INTERNATIONAL

 

Oct 14 - 20, 2002

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF

 

SINGAPORE RECESSION FEARS GROW

Fears that Singapore could be heading back into recession have risen following the release of disappointing growth figures.

The figures show that the output of the trade-dependent island state between July and September grew by just 3.7% from the level of a year earlier.

 

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 GAP

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 859m.

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 UN

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 Asia.

"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 FARM MARKETS

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 unchanged.

VISA CONTESTS CREDIT CARD REFORMS

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 consumers.

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 Electronics.

The communications regulators, the Federal Communications Commission (FCC), argued that the $16bn (10bn) acquisition would hamper competition in the industry and create a monopoly.

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 WELCOMED

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 FARMERS

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 factories.

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 SECRECY

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.

HYDRO-ELECTRIC DEAL

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 sector's recovery.

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 FINANCES

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 reality.

The organisation also claimed that Chancellor Gordon Brown's proposals were causing serious damage to investor confidence.

FRANCE INCHES NEARER ENERGY REFORMS

Europe-wide France has bowed to pressure from other European Union countries over liberalising its gas and electricity markets.

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 energy ministers.

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.