The after-effects of the Sars virus, which devastated
travel and trade across Asia, were evident in the services sector, which
grew just 0.8%.The Chinese government had rejected warnings of Sars'
impact till late April, sparking criticism that it had unnecessarily
hindered efforts to control the virus's effects.
Before the announcement earlier this month that China
was finally Sars-free, the epidemic killed more than 340 people and
infected more than 5,300.The belated announcement saw much of the country
grind to a near-standstill, with the number of people travelling down by
almost a quarter.
"After entering April, because of the impact of
Sars, some industries were severally affected leading to a clear slowdown
in economy growth," National Bureau of Statistics chief economist Yao
Jingyuan said in a statement.
The government is counting on continued growth to feed
the demand for jobs in China as more and more workers are pushed out of
work in market-oriented reforms.But although exports are up a third and
imports up 45%, retail sales are still weak, causing some to fear the
economy could overheat.
US SLASHES GROWTH FORECAST
The sluggish US economy is taking longer to pick up
than anticipated, according to the latest figures and comments from the
Federal Reserve chairman Alan Greenspan.
Mr Greenspan, in his twice-yearly testimony to
Congress, said the central bank was cutting its forecast for US economic
growth this year by three quarters of a percentage point to 2.5-2.75%.
The downgrade came on the day the Bush administration
predicted that the federal deficit would surge to a record $455bn this
year thanks to tax cuts, economic weakness, and the cost of war in Iraq
and the fight against terrorism.Mr Greenspan described economic growth in
the first half of 2003 as "sluggish".
He blamed the war in Iraq and ongoing caution by
businesses, reluctant to invest or hire more workers.But he said the
Federal Reserve Bank expects economic activity to "accelerate in the
second half of this year and to gather momentum in 2004"."We
believe that we are at a turning point," Mr Greenspan said, hinting
that there are already some signs of an economic recovery.
A glimmer of hope for the economy came from figures for
US retail sales, which rose by 0.5% in June, the biggest increase in three
months.Retail sales are seen as a reliable guide to the health of the
economy in the US, where consumer spending accounts for two thirds of all
Economists said last month's increase reflected lower
interest rates, with homeowners taking advantage of cheaper borrowing
costs to remortgage their properties.
EU TO RECEIVE DRAFT CONSTITUTION
The final draft of the EU constitution is set to be
handed over to Italian Prime Minister Silvio Berlusconi, who as holder of
the EU presidency will chair delicate negotiations on the document.
Former French President Valery Giscard d'Estaing —
head of the European Convention, which drew up the draft — will formally
hand over the constitution to Mr Berlusconi in Rome.
The governments of the 15 EU members and future members
are due in October to begin examining the draft, which aims to streamline
the bloc's institutions and prevent decision-making gridlock when it
expands to 25 nations next May.
The document is the product of 16 months of debate and
Mr Giscard d'Estaing is expected to again recommend it be left intact as
far as possible.But there are lingering worries among EU member states,
and there is still much talking to be done before the constitution is
DOLLAR BOUNCES BACK
The long-battered dollar has jumped sharply in Europe
and Asia, reacting to positive sentiment about US economic prospects.
Comments from Federal Reserve chief Alan Greenspan,
while downbeat, were seized on as evidence that the US could at last be in
definite recovery.A wave of interest-rate cuts around the world, most
recently in Britain and Canada, has also encouraged US investors to shift
out of overseas assets.
And Japan has been rumoured to be intervening on the
markets to support the dollar, hoping that a weak yen will help kick-start
its stagnant economy.At July 15 close, the euro stood at $1.12, well below
the highs of almost $1.19 achieved a month ago.
SURPRISE FALL IN UK INFLATION
UK inflation unexpectedly fell in June, largely because
of cheaper foreign holidays.The underlying rate, which excludes mortgage
interest payments, fell to 2.8% from 2.9% in May.This keeps inflation
above the government's 2.5% target.The falls give extra justification to
the Bank of England's decision to cut interest rates last week to a
48-year low of 3.5%.
The harmonised inflation rate, which the government
plans to target from November, fell to just 1.1%, according to the Office
for National Statistics.There is widespread speculation that the eventual
target for that rate will be 2%.
AFRICA'S MAMMOTH OIL PROJECT COMES OF AGE
One of Africa's most ambitious — but typically
controversial — oil projects came to fruition on July 15, when Chad
began pumping oil for export via Cameroon.
The total cost of extracting the oil from Chad and
piping it to Cameroon is estimated at $3.7bn (£2.2bn), one of the biggest
investments ever made in the region.When production gets up to full speed
next year, this one project alone is expected to account for 45-50% of
Chad's national budget.
ERICSSON LOSSES SHRINK
Swedish phone firm Ericsson has reported its ninth
quarterly loss in a row — but has come much closer to breaking even than
investors had expected, and vowed to return to the black by the end of the
The company said it lost 2.7bn kronor ($328m; £206m)
before tax but after restructuring costs in the three months to 30 June.
Some of the world's top cosmetics firms and retailers
are to give away make-up worth $175m (£110m), as part of the settlement
in a California price-fixing case.
MIXED MESSAGE FROM MICROSOFT
Microsoft has taken the shine off better than expected
sales figures by narrowly missing profit forecasts and disappointing
investors hoping for a dividend increase.
The company, the world's biggest software maker, said
sales for the three months to late June came in at just over $8bn
(£4.8bn), up 11% on the same period last year, and comfortably ahead of
the $7.8bn forecast by analysts.
TAIWAN TELECOM SALE NETS $1.65BN
Taiwan's finances got a boost last week after the
government raised $1.65bn (£1.04bn) by selling a 12% stake in
state-controlled Chunghwa Telecom.
Most of the sale - 965 million of the 1.165 billion
shares on offer went to foreign investors, in the shape of bundles
equivalent to 10 shares apiece sold on the US markets.
The move reduces the government's stake in Chunghwa to
69%, and the success of the current offering should help the state sell
its holding down to 50% by the end of the year as intended.
POWER SHORTAGES 'HIT CHINA'
Power prices in China may have to rise to cope with the
power shortages spreading across the country, the state media reported.
According to the English-language China Daily, power
consumption rose by almost a sixth in the first half of this year as
economic growth topped 8%.Blackouts are expected to multiply in the east
and south of the vast country, the paper said.
FINANCE DEALS HIT GM PROFITS
GM, the world's biggest carmaker, has unveiled a sharp
decline in profits for the April to June period.The Detroit-based car
giant said profits for quarter came in at $901m, (£540m), down by nearly
a third compared with the same period last year.
SAO TOME COUP SPELLS OIL DELAY
The hoped for oil bonanza in the tiny African island
state of Sao Tome and Principle will have to wait, in the wake of last
week's coup, experts believe.
The government of the twin islands, inhabited by about
170,000 people, finally clinched a deal with massive neighbour Nigeria
over oil rights in the Gulf of Guinea earlier this year.
HK JOBLESS RATE SOARS
The pressure on Hong Kong's government increased last
week as unemployment levels rose to unheard-of highs.
The proportion of people out of work in the former
British colony reached 8.6% for the three months to June, 0.3% up on the
previous record set only a month earlier.
NEW PAY OFFER FOR SA MINERS
South Africa's major mining companies have raised their
pay offer in the hope of avoiding a strike.The Chamber of Mines (COM),
which is negotiating on behalf of gold mining firms, said it has raised
its pay offer to 8.5% from 7%, Reuters news agency reported.
Coal mining employers have also upped their offer to 9%
from 8%, while one major producer, Xstrata, has offered 10%.
Plunging chip and other product prices have driven a
41% fall in profits at hi-tech giant Samsung Electronics.
Samsung earned 1.13 trillion won (£600m; $960m) net
profit in the three months to end-June, down from 1.92 trillion won a year
S KOREA VOTES FOR EMERGENCY CASH
South Korea's parliament has passed an extra government
spending package, in the hope of revitalising an economy that has slipped
In a rare display of cohesion, the opposition-led
parliament pushed through the 4.5 trillion won ($3.8bn; £2.4bn)
supplementary budget in a 228-1 vote last week.
The need for the extra money almost 10% more than
originally expected — was underlined by figures from the finance
ministry showing that the economy shrank by 0.5% between April and June.
Given the 0.4% shrinkage in the first three months of
the year, that leaves South Korea technically in recession, defined as two
consecutive quarters of contraction.
TOBACCO GIANT BUYS ITALY'S ETI
British American Tobacco has bought the state-owned
Italian tobacco firm Ente Tabacchi Italiano (ETI) for 2.3bn euros
The deal will give BAT, the world's second largest
cigarette group, a key position in Europe's second largest tobacco market
where 26% of adults smoke.ETI has a 26% share of the Italian market
through its MS and Sax cigarette brands.
UK JOBLESS TOTAL FALLS
The UK's unemployment rate has fallen to its lowest
level for two years as the labour market remains strong, according to
Data from the Office for National Statistics (ONS)
showed the number of people out of work in the three months to May fell by
20,000 to 1,474,000, bringing the unemployment rate down to 5%.
LULA ATTACKS US TRADE STANCE
The president of Brazil has spoken out against any
notion of the United States being the dominant force in the Free Trade
Area of the Americas (FTAA) and called for fairer negotiations.
In an exclusive interview with BBC News Interactive's
Talking Point, President Luiz Inacio Lula da Silva, known as Lula, said
the FTAA "was not owned by the United States" and that all
countries wanting to join should have an equal voice.
He said that if this were not possible, then the matter
would be taken to the World Trade Organisation (WTO).