Development Promise of the Doha Agenda' presents a
detailed overview of the world economy, and the near-term outlook. It also
offers a rigorous analysis of global trade issues.
Officially, the Cancun meetings are an interim
stocktaking for the negotiations, which are scheduled for completion by
January 1, 2005. However, the meetings occur at a time when the global
economy and international trade are languishing. As the report notes, the
trade talks are stalled over disagreements on issues of particular
importance to developing countries, such as agriculture, tariff reductions
on manufactures, special treatment for developing countries, and drug
patents in poor countries.
Progress in Cancun could bolster investor confidence,
and create momentum towards a more significant WTO agreement that would
spur trade.The latest GEP projects a growth of 1.5 per cent in 2003 in the
industrialised world, well below potential. It foresees better performance
next year, as industrial countries' growth rises to 2.5 per cent.
Developing countries are somewhat more buoyant than industrial countries,
growing at 4 per cent in 2003, and, if the recovery stays on track, will
grow at 4.9 per cent in 2004. World trade is projected to grow by 4.6 per
cent, slightly more than last year, but still less than half the rate in
FDI INFLOW INTO US PLUNGES BY $114B
With the exception of tiny Luxembourg, China emerged
the favoured destination of foreign direct investment (FDI), according to
the latest report from United Nations Conference on Trade and Development
(UNCTAD).This is the first time that a developing nation has emerged at
the top of the FDI destinations. Luxembourg took in $126 billion, which is
attributed to the heavy M&A (for mergers and acquisitions) activity
during the first quarter of 2002.
In contrast, FDI into US dropped a whopping $114
billion during the period to $30 billion. France was in third spot with
$52 billion and Germany $38 billion. UK came in with $25 billion.The
overall picture is also far from rosy — total FDI dropped from $1.4
trillion to just over $651 million in 2003.
In fact, 108 countries sports drop in FDI activity out
of 195. eighty-two of 150 developing countries and 16 of 26 developed
nations were hurt by lower capital coming in.
Given these projections, the eventual 2003 figures
would more or less be flat vis-a-vis 2002. But there could be an upturn in
2004, again helped by the prospect of increased cross-border M & A
plays. A lot will depend on individual sectors, and tourism and telecom
may be the ones to watch out for.As for the immediate past, the report
finds that the number of M&As fell from a high of 7,894 instances to
4,493 in 2003. More tellingly, their average value dropped from $145
million in 2000 to $82 million last year.
On West Asia, the report contends: "Despite the
recent efforts of some countries in this sub-region to relax FDI
restrictions, flows continue to be low, with geo-polictical tensions being
a major factor."Some countries have large oil reserves with low
extraction costs, which help attract FDI to oil and gas activities."
US TALKS TOUGH ON ASIAN CURRENCIES
The US has started to raise the temperature of
discussions about the strength of the dollar against a number of Asian
currencies, but a key meeting of finance ministers in Thailand has ducked
any response. The latest meeting of the 21-country Asia Pacific Economic
Co-operation (Apec) group, was expected to be dominated by the value of
China's currency, the yuan, which has been pegged at 8.30 to the dollar
for a decade.
Chinese ministers, however, stayed well away from the
limelight, offering only to loosen controls on companies' rights to own
foreign currencies. Too fast a move away from the peg, they hinted, would
spell disaster for an economy already breeding uncomfortably high
EURO INTEREST RATES STAY AT 2%
The cost of borrowing in the 12-nation eurozone has
been left unchanged for the third month in a row. The European Central
Bank has kept interest rates at 2% following a half-point cut in June.
The Bank of England has left interest rates on hold at
3.5% for a second month in a row.
The plentiful supply of cheap money and signs of
recovery mean the ECB sees little need for further stimulus, analysts say.
The unanimity of expectations among observers meant the euro budged no
more than a fraction of a cent in the wake of the announcement, trading at
$1.0818 right after the decision compared with about $1.0820 before.
FRANCE ADMITS HUGE DEFICIT BREACH
France has admitted that its budget deficit this year
will be 4% of gross domestic product a level way above Brussels rules on
fiscal discipline. This would be the second year in succession that France
has exceeded the 3% deficit ceiling, and adds to the growing list of
eurozone countries to have broken the rules. The French Government has
been particularly vocal in its calls for looser eurozone budget rules, as
it is hoping to cut taxes to stimulate its flagging economy.
Others argue, conversely, that fiscal discipline is
necessary in order to shore up market confidence in the euro. Paris says
it has been caught out by a slowing economy, which has trimmed tax
revenues, while demanding action to kick-start growth. The government says
it is trying to position the country to take advantage of the next
S KOREA THROTTLES BACK ON DEBT
South Koreans are borrowing less in the wake of
government changes to lending rules. The fall, registered by the central
bank in the three months to June, is the first in four years, after a
credit glut which has seen personal debt soar to record levels.
Credit by financial instutitions dropped 252.5bn won
($215m; £137m) in the second quarter after a rise of 279.5bn won between
the end of December and the end of March, according to the Bank of Korea.
"Growth in household loans slowed notably from the previous quarter,
while sales on credit saw a big fall amid sluggish consumption," the
bank said in a statement.
POLICE CHECK SEIZED '$6BN BONDS'
Police are examining bonds with a face value of nearly
$7bn seized during an operation against Colombian drug traffickers to see
if they are genuine. Officers are also thought to have picked up 55,000
ecstasy tablets, 15kg of amphetamines and £7m of cars, jewellery,
property and cash in a painstaking investigation.
ZURICH INSURANCE GETS OUT OF FRANCE
Swiss insurance firm Zurich Financial Services is to
sell up its consumer operations in France in favour of concentrating on
insuring businesses. The group embarked on a massive expansion programme
in the late 1990s which cost it dearly, leading to a $3.4bn loss in 2002
and more than 4,000 job cuts.
GERMAN JOBLESS RATE FLATTENS
German unemployment has flattened out, boosting hopes
that the government attempts to reform the labour market might be having
an effect. The raw figure showed a fall from 4.35 million to 4.31 million,
giving an overall jobless rate of 10.4% of the working-age population.
NBC WINS VIVENDI BATTLE
The creation of a new global media giant has drawn
closer after Vivendi Universal said it intended to merge its entertainment
business with General Electric's television network NBC.
FRENCH PM PLEDGES TAX CUTS
France will cut its income tax rate by three percentage
points in next year's budget, Prime Minister Jean-Pierre Raffarin has said
in a press interview. The move is intended to boost France's sluggish
economy and comes despite calls from the European Union for the country to
cut its budget deficit.
US MUTUAL FUNDS UNDER ATTACK
New York attorney general Eliot Spitzer has said his
office has found evidence of illegal trading by mutual funds which leaves
their shareholders out of pocket. Mr Spitzer said he had reached a $40m
settlement with a hedge fund over allegations of illegal trading, and the
firm would also assist with an ongoing inquiry into the trades.
UK ONLINE BANKING BOOMS
The numbers of consumers using Internet banking
services has more than doubled in the past two years. The survey from
payment services group BACS concluded that the number of Internet banking
users had increased from 3.5 million to 7.8 million from 2000 to the end
of last year.
Unsurprisingly, the number of people paying bills or
transferring money over the Internet or telephone has also risen
dramatically. During 2002, 7.2 million people paid bills or transferred
funds in this way, 44% more than in 2001.
OIL FIRM FLEES SUDAN
Austria's OMV has bowed to pressure from human rights
groups and pulled out of Sudan.
OMV is Austria's largest industrial group and is the
third Western oil firm to pull out of the war-torn country within a year.
TOYOTA WINS ON US CAR SALES
Japanese carmaker Toyota has overtaken Chrysler as the
third biggest selling car marque in the US. The figures for vehicle sales
in August — totalling 1.63 million units — show more cars left the
showrooms than during any month this year.
General Motors kept its top spot on just a 0.7% fall in
sales from last August, but sales of Ford, the second most popular make,
slumped 13% over the year. Next in line is Toyota, up 11.4% on August
2002, with Chrysler limping in fourth on a fall of 6.4%.
AUSTRALIAN ECONOMY GRINDS TO A HALT
Australia's economy has ground to a halt, recording
just 0.1% growth between April and June.
That is the weakest level in more than two years, and
was caused by a sharp drop in exports and a slump in tourism.
Treasurer Peter Costello blamed the stagnation on the
war, the drought and the deadly Sars virus. But he was still upbeat about
the months ahead, and continues to predict 3% growth for the Australian
economy during the year as a whole.
VIETNAM ECONOMIC REFORMER DIES
Nguyen Xuan Oanh, a Harvard-educated economist and
former deputy prime minister in the American-backed Southern Vietnam
government, died at home, according to government officials. He was 82.He
helped draft Vietnam's landmark doi moi economic reform package in the
mid-1980s, which sought to turn Vietnam's centrally planned economy into
one that was market-based but with socialist influences, and that later
would embrace private enterprise.
EU SHARE LAW FACES KEY VOTE
Members of the European Parliament (MEPs) will vote on
controversial European Union (EU) proposals which could make share trading
prohibitively expensive for small investors.
The draft laws, aimed at protecting consumers from
making ill-advised investment decisions, would oblige private investors to
seek professional advice every time they buy or sell shares.
UK HOUSING MARKET 'ROBUST'
Despite increasing speculation about its long-term
fortunes, the UK housing market is showing signs of renewed strength, new
figures indicate. The latest data from the Halifax, the UK's largest
lender, showed house prices in August grew by 1.3% — the same rate
reported in July. The bank said low unemployment and the end of the war in
Iraq boosted confidence in the market, with estate agents reporting more
interest from buyers.
US FACTORIES CONTINUE RECOVERY
The US manufacturing sector is showing further signs of
recovery, according to the latest snapshot of the sector. The Institute
for Supply Management (ISM) said its manufacturing index rose to 54.7 last
month, up from 51.8 in July.
A figure above 50 indicates expansion and August's
figure is the highest reading since December 2002. Despite the pick-up in
activity, the ISM showed the sector was still shedding jobs with the
employment index falling to 45.9 from 46.1 in July.
SRI LANKA HOPES FOR TOURIST BOOST
Sri Lanka is planning a massive boost in its tourist
accommodation to cope with what is proving to be a surge in business
thanks to the 18-month ceasefire with the Tamil Tiger rebels. The influx
of up to 10,000 visitors from the UK later this year for a series of
cricket Test Matches could also put a strain on the avaiable
accommodation, the government believes. The 14,000 or so available rooms
are not sufficient, Tourism Minister Gamini Lokuge told reporters.
UK FACTORY REBOUND CONTINUES
British factory output rose at its fastest pace in 15
months in August, figures have shown. The Chartered Institute of
Purchasing and Supply's (CIPS) manufacturing index for August climbed by
more than expected to 51.9, up from 51.1 the previous month. Any reading
above 50 on the index indicates expansion, while a score below 50 denotes