"The trend for consumer spending has not changed,
and the reading for capital spending was revised upwards."
Despite the slowdown, the second quarter of 2004 marked
the fifth straight three-month period of growth for Japan.
The run of expansion broke a pattern of stagnation and
deflation which dogged Japan for much of the previous decade, following
the collapse of asset and property prices in the early 1990s.
But the switch in the growth trend — against
expectations that the number would be revised up to 3.1% — triggered
Government investment — which throughout the late
1990s had single-handedly kept the economy afloat — was a key culprit,
down 7% from the previous quarter.
The reduction is part of efforts to bring the immense
public sector deficit under control.
Also attracting attention were the figures for
machinery orders released earlier this week, which showed an 11.3% fall in
July, and a recent rise in unemployment.
GREENSPAN UPBEAT ON US ECONOMY
US central bank chief Alan Greenspan has said the
economy is emerging from a summer lull despite soaring oil prices.
Mr Greenspan told a Congressional panel that economic
growth had "regained some traction" in recent weeks.
He said that business investment and manufacturing
output were on the rise, while the pace of new job creation had picked up
Mr Greenspan added that last month's record surge in
oil prices had had little impact on inflation.
However, he warned that the US public finances were set
to "deteriorate substantially" in the years ahead unless current
spending policies changed.
Mr Greenspan said extra pressure would fall on the
public purse as members of the "baby boom" generation reached
retirement age and became eligible for subsidised healthcare.
"As a nation, we may have already made promises to
coming generations of retirees that we will be unable to fulfil," he
Last Tuesday, the Congressional Budget Office said the
budget deficit — the amount by which government spending exceeds
revenues — would reach a record $422bn (£232bn) in the year to 30
It also predicted that annual deficits would grow by
more than originally thought over the next decade, partly because of
higher defence spending.
Budget deficits force governments to borrow more and
reduce their scope for fiscal measures aimed at boosting economic growth.
US BUDGET DEFICIT OUTLOOK WORSENS
The US is set to rack up an even bigger budget deficit
than originally thought over the next decade, officials say.
The Congressional Budget Office (CBO) said the deficit
would grow to a cumulative $2.3 trillion (£1.2 trillion) between 2005 and
The CBO had previously forecast a cumulative budget gap
of $2.1 trillion over the decade. The agency added that the deficit for
the year to 30 September 2004 would set a new record of $422bn.
Although a new record, the figure for the current
financial year is slightly lower than the CBO's previous forecast of
It is also smaller as a proportion of the overall
economy than the budget shortfalls recorded during the late 1980s and
OIL MOVES UK TRADE DEFICIT HIGHER
The UK's worldwide trade gap widened in July, as it ran
up a monthly deficit on its oil balance for the first time in more than a
The Office for National Statistics (ONS) said the
deficit widened to £5.16bn in July, its highest since January.
The figure was up on the upwardly- revised figure of
£5.06bn for June.
A drop in North Sea oil production saw the UK import
more oil than it exported for the first time since August 1991.
The UK posted an oil deficit of £61m in July from a
revised £61m surplus in June.
The trade deficit with the European Union (EU) was
unchanged at £2.4bn in July. And the gap with non-EU countries was also
unchanged at £2.7bn.
INDONESIA SHARES SLIP AFTER BLAST
Indonesia's financial markets have reacted with shock
to an explosion at the Australia embassy on Sept 9, with both shares and
the currency sliding.
By 0530 GMT, two hours after the blast, Jakarta's main
stock index was down 3.8%, with the rupiah down almost 1%.
The slide follows four months in which shares have
risen amid hopes for a peaceful presidential poll.
So far six people are feared killed by what police say
was a car bomb, with more than 100 injured.
BRAZIL WINS DOUBLE TRADE VICTORY
The World Trade Organisation has backed Brazilian
complaints against US cotton subsidies and European Union support for
The decisions mark a victory for Brazil, Latin
America's biggest agricultural exporter.
The WTO said the US had paid illegal subsidies worth
$3.2bn (£1.7bn) to its cotton farmers.
In a separate ruling, it said the EU had exported more
sugar than it was allowed to under world trade rules.
The US announced that it would launch an appeal against
parts of the WTO cotton ruling within the next two months.
The EU said it would study the Geneva-based body's
decision on sugar before deciding whether to appeal.
VW THREATENS TO CUT 30,000 JOBS
Volkswagen is threatening to cut 30,000 jobs in Germany
if unions fail to agree to pay freezes in next week's talks.
The carmaker is calling for a two-year pay freeze, amid
declining sales in its key markets — China, the US and Europe.
"If we end up nowhere... this would certainly be
an extreme negative for the employment situation," VW finance chief
Hans Dieter Poetsch told the Wall Street Journal.
ORACLE CLEAR TO GO FOR PEOPLESOFT
A federal judge has rejected the US government's bid to
block software giant Oracle's proposed hostile takeover of rival
In his judgement, US district judge Vaughn Walker said
US anti-trust authorities had failed to prove that a takeover would stifle
Instead he gave Oracle clearance to restart its $7.7bn
GERMAN GOVERNMENT SEEKS PAYMENT
The German government is now demanding more than 4.5bn
euros ($5.48bn;£3bn) in compensation from the consortium behind a
late-running road truck toll system.
Under the Toll Collect scheme trucks will be charged
for using German highways, but it has been beset by problems and
DaimlerChrysler and Deutsche Telekom each own 45% of
Toll Collect, with France's Confiroute the other 10%.
The dispute is now going to go before German
NOKIA SEES RISE IN HANDSET SALES
Mobile phone maker Nokia says its third-quarter results
will be better than previously forecast, thanks to higher-than-expected
The Finnish giant now predicts its quarterly sales will
be as high as 6.9bn euros ($8.4bn; £4.7bn), compared to its past estimate
of up to 6.8bn euros.
AIRBUS BOOST TO DEFENCE GIANT BAE
Europe's largest defence firm, BAE Systems, says it has
been boosted in the first half of the year by sales at Airbus, in which it
owns a 20% stake.
UK-based BAE reported a 4.5% rise in underlying
operating profit during the first six months of 2004.
First-half earnings rose to £486m ($862m) from £465m
a year earlier.
France-based Airbus delivered 161 airliners in the
first half of 2004, up 12 from the same time last year, and
"continues to perform well", it said.
DELTA PLANS TO CUT 10% OF STAFF
Delta Air Lines is planning to cut as many as 7,000
jobs, or 10% of its workforce over the next 18 months.
It will also overhaul flight routes, dropping
Dallas-Fort Worth as a hub.
BANK SET TO KEEP RATES UNCHANGED
The Bank of England (BOE) is widely expected to keep
interest rates on hold at 4.75%.
The BOE has raised interest rates five times since last
November, most recently in August, to cool the UK property market and
The UK economy now appears to be slowing in response to
the rate rises.
Data from the Halifax said house prices fell 0.6% last
month while manufacturing output contracted for the second month running
WORLD BANK PRAISES SLOVAK REFORMS
Slovakia and Colombia have improved their business
climates the most during the past year, according to a report from the
The two countries have cut the time needed to start a
business, revamped labour laws, reduced red tape and made it easier for
firms to collect debts.
The bank said that as a result, growth had picked up,
there were more jobs for women and the black economy had shrunk.
But the study found that many African nations were
lagging behind in reforms.
Helping to drive reform in Slovakia, as well in a
number of other European nations, was the lure of European Union
membership, the World Bank said.
AFRICA ' TOO TOUGH ON BUSINESS'
A new World Bank report has accused African governments
of putting in place a web of regulations which strangle business and keep
people in poverty.
The report was released as some 20 African leaders are
discussing poverty and unemployment in the Burkina Faso capital,
But they are unlikely to give much of a hearing to the
World Bank model.
African Union head Alpha Oumar Konare has rejected
"rabid liberalism", saying the market imposes "brutal
INVESCO DEAL ENDS US FUNDS PROBE
Invesco Funds Group (IFG) and affiliate AIM are to pay
a total of $450m (£254m) to settle an improper trading probe.
The UK's Amvescap, which owns both firms, said the two
would pay $140m in civil penalties, $235m in restitution and cut
management fees by $75m.
The payout was agreed in a preliminary settlement with
the Securities and Exchange Commission and New York, Colorado and Georgia
BA TO SELL OFF 18% QANTAS STAKE
British Airways is to sell its stake in Australian
airline Qantas in the next two days, the company has said.
The sale of the 18.25% stake in Qantas is expected to
land BA at least A$1.1bn (£425m; $753m), the UK airline added.
ABBEY SUITOR SELLS STAKE IN RBS
Banco Santander Central Hispano, the Spanish bank
wooing the UK's Abbey, is selling half its stake in UK competitor Royal
Bank of Scotland (RBS).
The sale of up to 79 million shares should raise more
than £1bn. Santander said it would end cross-directorships and commercial
co-operation with RBS, if its £8bn offer for Abbey succeeds.
TURKISH STOCKS SOAR ON EU HOPES
Turkey's stock market has closed at a record high on
hopes that the European Union will soon invite the country to start
The benchmark Istanbul share index closed 1.3% higher
at 21,119, easily beating its previous closing high of 20,887 on 29 March.
The rally followed positive remarks from EU enlargement
chief Guenter Verheugen, who is on a trip to Turkey.
It is his final visit before the EU decides whether to
That decision will be taken at a meeting of EU heads of
government in December.
SRI LANKA TO GET $570M ADB LOAN
Sri Lanka will borrow $570m (£322m) from the Asian
Development Bank (ADB) over the next two years.
The money is part of a programme which aims to boost
spending on infrastructure such as roads, and projects that try to boost
The ADB also wants to promote building in the north and
east of the country, areas which have been hit by conflict.
UK MANUFACTURERS 'IN GOOD SHAPE'
UK factories enjoyed a strong upturn in new orders over
the summer, but high oil prices are weighing on the service sector,
Manufacturers' organisation EEF said new orders rose to
a nine-year high in the three months to September.
The EEF survey also revealed a pick-up in recruitment
and business investment.
But a report by the Confederation of British Industry
(CBI) showed service sector sentiment declined for the first time in a
year amid high fuel prices.
BEIJING SEEKS GAMES CUTS
Organisers of the 2008 Olympics in Beijing are seeking
to cut up to £400m from the costs of building venues.
The cost-cutting measures come after Beijing mayor Wang
Qishan warned it could cost more than £1.7bn to build the required
The biggest change so far is to the main stadium, which
will no longer have an expensive retractable roof.
Organisers could also move some sports, such as the
equestrian events, to Hong Kong in a bid to spread the costs.