INTERNATIONAL

 

May 31 - June 06, 2004

 

1.INTERNATIONAL

2. PAKISTAN

3. GULF

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UK'S MANUFACTURING RECOVERY 'PICKS UP'

The UK manufacturing recovery is continuing apace, with rising demand pushing order books to six year highs.
The CBI industrial trends survey showed 24% of firms, driven by rising exports, reporting higher than normal orders, with 23% reporting less than normal.
The balance of plus 1 for March was the highest level since February 1998, and up from minus 14 last month.
Following the positive report the CBI raised expectations for growth to 3.2% from the 3% predicted three months ago.

 

 

 

 

The CBI said: "All signs in this survey point to the manufacturing sector going from strength-to-strength."

Increased demand at home and abroad was behind the improvement with the export orders balance standing at minus 3, up from minus 9 in April.

The figure, the best since February 1996, was also helped by a weakening of the pound over the past month.

Declining stocks and increasing demand have also resulted in sector expectations of increased production with output expectations at their strongest level since May 1999.

Only the textiles and motor vehicle sectors expect output to slip while metal manufacturers and electrical engineers have forecast the sharpest rises.

"Strong consumer spending fuelled by low unemployment, rising take home pay, willingness to borrow and a strong housing market is driving the economy," said the CBI.

But the organisation said rising oil prices and financial market instability could impact on the rosy outlook.

ASIAN DEMAND LIFTS JAPAN'S TRADE

Japan's trade surplus in April leapt 30.3% on a year ago, powered by exports to Asia, where demand for steel and electronic goods is high.

Japan's surplus on trade in goods for April rose for the tenth month in a row to 1.07 trillion yen ($9.63bn), the Finance Ministry said.

Japan's trade surplus with Asia grew 62.6% in April, whereas its surplus with the US shrank 2.4%.

Overall, the trade data is yet another sign of healthy growth in Japan.

Japan, the world's second-biggest economy, has beaten forecasts by growing 1.4% in the first quarter of 2004.

Export growth has helped the domestic economy as the feel-good factor has spilled over into business and consumer spending.

"The brisk exports of digital and steel products to Asia contributed to the high levels of trade surplus in Asia," a Finance Ministry official said.

The stronger yen and changes in the auto industry were behind Japan's declining trade surplus with the US, with car exports dropping nearly 15% from levels seen in April last year.

"Japanese automakers are shifting production overseas," said Shuji Shirota, an economist at Dresdner Kleinwort Wasserstein.

Japanese exports to the US fell 2.4%, as did imports from the US.

Japan's trade surplus with the EU rose 1.6% to 275.2bn yen, with both exports and imports rising more than 3%.

In Asia, Japan had a trade deficit with China, though this shrank 2.6% to 203.5bn yen, and trade surpluses with South Korea, Singapore and Taiwan.

HUNDREDS DEAD IN HAITI FLOOD TOWN

As many as 1,000 people are feared dead in a remote Haitian town left submerged by disastrous floods.

About 300 bodies have been found so far in the south-eastern town of Mapou, which was described as "a lake".

Rescue workers are moving to try to help thousands of survivors who may have lost relatives, their homes and access to clean water and food.

Disinfectant is to be sprayed in the nearby Dominican Republic town of Jimani to stop the spread of disease.

More than 900 people have been confirmed dead from the floods across Haiti and the Dominican Republic which make up the Caribbean island of Hispaniola.

Two teams of United Nations disaster relief experts will set off for the island.

Aid workers are scrambling to get chlorine tablets and first-aid kits to Mapou and other stricken towns, helped by US-led peacekeeping forces.

The multinational forces were sent to Haiti to help keep order after the February overthrow of President Jean-Bertrand Aristide.

Three helicopters carrying water, chlorine purification tablets and other supplies have been sent to Mapou and Fond Verettes, where 165 people are said to have died.

Another 100 bodies have been found in the coastal town of Grand Gosier.

"Mapou is in the middle of a valley and the village is practically under water," spokesman Lieutenant Colonel David Lapan told Reuters news agency.

"It is like a lake when you look at it from the air."

MANUFACTURING BOOSTS SOUTH AFRICA

South Africa's economy expanded at an annual rate of 3.1% in the first quarter of 2004.

The gain was the result of a sharp upsurge in manufacturing, coming out of a long recession which had been exacerbated by the strong rand.

Agriculture also began to recover from a lengthy drought, which had seen the sector shrink 9.5% in the previous quarter.

The growth marks a turnaround from the 1.3% registered at the end of 2003.

SOUTH KOREA OUTPUT SLOWS DOWN

South Korea's industrial output grew a less-than-expected 11.3% in April because of weak domestic spending, officials have said.

Growth was led by the semi-conductor industry whose production climbed 62% year-on-year.

But car manufacturing grew only 2.9% due to lower domestic demand for cars.

"Production maintained growth momentum on strong exports, while investment and consumption remained sluggish," the National Statistical Office said.

 

 

Consumers have not been spending because of debt worries, analysts said.

Growth, which amounted to 11.6% in March, had been expected to rise to 12.4% last month.

PHILIPPINES ECONOMY RACES AHEAD

The Philippines economy grew at its fastest rate in five years in the first quarter of 2004, as farming output and consumer spending rose, officials said.

The rise in GDP up a seasonally adjusted 2.2% from the fourth quarter led the government to retain a forecast of 5.8% growth for the year.

This is despite high oil prices, which will hit a country where almost all of its energy requirements are imported. Officials warned high oil costs could mean inflation reaches 5% in 2004.

INDIA GOES COOL ON PRIVATISATION

India's new government has scrapped key elements of its predecessor's privatisation programme. The communist-backed coalition, led by the Congress party, said in a policy statement that it would not sell off profitable state-run firms. Privatisations of loss-making firms would be decided "case-by-case".

Earlier, Indian share prices posted a near-record slump amid fears that the new coalition would reverse the BJP government's economic reforms.

The prospect of slower progress on reform has also spooked foreign investors, who have sold some $800m worth of Indian shares so far this month.

BRAZIL AND CHINA UNITE ON TRADE

China and Brazil have pledged to widen collaboration in world trade talks.

The two countries are already members of the G20 bloc of developing states, designed to counter US and European bargaining power on trade.

In a statement issued in Beijing, the two said they would work to ensure the World Trade Organisation's negotiations "reflected everyone's interests".

Brazil's President, Luiz Inacio Lula da Silva, is in China to heighten economic links between the countries.

The two countries are among the main protagonists in the G20's efforts to make world trade talks more beneficial to developing countries, not least the grouping's defeat of EU and US proposals in Cancun in 2003.

Brazil and China already have a strong trading relationship, worth $8bn in 2003 and more than five times the level of 2000.

JAPAN'S BANKS BACK IN THE BLACK

Japan's financial sector marked a return to health last week as most of the country's biggest banks looked set to make it back to profitability.

Of the top seven banks, Mizuho the world's largest bank by assets and four others all reported solid figures.

Mizuho's 407bn yen profit ($3.6bn; $2bn) followed a 2.4 trillion yen loss in 2002-3.

But UFJ, the number four "megabank" in Japan, said it had made a loss as heavy bad debts continued to weigh it down.

UFJ reported a loss of 402.8bn yen, making three straight years of losses.

Its bad debts rose to 3.95 trillion yen, up 6.5% in six months, and its president has announced he will resign.

And Resona Holdings, the fifth-biggest bank, also recorded heavy losses as its efforts to clean up its balance sheet ate into its bottom line.

Resona, effectively nationalised in 2003 as its bad-debt losses mounted, said losses doubled in the year to March 2004 to 1.66 trillion yen.

KERRY ATTACKS BUSH FOREIGN POLICY

Democratic White House challenger John Kerry has pledged that if elected president, he would build new alliances around the world to fight terrorism.

In a major speech on national security in Seattle, Mr Kerry said his top priority would be preventing terrorists from "gaining weapons of mass murder".

Attacking President Bush's decision to go to war with Iraq, he vowed to work with other nations on key issues. Mr Bush's campaign spokesman dismissed the speech as political rhetoric.

CUBA AND MEXICO MOVE TO MEND TIES

Cuba and Mexico are to return their respective ambassadors to try to mend relations strained earlier this month.

Mexico, once Cuba's strongest ally in Latin America, accused Havana of interfering in its affairs and pulled out its envoy on 2 May. Cuba responded by doing the same with its ambassador in Mexico City.

TRADE 'NOT EASING' POOR'S PLIGHT

The world's least developed nations are not benefiting as they should from globalisation, a UN report says.

Although poorer nations were showing encouraging signs of growth, their populations were not seeing the advantages of it, the report says.

It says poverty remains a mass phenomenon, and international trade which should contribute to poverty reduction has not really done so. The report was issued by the UN Conference on Trade and Development.

TELEGRAPH SALE GETS THE GO-AHEAD

Hollinger International, the publisher of the Daily Telegraph and its stable mates, has cleared the way for the sale of the newspapers to proceed.

The company said its board had decided to focus on the UK properties, rather than sell the group as a whole.

At least four bidders are after the Daily and Sunday Telegraph and the Spectator magazine.

MYTRAVEL NARROWS LOSSES

Holiday firm MyTravel has managed to cut its losses but warned it is still battling tough market conditions.

The firm revealed it had narrowed its pre-tax loss to 199.6m ($364.5m) for the six months of the year, from 617.9m for the same period in 2003.

PEOPLESOFT SPURNS TAKEOVER OFFER

Business software group PeopleSoft has rejected the latest takeover offer from US rival Oracle. California-based PeopleSoft described Oracle's lowered hostile bid for the company as "inadequate".

Oracle dropped its cash offer by 19% earlier this month, to $7.7bn (4.2bn), following a decline in PeopleSoft's share price.

Peoplesoft's board has already rejected three previous Oracle bids, including one offer at $9.4bn.

SHARES WARM TO INDIA FINANCE TEAM

India's stock markets have given a warm welcome to the finance minister chosen by the Congress Party-led government.

The appointment of Palaniappan Chidambaram, who served in the same post from 1996 to 1998, saw the Bombay Sensex index rise 3.2% to 5,120.67.

Mr Chidambaram, a graduate of Harvard Business School, reformed and cut taxes during his previous term.

CONSUMERS SHRUG OFF UK RATE RISE

The Bank of England's latest interest rate rise has done little to sway UK consumer confidence, despite warnings that purse strings must be tightened.

According to the latest survey from Martin Hamblin GfK, consumer confidence was unchanged at minus 2 during May.

This was one point higher than in the same period last year and above the annual average.

RETAIL WOES HIT JAPAN'S RECOVERY

A surprise dip in retail sales has raised questions about the strength of the Japanese economic recovery.

Official figures show that the retail sector's takings fell by 1% on the month in April, and by 0.8% compared with the same period last year.

The data wrong-footed forecasters, who had predicted a year-on-year decline of just 0.2%.

The figures contradicted recent signs that strong export sales were feeding through to increased consumer demand.

EUROPEAN RETAILERS BET ON CHINA

German retailer and distributor Metro and UK supermarket chain Tesco are both looking to expand in China.

The German retail giant plans to open 10 more stores in China this year, and another 40 within five years.

Meanwhile, Tesco chief executive Terry Leahy said the firm plans to open stores in China and across Asia.

Retailers regard China which saw 9% growth last year and has a population of 1.3 billion people as offering huge market potential.

 

 

NO SLOWDOWN IN UK HOUSING MARKET

The UK's housing boom is showing no signs of weakening, according to the Nationwide building society.

The mortgage lender has now admitted there is a risk its forecast of 15% price growth this year may be too low.

Its latest survey showed house prices rose by 1.9% in May, compared with a 2.1% increase in April.

The rise meant annual house price inflation hit 19.5% the highest level since May last year. The average house now costs 149,020, Nationwide said.

BRUSSELS OBJECTS TO SONY-BMG DEAL

Music giants Sony and BMG have two weeks to respond to objections from the European Union about their plans for a merger.

Brussels' objections to the deal remain confidential, but are understood to centre on market share. Combined, the two would rival Universal for top spot in the $30bn industry.

ALSTOM LOSSES ACCOMPANY EU DEAL

Alstom has unveiled the details of a rescue plan which could pump as much as 2.5bn euros ($2.2bn; 1.2bn) into the troubled French engineering company.

The company is trying to repair itself after a string of business disasters.

At the same time, the firm announced a loss of 1.84bn euros for 2003, much bigger than analysts had predicted.

PROPERTY 'CAN'T REPLACE PENSION'

Britons hoping their homes will provide an alternative nest-egg to a pension are mistaken, a report has said.

Rather than choosing property or pensions, most people even in wealthy areas will need both, the Pensions Policy Institute (PPI) has said.

While pensions have suffered and house prices have boomed, the PPI says pensions are better in the long term.

Pension funds have risen by an average of 11.6% a year since 1970, while homes have grown by 11.1% a year, PPI said.

One-in-eight of all working people expect property to be the main source of retirement income. Yet property is unlikely to deliver the returns for all but the very wealthy, said PPI.

AFRICA REGAINS GROWTH TRAJECTORY

Africa's growth picked up in 2003 after a rough 2002, a survey has found.

Rising commodity prices and peace talks in several war zones helped turn things around, said the Organisation for Economic Co-operation and Development.

According to the OECD's African Economic Outlook (AEO), growth was 3.6% in 2003, back to the long-run average after a dip to 2.7% in 2002.

But the figures still leave Africa far off the rate needed for poverty reduction, the report's authors warn.

The Millennium Development Goals set by the United Nations call for a halving of economic poverty levels to 23% of Africans in 2015 from 46% in 1990.

MORTGAGE LENDING CONTINUES BOOM

The UK's appetite for mortgage debt continued rising in April, but existing borrowers showed growing caution.

Mortgage lending in April totalled 25bn 25% higher than the same month last year and 1% more than March, the Council of Mortgage Lenders (CML) said.

But there was a marked drop in people mortgaging to release cash from their property or to get a better rate.

Remortgaging slowed to 33% of the total market, the lowest level since September 2002.

At 9.2bn the value of remortgaging fell from 10.1bn in March, and was 5% lower than last April's figure of 9.7bn. Then it accounted for 49% of new lending.

PUTIN PUSHES FOR URGENT BOOST IN EXPORT CAPACITY

Russian President Vladimir Putin said last week ministers must approve new crude oil export routes faster, criticising officials for taking years to rubber stamp plans for new pipelines.

Output in the world's second largest oil exporter has boomed over the past five years and an export boost could help world consumers diversify away from Middle East suppliers a key target of global powerhouse the United States.

But Russia's main export routes are running at capacity, making it difficult for Moscow to cash in on record oil prices.

"The government has been unable to determine its priorities for some time, while this issue should have been solved a long time ago," Putin told both houses of parliament in his annual state of the nation address.

Russian output hit a post-Soviet high of 9.01 million barrels per day in April, outpacing the most optimistic official growth forecasts of seven percent for the year.

GASUNIE PUSHES AHEAD WITH PIPELINE TO UK

Dutch gas company Gasunie is pressing ahead with plans to build a 500-million euro ($606 million) pipeline to Britain after the European Commission agreed the project should be exempt from rules on shared access.

Former state monopoly Gasunie said the pipeline would be ready to pump gas to Britain by the end of 2006, placing it ahead of several other projects to supply the UK, which needs new sources of the fuel to replace its dwindling North Sea reserves.

Gasunie said it decided to go ahead with the project after the European Commission granted the pipeline an exemption from forthcoming laws forcing pipeline operators to allow other companies to use their facilities.