risk of overheating, the country's
central bank chief has warned.
The warning affirms the position of the Australian
economy as one of the world's strongest, with growth hitting 3.6% for
2001-02, a year during which many other leading industrialised nations
ITV'S GRANADA LOSES £169M
The collapse of pay-TV service ITV Digital has
helped push broadcaster Granada to a £169m loss for the six months to
SUZUKI SEALS MARUTI TAKEOVER
Suzuki Motor of Japan has gained control of India's
biggest automaker, Maruti Udyog, boosting India's state enterprise
Suzuki chairman Osamu Suzuki presented a cheque of
10bn rupees (£139.8m) to the Indian minister of power and heavy
industries, Suresh Prabhu, in New Delhi on Thursday.
WTO HURDLES REMAIN FOR MOSCOW
Despite the announcement this week that the
European Union intends to recognise that Russia has a market economy,
significant obstacles remain to the country's accession to the World
Alexei Portanski, Director of the WTO office in
Moscow, told on Thursday that gaining market economy status from the
European Union reflects Russia's progress in pushing through economic
ACCOUNTS PROBE AT CHENEY FIRM
US oil services and engineering firm Halliburton is
being investigated for its accounting practices when US Vice President
Dick Cheney was at the helm.
Halliburton is the latest in a string of companies
to come under fire for allegedly shielding their true financial
position from investors and analysts.
Mr Cheney was chairman and chief executive of the
company between 1995 and 2000 and the probe revolves around the firm's
accounts in 1998.
BANK CHIEFS UPBEAT OVER KOREA
Financial chiefs have again revised upwards
estimates for South Korea's economic growth, crediting thriving
exports for the upgrades.
The Bank of Korea said growth would be
"slightly higher" than 6% over 2002.
The estimate is the Bank's third in six months.
The Bank in December, with the world still
wallowing in economic downturn, forecast growth of 3.9%, revising that
figure in April to 5.7%.
The BoK's upgrade was mirrored on Tuesday by an
uprated estimate from the Korea Development Bank of 6.2% growth this
NORTEL TO CUT 3,500 JOBS
Telecoms giant Nortel Networks has said it is to
cut 3,500 jobs and may sell off its optical components business.
The supermarket group, Sainsbury, says its recovery
plan is working. After two years of falling profits, the company is
seeing a change in its fortunes. In the 12 months to March, pre-tax
profits, before one-off items were up 14% at £627m.
The British mobile phone company MMO2 has
disappointed investors with its first set of results since demerging
from British Telecom last year. The firm made a pre-tax loss of
£873m, against a loss of £3.5bn last year.
URUGUAY PASSES TAX RISE LAW
Lawmakers in Uruguay have passed a tax bill which
the International Monetary Fund (IMF) has demanded as a condition of
fresh loans to the struggling South American country.
Workers held a general strike last week to protest
against the bill, which will raise taxes on salaries and pensions.
Congressional approval for the bill came a day
after the IMF signalled its willingness to give the Uruguay an extra
$1.5bn of aid to help it cope with the financial crisis in
IMF DENIES TELLING MALAWI TO SELL FOOD
The International Monetary Fund (IMF) has denied
that it recommended the sale of Malawi's strategic maize reserves just
before a crop failure occurred.
President Bakili Muluzi declared a state of
national disaster in April and has asked for $21m (£14.4m; 22.6m
euros) in international assistance for food relief.
Up to 76% of Malawians lack food and more than 300
people are reported to have died of hunger this year.
FOREIGNERS SNUB MALAYSIAN MOBILE BID
Five mobile firms serve Malaysia's 23 million
people International telecoms firms have turned down the chance to
cash in on Malaysia's next generation of mobile phones.
Five Malaysian firms have put in bids for the third
generation licences, but foreign firms have decided to steer clear.
Existing cellular operator DiGi.com, majority owned
by Norway's Telenor, said it decided not to bid for
The three 3G licences are being sold for 50m
ringgit ($13.2m; £9m) each, a fraction of the price paid by many
operators several years earlier during the telecoms boom.