INTERNATIONAL

 

July 14 - 20 , 2003 

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF

 

ASIA SHRUGS OFF SARS' ECONOMIC IMPACT

After months of gloomy predictions, some of Asia's biggest economies are emerging from the outbreak of the deadly Sars virus more or less unscathed.
China and Japan have unveiled statistics showing that economic recovery from the epidemic has been rapid, and that some sectors have in fact benefited.
The news is in sharp contrast to pundits' pessimism during the outbreak, which centred around the damage done to Asia's services industries, especially tourism.

 

 

 

By making human contact less attractive, many argued, Sars cut down on commercial interaction and persuaded potential visitors to shun the region.

China, which suffered most casualties from the outbreak, has been economically least affected.

Its economy has been growing extremely rapidly for years, and showed no signs of slowing.

During the first half of this year, Chinese exports jumped by one-third year on year, and imports leapt by 45%.

This surge in trade helped fuel continuing gains in industrial production, which was up 16% during the same period.

Some sectors outperformed expectations, notably cars, which Chinese consumers bought in unexpectedly high numbers in order to avoid public transport.

The buoyancy comes despite the fact that China's main industrial region, the coastal southwest, was at the heart of the Sars outbreak.

Japan was barely touched by the epidemic, but its economy was tipped to suffer along with the rest of Asia.

But new figures show that it has benefited from the decision of many Japanese tourists and shoppers to stay at home.

The number of Japanese travelling abroad in May fell to 575,000 from the previous month's 1,279,000, the trade ministry said.

INVESTMENT IN UK 'HOLDING UP'

The UK is continuing to "punch above its weight" in attracting new overseas investment, according to official figures.

Data from Invest UK, the government body that promotes inward investment, showed that the number of overseas investment projects in the UK slid 7% to 709 during 2002/03.

Invest UK said the performance was a good result in what it described as "a difficult year for the global economy".

But while the UK still led the rest of Europe in attracting investment, Invest UK noted that some Eastern European countries are starting to attract funds at an increasing rate.

The 709 investments listed consist of new projects, expansions and acquisitions.

Invest UK said the projects brought 34,396 new jobs into the country a slight rise on the previous year despite there being fewer projects.

"This has been a challenging year for inward investment," said Invest UK's chief executive William Pedder.

"The combination of a sluggish and introverted world economy, with uncertainties over Iraq, meant many businesses deferred or even cancelled decisions."

Low barriers to entry, a flexible workforce and leading universities were all cited as reasons why firms were choosing the UK.

"The UK continues to punch well above its weight in attracting new investment into Europe," Mr Pedder said.

"With a market share (excluding mergers and acquisitions) of 19.5%, we remain well ahead of France with 13.5% and Germany with 8.0%.

"However, some EU Accession States, after two generations of under-investment, are attracting investment at an increasing rate."

EU EYES FREE TRADE ACCORD WITH ASEAN

The European Union is ready to negotiate a free trade agreement with the Association of Southeast Asian Nations (ASEAN) after the current round of WTO-led talks, the European Commission said last week.

The EU's executive arm will this week formally agree a document setting out a strategy for relations between the EU currently 15 members, expanding to 25 next year and the 10-member ASEAN.

The Commission is notably proposing a regional trade action plan, called the trans-regional EU-ASEAN trade initiative, said spokesman Reijo Kempinnen ahead of the weekly commission meeting.

The Doha development agenda, launched with great fanfare in the Qatari capital Doha in November 2001, aims to establish a more equitable approach to international trade for developing countries.

US SHARES TUMBLE ON JOB FIGURES

 

 

The number of people out of work in the US has hit a 20 year high.

The queue of people making unemployment benefit claims for two weeks or more leapt 87,000 to 3.82 million in the week to 28 June.

This is the highest figure since February 1983, seasonally adjusted Labor Department figures showed.

The figures combined with weaker-than-expected results from Internet giant Yahoo and retailer Wal-Mart to spark a sell-off on Wall Street.

The Dow Jones Industrial Average closed down 120.17 points, or 1.3%, to 9,036. The broader Standard & Poor's 500 Index slumped 1.4% to 988.67.

AFRICA PRESSURES BUSH ON TRADE

Trade is an important theme in President George W. Bush's visit to Africa. Many countries have special access to the US market for many of their goods.

But they also want global talks underway in the World Trade Organisation (WTO) to make further reductions in the trade barriers they face.

Many African goods sold to the US face no tariffs taxes which are applied only to imports.

An American law, called the Africa Growth and Opportunity Act, established this arrangement in 2000.

It is, for many African countries, a welcome improvement in their access to the world's largest economy.

But some of their most important products in agriculture still have to compete with subsidised American farmers.

CONGRESS SET TO SLASH AFRICA AID

As US President George W. Bush proclaims his commitment to Africa during this week's five-day trip, his Republicans in Congress are planning on cutting back the money allocated to his much-vaunted plans to tackle HIV/Aids and encourage development.

At the heart of the president's new focus on Africa are two initiatives for which the administration has promised a significant increase in funding.

Mr Bush has pledged $15bn to fight HIV/Aids, primarily in Africa, over the next five years, and an additional $10bn in additional foreign aid over the next three years in a new Millennium Challenge Account.

GOLD

After edging up in Asian trade to over $351 an ounce, spot gold gave in to the weaker single currency, which dulls the dollar-denominated metal's attraction as an alternative investment for European investors.

Bullion slipped below support at $350.00 early in European activity, before going on to score a low at $347.65 when limited selling from funds kicked in.

 

 

EURO LOWER AGAINST GREENBACK

The euro recoiled against the dollar to the lowest level for almost two months as dealers marked down the single currency over bleak euro-zone growth prospects, analysts said.

The single European currency fell to $1.1376 from $1.1498 in late European trading last week.

The dollar stood at 118.13 yen from 118.09. Given that the market is currently taking the view that economic growth rather than interest rate differentials are becoming once again more attractive, it's not too surprising therefore to see the dollar moving higher versus the euro, said Michael Klawitter, economist at German bank WestLB.

$250,100 FOR A BUFFETT LUNCH

A lunch date with Warren Buffett, the world's second richest man, has been sold for more than a quarter of a million dollars in an eBay charity auction.

The winner, who goes by the name Schtinyt, will get the chance to swap financial small talk with the legendary investment guru.

The winning bidder can bring along seven friends.

UK INTEREST RATES CUT TO 3.5%

Business leaders have praised the Bank of England for cutting UK interest rates by a quarter of a percentage point to 3.5%, the lowest level since January 1955.

Homeowners also had reason to cheer the decision, as the rate cut could lead to cheaper mortgage payments.

The Bank pointed to slow economic growth here and abroad as a reason for the cut, and added that although underlying inflation is still above its 2.5% target, the level is expected to fall.

EUROZONE RATES LEFT ON HOLD

Eurozone interest rates have been left on hold, but most analysts still expect a cut later in the year.

The European Central Bank's (ECB) main interest rate remains at 2%.

A month ago, the ECB responded to calls for a dose of economic stimulation by cutting a half-point off rates, a decrease that many saw as sufficient at the time.

But with inflation low and growth still feeble around the eurozone, a further cut is seen as inevitable unless there is an unforeseen economic revival.

NIKE EXPANDS TRAINER EMPIRE

The sportswear maker Nike has agreed to buy the trainer maker Converse.

The acquisition would give Nike access to Converse's retro style brands, such as its Chuck Taylor All Star trainers.

CHINA DAM SWITCHES ON POWER

China's Three Gorges Dam, the world's largest water control project, has begun generating electricity.

The first of the dam's 26 generators to go into operation was connected to the power grid, 20 days ahead of schedule, Xinhua news agency reported.

The generating unit will supply 12.9m kWh per day to the power grids in central and east China, the project's vice general manager said.

Yang Qing said the unit would have to pass a 30-day trial operation, before beginning commercial production in August.

The combined energy of all the dam's 26 generators will eventually generate more than 80bn kWh of electricity each year.

AD SALES DOUBLE YAHOO PROFITS

Internet stalwart Yahoo has said profits more than doubled over the last three months, lifted by strong advertising sales and growth in subscription services

The Internet portal said net profits for the three months to June came in at $50.8m (30.5m), up from $21.4m a year earlier.

 

 

CALL TO REFORM STATE PENSION

Reforming state pensions is the most important step in solving the growing discontent with pensions, says a new report.

The Pensions Policy Institute said the system was too complex, inadequate, and if forecasts for future spending are not revised upwards, it will become "socially unacceptable".

In contrast to many other countries, public spending on pensions is expected to fall over the next few decades, from 5.5% of GDP to 4.4% by 2050, even though the number of pensioners is expected to rise by 40%.

GERMAN JOB MARKET 'ON THE MEND'

German unemployment has fallen for the fourth month in a row, fuelling government hopes that the country could be over the worst of its economic woes.

The fall was slight, down to 4.26 million or 10.2% of the workforce from 4.34 million in May, but well below the peak of more than 4.7 million at the beginning of this year.

RISING IMPORTS WIDEN UK TRADE GAP

The UK's trade deficit unexpectedly worsened in May as the economy sucked in more imports, official figures have shown.

The trade gap rose to 4.1bn ($6.7bn) in May, compared with an upwardly-revised 3.37bn deficit in April.

The deficit was worse than expected, and came after global goods exports dropped 1.4% to 15.2bn while imports rose 3% to 19.3bn.

The Office for National Statistics (ONS) also announced large upward revisions to imports from the EU for the past four years as a result of a value-added tax (VAT) fraud.

JAPAN BITES BACK AT LOAN SHARKS

Japan is preparing a clamp-down on loan sharks, who have become a growing menace as the country's decade-long recession grinds on.

Lawmakers are due later this week to consider a bill to increase penalties for illegal money-lending.

Campaigners estimate there are up to 60,000 unregistered lenders operating in Japan, many of them gangster-related, while more than a million Japanese people are thought to have borrowed from them.