INTERNATIONAL

 

Oct 07 - 13, 2002

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF

 

GORE WARNS BUSH OVER ECONOMY

Former US Vice-President Al Gore has said that President George W Bush should be paying as much attention to the country's damaged economy as planning a war with Iraq.
Mr Gore warned that the economy was in "big trouble" and that it had created a global "crisis of confidence" in America's economic leadership.

 

In his second major policy speech in two weeks Mr Gore said Mr Bush was trying to dodge his responsibilities on the issue.

Mr Gore was the Democratic presidential candidate in 2000 and he is currently considering whether to stand again.

"How can it be essential that we go to war prior to the election but absolutely fine to wait until after the election before we take any action to deal with the economy?" Mr Gore said.

"He needs to take responsibility for the fact that these policy failures have contributed to the crisis in confidence in US economic leadership," he added.

Some Democrats are concerned that a focus on Iraq will put them at a disadvantage when voters go to the polls for mid-term congressional elections on 5 November.

"We've got an election five weeks from now and a lot of the most important issues don't seem to be being discussed very much," Mr Gore said.

"If we turn a blind eye to our weak economy it will eventually undermine everything else that we are trying to accomplish whether it's winning the war against terrorism or giving all families the economic opportunities they deserve," he added.

Republicans have been swift to criticise Mr Gore's comments.

PORT LOCKOUT RISKS ASIAN RECESSION

The lockout which has shut down 29 ports on the US West Coast could trigger a recession in East Asia, investment bank Morgan Stanley has warned.

In a note sent to clients, Morgan Stanley economist Andy Xie said the dispute risked "horrendous" consequences if it lasts longer than a month.

Over $1bn (640m) worth of goods pass into the US by ship from East Asia every day, he said, and a prolonged disruption could ravage the "just-in-time" production systems used across Asia.

The weak recovery seen in many Asian countries is export-led, and a slump in sales overseas to the US, by far the biggest market, could cause serious damage.

Japan's carmakers are keen to take advantage of continuing high demand for automobiles in the US, but are now looking at temporary closures of their US plants as parts imported from factories in Asia grow scarce.

The latest figures show that almost every Asian exporter bar Singapore and Indonesia has seen a sharp slowdown in deliveries to the US over the past two years.

But in 2002 the slowdown has abated.

Malaysia, Thailand, South Korea and China are showing export growth that in some cases is reaching 10% in a single three-month period.

Los Angeles alone normally brings in more than 300 containers a day of furniture alone, while computer equipment fills another 150.

That is now grinding to a halt as the containers stack up on the West Coast.

ASIA BORROWING LESS FROM DEBT MARKET

Asia borrowed less in the first nine months of this year with bond issues and loans falling six per cent from a year earlier to $101.9 billion, a financial research firm said on Tuesday.

Domestic bond issuances in Asia excluding Japan and Australasia declined three per cent to $45.5 billion in the period from $46.7 billion last year, Thomson Financial said in a statement.

A slowdown in bond issues in Singapore and Malaysia contrasted with a 43 per cent increase in domestic bond market offerings in Hong Kong and South Korea, it said.

South Korea saw 82 deals from January to September worth $14.7 billion equalling issuance volumes in Hong Kong.

Foreign currency bond volumes in Malaysia, the Philippines and South Korea however remained strong, Thomson Financial said. The largest deal was a $650m eurobond issue by Korea Electric Power Corp.

US PROPOSES AFRICA SMALL BUSINESS LOANS

The World Bank should set up a fund dedicated to backing small businesses in Africa, the US Treasury has proposed.

In a speech on Wednesday, Undersecretary for International Affairs John Taylor said the Bank should set aside $135m (86m) to be distributed over the next four years, with extra money coming from the US and other countries.

The money, he suggested, would be funnelled through the Bank's International Finance Corporation, which concentrates on private sector lending, but would come from the lowest-cost lending arm of the Bank, the International Development Association.

Mr Taylor's proposal would have to be approved by the Bank's board of directors before going into operation.

It envisages loans and grants ranging from $1,000 to $50,000, with about $35m going on technical assistance to set up local banks which could run the loan programme.

EU PREPARES FOR US NUCLEAR TRADE WAR

The European Commission is preparing to retaliate against US import duties on European uranium, raising fears of another damaging trade dispute.

Earlier this year the US Department of Commerce imposed tariffs on European producers of low enriched uranium (LEU), claiming they received unfair state subsidises.

The Commission, which values the LEU exports at $500m (320m) or one third of the US market has condemned the duties as "illegal".

An EU spokeswoman told BBC News Online it had failed to reach an "amicable" solution after months of talks with the US and would now seek to refer the case to the World Trade Organisation (WTO).

EUROPE BACKS DOWN IN STEEL WAR

The European Commission has decided to back down from a plan to impose sanctions on the United States as a punishment for high tariffs on steel imports.

The US imposed extra duties of up to 30% on foreign steel imports in March, saying they were unfairly subsidised.

The move sparked a global trade dispute as the EU, Japan and other countries filed complaints at the World Trade Organisation (WTO).

The EU's executive body has now decided against going ahead with a list of potential sanctions worth more than $300m "at this stage", and will recommend a delay to the meeting of EU foreign ministers on Monday.

US 'TO BAN' TIE-UP OF SATELLITE TV GIANTS

Regulators are reportedly preparing to block the merger of the US's two biggest satellite TV operators, news agency Bloomberg has reported.

The agency, quoting sources "familiar with" the matter, said Echostar Communications' $23bn purchase of Hughes Electronics faced rejection by watchdog the Federal Communications Commission.

NASDAQ FALLS TO SIX-YEAR LOW

Down beat corporate news has pushed the iconic Nasdaq index of hi-tech stocks to its weakest close in six years.

The Nasdaq settled down 1.83% at 1,165 on Thursday, its lowest close since 12 September 1996.

The latest decline came as investors digested news that semiconductor giant Advanced Micro Devices (AMD) expects to undershoot its sales targets for the July to September period by as much as 18%.

FRANCE TELECOM

France Telecom may need to cut up to 10% of its workforce to tackle its debts, according to a report in the French newspaper Le Figaro.

The paper said that between 10,000 and 11,000 jobs could go at the phone firm, though it did not say who its sources were.

NIGERIA BANS TEXTILE IMPORTS

Nigeria's government has banned imports of all printed fabrics in order to protect its own ailing industry.

The number of local textile factories in Nigeria has fallen to just 40, a quarter of the number seen in the mid-1980s.

The government said it took the decision in order to protect against dumping when exported goods are sold below their normal value.

US JOBS PAINT SLOW-GROWTH PICTURE

Every month Wall Street waits with bated breath the release of the monthly US jobs report.

No other indicator of the economy is so widely anticipated or paid so much attention.

The report, issued the first Friday of each month, is considered the single best measure of the health of the economy and generally sets the tone for other economic releases that follow it.

The report contains not only the closely-watched unemployment rate but also information about job and wage growth.

It is the lack of expansion in employment and earnings, some analysts argue, that should alarm the Republican Bush administration and set his team of conservative economic advisers into crisis mode.

HOUSE PRICES STORM AHEAD

UK house prices surged by a further 4.3% last month, according to latest figures from the Halifax.

The rise means house prices have increased by 24.2% over the past year.

The Halifax said the recent strength in property prices had caused it to revise its forecast for annual house price inflation at the end of 2002 upwards from 15% to 24%.

EU SCORES IN US TRADE BATTLE

The World Trade Organisation (WTO) has ruled that the European Union (EU) can impose $4bn (2.6bn) worth of sanctions against the US in a dispute over tax breaks for its exporters.

The WTO has backed the EU's claim that the tax scheme amounts to a massive illegal subsidy which costs European companies billions a year in lost trade.

This is the biggest transatlantic trade dispute in history. The damages are the highest awarded by the Geneva-based WTO, since its creation in 1995.

FEAR GRIPS JAPAN'S BANKS

Only days after Japan's foremost economic reformer was given a free hand, the euphoria about the chances for real change is waning.

Heizo Takenaka, appointed financial services minister on Monday as well as keeping his job as economics minister, has kicked off a top-to-bottom review of banking policy.

But while investors are sick of the trillions in bad debts crippling the banking system and want reform, they are also scared that the pain caused by any cure could be unbearable.

A mass selloff of banking stocks on Thursday, driving the benchmark Nikkei down below the key 9,000 level to yet another 19-year lows as fears of a 'hard landing' grew.

The Nikkei index of leading shares closed down 1.25% at 8,936.43, the lowest finish since August 1983.

US BANK IN $4BN CLERICAL ERROR

The US investment bank Bear Stearns entered an order to sell $4bn (2.6bn) worth of stocks by accident in late trade on Wednesday, the New York Stock Exchange (NYSE) has said.

The exchange said the order was the result of a "clerical error" and should have been for $4m.

All but $622m of the order was cancelled before execution the NYSE said.

US MANUFACTURING SLACKENS PACE

US manufacturing activity shrank in September for the first time in eight months in a sign that economic growth may be weakening, an influential survey has suggested.

"After a strong first quarter, the manufacturing sector has softened significantly," said Norbert Ore, who oversees the Institute for Supply Management survey.

"Stagnant and sluggish are apt descriptions for manufacturing at this time."

INDONESIA DEBTS RESCHEDULED

The United States has agreed to reschedule $500m of Indonesia's debts.

Under the deal, Indonesia will be allowed to delay the repayment of the debts and low interest rates will be charged.

The agreement "gives Indonesia the most favourable terms the US government is able to offer", the US embassy in Jakarta said.

"It offers Indonesia breathing room as it continues to recover from the economic crisis."

HOUSING BOOM

The government pocketed a record 2.7bn in stamp duty from homebuyers last year, official figures have revealed.

More than half of the tax was paid by homeowners in the London and south east of England, the Inland Revenue said.

BROWN ADMITS UK GROWTH TO SLOW

The UK Government appears to have admitted that it will not reach its economic growth targets for 2002 and 2003.

A key aide to the Chancellor has suggested to journalists during the Labour Party conference at Blackpool that the UK economy will not grow by 2-2.5% this year, and 3-3.5% next year, as forecast in July.

At that time Gordon Brown announced the biggest ever increase in public spending to fund improvements in health and education.

Now those improvements could be put in jeopardy if the economic slowdown continues to intensify unless the Chancellor is prepared to raise taxes further in future Budgets.

JAPANESE BOSSES CAST DOUBT ON REVIVAL

Corporate confidence among Japanese executives has hit an 18-month high, the Bank of Japan's benchmark Tankan survey has said.

But, with the pace in the revival of business optimism slowing, the survey was seen by many observers as evidence that the recovery in the world's second largest economy was slowing.

GERMAN VOTERS REJECT ECONOMIC REFORM

The clear message from the recent general election in Germany that returned Chancellor Gerhard Schroeder to power is that there is little appetite among voters for radical economic changes.

That is bad news for Germany's small businesses, which are staggering under the burden of taxes that add an extra 50% to the cost of employing anyone.