Aug 30 - Sep 05, 2004






A recovery in the world's largest economy is likely to continue, despite oil prices surging to record levels, US Federal Reserve officials said.
Speaking on US television last week, Fed governor Ben Bernanke said that while higher oil costs may slow expansion, they would not derail it.
Dallas Federal Reserve Bank President Robert McTeer echoed this optimism during a separate TV appearance.
Markets have become jittery in past weeks amid concerns about oil supply.



The Fed, which raised US interest rates two weeks ago, is more optimistic about the outlook.

"There's going to be a little bit of a slowdown effect," Mr Bernanke said during an interview on PBS's 'Nightly Business Report'.

"But at current levels, anyway, I think it won't derail what looks like a self-sustaining expansion at this point."

He added that consumer spending "has picked up fairly considerably... and that is going to support growth going forward".

On business channel CNBC, Mr McTeer also underlined the robustness of the US economy.

"I don't think it is in jeopardy," he said. Growth "is self-sustaining and it's not terribly fragile".

Helping soothe investors' nerves further, the price of oil on Monday fell back from recent record highs after pumping in northern Iraq resumed.

Southern exports also are returning to normal levels following militia threats to pipelines.

A barrel of New York light crude fell 67 cents to $46.05, while in London, benchmark Brent Crude slid 51 cents to $43.03.

Analysts said that any dip may be short term and prices still may top the $50-a-barrel mark.


China's leaders should not relax their efforts to cool the country's fast-growing economy, the International Monetary Fund has warned.

The IMF's latest health check on China's booming but unbalanced economy found that "a soft not yet assured".

It urged China to introduce a more flexible exchange rate without delay.

The IMF now expects China to grow 9% in 2004, beating an earlier forecast of 8.5%, before cooling to 7.5% in 2005.

The IMF found signs that Beijing's efforts to curb reckless lending for expansion projects by its undisciplined banking system are paying off.

But it remains concerned that China's rapid growth could still tip over into a damaging crisis if pressure on the banks is not maintained.

Beijing has issued a blizzard of edicts warning of tougher scrutiny of bank lending, freezes on loans for new factories in over-supplied sectors like steel, and penalties for officials who ignore these guidelines.

The IMF warned of the limitations of political pressure as a method of regulating the economy, pointing out that "if the administrative controls become less effective, credit growth could take off again".

Many economists think that sweeping reforms to China's financial institutions are needed to introduce more effective credit checking systems and market-driven controls.

China's banks are weighed down by bad loans to state enterprises, estimated at 45% of loans by credit agency Standard and Poor's.


Asia's surging economic growth has helped to reduce levels of poverty in the region, a report has said.

The Asian Development Bank (ADB) estimated that the number of people living on less than $1 a day fell to 22% of the region's population in 2002.

That compares with 34% in 1990 and shows "considerable progress in the fight against poverty", the bank said.

The poor may be getting richer, but the gap between the haves and have nots continues to widen, the ADB said.

Some areas have lagged and the ADB identified South Asia as a region where more needs to be done.

The ADB found that 93% of the extremely poor, those living on or below the $1-a-day threshold, were to be found in India, China and South Asian countries.

In India, 357 million people were living in extreme poverty, with 203 million in China and 77 million in South Asia.


Higher oil prices and rising interest rates are likely to lead to a slowdown in spending on the UK High Street, business leaders have predicted.

The Confederation of British Industry said it was now reducing to 2.8% its forecast for economic growth in 2005.

The CBI said the Bank of England "must not overdo" interest rate rises as recent moves seem to be having the desired effect of calming the economy.

The group assumes interest rates will reach 5.25% by early next year.

The Bank of England should not raise rates above that figure, the CBI said in its quarterly economic forecast.


UK scientists have developed a process for making hydrogen from sunflower oil which could prove an important future source of eco-friendly energy.

A University of Leeds team says the development could make hydrogen-powered vehicles a more realistic proposition.

The researchers envision a small unit inside a car that would pull hydrogen out of the oil to drive a fuel cell.

The team has presented details of its research to the annual meeting of the American Chemical Society.

As petroleum supplies gradually dwindle and the impacts of global warming become more pressing, the arguments in the eyes of some people for moving from an oil-based economy to one based on hydrogen become more and more persuasive.

But making hydrogen can be expensive and with some methods will produce as much greenhouse gas as oil-burning itself.


German economic growth has picked up in the second quarter, driven by strong demand for exports.

Europe's largest economy grew by 0.5% in the three months to the end of June from the previous quarter and 2% from the same period a year earlier.

Analysts however question whether the economic recovery can be sustained.

They expect exports to fall in the second half of the year and fear that domestic demand will not be strong enough to compensate for this fall.


The number of Americans who slid into poverty last year rose despite US economic growth, official data shows.

Figures from the US Census Bureau show that the ranks of the poor grew by 1.3 million people to 35.9 million.


The number of mortgages approved for house purchases fell by more than a fifth in July, according to the British Bankers' Association (BBA).

A total of 70,756 new loans were approved in July, down from 88,859 in June and almost 90,000 lower than in the same month last year.


Nigeria's Senate is reportedly to ask a Shell unit to pay $1.5bn (0.84bn) compensation to oilfield communities for environmental damage.

"The motion was overwhelming passed and the Senate Committee on Petroleum was asked to monitor compliance," Reuters quoted a Senate spokesman as saying.

Shell Petroleum Development Corp (SPDC), owned by Royal Dutch/Shell, said it was unaware of the ruling.

The resolution is said to follow a petition by members of the Ijaw tribe.

They are based in the southern Bayelsa state, where Shell and other multinational companies have operations.

SPDC operates through a joint venture in Nigeria, in which it owns 30% while state-run Nigerian National Petroleum Corp owns 55%.


South Africa's economic growth has accelerated in the first half of 2004, the country's central bank has said.

All major industries have seen a pick up, helped by low interest rates, high commodity prices and government policy, the South African Reserve Bank said.

The economy grew by an annualised rate of 3% in the six months through June, up from 1% a year earlier.

The central bank said that conditions are now favourable for faster and more sustainable job and economic growth.


China will raise domestic petrol and diesel retail prices by 6% as crude oil prices stay near record highs.

Gasoline prices are expected to rise by 240 yuan ($29; 16) a tonne last Wednesday while diesel will rise by 220 yuan per tonne, industry sources say.

The cost of crude oil has climbed by almost 50% this year, pushing prices close to the $50-a-barrel mark.

China is one of the world's biggest oil importers and its demand for oil is seen as a main cause of high prices.


India's parliament has passed the national budget amid a boycott by opposition parties.

There was no discussion on tax proposals announced as part of the 4,780 billion rupees ($104bn) budget.

The lower house passed the budget by a voice vote as opposition MPs stayed away after alleging that Prime Minister Manmohan Singh had insulted them.

Parliament has been disrupted for weeks by a political standoff over ministers facing criminal charges.

The main opposition BJP says the prime minister refused to discuss the budget at a private meeting.

But the prime minister's office has denied that Mr Singh had insulted the opposition leaders saying Mr Singh had only said that any discussion of the budget should take place in parliament and not outside it.


Tour operators in Nepal say that they lost up to five million dollars due to cancelled bookings by foreign tourists last week.

They blame the cancellations on what they say was exaggerated reporting on the week long Maoist-imposed blockade of the capital, Kathmandu.

The rebels lifted the blockade last Wednesday amid mounting national and international pressure.

The blockade sent prices up and put pressure on the new government.


Supermarket chain Sainsbury's has agreed a new milk supply deal which could benefit hundreds of UK farmers.

Robert Wiseman and Dairy Crest have won long-term supply contracts with the firm, which sells 228m of milk a year.

The dairies take milk from farmers co-operative First Milk set up to get a fairer deal for farmers who said they were being squeezed by supermarkets.

Wiseman expects to pick up an extra 60-70m at retail value from the deal and Dairy Crest a further 8m.

As a result of the agreement, Sainsbury's milk supply deal with Arla Foods will end in January 2005.


Brazil is to get a $1.2bn (0.67bn) loan from the World Bank over four years to help protect its environment.

The bank says it is the largest single loan given to protect a country's environment, with an initial payment being made this year of $505m.

The cash is to ensure Brazil, thought to have the greatest biodiversity on earth, considers environmental issues and management in government policies.

"For us, this (loan) is highly relevant," said a government minister.

The money will be used to hire more environmental experts to quicken the process of licensing projects, including offshore oil rigs and hydro-electric plants.

The country will have 17 years to pay back the loan at an interest rate of 4.9%.


Southeast Asia's free trade agreement should not include tobacco because of the health risks and costs, the World Health Organisation (WHO) has said.

The Association of Southeast Asian Nations (Asean) plans to cut tariffs between members to under 5% by 2008.

The WHO urged that tobacco be exempt from the agreement so that governments can raise prices to discourage its use.


Turkish Cypriots have begun trading with their Greek Cypriot compatriots in the south of the island for the first time in three decades.

The introduction of inter-island trade is part of a package of EU measures to boost the economy of northern Cyprus.

It comes after Turkish Cypriots voted in favour of reuniting the island in a poll last April.

But the rejection of reunification by Greek Cypriots meant the north remained excluded from the EU.