April 14 -20, 2003 










Asian economies are on course for rapid growth this year but they face multiple threats even besides the Iraq war, the International Monetary Fund said last week.China, the increasingly powerful engine for Asian growth, is heavily dependent on the swings of the world economy and is unlikely to provide much of a cushion from outside shocks, the IMF said.




















"Emerging Asia is in fact the strongest growing region of the world at 6.0 per cent for 2003 and 6.3 per cent for 2004, although we do not view this recovery as self-sustaining if the rest of the world slumps," IMF chief economist Kenneth Rogoff told a news conference.

Chinese gross domestic product growth would ease from 8.0 per cent last year to 7.5 per cent both this year and next.

Growth in newly-industrialized economies Hong Kong, South Korea, Singapore and Taiwan would dip from 4.6 per cent last year to 4.1 per cent in 2003 and rise to 4.5 per cent in 2004.

Growth in Southeast Asian nations Indonesia, Malaysia, the Philippines, and Thailand would ease from 4.3 per cent last year to 3.9 per cent this year before recovering to 4.3 per cent next year.

In South Asia Bangladesh, India and Pakistan growth would rise from 4.7 per cent last year to 5.1 per cent in 2003 and 5.8 per cent next year.

In Vietnam, growth would climb from 5.8 per cent last year to 6.2 per cent this year and 7.0 per cent in 2004.

The Middle East economies, which includes the Gulf oil states as well as the poorer Mashreq area, saw growth slip to 3.9 per cent last year, but should see an improvement to 5.1 per cent this year and 4.8 per cent expansion in 2004, the IMF said in its World Economic Outlook.

The IMF predicted 5.8 per cent growth this year for the oil exporting countries in the region, including Saudi Arabia, Kuwait and Iran, while the Mashreq countries of Egypt, Jordan, Lebanon and Syria would see average growth of just 3.1 per cent.


The IMF's semi-annual world economic forecast says the world faces another year of sub-normal growth.

The International Monetary Fund (IMF) has sharply revised downwards its forecast for economic growth for 2003, and says that it is unlikely that the "sputtering global growth will suddenly lunge ahead into an immediate strong recovery."

It is forecasting world growth of 3.2% this year, and 4.1% next year, down 0.5% in 2003 from previous forecasts.

Kenneth Rogoff, the IMF's chief economist, told the BBC that there had been some "collateral damage" from the war, which damaged consumer and business confidence, and that the fall-out from the collapse of stock prices was still affecting the world economy.

Mr Rogoff also warned that there were some longer-term risks to the world economy from the more uncertain world security situation.

He said that average world growth could be reduced by around 0.25% because of the greater insurance costs and the reduction in global trade, which was putting "sand in the wheels of globalisation."

The worries about world security since September 11 could also affect business investment and reduce migration, he argued.

And the greater military spending could have reduced the "peace dividend" that allowed countries to reduce their budget deficits and spend more on social programmes.



Mr Rogoff also expressed worries about the US budget deficit which was "unsustainable" in the medium term.

He said that, although he was "sympathetic" to the idea of eliminating the double taxation of dividends, the Bush administration plan for a $726bn tax cut was "awkwardly timed", given the "open-ended commitment" to spending on security and reconstruction in Iraq and possibly elsewhere.


The UK's trade deficit with the rest of the world has widened more than expected as exports to the United States and Saudi Arabia fell sharply in February.

Figures from the Office For National Statistics (ONS) said the UK goods trade deficit reached 3.7bn in February, compared with 3.2bn in January.

Analysts had predicted a deficit of about 3.3bn.

ONS blamed the gap on trade with countries outside the European Union and economists warned that the situation was likely to get worse before it gets better.

Overall exports were down almost 5% in February but imports also fell by 1.5%.

The result was a trade gap of 2.4bn with countries outside the EU, up from 2bn in January.

Within Europe, the trade gap fell only slightly from 1.2bn to 1.25bn.


German Chancellor Gerhard Schroeder has blamed the Iraq war for crushing global economic growth, as the European Commission prepares to cut its growth forecasts.

"It can already be seen that the war in Iraq has increased the economic uncertainties worldwide, and some of the hopes for economic growth have been impaired, if not entirely destroyed," Mr Schroeder said in a speech last week.

The Commission is expected to cut euro zone growth to 1% from the previous 1.8%, blaming the war on Iraq.

The target for Germany, the largest economy in the euro zone, is expected to slashed 0.4% from 1.4% for 2003 and to 2% from 2.3% for 2004.


UK manufacturing has staged an unexpected upturn for the second month in a row, prompting suggestions that the sector may be in better shape than feared.

Figures from the Office for National Statistics (ONS) suggested manufacturing output rose by 0.3% in February from January.

The figures were a welcome surprise from predictions of a 0.3% slide.

Economists said the figures spelt good news for the UK economy.

"It will help the chancellor give a less downbeat assessment of the UK economy," said Philip Shaw, chief economist at Investec bank in London.


Chancellor Gordon Brown has cut his predictions for UK economic growth and announced an increase in government borrowing.

Unveiling his seventh budget, the chancellor also outlined measures that see greater taxes for smokers and drinkers, a new "baby bond" and benefits for pensioners.

Despite cutting his growth forecast, Mr Brown remained bullish over prospects for the UK economy. He said Britain was in a much stronger position than other countries amid the global slowdown.

Treasury officials said the overall economic impact of the Budget was neutral and, as most economists expected, there were no major tax rises or giveaways announced.

The chancellor said economic growth this year would be between 2% and 2.5% compared with his prediction in November for 2.5-to-3% growth.

He said government borrowing this year would be 27bn up 3bn on his earlier prediction.


With Iraq now firmly on the back-burner as an incentive to trade, markets in Asia have slid for the second day as pre-war worries about the global slowdown returned.

The damage wrought by the Sars respiratory virus continued to take its toll as well, as a diplomatic row brewed between Malaysia and Hong Kong over cancelled flights.

Last week, the Tokyo Nikkei 225 had slumped to fresh 20-year lows with a fall of more than 2% to 7,816 as big corporate pension funds sold shares, with Hong Kong's Hang Seng down 0.5%.




The Bank of England has left interest rates on hold at 3.75%. The Bank's Monetary Policy Committee resisted pressure from industry for a further rate cut to kick-start sluggish economic growth.

The decision comes despite evidence of flagging consumer confidence and a recent flood of gloomy economic data.

Chancellor Gordon Brown was forced to cut his growth predictions and increase government borrowing.


A new survey has shown signs of a further slowdown in house prices in London, while properties grew strongly in the North of the country.

According to the UK's biggest mortgage lender Halifax, Londoners saw the price of their properties increase by just 2.7% to 220,525, while in the South East they were up 3.3% to 195,700.

But house prices in the North jumped more than 8% during the first three months of the year, while they dropped 5.4% in Northern Ireland.

The North enjoyed the strongest growth of all regions in the first quarter, with prices increasing to an average 83,833, with houses in Northern Ireland falling to 77,250.


The mayor of New York City, Michael Bloomberg, has launched a $100m (64m) lawsuit in a row over taxes on buildings used by overseas governments.

The city is chasing Turkey, the Philippines, India and Mongolia for what it says are unpaid property taxes stretching back three decades.


Liberia's government has denied claims that it has salted away $3.8bn in Swiss Bank accounts.

President Charles Taylor called on opposition parties and the international groups to investigate the claims and said he would resign if they were proved to be true.


With shops closed, airlines slashing flights, hotels and restaurants emptied, Hong Kong's targets for economic growth will have to be scrapped.

The government's acknowledgement of just how bad the SARS virus is for economic as well as physical health came as legislators passed a budget packed with tax rises and cost cuts to trim a HK$70bn (5.7bn; $9bn) budget deficit.


Fast food giant McDonald's says it is changing direction, after suffering the first loss in its 55-year history.

The firm's executives have conceded that its approach is out of date and would now change to give more healthy food and higher quality burgers.

The world's largest restaurant chain is also planning to open fewer restaurants expanding by only 360 outlets this year, compared to more than 1,000 in 2002.




China's biggest maker of colour televisions is to slash the price of its top-end products by at least 25%, to bolster profits by stepping up sales at the luxury end of the market.

Sichuan Changhong sells roughly one fifth of all televisions sets bought in China but must grapple with an increasingly saturated market.

Prices on some products would be cut by as much as 40%, the firm said in a statement published in the official stock market journal, Shanghai Securities News.

The price cuts will centre on upmarket rear-projection TVs in the hope of boosting demand among middle income households, most of whom already own a television.


The United Nations has said hundreds of millions of dollars have been paid out to victims of the 1990 Iraqi invasion of Kuwait.

The UN said $863.7m (556m) was paid to the victims, with $738m going to Kuwait's wealthy elite, companies and the state.

The UK was the second largest payment of $23m followed by Israel with $20m.

The UN Compensation Commission (UNCC), which is dealing with almost $350bn in claims against Iraq, said a total sum of $17.5bn has been paid out to date.


A decision on the UK and the euro will be announced in the first week of June, Chancellor Gordon Brown has confirmed in his Budget statement.

The chancellor said his assessment of the five tests on joining the currency would be published at that time alongside 18 supporting studies.

The government had vowed to rule on the euro within two years of the last election a deadline which runs out in June.

A positive verdict would spark a referendum on whether the UK should join the euro.


People investing their money in Sub-Saharan Africa last year have probably not regretted it.

According to a report by the World Bank, foreign direct investment (FDI) in Sub-Saharan Africa yielded the highest returns in the world in 2002.