June 09 - 15 , 2003 










Investment into Europe may be slowing, but companies are becoming more adventurous, according to a report from Ernst & Young.
The accountants' ranking of the most popular foreign investment destinations places exotic targets such as Moscow, Budapest and Istanbul close to the top, ousting some established West European regions.




Overall, the number of investment projects into non-EU Europe grew by 21%, while deals into the EU shrank by 11%.

Europe as a whole garnered 1,895 new foreign investment projects last year, down 4% year on year.

But the number of jobs involved 242,000 was down by one-third on 2001, indicating that the average project size is shrinking.

The balance between east and west has not shifted completely.

The 10 mainly East European countries waiting for admission into the EU account for just 15% of the continent's total foreign investment, less than the UK on its own.

But the only West European country where investment activity is growing is tiny Portugal, Ernst & Young calculated.

It seems likely that the 2002 trend will continue, especially as impending EU accession makes investment in countries such as Poland ever easier.

And half of the top 20 investors were car or car components firms, which have been among the quickest to realise Eastern Europe's potential for low-cost manufacturing.

According to Ernst & Young, the figures also reveal a lukewarm corporate attitude to the euro.

In 2000, the eurozone accounted for 51% of total investment into Europe; last year, that figure was just 44%.


Africa should experience modest economic growth in 2003 but only if the developed countries can get their act together and the droughts ravaging southern Africa ease, the African Development Bank believes.

In its annual African Development Report, released during its annual conference in Addis Ababa in Ethiopia, the Bank said that the economies of African nations should expand about 3.6% on average this year.

The predicted performance would comfortably outstrip last year's 2.8% growth, and benefits from the relatively quick end to the US-led war on Iraq.

But it remains way below the 7% generally accepted as necessary to make a serious dent in the poverty endured by most of the continent's citizens, and meet the United Nations' goal of halving the number of people living in poverty by the year 2015.

Even 3.6% growth is contingent on an improved showing by developed nations, particularly the 30 members of the Organisation for Economic Co-operation and Development (OECD), the Bank said.

A fall in oil prices from the near $30 a barrel at which they currently hover is also needed, as is an easing of the hot, dry weather which has catalysed near-famine across much of southern Africa.

"Growth in the world economy is expected to be moderate," the Bank wrote.

"This increased aggregate demand will significantly increase Africa's external impetus for growth by impacting on both the volume and prices of major exports, as well as continuing to affect capital flows."


Australia's economy remains on target to grow 3% this year but faces a tough challenge from the country's severe drought and the effects of Sars, Finance Minister Peter Costello has warned.

Mr Costello warned there could be further pressures to come as the effects of the country's worst drought in more than 100 years are compounded by the fall in visitors because of the Sars outbreak.

"The remaining impact of drought, the largest impact in relation to Sars, will take place in the June quarter," said Mr Costello.

But he insisted the economy would meet the government's 3% growth target for the year to June 2003.

Gross domestic product (GDP) rose a weaker-than-expected 0.7% in the three months to March, leaving annual growth at 2.9%, official figures released showed.

Revisions released also cut growth figures for the previous quarter, from October to December, from 3% to 2.7%.




A group of African leaders who were guests at the summit of the G8 major powers have criticised their hosts' performance on debt relief for poor countries, most of them in Africa.

After a working dinner in the French alpine resort of Evian, one African leader said the debt relief initiative run by the International Monetary Fund (IMF) and the World Bank had delivered too little too late and had little impact.

The debt relief scheme for the poorest countries has been running for more than six years.

It is often criticised for delivering insufficient debt relief too slowly to too few countries.

After a discussion with the G8 leaders of their plans to help Africa, one of the continent's leaders the Nigerian President, Olusegun Obasanjo spelled out his criticism of what is called the Highly Indebted Poor Countries' Initiative or HIPIC.


The conditions are right for a resumption of faster global economic growth. That is what the French President Jacques Chirac told us at the G8 summit he has been hosting here at Evian.

There has indeed been a wide ranging debate about what is needed to revive the flagging G8 economies.

But, just as in the diplomatic talks, there was a flavour of 'don't mention the war', with leaders disinclined to dwell on two major economic wars deflation and the weak dollar.

Deflation, or sustained falling prices, has been a painful fact of economic life in Japan, the second largest G8 economy, since the mid 1990s.

It has made consumers delay big purchases and aggravated business debt problems.


EU member states have pressed France to get its finances back in order by October, after Paris breached Brussels rules on budget deficits.

European finance ministers, meeting this week in Luxembourg, are concerned that the French Government will be reluctant to cut spending at a time of slow growth and labour unrest.

France's state budget deficit reached 3.1% last year, just above the 3% EU ceiling, and is predicted to hit 3.7% in 2003 unless action is taken.

Such lapses are of concern to Brussels, because they could undermine financial markets' faith in the stability of the euro.


The Russian government approved a draft 2004 budget last week based on a predicted surplus of 0.6pc of gross domestic product and higher than expected growth in GDP this year, Finance Minister Alexei Kudrin said.

Growth for 2003 "is heading for five, even 5.5pc, as against the 4.6pc we originally expected," Kudrin told reporters, as quoted by the ITAR-TASS, adding that he believed a doubling of GDP by the end of the decade was an "achievable" objective.


The European Central Bank has slashed interest rates in the 12-nation eurozone by half a percentage point to 2%, in the face of fears of deflation and renewed recession.

The decision marks a radical departure from the ECB's usually cautious stance, but was widely predicted in Europe and elsewhere after the eurozone failed to grow at all during the first three months of the year.

The euro rose 2% against the dollar following the decision, reaching $1.1888 in New York trade, before falling back to $1.1839.

European stock markets initially responded with vigour to the decision, with both France's Cac 40 index and Germany's Dax coming off earlier falls and heading towards positive territory.


The New York Stock Exchange (NYSE) has announced a series of changes aimed at improving its corporate governance standards.

The Exchange has said it will disclose how much it pays top executives and will also block executives from serving on the boards of other listed companies.




Intel, the world's largest maker of microprocessors, has narrowed its revenue outlook and said demand for communication products remains "soft".

The firm said it expected its revenues for the April to June period to be in the range $6.6bn to $6.8bn.

That compares with its previous forecast of between $6.4bn and $7bn for the quarter.


AOL Time Warner, eager to raise money by spinning off non-core subsidiaries, has had to abandon the sale of its books division owing to lack of interest.

After months of seeking a buyer, AOL had attracted just one bid for its publishing unit, which includes Warner Books and Little, Brown.

That bid, from publishing firm Perseus, was reportedly for $300m, below AOL's target price of $400m

A sale is a crucial part of the company's efforts to cut net debt from $26bn (15.7bn) last quarter to $20bn by the end of 2004.


The cost of borrowing remains unchanged at 3.75% following the last Bank of England interest rate meeting to be chaired by Sir Edward George.

Despite pressure from some industry leaders, and worries over the continuing slump in UK manufacturing, the Bank's Monetary Policy Committee (MPC) voted not to reduce rates from their lowest level since 1955.


Palm has announced plans to buy its closest rival Handspring, in an acquisition which will unite two leading forces in the handheld computer market.

Palm said it had agreed to buy Handspring in an all-shares deal worth about $168.9m (101m ; 135m euros).


Economists from the International Monetary Fund (IMF) have ended their latest visit to Uruguay on a high note, government officials said.

The government in Montevideo said the IMF believed things were on the mend, after a rough year of recession and struggles with public debt, following neighbouring Argentina's economic implosion.

After the visit the third to review a $3bn (1.8bn) loan agreement the IMF mission dropped its forecasts for inflation to 19% from 27% and said the economy will only contract by 1% rather than 2%.


US billionaire Haim Saban's attempt to buy the main assets of insolvent German broadcaster KirchMedia has fallen through.

The collapse of the deal is a blow to KirchMedia, which has been trying to sell its ProSiebenSat.1 commercial television channel and its vast film library in order to pay off its debts.




Sri Lanka's record-breaking rice crop for 2002-3 is the result of the peace process, said the Agriculture Ministry.

In an interview with the state paper, the Daily News, Ministry Secretary Dhanesena Hettiarachchi said the harvest for the Maha season the main growing season in Sri Lanka was 1.93 million metric tonnes, a 15% increase on the year before.


Foreign shipping companies have resumed operations from the Bangladeshi port of Chittagong, after a four-day boycott forced the government to change a controversial law favouring local vessels.

Shipping Minister Akbar Hossain told reporters that the cabinet agreed to drop a provision in the Bangladesh Flag Protection Ordinance that protected local shipping companies from open competition.


The UK's manufacturing sector has seen a sixth consecutive month of decline, according to a key survey of business conditions.

The Chartered Institute of Purchasing and Supply's (Cips) monthly purchasing managers' index fell to 48.1 in May, from 48.6 in April.

The index, which measures demand for manufactured goods, is a seasonally adjusted figure where anything below 50 indicates contraction, and anything above shows expansion.

The level of decline is, however, less than the 15-month low of 46.3 in March, triggered largely by the Iraq war.

May's decline reflected a similar fall in both output and new orders during the month.


Hong Kong's people can breathe more freely now that global health officials have declared the city is no longer unsafe from the lethal Sars flu virus.

But restoring the health of its economy wheezy enough before Sars remains an uphill job.

To that end, the Hong Kong government is to spend roughly 80m ($131m) to restore the city's image and lure back business travellers and tourists, according to Andrew Leung, Hong Kong's official spokesman in Britain.