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 5. TRADE  6. GULF



Jan 21 - 27, 2002

US economic signals 'mixed'

The US economy as a whole is giving off mixed signals, but the manufacturing sector was still firmly in the grip of recession last month, according to official figures.

The US Federal Reserve's monthly 'beige book' report an anecdotal survey of business conditions compiled by the Fed's 12 regional banks suggested that while growth remains fragile, pockets of strength have started to emerge.

"Economic activity remained weak from late November through early January," the report said.

"But while there are still indications of caution, there are also scattered reports of improvement."

The beige book, which the Fed consults in deciding whether to change interest rates, said that demand for housing appears to be firming up, while retail sales also improved in late December and early January.

Manufacturing, however, remains "weak or down" in most districts, the report said.

In a further sign that a recovery may still be some way off, the beige book reported that employment appears to be falling in most areas, with wages and prices mostly in decline.

The beige book's downbeat picture of the manufacturing sector tallies with the Fed's monthly snapshot of industrial production, released earlier on Wednesday.

The Fed revealed that production in US factories, mines and utilities fell by 0.1% in December, its fifth consecutive monthly decline.

Industrial output for the year as a whole contracted by 3.9%, the steepest decline since 1982.

And manufacturers used just 74.4% of their productive capacity, their lowest level of capacity utilisation in almost 19 years.

Major oil find in North Sea

The discovery of new reserves of oil in the North Sea has been described as the biggest find in more than a decade.

The Buzzard Field, 125 kilometres north east of Aberdeen, is expected to yield around 400 million barrels 25% more than was originally expected.

The development will be carried out by the Pan Canadian Energy Corporation.

It is understood the field will be onstream by about 2004.

Energy Minister Brian Wilson welcomed the find as the biggest North Sea discovery in more than a decade.

PanCanadian Energy estimated last summer that it could recover up to 300 million barrels of oil from the Buzzard Field.

However, test drilling has shown that the oil reservoir is larger than previously thought.

Mr Wilson said: "This is the biggest North Sea discovery since the Nelson Field in 1988 and confirms that there are still huge prizes to be won.

"This is a prime example of why we are working so hard with industry to get offshore blocks in the hands of the right operators."

In July last year, shares in Edinburgh, Oil and Gas more than doubled after it struck success in the Buzzard Field.

The company, which has 3,000 shareholders, owns 5% of the Buzzard well. PanCanadian Petroleum owns 45% and 20% is owned by BG, previously British Gas.

At the time, managing director Alf Bissett said it could take three to five years between discovery and bringing a well on stream in the North Sea.

Jon Wormley, the executive vice president of BG, also said after the initial find that Buzzard "may be one of the most substantial finds in the North Sea in recent years, with further significant upside potential in the untested areas.

Chinese economic growth steams on

China has confirmed that its economy grew 7.3% last year. The country's top economic planner says it can attain a similar level this year, despite a global economic downturn.

The head of China's State Development Planning Commission, Zeng Peiyan, said the government would continue to invest in infrastructure projects which have helped keep the economy buoyant.

However, the downturn in other major economies has hit China's exports though this has been offset by rising foreign investment.

China's economic growth figures have assumed an enormous significance with officials saying the country needs at least 6% or 7% growth just to maintain momentum and create new jobs for laid-off state workers.

UK inflation remains subdued

UK inflation has remained at one of its lowest levels since records, began despite a small rise over the previous month.

The underlying rate of inflation rose by 0.1 percentage points in December to an annual rate of 1.9%, still below the government's target of 2.5% with a leeway of one percentage point in each direction.

Higher food prices are thought to have been offset by cheaper petrol prices and lower prices in the High Street as retailers battle for custom.

The headline rate of inflation which includes the cost of home loans fell by 0.2 percentage points to 0.7% because of cheaper mortgage costs.

Germany on brink of recession

The German economy is teetering on the brink of official recession, officials have said, after figures showed growth in 2001 slowing to its lowest level for eight years.

Growth in Germany's gross domestic product (GDP) last year was 0.6%, compared with 3% in 2000.

The Federal Statistics Office told BBC News Online that it was too early to say whether the economy met the official definition of recession two successive quarters of contraction.

After shrinking in the July-to-September quarter, growth was around zero over the last three months of the year, the office said, but there were too many estimates in the calculations to make an unequivocal figure possible.

Korea seeks new Hyundai buyers

The South Korean government is in touch with possible new investors after US insurer AIG walked out of a deal to buy ailing brokerage firm Hyundai Securities.

Korean finance officials said on Friday that the government is considering approaches from three unnamed foreign investors who have "shown interest" in Hyundai.

UK releases Afghan assets

The UK Treasury has announced that more than 55m of Afghan assets have been unfrozen and made available to the Interim Authority in Afghanistan.

The money, belonging to the Da Afghanistan Bank and Ariana Airlines, was frozen under United Nation sanctions to stop it being used by the Taleban regime.

Pipeline deal could freeze out Ukraine

A visit by Russian president Vladimir Putin to Poland might have pleased Russia's gas industry, but it has threatened to leave Ukraine out in the cold.

Mr Putin and Polish president Aleksander Kwasniewski attempted to revive economic relations between two countries.

Poland is worried about its deficit, which had risen sevenfold during the last four years, in trade with Russia.

Russia meets 90% of Poland's needs for gas, and provides 75% of oil supplies.

Denmark cagey on early euro referendum

The Danish Foreign Minister, Per Stig Moeller, has rejected claims that Denmark could hold a second referendum on the euro in 2003, despite his recent comments in a newspaper article.

Mr Moeller, speaking in an interview with Tim Sebastian for the BBC's HARDtalk programme, said he could not pinpoint a specific date on which the Danish people would be asked to vote again on whether to reject their currency the kroner in favour of the euro.

Big fuel price rise in Indonesia

Indonesia's government has announced fuel price increases averaging 22%, despite protests in several cities.

Energy Minister Purnomo Yusgiantoro said subsidies were being cut to reduce the burden on the national budget.

The cost of most fuel products would now be pegged to world market price, with state energy firm Pertamina publishing a revised price list at the beginning of every month, Mr Yusgiantoro said.


Microsoft: Profits at Microsoft slumped 13% in the latest quarter despite record revenues of $7.74bn from the sale of Windows XP and Xbox games consoles. Microsoft posted a net profit of $2.28bn for the quarter

IBM: The computer giant which sells everything from PCs to giant mainframes to software made a profit of $2.3bn, down from $2.7bn in the same period a year ago, at the higher end of analysts expectations.

Citigroup: The New York-based company earned $3.88bn in the October-to-December quarter, after the attacks, compared with $2.84bn in the year before.

Ford: Ford suffered a $5.07bn (3.52bn) loss during the last three months of 2001. During the same period a year earlier, the company clocked up $1.1bn profits.

Compaq: The world's second biggest computer manufacturer, said profits jumped to $92m in the final three months of 2001, up from a loss of $672m during the same period one year ago.

Apple: Apple said its profits climbed to $38m over the same period, compared to a $195m loss during the final three months of 2000.

Southwest: Southwest Airlines, America's seventh largest airline, reported net profit of $63.5m for the October-to-December quarter, down more than a half from a year before.

Northwest: Northwest Airlines, the fourth largest US carrier, reported a net loss of $216m for the October-to-December quarter, despite receiving $212m in cash from the federal government.

US Airways: The sixth largest airline, US Airways, announced a $1.01bn fourth-quarter loss. Excluding special items, such as $11m in expected federal aid, US Airways lost $552m, taking its full-year loss to $1.98bn compared to $269m in 2000.

JP Morgan: JP Morgan Chase lost a whopping $332m (230m) during the last three quarters of 2001 due to its financial exposure to the crisis hit Argentine economy and the bankrupt energy trading company Enron.

Argentina receives debt lifeline

The International Monetary Fund has thrown Argentina a lifeline by postponing $933m in loan repayments for one year.

Putting back the repayments, which were originally due on Thursday, will give President Eduardo Duhalde's interim government extra breathing space as it grapples with the country's economic crisis.

The IMF also pledged to continue working with the government in an effort to find a solution to Argentina's problems.

"The decision of the board shows the fund's desire to help Argentina overcome its difficult economic and social situation," said IMF managing director Horst Koehler in a statement.

The IMF "stands ready" to help draw up a strategy designed to "restore sustained growth" to the beleaguered Latin American republic, Mr Koehler added.

EU plan 'to push down car prices'

British car buyers could reportedly see the price of new vehicles fall to levels seen across mainland Europe under guidelines due to be published in a European Commission report.

Strict rules governing car sales in Britain would be scrapped and the door opened for retailers to sell different car brands under one roof reducing prices, according to ITV News.

UK unemployment rises again

The latest official figures show the number of people out of work and claiming benefit rose by 3,200 last month to 963,500.

Labour Organisation methods, the government's preferred measure, unemployment rose by 15,000 to 1,522,000 in the three months to November.

South Africa rate rise fears

South African businesses have warned that rising interest rates will further hurt the country's economic prospects.

The central bank raised rates one per cent to 10.5% on Tuesday, prompting banks to raise rates for the first time since 1998.

Nigeria's economy dominated by oil

It is ironic and yet typical that it is fuel prices that have caused a general strike in the Western African state of Nigeria.

Nigeria's entire economy revolves around oil with large reserves meaning the country has, in theory, the potential to build a very prosperous economy.

But despite Nigeria's rich natural resources, poverty is widespread and Nigeria's basic social indicators place it among the 20 poorest countries in the world.

The wealth from oil has not fed through to the wider population, but has often been squandered or lost through corruption.

That is why rises in fuel prices cause such outrage amongst Nigerians.

Confidence stays high in Australia

Businesses and shoppers in Australia are beginning the new year with a surge in confidence, raising hopes that the economy could keep defying the global gloom.

The rosy outlook comes in part from the third straight month of rising consumer confidence, showing that the holiday season shopping bug has carried over into 2002.

The Westpac-Melbourne Institute index was up 3.3% to 112.2 for January, up 10.7% from the year before and marking a 12.7% rise since October.

And businesses too are feeling good about the future, according to consultants Dun Bradstreet, which said sales in the first three months of 2002 are expected to hit a 20-month high.

Eastern Europe's difficult decade

On paper at least, Eastern Europe's decade-long recession has come to an end.

For the first time since the collapse of communism, all 27 ex-socialist bloc economies are growing at the same time and a lucky few have already surpassed their 1990 level of output.

In a new survey of the region, "Transition: The first 10 years", the World Bank broadly congratulates policymakers for an almost complete shift from central planning to free markets.

Ukraine reports record 2001 growth

Ukraine last year grew at its fastest rate since gaining independence from the former Soviet Union, fuelled by a rise in industrial output, stronger exports, and a good harvest.

According to government statistics, the country's economy grew by 9% last year, up from 5.8% in 2000.

Growth was underpinned by a record 14.2% rise in industrial production, while average annual inflation plunged to 6.1% in 2001 from 25.8% in 2000.