INTERNATIONAL

 

Aug 11 - 17 , 2003

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF

 

NO CHANGE IN UK RATES

UK interest rates have been kept on hold at 3.5% following the Bank of England's latest rate-setting meeting. The move had been widely expected following recent data which suggested the UK economy is beginning to pick up. Figures out this week have shown renewed strength in both the service sector and the housing market.

 

 

 

Last month, the Bank sprang a surprise by cutting UK rates by a quarter of a percentage point to 3.5% their lowest level since January 1955. Industry representatives said the Bank's rate-setting body the Monetary Policy Committee (MPC) had made the right decision. "The Bank is right to take the breathing space afforded by last month's cut and assess how the economy develops through the autumn," said Steve Radley, chief economist at the Engineering Employers' Federation.

"There are tentative signs that the global economy is beginning to show signs of life and manufacturers will hope that this is translated into stronger demand in the second half of the year." But the CBI warned that the Bank needed to keep a close eye on the economy."Interest rates appear to be set at the appropriate level for now," said Doug Godden at the CBI."However, business will look to the MPC to monitor the global situation and be prepared to cut again if the situation warrants it."

Last month, the MPC cited two main reasons the hesitant global recovery and signs of slowing consumer demand in the UK for its surprise cut. But since then US figures have hinted that it is no longer in danger of a 'double dip' recession. And in the UK, retail sales rebounded in June as shoppers rushed to buy barbecues and light clothing amid the hot summer temperatures.

TURKEY GETS IMF EXTENSION

Turkey's financial markets will be encouraged by the release of the latest tranche of the country's IMF loan. The long-delayed announcement, which has been expected since April, means that Turkey will receive another $475m in economic assistance from the International Monetary Fund.In addition, the country will receive a one-year extension on the repayment of $11bn in outstanding loans.

Turkey has borrowed $15bn from the IMF to help stabilise its currency over the past two years as it faced its worse economic crisis since 1945. The IMF's managing director, Horst Koehler, praised the efforts of Turkey to rein in public spending and curb inflation. "The Turkish authorities have made strong and welcome efforts in recent weeks to implement their program of stabilization and economic reform.. The Government's recent actions bode well for the success of the Fund-supported programme," he said. Turkey has pledged to run a primary budget surplus of 6.5% of GDP and to reduce inflation below 20%. It is also pledged to improve banking regulation and privatise its main banks.

The war with Iraq had threatened to hamper Turkey's economic recovery, especially after Turkey failed to negotiate a huge loan with the United States in return for allowing US troops to use Turkey as a staging base. In the end, Turkey will receive a $1bn grant, or up to $8.5bn in loan guarantees, from Washington, making the IMF loan more important. The US Congress approved the funds in April after Ankara decided to open its airspace for the US-led war on Iraq.

CHINA EASES MIGRANT CRACKDOWN

China's government has been too harsh in its treatment of the country's vast army of poor, migrant workers and needs to "adopt a fair attitude", according to Vice Minister of Police Bai Jingfu. "It was wrong in the past to punish farmers in the cities for having no temporary residence permit," Mr Bai told journalists in Beijing. "It was also wrong to fine them or send them back to the countryside," the French news agency Agence France Presse reported him as saying. Mr Bai's unusual confession is the latest sign of a fast-developing shift in the government's view of laws restricting migrant workers rights.

CASH RESCUE FOR GERMAN CITIES

The German government has unveiled plans to relieve its cash-strapped cities by giving more money to local authorities.Finance Minister Hans Eichel has said that changes to local business tax will boost city coffers by 4.5bn euros (3.2bn) next year and by 5bn euros the year after.

Many cities have been left struggling to keep public services operating after weaker company profits resulted in less tax revenue.

UK INDUSTRIAL OUTPUT WEAK

Official figures have shown that Britain's manufacturing sector remains stuck in a pattern of sluggish growth. The Office for National Statistics (ONS) said British manufacturing output climbed 0.2% in June from May to stand 3.5% higher than one year earlier. The ONS said the annual rise was the sharpest since December 1994, but stressed that the year-on-year comparison was flattered by a downturn in manufacturing activity during the Queen's Jubilee celebrations in June 2002.

 

 

FRENCH TOURISM UNDER PRESSURE

France, one of the world's biggest tourist destinations, is struggling this summer to cope with a number of adverse conditions. Figures just released for July an important month for the tourism sector show that visitor rates are down by an average of 20% on 2002. "It's true that July was a weak month," Tourism Minister Gilles de Robien said. Forest fires have hit business in the south-eastern Riviera region, while the oil of the sunken tanker Prestige has blighted the beaches of the south-west for months.

RWE FACES US SANCTIONS THREAT

The US has warned the German utility group RWE that it could face sanctions because of a deal to explore for oil and gas in Libya. The US State Department said it was examining the contract to see if it broke the Iran-Libya Sanctions Act, passed in 1996. Under this law, the US can punish foreign firms that invest more than $20m a year in the energy sectors of Iran or Libya.

ZIMBABWE TACKLES CASH SHORTAGE

The Central Bank in Zimbabwe has said it is to issue travellers' cheques for local use to ease the country's severe cash shortage, as the country spirals into an ever deepening economic crisis.

The bank says the travellers' cheques, which are legal tender and will be acceptable as payments for goods and services anywhere in Zimbabwe, will go into circulation, in denominations of between Z$1,000 and Z$100,000 (approximately $1.20 to $120). The move is the latest in a series of measures by the Zimbabwean authorities to alleviate the cash crisis, which many blame on President Mugabe's controversial policies.

US SHOPPERS SHUN PLASTIC

US shoppers kept their credit cards tucked away in June, prompting an unexpected fall in consumer debt figures. The Federal Reserve said outstanding consumer credit fell by $400m in June to $1.76 trillion the first time figures have dropped since November 2002. Wall Street had been expecting figures to climb by about $6.9bn. The fall, led by a $1.3bn drop in charge and credit card debt, prompted further fears that the US economy is far from rebounding. With unemployment above 6% and weak consumer confidence, there are fears that consumer spending the US economy's main ballast in recent months will be next to suffer.

BANK APOLOGISES FOR PRAISING HITLER

A Chicago bank has apologised after praising Adolf Hitler as a great economic leader. Glenview State Bank said it had received "many letters and calls" from people offended by its July economic newsletter, which credited sound economic policies for the German boom of the 1930s a decade when most economies were in severe depression. The Anti-Defamation League formally complained about the report written by Glenview president Dave Raub and called its positive portrayal of Hitler "deeply disturbing".

GERMAN DOLE QUEUES LENGTHEN

The German labour market has deteriorated again, with more than one in 10 people now looking for work, according to new government figures. Germany's seasonally unadjusted unemployment rate rose to 10.4% in July, up from 10.2% in June, the country's Federal Labour Office said.That means an extra 94,500 people were out of work in July, bringing the total to 4.35 million. Government promises to bring down Germany's stubbornly high rate of unemployment have failed as the economy has stagnated. Chancellor Gerhard Schroeder is currently pushing through more labour market and welfare reforms in an effort to improve the situation.

ICELAND TO RESUME WHALING

Iceland announced its intention to resume whaling this month. It said it would take 38 minkes this year, in August and September, from waters around the island to study the mammals' impact on fish stocks. The country's whaling commissioner told BBC News Online that with 43,000 minkes currently in Icelandic waters, the "scientific catch" would have no impact on the species' status.

 

 

EU GIVES 'LAST CHANCE' TO MICROSOFT

Software giant Microsoft has one last chance to comment before it gets hit by sanctions for abusing its dominant position, the European Commission has said. "The Commission's preliminary conclusion is that Microsoft's abuses are still ongoing," the EU executive said in a statement giving the company a month to respond.

VIETNAM REFORMS 'TOO SLOW'

Vietnam's hopes of joining the World Trade Organisation have been given a boost by World Bank and US officials. However, they stressed that Communist-ruled Vietnam needs to do more to open up its markets and reform its economy to meet its goal of joining by 2005. World Bank Managing Director Shengman Zhang has completed four days of meetings with Vietnamese government officials.

GLAXO ANTI-MALARIAL DRUG APPROVED

Drugs giant GlaxoSmithKline has won UK approval for its latest anti-malarial drug, paving the way for it to be made available in Africa. Glaxo spokesman Chris Hunter-Ward said the drug was expected to become available in seven African countries by the end of the firm's financial year.

US SHRIMPERS JOIN SEAFOOD BATTLE

Fresh from a recent legal victory over Vietnamese catfish farmers, seafood producers in the United States are now targeting imports of shrimp, or prawns. Last month, the US Federal Trade Commission backed protests by American catfish farmers and imposed massive duties on cheap Vietnamese imports. Calling for similar duties on shrimp, American fishermen are accusing around a dozen countries, including Vietnam, Thailand, China and India, of dumping cheap seafood on the American market.

ANGLOGOLD OFFERS $1.1BN FOR ASHANTI

AngloGold has made a $1.1bn (680m) bid for Ghana's Ashanti Goldfields. If the deal goes ahead, it will give AngloGold more gold reserves than Australia's Newmont which is currently the biggest gold miner in the world.

WORLDCOM BLASTS AT&T

Bankrupt US telecoms firm WorldCom has accused its rival AT&T of deliberately sabotaging its attempt to survive. Last month, federal prosecutors subpoenad documents from WorldCom after AT&T claimed it was defrauding competitors by improperly routing domestic telephone calls to avoid paying fees to other US telecoms firms.

RUSSIA AND MALAYSIA SIGN JETS DEAL

Russian president Vladimir Putin has signed a $900m (562.5m) deal to supply fighter jets to Malaysia while on a visit to the south-east Asian nation. Mr Putin said he hoped the sale would help open doors to the south-east Asian market for Russian high-tech goods.

ALSTOM CONFIRMS STATE BUY-UP

French engineering giant Alstom has announced that the French government is to give it 300m euros (211m; $339m) in exchange for almost a third of the company in an attempt to bail it out of crippling financial difficulties.

FIRST-TIME HOMEBUYERS AT RECORD LOW

UK house prices grew 1.3% in July a rise from the month before but the annual rate of increase slowed to 19% as the number of first-time buyers continued to fall, the Halifax bank has said. The bank said the number of first-time buyers was now at its lowest level since records began in 1974.