INTERNATIONAL

 

Sep 16 - 22, 2002

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF

 

NEW ASIAN TIGER TO RIVAL HONG KONG

To measure Shanghai's potential as an economic powerhouse you need only to stand on the famous Bund and look across the river.
In barely 10 years, the shining metropolis of Pudong has been carved from a landscape of farmland and swamp.

 

Political will enabled the development to happen, but sheer human effort saw it created in so short a time.

And still the building goes on, with plans for new roads and railways, underground lines and an elevated train link to the airport.

As China's move to a market economy gathers pace, spurred by the country's acceptance into the World Trade Organisation, it has big plans for Shanghai.

It wants to see this teeming city of 17 million people once more become Asia's commercial centre.

British businessman Lance Browne has watched the city grow.

"If somebody had said that Shanghai was going to be like this in 20 years' time they'd have got the doctor," he says.

"The changes are extraordinary and the thing is the pace is increasing, going faster and faster, more and more changes all the time.

"And now, with China entering the WTO, that is going to hot up even further."

Driving in from the sparkling new international airport, you'll pass hundreds of cranes.

At its peak, half the world's high-rise cranes were said to be here, on the planet's biggest building site, constructing the apartment blocks, offices and public buildings that make up Pudong.

It is also home to the Jinmao Tower, part commercial, part hotel and, at 420 metres, one of the world's tallest buildings. An even bigger one is planned.

US ECONOMY SEES PATCHY GROWTH

Economic growth in the US has been "slow and uneven" in recent weeks according to the latest study of conditions by the US Federal Reserve.

The Fed's 'Beige Book', so-called because of the colour of its cover, found a mixed performance among retailers and "sluggish" activity in the manufacturing sector.

The survey provides an anecdotal picture of the US economy and will be used by the Fed when it meets on 24 September to discuss interest rates.

Analysts said the findings meant the Fed is unlikely to cut interest rates from their current level of 1.75%.

Some observers had speculated that the Fed may cut rates to prevent the economy slipping into recession again the so-called 'double-dip' scenario.

The Beige Book gathers together information from the 12 regional Fed bank districts.

"Most districts indicated slow and uneven economic growth, with mixed or scattered experiences across sectors of the economy," the Fed said.

Car sales were higher, but this was mainly due to aggressive incentive schemes being operated by the manufacturers.

Overall, retailers in different districts have had contrasting fortunes, but the Fed said they were "cautiously optimistic" about the coming months, "expecting sales to be flat or slightly up from their 2001 levels".

But the survey found that manufacturers were still having a tough time.

"On the whole, manufacturing activity was sluggish, with a good deal of variation by industry and region," the Fed said.

Most the districts also found little or no growth in employment.

US REMEMBERS SEPT 11 VICTIMS

Sad and tearful, the United States remembered on Wednesday the victims of the Sept 11 terrorist attacks as people across the country marked the solemn occasion with a moment of silence.

In Washington, President George W. Bush joined senior members of his cabinet in observing a moment of silence at the south lawn of the White House.

About 12,000 people gathered at the Pentagon where 189 people were killed this day last year in the attack.

Bush, echoing another president confronted with horrific loss of life, said those killed in the Sept 11, 2001, terror attacks "did not die in vain."

"The murder of innocents cannot be explained, only endured," he said. "And though they died in tragedy, they did not die in vain."

JAPAN'S GROWTH PICKS UP

Japan's economy grew by more than originally thought during the three months of April, May and June, the Cabinet Office said.

It revised its estimate of economic growth to 0.6%, up from an initial forecast of 0.5% issued late last month.

The improvement was due to Japanese firms' increasing their capital spending and their stockpiles, as orders have picked up.

The news is a boost for Japan's leaders as they put together a package of measures to tackle falling prices which have contributed to Japan's economic stagnation.

Prime Minister Junichiro Koizumi is expected to unveil his proposals on 20 September.

Japan's benchmark Nikkei stock index fell to 19 year lows in early September.

The Nikkei's drop below the 9,000 level contributed to pressure for the government to produce an economic revival package to restore the stock market's performance.

US ECONOMY TRAPPED IN TRADE GAP

The United States has reported its second-largest trade deficit on record.

During June, the trade gap narrowed only slightly, as demand for imports reached its highest level for 15 months.

The US Commerce Department said June's trade deficit came in at $37.2bn (24.4bn), compared with May's record deficit of $37.8bn.

Imports of goods and services increased by 0.5% to $119.2bn, as imports of consumer goods, such as clothing and electrical goods, reached a record high of $26.2bn.

US exports grew by 1.7% to $82bn, helped by increased sales of agricultural products.

The biggest trade gap was recorded with China, where a deficit of $8.5bn emerged, even though US exports to China climbed to a record $2.2bn.

NO CHANGE FOR EURO INTEREST RATES

Interest rates across the 12-nation Eurozone are staying at 3.25% for the 11th month in a row.

The decision from the European Central Bank, announced on Thursday at the first policy meeting following the month-long summer break, is in line with expectations.

The Bank has yet to comment on its reasons, but the standstill is in line with recent comments from its president, Wim Duisenberg, that inflation remains too high in many Eurozone countries.

The ECB's rules, not to mention its own preference, focus on inflation over and above economic growth and employment, which are feeble across most of the zone.

PRICES SLIDE AS CHINA'S WORKERS CUT BACK

Growing joblessness and the fear of insecurity is pushing the Chinese to save rather than spending, a trait that risks pushing the country into deflation.

The latest evidence of the trend especially worrying because of nieghbouring Japan's decade-long deflationary spiral came on Friday with official statistics showing prices fell 0.7% in August.

The decline was slower than in July, when prices fell 0.9%.

GREENSPAN WARNS BUSH OVER SPENDING

Alan Greenspan has warned lawmakers that their inability to balance the federal budget threatens the country's economic stability.

Mr Greenspan, chairman of the US Federal Reserve, urged Congress and the administration of President George W Bush to restrain the desire to cut taxes while raising levels of public spending.

Failure to preserve rules which rescued the US from its last period of deficits would be a "grave mistake", Mr Greenspan said.

TRIPLE WHAMMY HITS SHARE PRICES

A triple whammy of concerns over the US economy, fears of conflict with Iraq and higher US unemployment has sent shares tumbling.

In Europe, London's benchmark FTSE 100 index closed down 125 points with French and German shares also showing sharp losses.

And in the US, the Dow Jones industrial average closed 201 points lower.

Stocks under pressure in New York included shares in fast-food giant McDonalds, which fell 4.8% after a warning from analysts at Goldman Sachs of uncertainties over the firm's future.

In London, losers included BAE Systems shares, which slumped 14% after a disappointing profits announcement.

Earlier, the key Tokyo index, the Nikkei 22, ended 15.15 points higher at 9,415.23.

SOUTH AFRICA RAISES INTEREST RATES

Central bank chiefs, faced with stubbornly high inflation, have raised South African interest rates for the fourth time this year.

The country's Reserve Bank has raised rates by one percentage point to 13.5%.

The move, which takes the rise in South African rates this year to four percentage points, followed data showing that prices have continued to soar.

The country's inflation index rose in July at an annual rate of 9.9%, the biggest on record, and well outside the 3-6% range set for the Reserve Bank.

ECUADOR 'MUST WAIT' FOR IMF CASH

Mixed messages are clouding Ecuador's hopes of winning fresh assistance from the International Monetary Fund, with presidential elections just weeks away.

The country's finance minister, Francisco Arosemana, is heading for Washington DC on Friday to present a letter of intent containing the commitments which he hopes will sway the IMF into granting $240m in new loans.

AUSTRALIAN EMPLOYMENT FALLS

Australia has reported an unexpected fall in jobs during July, which economists said reflected uncertainty over the global economy.

Figures from the Australian Bureau of Statistics showed total employment fell by 28,000 in July, against economists' expectations of a rise of 10,000.

AUSTRALIAN ECONOMY GOES DOWNHILL

Australia's previously impressive rate of economic growth has slowed for the third consecutive quarter.

Despite the diminishing strength, the economy still managed to expand by 0.6% compared with the previous three months and by 3.8% compared with the same months a year earlier.

Treasurer Peter Costello blamed the slowdown which was worse than expected on falling stock markets and the worsening drought.

FED MAN TELLS BOSSES TO CUT PAY

One of the US Federal Reserve's most senior officials has warned America's executives that their immense pay packets are bloated and quite possible immoral.

WIlliam McDonough, president of the Federal Reserve Bank of New York, used the opportunity of an 11 September commemoration service in the city to hit out at corporate excess.

GERMAN TRADE REVEALS WEAKNESS

Germany's trade surplus was stronger than expected in July, but the figures painted a picture of a struggling economy.

Both imports and exports fell, but imports fell faster a sign that domestic demand was weak.

Exports from Germany, once viewed as Europe's economic powerhouse, were 0.4% lower than in July 2001, the Federal Statistics office said.

But imports dropped 6.3% from their level in July last year.

MALI GETS HELP WITH DEBTS

The French president has promised his country will cancel 40% of the debts owed to it by Mali, one of the world's poorest countries, his spokesman has said.

President Jacques Chirac made the pledge during a meeting with Mali's leader, President Amadou Toumani Toure, in Paris.

The bilateral debt cancellation will wipe out about 15% of Mali's total foreign debts.

UK JOBLESS FIGURES IN SURPRISE FALL

The number of people drawing unemployment benefit in the UK has fallen unexpectedly to a 27-year low.

The Office for National Statistics said the benefit claimant count fell from 949,400 in July to 943,000 in August, its lowest level since 1975.

WORLD BANK SUPPORTS AFRICAN PIPELINE

The World Bank is continuing to support a controversial oil pipeline project between Chad and Cameroon despite criticism by independent inspectors.

The inspectors claimed the project was harming the environment and failing to meet some objectives.

But a report defending the Bank's role and rejecting the inspectors findings will be discussed on Thursday by its shareholders, including its biggest shareholder the US.

POSH HOTELIERS RETURN TO SRI LANKA

An operator of hotels for the super rich is reported to be preparing to invest $750m (482m) in resorts in southern Sri Lanka as the prospects for peace improve.

Aman Resorts International scouted locations in Sri Lankan sites earlier this year and recently bought the rundown New Oriental Hotel in Galle.

EUROPE'S GROWING PROBLEM

Ministers from 55 countries are meeting in Berlin on Wednesday to discuss the problems of an ageing population and whether we will have to work for longer.

According to the United Nations, ageing is increasingly becoming one of the most salient social, economic and demographic phenomena of our times.

In Europe, as in other continents of the world, the problem will be acute.

It is estimated that by 2050, the number of people over 60 in Europe will have doubled to 40% of the total population or 60% of the working age population.

US MANUFACTURING REMAINS WEAK

The strength of the recovery in the US economy has been thrown into doubt by new data which showed that the manufacturing sector was growing at a sluggish rate.

US investors took fright at the news of the survey, sending the Dow Jones stock index down more than 350 points, and share prices tumbling across the world.

BOJ TARGETS DEFLATION

Japan's central bank is ready to consider further steps to bolster the country's troubled economy, with an inflation target now a possibility, according to top finance officials.

TURKEY'S ECONOMY BOUNCES BACK

The Turkish economy has rebounded strongly from its recent crisis, according to the latest growth statistics.

Turkish gross domestic product (GDP) rose by an annual 8.2% in the second quarter of the year, considerably in excess of forecasts.

The bounce does much to claw back the heavy output falls suffered in 2001, when the Turkish economy contracted by 7.4%.

US 'TO PUSH NEW STEEL DEAL'

The United States is reportedly drafting sweeping proposals to abolish all steel tariffs and subsidies ahead of international talks on the industry's problems.

The US sparked a trade war when it slapped tariffs of up to 30% on imported steel in March, a move which European and Asian steel makers viewed as unjust.