INTERNATIONAL

 

Mar 03 -09, 2003 

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF

 

JAPAN STRUGGLES FOR REVIVAL

Unemployment in Japan has climbed back to a record high and the country's economy is showing little sign of growth.The figures underlined the task facing the country's new central bank governor.The jobless rate reached 5.5% in January compared with a revised 5.3% in December.

 

 

 

There was some positive news industrial production rose by 1.5% over the month but that was after four months of decline.

"Job conditions continue to be severe," said Economics Minister Heizo Takenaka.

"Personal consumption is weak but industrial production came in positive. The economy remains on a plateau."

Companies have been cutting costs and jobs in response to stagnant demand at home.

The country has been looking to exports to lead the recovery.

But Japan's biggest market, the United States, has suffered its own economic slowdown and is now affected by concerns about war with Iraq.

The rise in output was led by electric machinery, personal computers, liquid crystal displays and mobile phones.

But economists said that despite the growth in production any recovery was still weak.

"I would suspect the rise in January was a kind of bounce after four straight months of decline," said Peter Morgan, senior economist at HSBC Securities Japan. "I wouldn't say that this is a turnaround yet."

GERMAN ECONOMY AT A STANDSTILL

Germany's economy stopped growing at the end of 2002, after showing only minimal expansion during the rest of the year.

The Federal Statistics Office said there was zero growth in the October to December period, and confirmed that for the whole year gross growth in economic output or GDP was just 0.2%.

"This was a 'red zero'," said Lothar Hessler of HSBC Trinkaus & Burkhardt.

"We still expect Germany to fall into a slight recession in the first quarter [of 2003]."

But the October to December data, which showed the economy had expanded by 0.5% from the same period in 2002, was better than some analysts had predicted.

Many observers had forecast that the economy would have contracted by 0.1% over the year.

The statistics office also revised down Germany's public deficit for 2002, but it was still higher than the EU limit laid down in the Stability and Growth Pact, which underpins the euro.

 

 

The deficit was revised to 3.6% from an earlier estimate of 3.7%.

Eurozone countries are not allowed to run up deficits in excess of 3% of gross domestic product.

Germany and France have proposed loosening the stability pact rules if the UN Security Council authorises military action against Iraq.

German capital investment in the fourth quarter was up 1.4% compared with the third quarter, and private consumption rose 0.1%, the statistics office said.

Germany's influential Ifo business confidence index rose for the second month in a row in February to its highest level in seven months.

Nonetheless, the European Central Bank is expected by many analysts to cut interest rates when it meets on March 6.

Exports were up 0.3% on the quarter while imports rose by 1.9% in the quarter as the euro hit near four-year highs against the dollar.

US READY TO RELEASE OIL RESERVES

US Energy Secretary Spencer Abraham said last week the United States was ready to act quickly to release emergency oil reserves if necessary to offset any disruption to Middle East supplies in the event of war with Iraq.

"We will and can act quickly to use the Strategic Petroleum Reserve to fortify efforts by producers to offset any severe disruption if it is needed," Abraham told lawmakers at an Senate Energy Committee hearing.

The US emergency oil stockpile was created in 1975 and currently has about 600 million barrels of crude oil stored in deep underground salt caverns in Texas and Louisiana.

It can be drawn at a rate of 4.3 million barrels a day for 90 days, before the rate drops as storage caverns are emptied.

SOUTH AFRICA UPS SPENDING IN BUDGET

South Africa has cut its growth forecast because of the threat of war on Iraq, but is still offering tax cuts and higher spending on health and crime-fighting in the budget for the coming year.

Finance Minister Trevor Manuel unveiled the 334bn rand (26.2bn; $41.3bn) budget in Cape Town last week.

He revised growth forecasts for 2003 to 3.3% from the 3.5% set in October, after the economy grew by a robust 3% in 2002.

 

 

US CONFIDENCE HITS 10-YEAR LOW

US consumer confidence has dropped to its lowest level since October 1993, prompting fears about the prospects for economic recovery.

Confidence fell by an unexpectedly-steep 15 points in February, figures from private business group the Conference Board showed.

Rising oil prices and the threat of a war with Iraq have been blamed for the gloomy mood.

The monthly survey is seen as a barometer of future consumer spending, which makes up about two thirds of the US economy.

UK INVESTMENT HITS FIVE YEAR LOW

UK business investment has dropped to its lowest level for five years, official statistics have revealed.

Manufacturing was the worst hit, with spending on new plant and equipment dropping to levels not seen since the mid 1980s.

Non-manufacturing investment was flat but there were few signs that hard-pressed businesses were about to embark on a spending spree.

The gloomy figures will fuel speculation about a further cut in interest rates, after the Bank of England's decision to slash rates to a 48-year low of 3.75% earlier this month.

MICROSOFT WEAVES WEALTH MAGIC

Bill Gates has, once more, been named by Forbes Global magazine as the richest man in the world, as Microsoft continued to weave its spell of riches.

The Microsoft chairman is worth $40.7bn, $10bn more than investment legend Warren Buffet, ranked second in Forbes' annual billionaires league.

Microsoft co-founder Paul Allen earned fourth place with a 20.1bn fortune, with chief executive Steve Ballmer's $11.1bn winning him 16th position.

CHINESE FRIDGE MAKER SEEKS FUNDS

Chinese fridge and washing machine maker Haier Group sent its shares into a spin last week by announcing it plans to increase its holding in a Hong Kong subsidiary.

The move amounts to a backdoor listing on the Hong Kong stock market for Haier Group, which is bidding to become a global brand.

Haier-CCT closed 40% higher in Hong Kong, having shot up 63% at one point.

NEW FACES AT BANK OF ENGLAND

A journalist and a career civil servant have become the latest members of the Bank of England's interest rate-setting committee.

Rachel Lomax currently permanent secretary at the Department of Transport will be appointed deputy governor of the Bank of England when Mervyn King is promoted to governor on July 1.

ZURICH MAKES $3.4BN LOSS

The insurer Zurich Financial made a $3.4bn (2.1bn) loss last year. And the company said it was cutting its dividend to 1 Swiss franc from 8 Swiss francs a year ago.

INDONESIA IN FOREIGN INVESTMENT DRIVE

Indonesia's President Megawati Sukarnoputri has urged foreign investors to return to the country.

President Megawati accepted that many foreign businesses did not feel safe in Indonesia and felt unprotected by the legal system, but pledged government action in these areas.

In the first nine months of 2002 promised foreign investment fell 39% to $3.5bn.

UK GROWTH ESTIMATE LOWERED

The official estimate for the UK economy's growth rate last year has been revised downwards from 1.7% to 1.6%, the lowest figure since 1992.

New figures from Office for National Statistics (ONS) cut the original estimate following slightly slower growth of government spending than originally thought.

The ONS said the economy grew by an unrevised 0.4% in the October to December period last year, compared with the quarter before.

 

 

GERMAN DESIGN 'CHOSEN FOR WTC'

A complex of angular towers and a spire that would be among the world's tallest structures has been chosen for the World Trade Center site in New York, several sources have said.

Berlin-based architect Daniel Libeskind's design is centred around the excavated pit of the former World Trade Center.

The plan features a 541-metre (1,776-foot) spire, topped with gardens.

BUSH ECONOMIC AIDE QUITS

President Bush's senior economic adviser has resigned. The departure of Glenn Hubbard, who was chairman of the White House Council of Economic Advisers, completes a shake-up of the president's economic team.

The White House quickly nominated Harvard University's Gregory Mankiw, a veteran of the Reagan administration, as the replacement.

WALL STREET EYES NEW TREASURY CHIEF

In nominating John Snow as his new treasury secretary, President George W Bush has once again turned to a captain of industry this time with the hope of soothing rattled nerves on Wall Street.

But if the share tumble witnessed last week is any indication of investor confidence in the US economy, it will take more than a cabinet reshuffling to get Wall Street back in gear.

EX-KMART MEN ON $42M FRAUD CHARGE

Two former executives at bankrupt US retailer Kmart have been charged with a $42m (26.5m) accountancy fraud.

Enio Montini and Joseph Hofmeister are accused of manipulating the stricken company's financial statements and lying to its accountants.

The pair's actions led Kmart to overstate its 2001 second-quarter results by $42.3m, according to US financial watchdog the Securities and Exchange Commission (SEC).

FUEL-STARVED ZIMBABWE HIKES PRICES

The Zimbabwean government has raised the price of fuel by 95%, in an attempt to curb shortages.

Although seemingly drastic, the rise was moderated by concerns over inflation, currently running at more than 200%.

With Zimbabwean fuel prices among the cheapest in Africa, the oil industry had been demanding a near-tenfold rise in prices to cover import costs.

The price of petrol has risen from 74 to 145 Zimbabwe dollars a litre. At official exchange rates, 74 Zimbabwe dollars is just over US$1.50 a high price for a litre of fuel by any standards.

AUSSIE DOLLAR KEEPS ON BOOMING

The resurgent Australian dollar has breached the 60 US-cent ceiling for the first time since 2000, buoyed by high interest rates and a soaring local economy.

The Aussie as foreign exchange traders call the dollar has risen by 8% against the US currency this year, mainly because Australian interest rates are 3.5 percentage points higher than what can be earned in the US.

JAPANESE RETAIL SALES FALL

Bad weather has buffeted Japanese retailers, who have reported sales down 2.2% in January, compared with a year before.

It is the 22nd consecutive monthly decline and comes amid rising unemployment and falling incomes, as the economy continues to stagger.

Sales at large Japanese retail stores in January fell 1.9% from a year earlier after dropping 4.2% in December.

Domestic consumption accounts for about 55% of the Japanese economy.

UK SHARES DROP 2%

The FTSE 100 index of leading UK shares has dropped more than 2% last week, with insurance companies among the biggest fallers.

Dealers said investors were reacting to a statement from Prudential which scrapped its current dividend policy, raising fears that dividend cuts could follow.

Shares in Prudential dropped nearly 18% while stock in rivals Friends Provident, Royal & Sun Alliance and Legal & General all closed 9-11% lower as investors calculated those companies might take similar action.

SLOWDOWN PROMPTED UK RATE CUT

Worries over weaknesses in the global economy were behind this month's rate cut, the Bank of England governor Sir Edward George has said.

Speaking before the Treasury Select Committee, Sir Edward said weakness in the eurozone and worries over a potential war with Iraq were the main reasons why the Bank trimmed rates by a quarter-point to 3.75%.