INTERNATIONAL

 

June 07 - 13, 2004

 

1.INTERNATIONAL

2. PAKISTAN

3. GULF

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OLYMPICS 'MAY COST GREECE DEAR'

The 2004 Olympics has already given host nation Greece a significant economic boost but experts have warned it may be in for a hard landing.
PricewaterhouseCoopers (PwC) warned soaring costs and budget overruns could leave the country with hefty debts. The Games itself is estimated to result in a 3% budget deficit, PwC said. Operating costs of running the games have soared from 500m euros to 2bn while reports claim the total cost of Olympic spending is near 10bn euros.

 

 

With the host nation responsible for infrastructure projects linked to the Games such as the Olympic Village housing and new transport links the Greek government's budget for the Games has ballooned from 2.5bn euros to 4.6bn euros. But, PwC says that even this estimate may still be too low as the newly elected government has accused the previous administration of "losing control" of Olympic spending. In fact, some costs have not even been included on the Olympic bill, PwC added.

Up to 1.3bn euros for transport improvements and the 600m euro athletes' village have been excluded the latter because it is being built by the Workers Housing Organisation and will be sold off to low-income families after the Games.

With most activity and expenditure on the event concentrated in 2003-2004, the government's budget deficit has more than doubled since 2002, the study adds.

Official figures show the 2002 deficit was just 1.4% of gross domestic product (GDP), but a year later this had risen to 3.2% of GDP way above EU limits and sharply higher than the country's original 0.9% target. EU forecasts suggest the figure will remain the same in 2004 before dipping back to 2.8% a year later.

AFRICA'S 'TRAGIC' ECONOMIC RECORD

Africa's growth record in the post-colonial era has been an "economic tragedy," according to a report from the World Economic Forum.

In a damning assessment of the continent's economy, the report says income per head has fallen by 11% in sub-Saharan Africa since 1974. The long-awaited revival of the African economy has not yet taken place," it concludes.

The report was unveiled at an economic summit in Mozambique's capital, Maputo.

It looked set to overshadow the conference, aimed at taking stock of an ambitious plan to revitalise the African economy.

The plan dubbed the New Partnership for Africa's Development, or Nepad commits African nations to improving financial accountability and raising governance standards in order to boost investment from rich countries.

The WEF report ranked Botswana top out of 25 African countries in terms of competitiveness, crediting the quality of its political institutions and its stable macroeconomic environment. Tunisia was in second place, followed by South Africa, while Chad came bottom of the league.

WEF chief economist August Lopez-Claros acknowledged that the report's findings were not encouraging, but stressed that they could be used to draw up solutions to Africa's problems.

"African countries do not, on the whole, perform well in this study," he said.

"It is difficult to pinpoint a single group of African economies that have experienced high, sustained per capita income growth.

US OIL PRICES BREAK NEW RECORDS

US oil prices closed at a record $42.32 a barrel, after an attack by Islamic militants on a residential compound in Saudi Arabia which left 22 people dead.

There is growing concern that al-Qaeda-inspired violence may now target the disruption of oil supplies from the world's biggest oil exporter.

Recent attacks have focused on offices and housing compounds rather than on stopping the flow of oil.

Brent crude had surged $2.50 to $39.08 by the close in London trade.

Meanwhile, US light, sweet crude closed more than 6%, or $2.44, higher in New York at $42.32 just off record highs of $42.38.

DISCOUNTS DRIVE US CAR SALES RISE

US car sales picked up in May despite surging oil prices, as heavy discounts lured in more buyers.

General Motors (GM) reported a better than expected 6.5% jump in sales, boosted by an 11% surge in truck sales.

Chrysler, meanwhile, reported a 5% increase on strong demand for its new flagship sedan, the Chrysler 300.

But Japanese carmakers made the biggest gains, increasing market share by 2% despite offering smaller incentives than domestic rivals.

Nissan sales were up 24% on the previous year, with Toyota, now the US number two seller, up 8.4%.

Toyota' spent more on incentive packages including loan rebates and discounts than its Japanese rivals at an average of $2,982.

But that was significantly below even the least generous US carmaker, Ford, which averaged $4,297.

 

 

In total, Japanese firms saw sales rise 9.9% to 567,000, against an overall rise of 3.4% in US sales to 1.63 million units.

AUSTRALIA'S ECONOMIC GROWTH SLOWS

Australia's economy slowed down in the first quarter of 2004, hit by a poor trading performance and a cooling housing market, official data showed.

The economy expanded just 0.2% in the first quarter of 2004, compared to 1.3% in the last three months of 2003, the Australian Bureau of Statistics said.

But the strengthening global economy should improve Australia's performance, Treasurer Peter Costello said. Record highs for the local currency against the US dollar hurt exports. Falls in the US dollar helped push Australia's currency to a seven-year high of 80.05 US cents in February 2004.

US OUTPUT SEES UNEXPECTED SURGE

United States industrial production rose unexpectedly in May, according to the Institute for Supply Management. The industry body's index rose to a forecast-beating 62.8 in May from 62.4 the month before. Factory employment reached the highest levels seen in 31 years, although the price paid for goods dropped.

A healthier jobs market will give the Federal Reserve more reason to raise interest rates from 46-year lows of 1%, analysts said. Interest rates are expected to rise this month for the first time in four years.

TAKEOVER PLAN VALUES M&S AT 9BN

Retail entrepreneur Philip Green has revealed the outline terms of a possible bid for Marks & Spencer. Existing M&S shareholders will be offered up to 7bn in cash as well as a 25% stake in a newly-listed company, valuing the firm at an estimated 9bn.

VISA DELAYS 'COST US FIRMS $30BN'

Delays in granting visas for business travellers have cost US firms at least $30bn (16.2bn) since July 2002, says a survey by eight corporate lobby groups.

Extra security checks were introduced in July 2002, forming part of the greater vigilance in protecting the US after the 11 September 2001 attacks.

But delays, and a new vetting system, have brought lost sales and higher costs, the Financial Times reported. Companies dealing with politically sensitive technology were worst hit.

RUSSIAN TYCOON TO REFORM GEORGIA

Georgia's Government has handed control of the economy to a Russian tycoon, in an attempt to kickstart radical reform.

Kakha Bendukidze, a millionaire who owns the United Heavy Machinery (OMZ) group, becomes economy minister with a brief for "ultra-liberalisation".

Mr Bendukidze, who was born in Tbilisi, has long argued for reform in Russia and has sided with liberal tycoons such as the imprisoned Mikhail Khodorkovsky.

Georgian President Mikheil Saakashvili wants to see economic growth take off.

MOBILE COMPETITION LIFTS CARPHONE

 

 

New handsets and fierce competition between rival networks have helped to boost profits at phone retailer Carphone Warehouse.

Pre-tax profit for the 12 months to 27 March came in at 44.5m ($81.4m), compared with 34.5m last year.

The firm said its new landline service TalkTalk now had 385,000 users in Britain and it expected to reach 900,000 customers by March 2005.

Carphone Warehouse operates about 1,200 stores across 10 European markets.

BIG NIGERIA PHONE DEAL CALLED OFF

A South African mobile phone giant has pulled out of a $200m deal with Econet Wireless Nigeria (EWN).

In a statement, Vodacom said the pair had "mutually agreed to terminate their current management agreement on an amicable basis".

Vodacom also said its deputy chief executive, Mthobi Tyamzashe, had been sacked amid a management shake-up following the Nigeria decision. It followed mounting speculation that Vodacom was set to ditch the deal.

ARGENTINA MAKES NEW OFFER ON DEBT

Argentina has unveiled a new offer to repay most of its multi-billion dollar debt including overdue interest demanded by creditors.

Under the offer, Argentina will cut its almost $100bn debt by $60.9bn as well as issuing $38.5bn more in new bonds.

"The proposal is made with assumptions that do not put in risk the future of Argentina," Economy Minister Roberto Lavagna said. He added the deal represented a 75% cut in the present net value of the debt. The original offer made by the government referred only to the nominal, or face value, of the debts.

In 2002 Argentina defaulted on almost $88bn of debt, in the midst of its worst-ever economic crisis, and investors have not seen their money since.

RENAULT LAUNCHES 5,000 EURO CAR

French carmaker Renault has unveiled its budget 5,000 euro (3,335; $6,110) car as the company attempts to drive growth in emerging markets.

Renault hopes the new Logan sedan will help it achieve annual sales of four million vehicles by 2010.

PROFITS RISE AT CABLE & WIRELESS

Telecoms group Cable & Wireless says it has started to turn the company around after reporting an upturn in profits.

Releasing its annual results, the firm made a pre-tax profit of 317m for the 12 months ending 31 March, compared to 79m for the year before.

UK RETAIL SALES SPARK RATE RISE FEAR

Retail sales grew at their fastest pace in more than two years last month as shoppers continued to flock to the High Street, according to the CBI.

Its latest distributive trades survey showed 65% of retailers reported sales up on a year ago in May, while only 14% said they were down.

This was the strongest reading since April 2002 and is likely to trigger calls for more UK base rate rises.

Increased consumer spending could force a rise as early as next week.

The Bank of England's Monetary Policy Committee (MPC) now looks increasingly likely to abandon its steady approach of raising interest rates once every quarter and go for a more aggressive stance, economists warn.

CHINA TIGHTENS BANKING CHECKS

China's banking regulator has ordered tighter scrutiny of bank lending as part of a government campaign against reckless investment.

Loans to build new industrial and commercial premises will be halted unless they have received government approval, it said.

The China Banking Regulatory Commission told all domestic lenders to carry out checks on loans above 30m yuan ($3.6m). Beijing is trying to curb imbalances in China's fast growing economy.

SHOPS 'TO SCORE WITH EURO 2004'

Euro 2004 could provide a huge boon to the UK economy, but could mean a headache for the Bank of England's rate setting committee, economists say.

Spending by business and consumers may hit 1.05bn, the Centre for Economic and Business Research (CEBR) said.

But the boost may distort retail sales data making it hard for the Bank to judge the impact of recent rate rises.

The football tournament kicks off in Portugal on 12 June. By contrast, the 2002 World Cup hurt the UK economy.

WOODSIDE TO PUMP MAURITANIA OIL

Woodside Petroleum said it plans to invest A$8370m ($600m) in developing Mauritania's Chinguetti oil project, off the West African country's coast.

The Australian firm's decision to go ahead with production is a boost for one of the world's poorest states.

Woodside expects to extract 75,000 barrels of oil a day from Chinguetti, starting production in March 2006.

Woodside said the field could account for 12% of its annual revenue by 2008; its shares rose 2.5% in Sydney.

CENTRAL AMERICAN TRADE DEAL DONE

A Central American Free Trade Agreement (Cafta) has been signed by the US and five countries in the region.

Cafta should help ease poverty, foster development and strengthen democracy in the region, US Trade Representative Robert Zoellick said.

Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua signed the deal.

The agreement, which is subject to approval by US Congress, was opposed by labour activists and environmentalists. They say the deal will cause suffering for workers and farmers, as well as for the land itself.