The deficit widened to 3.7% of economic output, well
above the limit set in an agreement which underpins the euro. The
deficit ration was significantly higher than the 2.8% in 2001.
"Overall economic development in Germany in 2002
was disappointing, as in previous years," Federal Statistics Office
chief Johann Hahlen said in a statement.
Germany is the largest economy in the eurozone and
risks dragging its peers into more sluggish growth.
The sorry state of the economy poses a real challenge
to the newly elected centre-left government led by Chancellor Gerhard
And the threat of a US-led war against Iraq is likely
to delay any hopes of a swift recovery.
The meagre growth was almost entirely due to exports
rather than strong local demand, the statement said.
"Declining demand in German firms affected not
only their investment but their demand for goods from the rest of the
world," Mr Hahlen said.
There was no figure yet available for growth in the
last three months of the year, but it was expected to have been
Germany has already been rapped by the European
Commission for its failure to get its finances in order.
JAPAN'S EXPORTS GROW
Japan's broadest measure of trade with the rest of
the world grew by 9% in November compared with a year earlier, according
to government figures.
But there are still worries that exports might be
The current account surplus, which measures trade in
goods, services, tourism and investment, rose to 1.17 trillion yet
($9.9bn; £6.2bn) in November.
It was the second month in a row that the surplus had
Although the figures suggested that Japan's fragile
economic recovery was continuing, the yen's rise against the dollar was
"Exports aren't falling like some people had
worried, a downturn there is not the only concern for the Japanese
economy," said Kazuhiko Ogata, senior economist at HSBC Securities.
"Instability in the banking sector is eroding
domestic demand and there needs to be action on this front while exports
are still holding up," he said.
The government is trying to clean up the banking
systems backlog of bad loans, but this is being seen by some
commentators as a drag on the economy.
At one point the dollar rose close to 119 yen,
prompting talk of intervention last week.
But traders said it was more a result of nervous,
Vice finance minister Zembei Mizoguchi said his
ministry would take appropriate action against if yen remained too
"We are closely monitoring and watching the
market, taking the view that the yen's excessive strength is not good
for the economy."
HAS THE G8 HELPED AFRICA?
Africa is supposed to be a priority for the leading
rich nations. At last year's G8 summit a new Action Plan for Africa was
set out, and Africa's problems have featured in G8 discussions for many
years. But what progress has really been made?
A small group of African leaders made the long
journey to the Canadian Rocky mountains to be present for the birth of
the G8's Africa Action Plan.
They said it was worthwhile, but at the time many
observers thought the G8 plan very short on new specific commitments.
It is a long term vision for a radical transformation
of the continent, covering security, health, education and economic
development, so it is very early to be making judgements about
Even so, there are some areas where development lobby
groups don't hold out much hope.
UNCERTAINTY SAPS UK BUSINESS CONFIDENCE
Optimism among UK firms at both ends of the economic
scale has fallen, according to two surveys.
A recent poll of business leaders by the Institute of
Directors (IoD) said confidence was "well down" despite signs
of higher orders.
Meanwhile a survey of small business owners found
more of them are planning to cut back their operations.
Worries about the strength of corporate Britain have
led some to pressure the Bank of England for more interest rate cuts.
Last week, the Bank left UK rates unchanged at 4% for
the fourteenth month in a row.
ARGENTINA WINS BREATHING SPACE
Argentina has said it will meet a $1bn debt payment
to the IMF, avoiding a potentially damaging default.
The deadline for the payment was Friday.
The move comes as Argentina clinched an aid deal with
the IMF to refinance its short-term debts.
Argentina has battled for a year for the IMF deal to
help end a four-year recession that culminated in the biggest ever
sovereign debt default last year.
Earlier on Thursday, the country provisionally agreed
new terms on its short-term IMF loans.
RUSSIA OFFERS NEW N. KOREAN PLAN
A senior Russian envoy has arrived in Beijing to
discuss North Korea's nuclear programme with the Chinese authorities.
Deputy Foreign Minister Alexander Losyukov is expected to present a plan
to revive the 1994 agreement that froze the programme in return for aid.
Correspondents say that although Russia is one of the
few close allies of the isolated communist state, the visit is unlikely
to lead to an end to the crisis resulting from Pyongyang's withdrawal
from the Nuclear Non-Proliferation Treaty.
SUN LOSSES: While Sun Microsystem
turned in its biggest ever losses - the result of $2bn in one-off
charges due to bad investments. Sun, which makes computers that manage
networks, reported a net loss of $2.28bn, or 72 cents a share.
auction house eBay had a good night, beating expectations for its fourth
quarter, with a surge in profits to $87m, or 28 cents per share,
compared to $25.9m in the same period last year.
MICROSOFT: Microsoft reported a
net profit of $2.55bn, or 47 cents per share, for the three months to
December 31, 2002 up from $2.28bn in the same period last year.
IBM SALES UP:
IBM said its quarterly profit fell for the sixth quarter in a row, but
sales of services and computer hardware rose. The company said profits
from continuing operations were $1.9bn, or $1.11 per share, down from
$2.6bn in the same period last year.
GENERAL MOTORS: The world's largest car
maker, General Motors, has reported a big increase in net profits as its
aggressive discounting policy in its home US market continues to pay
off. Overall, GM fourth quarter net profits, including some one-off
charges, rose to $1.02bn or $1.71 per share, compared with $255m this
time last year.
VENEZUELA HALTS DOLLAR AUCTIONS
Venezuela's Central Bank has suspended its daily
dollar auctions after the bolivar dropped 6%.
The country's oil exports continue to be crippled by
a strike against President Hugo Chavez, now in its seventh week.
The country's Central Bank will still supply dollars
through its trading desk to ensure "normal functioning of the
market," it said on its Website.
BUSH MAKES AFRICA TRADE PLEDGE
President George W Bush has promised to ask the US
Congress to extend the lifetime of legislation granting tariff-free
trade to African countries.
Mr Bush made the promise in a speech, transmitted by
video link, to a forum of 38 African countries meeting in Mauritius.
The US president had originally promised to attend
the conference, but cancelled his trip to Africa during the Christmas
holiday, a decision many commentators have linked to the threat of war
in the Middle East.
The African Growth and Opportunity Act (AGOA), which
gives duty-free trade benefits, is due to expire in 2008.
This has raised concerns that it would not succeed in
promoting long-term investment in Africa as intended.
COLOMBIA SECURES $2BN IMF AID
The International Monetary Fund has approved a $2.1bn
loan for Colombia, opening the door to almost $10bn in aid from other
The loan was secured after Colombia's Congress last
month approved the higher taxes, spending cuts, and restructuring of
pensions and the labour market demanded by the IMF.
The US, the biggest shareholder in the IMF, has spent
more than $2bn in the past three years fighting its "war on
drugs" in Colombia and backed the loan.
SCOTLAND'S FIRST LOW-COST AIRLINE LAUNCHED
An Egyptian entrepreneur who came to the UK 20 years
ago has launched Scotland's first-ever low-cost airline.
The new airline, called Air-Scotland.com, was founded
by Dhia Al-Ani and will fly directly to six Spanish destinations from
Edinburgh and Glasgow with fares starting from as little as £25.
At present, low-cost carriers Easyjet and Ryanair do
not operate direct routes from Scotland to Spain.
SRI LANKAN TOURISM BOOMS UNDER TRUCE
Sri Lanka's tourism industry is booming as the
country's peace process continues.
Government forces and Tamil Tiger separatists signed
a truce in February 2002 and talks between the two sides are continuing
to end a 19-year-long civil war.
As a result the number of tourists visiting the
country in 2002 was up 16.7% compared with 2001, Paddy Withana, chairman
of the Sir Lankan Tourism Board, was quoted by Reuters news agency as
SPECULATORS ATTACK HUNGARY'S CURRENCY
Hungary's central bank has slashed one percentage
point off its key interest rate for the second time in two days to
protect its currency from foreign speculators.
The move by the National Bank of Hungary which cut
rates to 6.5% — is an attempt to devalue the forint as it soars
against the euro.
KENYA'S LEADER HAILS IMF THAW
Kenya could soon be receiving loans from the
International Monetary Fund again after a two-year gap, according to the
country's newly-elected president.
President Mwai Kibaki said talks with a top-level IMF
delegation that included its Director for Africa, Abdoulaye Bio-Tchane,
had gone well.
BIG RISE IN WORKING FOR THE STATE
Almost one in four people employed in the UK now
works for the state, according to figures from the Office of National
The number of public sector jobs has risen to more
than seven million in the past year after the government hired an extra
ECONOMISTS TACKLE US OBESITY
Why Americans just keep on getting fatter is a
question that has obsessed health professionals, sociologists and
politicians for decades.
Now, it seems, economists may have the answer.
David Cutler, Edward Glaeser and Jesse Shapiro, from
the Institute of Economic Research at Harvard University, have mined
almost a century's-worth of nutritional data in a hunt for concrete
According to their survey, the real culprit is not
sluggish lifestyles or even fatty food, but technology.
As technological advances have made food ever more
varied and convenient, the authors argue, the feeble will-power of the
American public has been unable to compete.
'FLAT' HOLIDAY PERIOD FOR US ECONOMY
US consumers kept a tight grip on their wallets over
the holiday season, according to the country's central bank.
The Federal Reserve's so-called "Beige
Book" an anecdotal survey of economic conditions across the US said
activity in most parts of the country continued to be
"sluggish" or "subdued".
The closely-watched report contains few signs that
the US economy is starting to pick up pace.
In fact, it said, there was little change from the
previous survey, which covered the period from late October.
UK UNEMPLOYMENT EDGES LOWER
The latest UK unemployment figures have shown a small
fall in the number of jobless.
On the measure of unemployment to which the
government now gives most prominence, the number out of work fell by
5,000 to 1,515,000 in the three months ending in November last year. The
jobless rate remained unchanged at 5.2%.
US LEADERS 'AMONG WORLD'S LEAST TRUSTED'
US leaders are among the least trusted in the world,
a survey identifying growing disquiet in global affairs has revealed.
Only a quarter of 15,000 citizens polled place faith
in US chiefs, compared with 42% who trusted UN leaders.
Heads of charities and other non-governmental
organisations (NGOs) were the most trusted.
And just one-in-five Argentines, and one-in-seven
Germans and Italians, believes the world is becoming a better place.
VIETNAM SEES CAR SALES SOAR
As Vietnam battles to control the mayhem caused by 10
million motorbikes on the country's roads, new figures show that more
people are shifting to cars as their preferred transport.
Despite the fact that the vast majority of Vietnam's
80 million people work on small farms, there has been a huge growth in
the number of luxury cars sold.