INTERNATIONAL

 

Aug 04 - 10 , 2003

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF

 

US ECONOMY 'PROMISING'

The US economy enjoyed unexpectedly strong growth in the second quarter of the year, according to latest figures, prompting suggestions it has finally turned the corner.The Commerce Department said last week healthy consumer and business spending helped gross domestic product (GDP) grow by 2.4% in the April to June period.This followed growth of just 1.4% in both the final three months of 2002 and first quarter of 2003.

 

 

 

Latest jobless numbers provided further optimism, with the number of weekly claims falling to a five-month low last week.Economists described both sets of figures as "quite promising news", prompting investors to push Wall Street up over 140 points at one point, before it settled down to close up 33 points at 9,233.

However, president George W Bush said the economy was still not growing fast enough.The Commerce Department reported a 3.3% bounce in consumer spending between April and June, up from 2% in the first quarter.Business investment leapt to 6.9% from a negative 4.4% previously."It just reinforces the optimism about a second-half pick-up," said James Glassman, a senior economist at JP Morgan Chase.

"Consumer spending is quite strong and this is an interesting contrast with what people saw on consumer confidence."Latest consumer confidence figures released earlier showed an expected slump in July, which economists had put down to concerns about rising unemployment.

A White House spokesman also cautioned that while the latest GDP figures were "another positive sign that our economy is continuing to pick up steam," there was still a long way to go.

AGRICULTURAL TRADE CLASH AT SUMMIT

Trade ministers from 25 countries have clashed over agricultural subsidies during a three-day meeting in Montreal ahead of the world trade summit in September.

Brazil has threatened to block attempts by the world's two largest trading blocs, the EU and the US, to bar complaints over their huge subsidies to farmers in the World Trade Organisation (WTO).

The two trade blocs have had a "peace clause" in effect until the end of the year as tense negotiations continue over how to cut the support given by rich nations to their agricultural sector support which many developing countries believe undermines their efforts to improve their economies through trade.Now Brazil, one of the world's biggest agricultural exporters, has objected to a proposal to extend the peace clause.

"We have paid a very high price for that clause, and developing countries will not approve its extension," said Gilman Vienna Rodrigues, who represents Brazil's farmersBrazil was speaking for the Cairns group of agricultural exporting nations, which include Argentina, South Africa, Australia, and Canada, the host of the meeting.

The Montreal meeting is being seen as the last-ditch attempt to reach agreement before ministers from all 146 WTO members meet in Cancun, Mexico to try and finalise a world trade deal that will benefit developing countries.The trade talks were launched in Doha, Qatar, in 2001.

Last week, several hundred anti-poverty protesters gathered outside the conference venue which was protected by riot police.Police said they arrested at least 100 demonstrators after shop windows were broken.

Some protesters attacked branches of the Gap clothing firm and Burger King fast food chain, two of the international brands activists accuse of exploiting workers in poor countries and driving local producers out of business through unfair trade.

ECB SET TO BACK TRICHET

The European Central Bank (ECB) kept eurozone interest rates on hold at its meeting last week, its last before its summer break.

And while economists are near-unanimous in their expectations on interest rates, the focus of attention will be on the ECB's likely approval of Jean-Claude Trichet as its next president.

The choice of Mr Trichet, made as far back as 1998, has been highly controversial owing to three years of involvement in a high-profile corruption case in France.

Mr Trichet was cleared of any wrongdoing in June, and was subsequently endorsed by a string of eurozone governments.

UK MISSES GROWTH FORECASTS

The UK economy grew by less than expected in the second quarter of 2003, official figures have shown.The Office for National Statistics said that gross domestic product rose by 0.3 % between April and June, and was up 1.8% on the year.The figure was below analysts' expectations of 0.4%, and wrong-footed predictions of a resurgence on the back of recent strong retail sales figures.

The economy's sluggish growth will come as a blow to Chancellor Gordon Brown, who had predicted growth of between 2.0% and 2.5% for the full year in his most recent budget.With just 0.1% growth in the first quarter of 2002, GDP is now weaker in the first half of 2003 than it was in the first six months of 2002, when it grew by 1.9%.

AFRICA ECONOMY SET FOR REBOUND

The African economy is set for a rebound in 2003 after a weak performance last year, according to the latest report from the UN Economic Commission for Africa (ECA).However, the report also warned of a number of risks to Africa's prospects, including the current unrest in Liberia and Zimbabwe, and the threat of flooding in various parts of the continent.The ECA forecast average growth of 4.2% in 2003, against 3.2% in 2002 and 4.3% in 2001.

Last year only five of Africa's 53 countries achieved key targets or Millennium Development Goals on poverty, agreed in a United Nations declaration in September 2000.A slower than expected recovery in world trade, drought, the Aids epidemic and war, were all blamed for Africa's weak performance in 2002.

 

 

US WIDENS FREE-TRADE DEALS

Singapore and Chile have become the first Asian and first South American nations to gain free trade relationships with the US.The US Senate's backing for the two free-trade deals follows the approval of the bills in the House of Representatives last week.

Such agreements free trade in most goods and services, set up a conflict resolution mechanism and provide for the protection of intellectual property.Canada, Mexico, Jordan and Israel already have similar deals with the US.Once Congress sends the bill back to the White House, President Bush has 10 days to sign the legislation.

The agreements, which are due to come into effect on 1 January next year, are the first to be negotiated by the Bush administration using special trading powers the so-called Trade Promotion Authority.

MUGABE TARGETS FARM GREED

Zimbabwe's President Robert Mugabe is reported to have ordered senior ruling party officials to conform to his "one man, one farm" policy under his land reform programme.The state-controlled Herald newspaper reported that he wanted any extra farms to be relinquished within two weeks.

The controversial land reform programme has seen most of Zimbabwe's 4,500 white farmers evicted from their land, but farm productivity has also declined rapidly.Aid agencies say this has contributed to food shortages leaving several million Zimbabweans in need of food aid.

TURKEY CLAN LOSES TO MOTOROLA

A United States judge has ordered a controversial Turkish business dynasty to pay more than $4bn to the mobile phone giant Motorola.The judge found that the Uzan family had defrauded the company through what he called an almost endless series of lies.Motorola and its rival Nokia accused the Uzans of spending $3bn they lent them for expansion of Telsim, the Turkish wireless carrier, on yachts, New York property and other luxuries.

EXXON PROFITS SOAR

Profits at Exxon Mobil, the world's biggest oil company, have more than doubled boosted by higher gas and oil prices.The group said that in the last three months profits had jumped to $4.17bn (2.61bn) from $2.64bn in the same period last year.

FRANCE SHAKES UP STATE GIANTS

The French government, which has promised big reforms to stimulate the country's economy, has started to shake up some of its biggest state companies.The government has adopted a bill which will allow the state share in France Telecom to drop below 50%, a move that paves the way for its full privatisation.

The move comes the day after the finance ministry challenged Electricite de France (EDF) and Gaz de France (GDF), the country's titanic energy firms, to draw up ambitious plans to develop their businesses in a deregulated environment.

Forcing firms like EDF towards greater independence is a central plank in European Union policy, which has long been suspicious of the favouritism shown to France's corporate champions.

SLACK EU ECONOMY 'MUST REFORM'

The eurozone economy is recovering slowly and uncertainly, the Organisation for Economic Cooperation and Development (OECD) has warned.And governments must take tough action if they expect sustained growth.After a "subdued" 2003, the region could expect modest growth of up to 2% next year, the OECD forecast in a report on the eurozone economy.

And even this cautious recovery faced a multitude of challenges notably a slower-than-expected rebound in key trading partners such as the United States.To help guard against this sort of unpredictable risk, the OECD recommended Europe accelerate the deregulation of its labour market.

WEAK US DOLLAR HITS RIO TINTO

The world's second-largest mining group, Rio Tinto, has blamed the weak US dollar for a 9% fall in net profit during the first six months of this year to $641m (398m).

The Anglo-Australian miner is affected by movements in the US currency because most of its products are sold in dollars while the cost of mining its ores is denominated in Australian or Canadian dollars, or South African rand.

 

 

TRADE TALKS STILL HAVE 'WAY TO GO'

Trade talks in Montreal have ended with optimistic noises from ministers about the prospects for a make-or-break meeting in the Mexican city of Cancun in six weeks' time.But behind the upbeat rhetoric, the industrialised countries the US, the European Union, Japan and Australia have barely shifted from the positions which have frozen negotiations for 18 months.Hopes that the ministers' meeting could free up the roadblock on agricultural subsidies and market access, key issues for developing countries, seem to have been dashed.

IMF URGES ARGENTINE REFORM

The International Monetary Fund (IMF) has approved the final tranche in a $3bn (1.8bn) aid package, but warned that more structural reforms were still necessary.

IMF managing director Horst Koehler said Argentina had comfortably met its fiscal and monetary targets.Now, he said, the government needed to make progress on reforms to the tax system, as well as improvements to ailing banks and public utilities.

MORE JOBS AT LAST FOR JAPAN

The number of people out of work in Japan dipped in June for the first time in three months, sparking a glimmer of hope about the prospects for its ravaged economy.At the same time, household spending accelerated faster than at any time in 20 years.

The figures will come as welcome relief for Prime Minister Junichiro Koizumi, who later this year is facing both reselection as head of the ruling Liberal Democratic Party and a probably general election.But relief was tempered by stubbornly weak retail sales, falling in June for the 27th month in a row.

LOSSES BATTER BRUISED BA

British Airways has revealed the recent staff dispute over clocking-on has cost it between 30m and 40m ($49m-65m).

TOSHIBA DOUBLES LOSSES

Japan's biggest computer chip maker, Toshiba, said its losses in the April to June period doubled compared to a year ago.Toshiba posted a net loss of 36.8bn yen ($307.5m; 189m) for the period, up from a loss of 18.8bn yen in the same three months of 2002.

DR CONGO GETS $10BN DEBT RELIEF

The Democratic Republic of the Congo is in line for debt relief worth as much as $10bn (6.2bn) after the International Monetary Fund and World Bank gave their blessing to economic reforms."In recognition of the authorities' satisfactory progress in implementing sound macroeconomic and structural policies, the DRC's total external debt... is to be reduced by up to 80%," the two said in a statement.

HISTORIC LOSS FOR SINGAPORE AIRLINES

The airline posted a loss of S$312m ($177.5m, 110.9m) in the three months to June, compared to a profit of S$478 in the same three months a year earlier.

 

 

SLIMMER PROFITS FOR UNILEVER

Anglo-Dutch consumer goods group Unilever has posted a 7% fall in first half profits to 1.5bn ($2.4bn).