INTERNATIONAL

 

Apr 26 - May 09 , 2004

 

1.INTERNATIONAL

2. PAKISTAN

3. GULF

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UK ECONOMY STILL ROARING AHEAD

The UK economy is gathering pace, and looks set for a robust performance this year, output figures have shown. Preliminary gross domestic product (GDP) estimates show the economy growing at a 2.4% annualised rate in the first three months of 2004.
Although this is slower than some forecasts, it leaves the economy poised to meet the Treasury growth forecast of 3-3.5% for the year as a whole. And this makes a further rate rise next month ever more likely. The Bank of 

 

 

 

 

England is reckoned likely to raise interest rates again next month from 4% to 4.25%. The Bank has already signalled by its last two rate rises that it believes the UK economy is growing too fast to keep inflation in check.

Many analysts now expect a further increase in the cost of borrowing early in the new year, with the markets expecting rates to reach at least 5% by the end of the year.

Retail sales were also strong in March as figures released last week showed High Street turnover rising at an annual 6.4%.

This has led to concerns of overheating, and worries about the runaway growth of personal debt. But in the short term, the news is a boost to Chancellor Gordon Brown, not least because value-added tax receipts will be buoyed.

General economic optimism leaves the government on course to plan for a General Election within the next year.

The preliminary GDP figures for the three months between January and March show that the economy grew at 0.6%, 0.1% slower than expected and below the 0.9% recorded in the last quarter of 2003.

WORLD 'FAILING POVERTY PLEDGES'

A new international report warns that most developing countries will struggle to meet agreed United Nations targets for tackling problems of poverty.

The joint study by the World Bank and the International Monetary Fund says the Millennium Development Goals are unlikely to be met on current trends.

The report calls for urgent action by richer countries to take the lead and address root causes of poverty.

It is to be discussed at ministerial meetings in Washington shortly.

The report assesses progress towards internationally agreed objectives for reducing poverty.

The Millennium Development Goals include halving the proportion of the population in extreme poverty, ensuring primary education for all children and reductions in child and maternal deaths by 2015.

On current trends, the report warns, most developing countries will fail to meet most of the goals.

It says the rich countries need to show leadership by living up to the promises they made two years ago at a conference on financing for development.

James Wolfensohn, president of the World Bank, called on governments to change their priorities and spend more on aid.

"The numbers are roughly these: $900bn on defence; $300bn to $350bn on agriculture and $50bn to $60bn on aid, of which about half gets there in cash. That is the fundamental imbalance," he said.

"So we can make all the noise we want, but unless we deal with the fundamentals we'll be playing at the fringes."

FOUR 'TO BUST EUROZONE DEFICIT RULES'

The Organisation for Economic Cooperation & Development has forecast Germany and three other EU countries will again break eurozone deficit rules next year.

Germany, Europe's largest economy, will break the rules for the fourth year running with a deficit of 3.2% of GDP. Worse still will be France with 3.5%. Italy and Portugal will also breach the 3% maximum rule.

Germany is set to grow 1.2% next year down from 1.4% in earlier predictions.

The OECD figures, also included lower growth forecasts for the euro zone as a whole but did not give a figure.

Italy's deficit is predicted to be 4.3% of GDP and Portugal's 3.2%.

Under the rules of the European Union's Stability Pact, euro zone countries are not supposed to run budget deficits above 3% of GDP.

The European Commission wants Germany to cut its deficit by 0.8% this year and bring it down to 3% by 2005. These figures would suggest this will not be attainable.

Germany says that with the economy growing at its current rate it needs more time to comply. In reports over the weekend, German Chancellor Gerhard Schroeder said the government target of 1.5% to 2% growth is within reach.

EU Economic and Monetary Affairs Commissioner Pedro Solbes has in the past said the public finances of these countries are not in a good shape.

Earlier this month he said France and Italy risked breaking the deficit rules next year while Germany seemed to be heading for compliance.

N KOREAN TRAINS EXPLODE IN CRASH

Overseas officials have confirmed a massive blast in North Korea feared to have left thousands dead and wounded. But authorities in the secretive state have not acknowledged any disaster, more than 24 hours after two fuel trains were reported to have collided.

South Korean media reports talk of up to 3,000 people killed or injured in Ryongchon, 50km from China's border. Details remain scarce and there are conflicting reports of survivors going to China, or Pyongyang asking for help.

Confirmation of the blast came first from Washington and Seoul.

KERRY RELEASES MILITARY RECORDS

US Democrat presidential hopeful John Kerry is posting his military records on the internet after questions were raised about his Vietnam war wounds.

Mr Kerry earned three Purple Heart medals in the war for injuries that included shrapnel wounds.

But his former commanding officer has recently said the first medal was awarded for a minor injury.

Mr Kerry rejected the comments as unfair and said: "Those of us who were there know what happened."

Mr Kerry's military service in Vietnam included five months in 1968 and 1969 as the commander of a US Navy swiftboat in the Mekong Delta.

CHINA-US TALKS REACH WI-FI DEAL

China and the United States have reached agreement on several contentious trade issues after talks between the visiting Chinese Vice-Premier Wu Yi and US officials in Washington.

China pledged action ranging from cracking down on rampant intellectual property piracy to opening up the country's goods distribution system and suspending a controversial technology standard on wi-fi wireless Internet.

The two sides hope the measures will help ease tension over the huge American trade deficit with China which looms large ahead of November's US presidential elections.

On the streets of Shanghai you do not have to search hard for counterfeit brand name watches, leather handbags and DVDs. And this counts as a city with a tough enforcement record.

JAPAN'S IMPORT SPURT BACKS GROWTH

Japan's imports jumped in March, while export growth continued, giving further evidence that the world's second-largest economy is still recovering.

Imports rose 6.5% from February and 12% from a year earlier lifted by demand for European-made cars and electronics. Exports gained 1.3% from the previous month and 13% on the year. Sales of cars, chips and steel, especially to China, were the main drivers of growth.

The Bank of Japan said there was "no question" of the economy stalling.

The bank's governor Toshihiko Fukui sounded a cautious note, however, warning that any recovery this year was unlikely to continue at its previous breakneck pace.

Growth in the first three months of this year had probably slowed from the 6.4% expansion rate seen in the fourth quarter of 2003, he said.

 

 

ANGOLA DISCOVERS NEW OIL DEPOSIT

Angola is hoping to unveil more offshore oil wealth at a newly discovered deposit.

Exploration is crucial to the war shattered country since oil accounts for about 90% of its total exports.

The new deposit's potential will be evaluated by national energy company Sonangol and French group Total.

The hope is that the new discovery should help the African nation boost its output to more than a million barrels per day.

BANGLADESH GROWTH UNDER THREAT

Political instability and infighting are threatening Bangladesh's economy, the World Bank has warned.

The country's opposition party, Awami League, has accused the government of failing to tackle corruption and of being wasteful and repressive.

It has threatened "unspecified action" unless the government resigns by the end of the month.

The ruling Bangladesh Nationalist Party (BNP) has called for talks to prevent the situation escalating.

CHIP MAKER SHIFTS DESIGN TO INDIA

Californian chip maker AMD is to set up a design centre in India, the first of its kind outside the United States.

The centre to initially employ 50 engineers will be located in the technology hub of Bangalore.

AMD has said its plan is part of an expansion and would not involve laying off American engineers.

A row is raging in the US over whether the outsourcing of work to the developing world where costs are lower is costing US citizens their jobs.

DAIMLERCHRYSLER DUMPS MITSUBISHI

DaimlerChrysler has refused to bail out Mitsubishi Motors, the loss-making Japanese carmaker in which it holds a 37% stake.

Debt-ridden Mitsubishi Motors has been talking to shareholders about a 700bn yen (3.6bn; $6.4bn) survival plan.

Japan's transport minister has called the decision "a serious matter".

NEW PRESIDENT

Dr Axel Weber, an economics professor at Cologne University, has become the new president of the German Bundesbank.

He replaces Ernst Welteke, who resigned following investigations into a hotel stay paid for by Dresdner Bank.

CHINA SIGNALS A YUAN PEG U-TURN

China may loosen its exchange rate system, the official in charge of running the policy has said. China's leaders have resisted pressure from the US, IMF and the G7 wealthy nations to end the yuan's peg to the dollar, until now.

The peg - at 8.28 to the dollar keeps China's exports cheap on world markets.

Mr Guo is director general of the State Administration of Foreign Exchange, and deputy governor of the central bank, the People's Bank of China.

BROWN URGES 'RESTRAINT' ON PAY

Gordon Brown has insisted he will "not tolerate" inflationary pay deals in either the private or public sector.

In a speech to the British Chambers of Commerce last week, the chancellor urged business leaders not to risk the UK's hard-won economic stability.

Mr Brown said there must be no return to the "bad old days of pay irresponsibility" prompted by signs of a global economic upturn.

LEGAL COSTS HIT MICROSOFT PROFITS

Giant software firm Microsoft's profits have been hurt by the cost of settling a raft of law suits over patents and anti-trust allegations.

Microsoft's profits dropped 38% to $1.32bn (744m) for its third quarter to 31 March, compared with the same period a year earlier.

Legal settlements meant a charge of $2.5bn against its pretax profits.

 

 

But sales rose by a healthy 17% to $9.18bn. Technology sector analysts were delighted at the overall picture.

FRANCE'S LAST COAL MINE TO CLOSE

France is to close its last working coal mine, bringing to an end an industry nearly 300 years old. The last of France's miners is to dig up a symbolic block of coal, kicking off three days of ceremonies to mark the end of an old and proud industry.

The mine, at La Houve near Creutzwald on the German border, is the last of an industry that once employed 300,000 and fuelled France's industrial revolution. Nuclear power now provides 80% of the country's energy needs.

BRITAIN HINTS AT PENSION HELP

The UK Government has given its strongest hint yet that it may be about to help people whose company pension schemes have collapsed.

Up to 60,000 people are thought be facing poverty despite a lifetime of saving responsibly for retirement.

Pensions minister Andrew Smith said his department had been examining the "dreadful situation".

UK CONSUMER DEBT CONTINUES TO SOAR

Mortgage lending in Britain surged ahead in March as consumers' appetite for debt showed little sign of easing.

Total mortgage advances jumped by 19.5% in March to 24.5bn ($43bn) its highest level in four months the Council of Mortgage Lenders (CML) said.

The British Bankers' Association (BBA) also reported bumper figures for the month, with lending through mortgages, credit cards and loans rising.

The figures are likely to raise expectations of an interest rate rise.

AMAZON PROFITS FROM SALES SURGE

Online retailer Amazon has seen its good fortune continue, posting a profit for the first three months of the year.

The group said it had earned $111m (62.7m), compared with a $10m (5.8m) loss for the same time last year.

RATES WILL HAVE TO RISE: GREENSPAN

Federal Reserve Chairman Alan Greenspan has said the US economy is in vigorous expansion and may need higher interest rates to keep inflation at bay.

But he said he was unconcerned about inflation at present, which suggests he may not be in a hurry to raise interest rates from their 46-year low of 1%.

He made his comments to Congress' Joint Economic Committee.

They followed similar remarks a day before, and many investors responded by selling off shares at Wall Street open.

MGM 'IN TALKS FOR $5BN BUY-OUT'

The major US film studio Metro Goldwyn Mayer is in talks about a possible purchase by Sony and two other buy-out firms, US media report.

The talks are said to be at an advanced stage for a deal that could be worth up to $5bn (8.5bn).

Buy-out firms including Texas Pacific Group are negotiating with billionaire financier Kirk Kerkorian to buy his 70%-plus stake.

Talks are understood to be taking place over how to finance any deal.

MGM, Sony, Texas Pacific Group, which may be partnered by Providence Equity Partners in any deal, declined to comment.

PROFITS SOAR AT EBAY

Internet auctioneer eBay has nearly doubled its first-quarter profits, raking in $200.1m (113m), up 92% from $104.2m in the same period of 2003.

The soaring profits came from higher sales as customers won during pre-Christmas promotions stayed loyal.

MOTOROLA PROFIT AND SHARES SURGE

Motorola's first-quarter profit was $609m (342m), compared with $169m a year earlier. Sales were $8.6bn, while revenue from mobile phones jumped 67%. The good news lifted its shares almost 25% in New York trading last week.

FORD PROFITS DOUBLE AS SALES SOAR

Profits at Ford, the second-largest US car maker, have more than doubled during the first three months of 2004.

Net profits rose to $1.95bn (1.1bn) for the quarter, up from $896m during the same period of last year.

COKE BEATS PROFIT FORECAST

Profits at Coca-Cola, the world's largest maker of soft drinks, have beaten analysts' forecasts, helped by rising sales in Europe and China.

First-quarter profit jumped 35% to $1.1bn (638m) from $835m a year earlier. Sales increased to $5bn from $4.5bn.

SONY ERICSSON RETURNS TO PROFIT

Sony Ericsson, the Japanese-Swedish mobile phone maker, says it has closed the gap on rivals and returned to profit in the first quarter of 2004.

Pre-tax profit was 97m euros ($119.5m) in the period, compared with a loss of 113m euros a year earlier.

GERMANY PLANS A NEW TABLOID PAPER

Germany's largest newspaper publisher has unveiled plans to test the market for a new upmarket national tabloid.

From 24 May, Axel Springer Verlag, publisher of the best-selling paper Bild, will begin a trial run for a 32-page newspaper called Welt Kompakt.

The paper will appear from Mondays to Fridays for eight weeks, the firm said.

It will contain editorial from two other ASV papers, Die Welt and Berliner Morgenpost, and is being sold as a companion newspaper, costing 0.5 euros.

BANK VOTED 8-1 FOR UK RATE FREEZE

The decision to hold UK interest rates at 4% earlier this month was approved 8-1 by the Bank of England's rate-setting body, minutes have shown.

Only Deputy Governor Andrew Large favoured a quarter-point rise at the Monetary Policy Committee's meeting.

Despite the decisive vote in favour of a freeze, most analysts still believe the bank will raise rates in May.

They cited the ever-growing rise in house prices, with the Bank itself saying they were "unexpectedly robust".

PENSIONS 'BLACK HOLE' FALLS 60BN

The pension fund deficit facing UK firms narrowed by 60bn during the second half of 2003, the Confederation of British Industry (CBI) has said.

In June 2003 the CBI put the difference between the assets and liabilities of UK company pension schemes at 160bn.

But a stock market recovery has repaired some of the damage and closed the gap to 100bn at the end of 2003.

Nevertheless, the CBI described the pension black hole facing firms as "a major business concern".

RATO FAVOURITE TO TAKE OVER IMF

Rodrigo Rato, Spain's former finance minister, is favourite to become the International Monetary Fund's new head.

Mr Rato's main challenger was Jean Lemierre, the current president of the European Bank for Reconstruction and Development (EBRD).

DENMARK TOPS E-BUSINESS RANKINGS

Denmark is the best place in the world for e-commerce with its Nordic neighbours not far behind, an Economist Intelligence Unit report has found.

The UK ranked second this year, up from third in 2003. The US slipped to sixth.

The research company also believes that the outlook for the technology industry is better than it has been for a while.

It points to increasing global demand for mobile phones and faster internet connections, as well as cheaper and easier-to-use products and software.

UK HOUSE PRICES 'UP 50% ON 2002'

The price of an average home in the UK has risen to 184,582 a 50% rise from the start of 2002, a survey by property website Rightmove has said.

Prices have risen more than 13,000 since January and are climbing at twice the rate of 2003, the survey said.

It added prices rose 2.8% in March from February, taking annual price inflation to 14.4% from 11.9%.