There was some positive news — industrial
production rose by 1.5% over the month but that was after four months of
"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
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
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
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
Confidence fell by an unexpectedly-steep 15 points in
February, figures from private business group the Conference Board
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
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
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
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
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
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
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
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
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
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
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
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%.