INTERNATIONAL

 

Dec 15 - 21 , 2003

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF


2003 CLIMATE HAVOC 'COST $60BN'

A UN conference on climate change has been warned about the growing impact of global warming on mankind. Senior UN official Klaus Toepfer said climate change was a reality that would increasingly lead to human suffering and economic hardship. Natural disasters, mostly caused by extreme weather, cost more than $60bn this year alone, the international conference in Italy was told.

 

 

 

However a senior US politician has cast doubt on the climate change warnings.Organisers of the conference in Milan had hoped to get final ratification needed to put the 1997 Kyoto Protocol on greenhouse gas emissions into effect. But in the last few days, Russia whose support is vital after the US pulled out of the accord has said it is having second thoughts about signing. The conference into its 10th day before finishing on December 12 heard that the effects of climate change were already being felt.

"Climate change is already having an impact on mankind, especially in developing countries," said China's chief delegate Liu Jiang. Mr Toepfer said: "Climate change is not a prognosis, it is a reality that is and will increasingly bring human suffering and economic hardship". UN Secretary-General Kofi Annan spoke of the heightened frequency of extreme weather events in recent years. ""There is growing concern that this trend is likely to continue," he said. The conference was shown some of the findings by insurance firm Munich Re, which has been tracking the cost of global natural disasters.

ASIA'S GROWTH PICKS UP PACE

Asia will remain the fastest growing region of the world economy in 2003 and 2004, according the Asian Development Bank's (ADB). The ADB upgraded its regional economic growth forecasts for this year and next for Asia, excluding Japan. It now expects the region to grow 5.7% this year, instead of 5.3% predicted in September, and 6.2% instead of 6.1%. It said China's rapid growth, stronger consumer spending and greater regional trade were behind the increase. "Overall, I am optimistic...I believe Asia as a region will continue to post the highest level of growth in the world," said ADB President Tadao Chino.

Asian economies are benefitting from stronger economic prospects in the United States and Japan, as well as Europe, though the latter's impact was less marked, the ADB said. Asia's exporters were hit hard by the US recession in 2001 and subsequent slow recovery. However, US economic growth is running at roughly 8% for 2003. Japan remains sluggish, but it too is showing signs of improvement. Economists expect it to grow at just over 2.5% this year. China's economic boom is helping regional growth by driving increases in trade between Asian nations, the ADB said. Strong consumer spending has also helped growth and is playing a greater role in some South East Asian economies. Spending by shoppers accounted for more than 50% of Thailand's growth and more than one third of growth in the Philippines and Indonesia since mid-2002, the ADB said. It also found "tenative signs" of a pick up in private investment.

FOREIGN INVESTMENT IN JAPAN JUMPS

Foreign investment in Japan has surged during the first six months of this year, the Finance Ministry has said. Money inflows jumped 55% to 981bn yen (5.2bn; $9bn) in the first half, compared with a year earlier. About two-thirds of the cash was used to buy company shares amid optimism that economic growth is picking up both at home and abroad. The US was the top investor, with the financial services and insurance industries being the most sought after. The influx helped fuel a rally in the benchmark Nikkei 225 stock index, which added 8% between the end of December and July.

GERMAN EXPORTS HIT BY EURO SURGE

German exports fell in October as the euro's rise against the dollar made non-EU exports less competitive. The currency has recently powered to record highs amid low US interest rates and widening deficits. Economists have voiced concerns that the euro's strength may snuff out a recovery in Europe's largest economy. The German government said earlier this year that its forecast of accelerating growth was dependent on favourable exchange rates. The drop in exports narrowed Germany' s trade surplus to 10.8bn euros (7.6bn; $13.2bn) in October from 11.5bn euros a year earlier, the statistical office said.

JAPAN OPTIMISM DESPITE GDP CUT

Japan's economy in the three months to end-September grew more slowly than than previously thought, hit by weak business spending. Revised gross domestic product (GDP) figures showed that output expanded by 0.3% during the quarter, half what had earlier been announced. The news underlines the fragility of recovery from a decade of recession. But analysts were cheered by figures showing that orders of machinery had soared in October. The latest GDP figures are the equivalent of an annual growth rate of 1.4%, sharply down from the initial estimate of 2.2%.

 

 

MYTRAVEL

Struggling tour operator MyTravel has announced a huge loss of 910.9m ($1.5bn) for the year.

DEUTSCHE BANK LOSES KIRCH APPEAL

Deutsche Bank has been ordered by a Munich appeals court to compensate former German media magnate Leo Kirch. He had accused Germany's biggest bank of hastening the collapse of his empire , one of the country's best-known.

US CAMPAIGN FINANCE REFORM UPHELD

The United States Supreme Court has upheld key parts of a landmark campaign finance law designed to curb the influence of money in politics. By a 5-4 vote, the court ruled that it was constitutional to ban unregulated contributions known as "soft money". It also upheld restrictions on TV and radio "issue ads" by corporations and unions right before elections. Congress approved the law and President George W. Bush signed it in 2002, but a number of opponents challenged it.

UK BUDGET SHORTFALL

The Chancellor has admitted that the government budget deficit will be 10bn larger than he previously thought. He also said that the economy is on course to grow at 2.1% this year, and 3% to 3.5% in the next two years. Some predict that taxes will have to rise to meet the growing budget gap. But Gordon Brown claims to be on target to meet his own "golden rule," which says the government should not borrow for current spending over the whole economic cycle.

CHINA'S OUTPUT SURGES IN NOVEMBER

China's industrial output surged last month, driven by increasing demand for steel, cars and electronic equipment. Factories made 17.9% more goods in November compared with the same month a year earlier, official figures showed. Computer production led the way, jumping 75%, with auto output up 33% and steel output 23% higher. Economic reforms, low wage costs and a massive domestic market have helped turn China into the world's fastest expanding major economy.

FED LEAVES INTEREST RATES ON HOLD

The Federal Reserve has decided to keep US interest rates on hold at 1% recently. As expected, they have been left at their 45-year low, despite the recent weakening of the US dollar. Most analysts believe the low rates are starting to stimulate the US economy, and the Fed appeared reluctant to rock the boat, with job creation increasing. US economic growth is currently in excess of 8%, but a modest slowdown is predicted around the turn of the year, ahead of an increase again in 2004.

UK HOME SUPPLY WAY BELOW DEMAND

Britain is now so short of new houses that an extra 39,000 need to be built each year just to keep up with the UK's population growth. The Treasury's Barker Review of Housing Supply says the lack of homes has been a major cause of high UK house prices. It says homeowners would have saved 8bn if house prices had risen at the rates seen in continental Europe. For first time buyers, the report says each is paying an extra 32,000 in comparison to the European average.

AILING DOLLAR FALLS TO RECORD LOW

The dollar has fallen to a record new low against the euro, before December 9 interest rates decision in the US. In late trading, one euro bought $1.2241, a new high, as the dollar continued to be hit by growing US deficits and low interest rates. The dollar also stayed near an 11-year low against pound sterling, which buys $1.7251, and it fell to 107.1 yen.

CABLE & WIRELESS REVEALS US EXIT

British telecoms group Cable & Wireless said it is using US bankruptcy law to exit its business in the country. The group has agreed to sell Cable & Wireless America (CWA), to Gores Technology Group for $125m in cash.

SINGAPORE TO START BUDGET AIRLINE

Singapore Airlines is to launch a new budget carrier, in a partnership that includes the founder of successful Irish low-cost service Ryanair. The new airline Tiger Airways will begin flights in the second half of 2004, to destinations up to four hours' flying time from Singapore.

EU COMPLAINS TO WTO ABOUT INDIA

The European Union has accused India of misusing trade legislation and unfairly protecting manufacturers from imports. Brussels has complained to the World Trade Organisation that India is not following the correct procedure when hearing anti-dumping cases. Import tariffs are too high on products such as chemicals, drugs and textiles, the EU says, but Indian officials insist they are in line with WTO rules. The cost to European exporters is put at about 50m euros (35m;$61m) a year.

CALL FOR MORE LONG-TERM MORTGAGES

Many UK home buyers are unaware of the benefits to be had from long-term fixed rate mortgages, according to a report commissioned by the Treasury. Instead, they look for the lowest initial repayments, even if the cheap deals last for only a couple of years.

EUROPEAN GO-AHEAD FOR RAIL ROUTE

European officials have cleared a joint venture between Keolis of France and Britain's FirstGroup to operate a train service in northern England. A new company, Trans-Pennine Express, will link cities including Liverpool, Manchester, Leeds and Newcastle. The two firms are involved in other UK rail franchises, but the European Commission says the "operation does not ... present any competition concerns". The deal includes 260m of new trains and a pledge to improve punctuality.

UK MOVING UP POVERTY LEAGUE

The UK may soon move out of the bottom of the European poverty league because of "real progress" by government since 1997, say experts. The latest figures suggest poverty has dropped below levels of the early 1990s, but progress has been slower on education and regional inequality.

TRADE DEFICIT NARROWS SLIGHTLY

Britain's trade deficit with the rest of the world narrowed by less than expected in October, according to the latest official figures. The Office for National Statistics said the UK imported 4.4bn worth of goods more than it exported in October, above forecasts of around 4.0bn. The higher than expected deficit partly reflected production problems at a refinery, boosting petroleum imports. However, the deficit for October was down from the previous month's 4.7bn.

 

 

US ON TOP IN TECH COMPETITIVENESS

The US is using information technology to boost economic growth more than any other country in the world, according to a World Economic Forum (WEF) survey. Singapore is in second place, with European nations such as Finland and Sweden accounting for 11 of the top 20.

DOW JONES BRIEFLY HITS 10,000

The Dow Jones briefly broke above the 10,000 points level for the first time in 18 months on December 9. It went through the psychological level after investors correctly anticipated that the US Federal Reserve would leave interest rates on hold at 1%. The index, listing firms like Microsoft and GE, reached the milestone in the first minutes of trading. However, the Dow Jones could not hold on to its gains and quickly fell back below 10,000 points again. It closed at 9,923.42, down 41.85 or 0.4%, after some investors decided to cash in on their winnings.