While respectable by European standards, the levels
are well down on the 7%-plus that economists were expecting.
"Horrendous," said Pamela Wong from MMS
International. "It's highly likely that we will go into a recession
again in the fourth quarter."
The government blamed the slowdown in part on a poor
performance from the chemicals sector.
The government's 3-4% target for annual growth was
already looking shaky, partly because of a tough year for the island
economy as the key electronics sector slumped and partly because of the
knock-on damage from the US West Coast ports lockout.
But now many economists are saying that even
achieving the bottom end of the range will be a challenge.
The signs of trouble for Singapore have been
multiplying in recent months.
Unemployment is turning into a serious problem, as
government figures suggest it could go up by a quarter by the end of
2002, from 4.1% to 5.5% of the workforce.
The numbers, issued last month by the Ministry of
Manpower, warned that the rise could prove structural as older and less
well-trained workers, unsuited to new economy businesses, would be next
to lose their jobs.
The last recession, the worst since 1964, only
finished in the April-June quarter of this year.
It produced a 2% contraction in 2001, following
blistering 10.3% growth the year before.
EUROZONE WOES SWELL UK TRADE
Europe faltering economic growth in the eurozone has
cut demand for British exports, leading to a bigger than expected
increase in the UK trade deficit.
The value of UK imports exceeded the value of its
exports by £2.8bn ($4.3bn) in August, up from £2.4bn in July, the
Office for National Statistics said.
The increase far outstripped analysts' forecasts,
with most predicting that the trade gap would edge up to just £2.5bn.
The increase in August partly reflected a 9% fall in
exports to other European Union countries compared with the previous
month, pushing Britain's trade deficit with the EU to a ten-year high of
The figures exacerbated fears that the UK economy,
which has escaped the global downturn for the last two years, could soon
succumb to it.
"The euro area is not just going nowhere — it
is doing its best to take us with it," said Geoffrey Dicks,
economist at the Royal Bank of Scotland.
European growth prospects have been downgraded in
recent months amid slumping share prices, sluggish job creation, and
weak consumer confidence.
British manufacturing groups said the trade figures,
which came as the Bank of England's monetary policy committee (MPC)
began its monthly interest rate-setting meeting, supported the case for
a cut in borrowing costs.
"The MPC must act now to ensure that the UK
economy is not blown further off course," said Stephen Radley,
chief economist of the Engineering Employers' Federation.
Manufacturers export a high proportion of their
goods, and are therefore sensitive to economic developments overseas.
GLOBAL SLOWDOWN PERSISTS, SAYS
The global economy is going to stay in the doldrums
until mid-2003, the United Nations has warned.
Until now, the UN believed that the world should have
pulled itself round from the slowdown which began in 2000 by the end of
this year, with 1.8% growth in 2002 and 3.2% expansion in 2003.
But now the UN Department of Economic and Social
Affairs (Undesa) says 1.7% and 2.9% is a closer estimate, as low
investment and slumping stock markets offset consumer enthusiasm and
attempts by governments to spend their way out of the downturn.
Last year, global growth was at its slowest for a
decade at 1.3%.
The UN said that part of the problem is that
international trade — an engine for expansion in the 1990s — is
likely to grow by a lethargic 1.6% this year, rising to 5.7% in 2003.
US PORTS REOPEN
US west coast ports have begun reopening after a
10-day closure because of a labour dispute.
The build-up of goods at the ports could take up to
six weeks to clear.
About 200 ships have been left waiting to unload
cargoes worth billions of dollars, while companies in both the US and
east Asia have warned about the damage to their businesses.
Tom Williams, a spokesman for the world's biggest
retailer Wal-Mart, said the company would be trying to identify any
priority items to unload first.
The ports' return to operation came after a federal
court granted an injunction sought by President George W Bush to halt
the dispute, which was costing the economy up to $2bn (£1.3bn) a day.
TRADE EXPERTS STICK TO GROWTH
FORECAST FOR 2002
The volume of world goods trade is projected to grow
by one per cent in 2002 after last year saw its first decline since
1982, the World Trade Organization (WTO) said.
Confirming its April forecast, the WTO warned in its
latest report, however, that the increase would depend on continued
momentum in the recovery in some industrialized countries and developing
"If the overall economic recovery, such as it
is, continues for the last two quarters of this year we might be looking
at trade expansion in volume terms of something in the region of one per
cent," Patrick Low, director of the WTO's development and economic
research division, told a news conference.
WB, WTO URGE RICH TO LIBERALIZE
Efforts by institutions such as the World Bank to
tackle poverty are irrelevant unless wealthy countries cut farm
subsidies, World Bank president James Wolfensohn warned.
Wolfensohn's remarks came as he met the
director-general of the World Trade Organization (WTO), Supachai
Panitchpakdi, and both mounted a united front to press mainly western
countries to liberalize agricultural markets.
The World Bank head cautioned that the $50 billion
spent on development assistance annually worldwide were dwarfed by the
$350 billion ploughed into agricultural subsidies every year.
JAPANESE STOCKS HIT 19-YEAR LOW
Japanese share prices dived 3.8 per cent to close at
a new 19-year low on renewed concerns over the outlook for the US
economy and corporate earnings, brokers said. The Tokyo Stock Exchange's
Nikkei-225 average fell 339.55 points to end at 8,688.00, its lowest
close since June 16, 1983.
The Topix index of all first section issues ended
down 31.13 points or 3.5 per cent at 860.47. Volume was estimated at 834
million shares and decliners led gainers 1,412 to 53, with 24 stocks
VISA CONTESTS CREDIT CARD
Credit card companies Visa International and
MasterCard have taken legal action against Australia's central bank over
plans to cut hidden fees and allow retailers to pass on costs to
The Reserve Bank of Australia (RBA) wants to save
consumers about A$400m (£140m, $219m) by cutting 39% off inter-bank
handling fees on each others credit cards transactions.
FIAT 'VERY LOW VALUE' FOR GM
Any bid for Fiat from US auto giant General Motors is
likely to be "very low value" despite Wednesday's announcement
of over 8,000 "temporary" job cuts.
US BLOCKS TV MERGER
US regulators have blocked EchoStar Communication's
proposed acquisition of its rival satellite television operator Hughes
The communications regulators, the Federal
Communications Commission (FCC), argued that the $16bn (£10bn)
acquisition would hamper competition in the industry and create a
EURO INTEREST RATES ON HOLD
The 12-nation Eurozone is keeping interest rates
steady at 3.25%, despite mounting evidence that the continent's economy
is having trouble growing.
The decision, by the European Central Bank, means
that borrowing costs have now been frozen for a full year, despite a
massive slowdown in Europe's economy.
It underlines the European Central Bank's view, made
forcibly by its president Wim Duisenberg, that uncertainty and the slow
pace of structural reform is keeping the Eurozone in the doldrums,
rather than the cost of money.
SOUTH AFRICAN MINES CHARTER
Some of the world's largest mining companies have
welcomed the South African "black empowerment" charter
transferring mine ownership to black-run companies.
AngloGold, the country's biggest gold miner, BHP
Billiton and Harmony Gold have all said they support the charter.
South Africa's cabinet approved a draft of the
charter under which some 26% of existing mines in the country would be
owned by black-run companies within 10 years
CATFISH ROW THREATENS VIETNAM
Catfish farmers in Vietnam are becoming increasingly
worried about the country's trade dispute with the US.
The row over dumping of the fish has seen export
orders from the US falling.
About half of Vietnam's catfish exports go to the
American market, after the fish is cut into fillets and steaks at local
The dispute is the first bilateral trade row since
the US lifted the trade embargo against Vietnam in 1994.
UK INTEREST RATES LEFT ON HOLD
The Bank of England's monetary policy committee (MPC)
has left interest rates unchanged at 4% for the 11th month running,
despite growing pressure for a cut.
The decision was in line with expectations, with most
economists predicting that the MPC would freeze rates so as to avoid
fuelling a potentially destabilising house price boom.
FORD SHARES HIT 10-YEAR LOW
Shares in Ford Motors sank to their lowest point for
more than 10 years after Credit Suisse First Boston (CSFB) downgraded
the company and halved its price target for the stock.
Ford's bonds also fell sharply.
Ford's shares closed down 75 cents, or 8.82%, at
$7.75 on the New York Stock Exchange.
EU TO WARN SWISS ON BANK
The European Union is considering economic and
political reprisals against its neighbour Switzerland if it doesn't help
in the battle against tax evasion.
Switzerland, facing unprecedented pressure to lift
its cherished banking secrecy, stands accused by the European Union of
profiting from tax evasion.
SURPRISE FALL IN GERMAN JOBLESS
Germany has reported a surprise fall in unemployment
in September, a day after Chancellor Gerhard Schroeder appointed a
"super-minister" to tackle the issue.
Unemployment fell by a seasonally adjusted 1,000 from
August to 4.098 million, the Federal Labour Office said.
A number of sites could support hydro-electric
schemes Australia has become the biggest foreign investor in Nepal after
signing a deal to build a $860m (£549m) hydro-electric plant.
UK MANUFACTURING FALTERS
UK manufacturers new figures have revealed that
manufacturing output stalled in August, casting fresh doubt on the
Production by UK factories was unchanged in August
from July, and came in 3.7% lower compared with the same period last
year, according to the Office for National Statistics.
The figures contrasted with a sharp rise in July, and
wrong-footed economists' forecasts of a 0.6% monthly increase.
FRANCE FACES CRITICISM OVER
France is expected to be heavily criticised by some
of its EU partners for undermining the euro by letting its finances fall
too deep into the red.
At a meeting in Luxembourg, EU finance ministers are
set to clash over a European Commission proposal to help France and
several other countries which are struggling with their budget deficits.
BUSINESSES ATTACK OIL TAX PLANS
Plans to increase taxes for the North Sea oil and gas
industry have come under a fresh attack.
The Scottish Council for Development and Industry (SCDI)
said the new tax regime was unstable and out of touch with economic
The organisation also claimed that Chancellor Gordon
Brown's proposals were causing serious damage to investor confidence.
FRANCE INCHES NEARER ENERGY
Europe-wide France has bowed to pressure from other
European Union countries over liberalising its gas and electricity
Industry Minister Nicole Fontaine said that France,
long criticised over the barriers around and within its energy markets,
was ready to agree a deadline for freeing up domestic markets.
"It is the clear will of my government to work
with our European partners for the total liberalisation of the power
market," Nicole Fontaine said after addressing a meeting of EU
The concession would end the imbalance which has seen
French utilities expand abroad, yet limited the ability of foreign firms
to break into the French market.