INTERNATIONAL

 

Sep 02 - 08, 2002

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF

 

US BUDGET SURPLUS FORECASTS SLASHED

The US government's budget surplus is expected to be 80% smaller than previously thought, according to the latest forecast from The Congressional Budget Office (CBO).

 

The budget watchdog has slashed its forecast for 2002 through 2011 to an accumulated total of $336bn (220bn).

In March, the CBO had forecast that the surplus would be $1.7 trillion. Last year, it had forecast a $5.6 trillion surplus.

The "vanishing surplus" has created much anger in political circles ahead of congressional elections in November.

Crucially, the controversy could shift party control of both the House of Representatives and the Senate because even small shifts in votes would be enough to do so.

Democrats blame the reduced surplus on President George W Bush's $1.35 trillion tax cuts announced last year.

"The budget, under Republican stewardship, is deteriorating at a rapid rate," said the leading Democrat on the House Budget Committee, John Spratt.

"The problem is getting worse, and the Bush administration has no plan to correct it."

The Republicans insist that the tax cuts have been crucial to lift the US out of recession and to avoid excessive economic damaged from the recent weakness in the stock market and the fall-out from the 11 September attacks.

So rather than blaming the tax cuts, spending by Congress should be targeted, they say.

"Democrats want to have their cake and eat it," said House Budget Committee Chairman Jim Nussle.

"These projections reinforce the need for Congress to constrain spending to put us back on the path to fiscal health."

GERMAN RECOVERY STUMBLES

Business confidence in Germany weakened for the third month in a row during August.

Germany's economic woes are in the spotlight ahead of the general election in September, with fears that recent floods might jeopardise the fragile economic recovery.

The data signals "a possible at least temporary interruption of the recovery", the Ifo research institute said.

Its closely-watched index of business confidence dipped to 88.8 points in August from 89.9 points in July. Back in May, the index stood at 91.6.

The index is based on a poll of about 7,000 German companies, who are asked for their view of the next six months.

The survey also found that businesses were more gloomy about their current situation than last month, especially in the crucial manufacturing sector.

Germany, which is Europe's biggest economy, is recovering from a recession last year but growth remains feeble, at only 0.3% in April, May and June.

Economists had been expecting a fall and shrugged off the gloomier interpretations of the data, pointing out that recent rollercoaster swings on world stock markets were bound to produce some pessimism.

The Ifo was "weaker than expected but could have been a lot worse," said Julian Jessop of Standard Chartered in London.

"There had been some rumours of a much weaker number coming around so I think it's actually holding up reasonably well considering the doom and gloom in the German economy," he said.

The consensus forecast among economists had been for a reading of 89 points.

NORWAY, UK TO BOOST NORTH SEA OUTPUT

Norway and Britain unveiled an ambitious plan to strengthen cooperation on their ageing North Sea oil and gas fields, which they said could save energy companies $2.0 billion by 2010.

The plan aims to boost output, cut operational costs and promote cross-border cooperation in a 60 km-wide corridor either side of the Norwegian-British median line.

The area contains reserves of an estimated 13 billion barrels of oil equivalent (boe), of which two-thirds is oil.

"The challenge is to get as close as possible to behaving as if there was not a border, to look at fields in an integrated way," British Energy Minister Brian Wilson told Reuters. He said it had taken about eight months to draw up the plan.

Britain, whose own gas supplies are waning while demand is growing, is a key market for Norwegian gas exports and sales are expected to rise rapidly.

EUROPE WELCOMES US STEEL VOTE

The European Commission (EC) has welcomed a vote against new steel tarriffs by the US Trade Commission.

The Commission voted late on Tuesday not to impose 'dumping' duties on countries who are allegedly filling the American market with cold-rolled steel at unfair prices.

It ruled in favour of five countries Australia, India, Japan, Sweden and Thailand. A total of 20 countries are accused of selling cold-rolled steel products below the fair market value or the cost of production.

The EC said it would continue to defend the interests of Belgium, France and Germany, and said that European steel exports to the United States were "thoroughly fair and legitimate".

TURKEY FACES WATER "CRISIS"

Turkey has admitted that its water supplies are running low and it will have to invest $1bn a year in new dams, just a few weeks after agreeing to sell water to Israel.

"Turkey is not water-rich, in fact it is a country that could soon hit a water crisis," State Water Works Director Mumtaz Turfan said.

Mr Turfan warned that more investment in dams was needed and that water-waste in farming needs to be reduced.

FOOD INFLATION HITS AFRICAN CLOTHES SALES

The budget retailing group Pepkor has warned that rising food prices in South Africa could cause consumer spending to fall in the coming months.

"As long as food inflation remains at its high level, it must unavoidably affect clothing sales to consumers with a low disposable income," Pepkor said.

Food inflation in South Africa rose at an annual rate of 16.8% in July, in part because the country's currency fell 37% against the US dollar last year.

The rand has since regained 13% of its value.

US REJECTS SUMMIT CRITICISM

The United States has strongly defended its record at the World Summit on Sustainable Development in Johannesburg, following criticism from European and developing countries.

American delegation leader Paola Dobriansky called the US a "leader" in promoting development, and said the absence of President Bush at the summit was not a sign of neglect.

EU MINISTERS TO GATHER IN DENMARK

European Union foreign ministers begin two days of meetings in Denmark on Friday with international concern about Iraq high on their agenda.

The ministers meeting at Hamlet's castle in Elsinore are due to spend the first day discussing the timetable for EU enlargement.

But on Saturday they will go on to discuss Iraq and the likelihood of US military action there.

Also on the agenda will be the Israeli-Palestinian conflict and the growing dispute with America about the newly established International Criminal Court (ICC).

Up to 10 new countries from central Europe and the Mediterranean are expected to be invited to join the EU in 2004, with negotiations due to finish by the end of 2002.

UK WORKING HOURS RISE SHARPLY

An increasing number of employees are working more than 60 hours a week, according to a government survey.

One in six surveyed said they were working more than 60 hours a week compared to one in eight two years ago.

One in every eight women now work more than 60 hours a week, more than double the number of women doing so in 2000.

SUMMIT LAUNCH FOR NEW AID SCHEMES

Western governments at the World Summit on Sustainable Development in Johannesburg are due to announce a series of partnerships with businesses and communities in developing countries on Thursday.

Led by the United States, they will promote partnerships worth millions of dollars as a means to help economic development and preserve the environment.

However, environmental groups say such projects are a poor substitute for specific targets and timetables which other governments are prepared to support.

ZAMBIA REINS IN SPENDING

Zambia has angered unions by suspending food and travel expenses paid to some government staff.

The spending cuts are in response to criticism from the International Monetary Fund (IMF).

IMF officials raised concerns about a gap in the country's budget during a recent visit to the country.

CHINA WOOS GIANT TAIWAN CHIP FIRM

A Taiwan firm which is the world's biggest contract maker of computer chips has signed a deal to build a huge factory in China.

The deal means that one of the mainstays of Taiwan's economy has joined the rush of Japanese, US, European and Asian hi-tech firms flocking to shift production to China.

Taiwan lifted restrictions on investment in China by the semiconductor industry in March, after China and Taiwan both joined the World Trade Organisation.

TAIWAN TO EASE CHINA TRADE RULES

Taiwan's government has announced plans to lift more restrictions that currently limit business exchanges with China.

The island says it will allow Chinese companies to advertise their products on the island.

And it will make it easier for Chinese employees of large firms to work in Taiwan.

In a process that began last year, Taiwan is slowly dismantling its 50-year-old restrictions on trade with mainland Ch