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
The development will be carried out by the Pan Canadian
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
"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
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
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
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
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
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
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
The money, belonging to the Da Afghanistan Bank and Ariana
Airlines, was frozen under United Nation sanctions to stop it being used by the
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
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
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
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
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
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