He said that the US should avoid falling back into
And he warned that Europe and Japan should do more to
bolster their economic growth prospects.
"The global economy has shown remarkable
resilience in the face of multiple shocks over the past two years,"
Mr Koehler said.
"Nevertheless, we need to be concerned about the
strength and durability of the ongoing economic recovery, and the
stability of the international financial system," he added.
In a speech to the Council on Foreign Relations he
said: "Risks to the global economic outlook today are clearly
tilted more to the downside than they were a few months ago.
"On balance, we do still expect that the
recovery will continue," he added.
Mr Koehler said the heightened risks included the
continued fallout from the collapse of the equity bubble, corporate
scandals that have undermined investor confidence, crises in some
emerging economies such as Brazil and Argentina, regional political
tensions and volatility in world oil prices.
He said it was crucial for leading economies to take
steps to boost confidence, including steps to improve accounting
standards and stamp out corporate corruption.
WORLD INVESTMENT FALLS BY HALF
Cross-border investment plummeted by more than 50% in
2001, the first fall in a decade and the worst for 30 years.
According to the United Nations Conference on Trade
and Development (Unctad), foreign direct investment (FDI) was one of the
main casualties of the global slowdown last year.
Among developing countries, again Africa found itself
last in line. Although the overall investment in the continent's 34
states classed as least developed countries rose $600m to $4.2bn, the
lion's share went to just three of them: oil-rich Angola, Sudan and
Despite the fall in overall investment, Unctad said
the influence of transnational corporations was continuing to grow.
Foreign affiliates now account for one-tenth of world
GDP and one-third of world exports, the agency's World Investment Report
Underlying the steady growth of the multinational was
the global push towards privatisation and rapid technological change.
"These driving forces are long-term in nature," it said.
Unctad's figures show the slide in FDI from a peak in
2000 to $753bn in 2001 was even worse than the 40% slide it predicted in
The year produced only 113 cross-border mergers worth
more than $1bn, down from 175 in 2000.
And the slide shows no signs of abating quite yet.
The first seven months of 2002 produced a 40% fall in cross-border
mergers and acquisitions over the same period of 2001.
The steep fall meant that developed countries
actually fared worse than the average, nursing a fall of 59%.
JAPAN PREPARES STIMULUS PACKAGE
Japan is to draw up tax reform plans which could
deliver massive tax cuts, and may stimulate the stagnant economy.
Up to 1.5 trillion yen (£8bn; $12bn) in real tax
cuts could result, according to Finance Minister Masajuro Shiokawa.
The country's central bank has also said it will buy
shares from Japan's troubled banks in a move to avoid a financial
But while the news may please the Japanese public, it
has raised concerns about Japan's efforts to reduce its massive public
Prime Minister Junichiro Koizumi's advisers have
proposed that he should order tax cuts of 2.5 trillion yen, or 0.5% of
the country's total output, or gross domestic product.
The finance ministry favours a smaller cut.
GLOBAL MARKET FALLS BUFFET ASIA
Stock markets in Asia have continued the wave of
falls across the globe, after Wall Street dropped to near five-year lows
on a profit warning from computer giant EDS.
Japan's Nikkei 225 had lost 1.6%, or 153.01 points,
to 9,516.61, wiping out the gains made after the Bank of Japan made the
surprise announcement on Wednesday that it would buy shares directly
from banks to prop up the financial system.
In Hong Kong the Hang Seng index was down 2% at
9,236.62, near 12-month lows, in Singapore the Strait Times fell 1.6% to
1415, and other regional markets also showed falls.
In London on Thursday, the FTSE 100 index came to
within four points of its lowest level for six years before recovering
slightly to close down 52 points at 3,814.
Paris fell 2.5% to end at 2,927 points, its lowest
closing level since January 1998, and in Frankfurt the Dax index dropped
to a new five-year low, falling 3.76% to 3,007.
Shares in New York fell heavily just before the end
of trading on Thursday to close 230 points lower, or 2.8%, at 7,942 —
it last closed below 8,000 in July.
IVORY COAST MUTINY 'OVER'
The Prime Minister of Ivory Coast, Pascal Affi
Nguessan, has said that Thursday's coup attempt by rebel soldiers was a
He called on all Ivorians to return to work after a
day of fighting in which dozens of people were killed.
State television showed the body of the man the
government has blamed for the uprising — General Robert Guei — who
three years ago seized power in a coup.
But hundreds of rebels are still reported to be
holding out in Ivory Coast's second biggest city, Bouake, and the
northern city of Korhogo.
CASPIAN OIL PROJECT FORGES AHEAD
Construction work has officially been launched on a
multi-billion-dollar pipeline to take Caspian Sea oil from Azerbaijan to
Turkey via Georgia.
It is the first major pipeline from the vast Caspian
oilfields to bypass Russian territory.
The Turkish and Georgian presidents, along with their
Azeri counterpart, took part in a ceremony to lay the inaugural section
of the pipeline at the Sangachal terminal, near the Azeri capital, Baku.
"This project guarantees peace, security and
stability in the region, and still further unites three countries and
three peoples", Azerbaijan's President Haidar Aliev said.
FRENCH FOOD AGENCY BACKS BRITISH BEEF
France's food safety agency has announced it is in
favour of lifting the country's ban on British beef.
The report could pave the way for the lifting of the
French embargo, imposed amid concern over BSE, the human form of mad cow
France faces a daily fine of £100,000 for continuing
its embargo three years after a European Union ruling that British beef
no longer carried the risk of mad cow disease.
The French government is likely to follow its
national food safety agency AFFSA's advice when deciding whether or not
to lift its ban.
ARGENTINA DELAYS $3BN LOAN REPAYMENT
Argentina has been told it can delay a $2.8bn
(£1.8bn) loan repayment for one year.
The International Monetary Fund (IMF) agreed to defer
the payment, due on 9 September, and said the situation in Argentina
remained "very difficult". It is the second time in three
months that the loan has been extended.
CITIGROUP PAYS COMPENSATION
The US banking giant Citigroup has agreed to pay a
record penalty to settle charges that it engaged in abusive lending
It will pay $215m (£138m) to customers as part of an
agreement reached with the US Federal Trade Commission (FTC).
And Citigroup will hand over a further $25m in
connection with a separate legal case.
BRAZIL AND ARGENTINA DAMN IMF
Senior political figures in Argentina and Brazil have
criticised the International Monetary Fund's policies for their
An Argentine cabinet minister has said citizens are
"sick and tired" of IMF officials criticising government
policies aimed at pulling the nation out of a four-year recession.
H&M FASHIONS PROFIT JUMP
Profits at Swedish fashion retailer Hennes &
Mauritz have jumped 53% in the third quarter. H&M reported a pre-tax
profit of 1.9bn Swedish kronor($204m; £132m) to the end of August as
sales increased 15% to 12.6bn kronor.
UNIONS TO TACKLE BLAIR ON PRIVATISATION
The unions and the government are heading for a major
confrontation over privatisation at the Labour Party conference.
Three powerful unions are planning to table motions
calling for a moratorium on any further private sector investment in
The leader of the TUC's largest union, Unison, told
BBC Radio 4's programme that the private finance initiative was a waste
of time and money.
RETAIL BOUNCE FAILS TO LIFT FACTORY GLOOM
British retail sales grew more strongly than expected
last month, easing fears of a downturn in consumer spending.
Sales volumes grew by 0.6% in August compared with
July, taking the annual growth rate up to 5%, the Office for National
UK PLC 'AGAINST EARLY EURO ENTRY'
Just one British firm in five wants the government to
adopt the euro during the current parliament, according to a new survey
from pollsters ICM.
The survey, which comes on the tenth anniversary of
the pound's ejection from the European exchange rate mechanism, suggests
that Prime Minister Tony Blair may find it more difficult than expected
to persuade businesses to embrace the single currency.
SENIOR BANKER WARNS ON EURO RATE
Andrew Crockett, a strong candidate to become the
next governor of the Bank of England, has cautioned that competitiveness
could be hit if the UK joins the euro at too high an exchange rate.
Mr Crockett was giving a speech to mark the 10th
anniversary of sterling's exit from Europe's exchange rate mechanism,
BRAZIL LEAVES INTEREST RATES UNCHANGED
Brazil's Central Bank has said it will leave interest
rates unchanged at 18% until after the forthcoming presidential
election, following fresh concerns over the country's economy.
The bank said the outlook was still one of
"volatility and uncertainty" as the left-wing candidate Luiz
Inacio Lula de Silva surged ahead in opinion polls.
Despite a $30.4bn loan from the International
Monetary Fund in August, Brazil is still struggling under the weight of
its $260bn debt.
SWISS LIFE SLUMPS TO RECORD LOSS
Swiss Life said it made a loss for the six months was
386m Swiss (£166m; $256m) francs, one-third worse than even the most
pessimistic predictions, and warned that it was unable to make a
forecast for the full year.
ZIMBABWE INFLATION SKYROCKETS
Zimbabwe's annual rate of inflation leapt to a record
high last month as the country's economic situation continued to
The annual rate of inflation rose to 135.1% in August
from 123.5% in July, according to the latest figures from Zimbabwe's
Central Statistical Office.
The surge in inflation reflects high levels of
debt-fuelled government spending as economic output falters due to a
combination of drought and political unrest.
EUROPE WARNS UK OVER BOOZE CRUISERS
The European Commission has attacked the British
Government over its treatment of cross-Channel shoppers.
It said it still had concerns about heavy-handed
tactics employed by UK Customs officials towards people bringing back
cheap alcohol and cigarettes from the Continent.
BANK UNITED BEHIND RATE FREEZE
The Bank of England's interest rate setting body
considered the possibility of cutting borrowing costs at its monthly
meeting for September, minutes have shown.
In the end, the eight members of the Bank's Monetary
Policy Committee (MPC) who were present voted in favour of keeping UK
rates at their current 38-year low of 4%.
UK INFLATION FALLS
Inflation in the UK fell in August, suggesting that
interest rates will stay on hold.
The underlying annual rate of inflation fell by 0.1
points to 1.9%, the Office for National Statistics said.
And the headline rate — which includes mortgage
interest payments — also fell by 0.1 points to 1.4%.
The price of clothes and shoes were the main reason
for the slide in inflation.
EURO CATCHES ON IN RUSSIA
In Moscow Russians are buying more euros than dollars
for the first time since the new European currency became available,
according to the central bank.
The swing may signal the weakening grip in Russia of
the US currency which has dominated the economy here for most of the
It comes after a 15% fall of the dollar against the
euro this year. Imports of euros by Russian banks had doubled year on
year in June and July, said the bank.
Over $700m-worth of euros were imported in July,
compared with just $573m in US
THAILAND PREDICTS FAST GROWTH
Thai economy Thailand is set to make 2002 a boom year
despite the continuing gloom in the world economy, the government's top
The country's official think tank, the National
Economic and Social Development Board (NESDB), said on Monday that
growth for the year will be between 4% and 4.5%, more than double 2001's