INTERNATIONAL

 

Jan 20 - 26 , 2003

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF

 

GERMAN GROWTH AT NINE-YEAR LOW

Germany's economic growth slowed to 0.2% last year, its lowest annual rate since the recession in 1993.
Growth slowed from 0.6% in 2001 and was well below the government's forecast of 0.5%.
In 1993, the economy shrank by 1.1%. The figures also revealed the state of Germany's controversial budget deficit.

 

 

 

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 Schroeder.

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 stagnant.

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 slowing.

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 risen.

Although the figures suggested that Japan's fragile economic recovery was continuing, the yen's rise against the dollar was causing concern.

"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, thin trade.

Vice finance minister Zembei Mizoguchi said his ministry would take appropriate action against if yen remained too strong.

"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 achievements.

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.

RESULTS

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.

EBAY: Internet 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 lenders.

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 saying.

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 Statistics.

The number of public sector jobs has risen to more than seven million in the past year after the government hired an extra 142,000 people.

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 lessons.

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.