INTERNATIONAL

 

Dec 06 - 12, 2004

 

1.INTERNATIONAL

2. PAKISTAN

3. GULF

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US GDP RISES FASTER THAN EXPECTED

Increased spending by consumers and business helped US economic growth rise at a higher-than-predicted rate in the July to September period.
The economy expanded at an annual rate of 3.9%, an increase on the 3.3% growth recorded in the second quarter.
But signs of more recent gloom among US consumers have helped force the dollar to fresh record lows against the euro.
November survey data also released last week found consumers' confidence has fallen for a fourth consecutive month.

 

 

 

 

The Conference Board's index of US consumer confidence dropped to 90.5 in November from 92.9 in October.

Analyst Gina Martin from Wachovia, said further declines in confidence could lead to slower spending by consumers in coming months.

"The present situation looks pretty sunny, but there are clouds on the horizon," she said.

Capital Economics, however, said they were not reading too much into the dip.

"We would argue this has more to do with a long overdue correction from the over-optimism that has crept into the index this year," said Paul Ashworth, Capital's international economist.

Fresh released gross domestic product data was better than economists had predicted.

The Commerce Department last month estimated the third quarter growth rate would be 3.7%.

Business investment in new equipment and software helped boost the figures.

And exports buoyed by weakness in the dollar rose 6.3% over the period, the Commerce Department added.

US IMPORTERS BACK CHINA TEXTILES

Textile importers and retailers have sued the US Government to block a proposed limit on imports from China.

Producers have asked for textile quotas because they say Chinese imports will damage the domestic industry.

The Commerce Department and four other government agencies are investigating the allegations.

But the US Association of Importers of Textiles and Apparel (USA-ITA) says the case is based on inaccurate information and violates importers' rights.

According to Laura Jones, USA-ITA's executive director, the rules for the government agencies which together make up the Committee for the Implementation of Textile Agreements (CITA) ban petitions such as those from the textile industry.

CITA had changed the rules based "on some future threat", she said.

"The government is accepting petitions that don't even meet its own limited standards. The government's behaviour is outrageous."

US textile manufacturers made the petitions based on a safeguard arrangement agreed with China during its entry negotiations with the World Trade Organisation (WTO) in 2001.

The agreement gives WTO members the right to impose temporary quotas if Chinese imports are found to cause market disruption.

But China has said that any import quotas placed on its textiles would have an impact on bilateral trade ties and warned that it might take the dispute WTO. The USA-ITA lawsuit could boost China's position in the argument.

RICH WILL PAY TAXES, SAYS AHERN

The Irish government is to end a tax shelter system that has benefited some of the richest people in Ireland.

Prime Minister Bertie Ahern said "the game is up" for people including 11 who earned more than 1 million euros a year but paid no income tax at all.

"The budget of next year is going to deal with them," he told RTE radio recently.

Those exempt from income tax include artists, musicians and stallion owners while film-makers and multi-storey carpark owners also receive tax breaks.

Ahern's comments came a day after Finance Minister Brian Cowen unveiled a budget for 2005 that lifted spending and welfare payments without increasing taxes.

Mr Cowen said the tax breaks cost the state 8bn euros ($10.6bn; 5.5bn) a year in lost revenue and he would review them within a year.

DOLLAR FALLS TO FRESH RECORD LOWS

The dollar fell to yet another record low against the euro on Dec 1 and slipped to its weakest rate against sterling since 1992.

The US currency hit a low of $1.3360 against the euro in late afternoon trade in New York.

The pound meanwhile, boosted by positive UK manufacturing data, reached as high as $1.9262, as the downward pressure on the dollar continued.

The greenback has lost up to 10% of its value in recent months.

Factors have included concern at the giant US current account deficit, and poor US consumer confidence data.

 

 

The European Central Bank has also not helped, with its president Jean-Claude Trichet saying that the bank was unlikely to intervene in favour of the dollar.

INDUSTRIAL OUTPUT FALLS IN JAPAN

Japanese industrial output fell in October while unemployment rose, casting further doubt on the strength of the country's economic recovery.

Production dropped 1.6% in October, reflecting a decline in exports, while unemployment levels edged up 0.1% to 4.7%, slightly higher than forecast.

The economy has grown for six quarters but growth slowed dramatically in the last quarter amid weaker global demand. Japan's government remains optimistic due to strong domestic demand.

CHINA IN LANDMARK ASEAN PACT

A landmark trade agreement between 10 South East Asian countries and China has been signed at a summit in Laos last week.

The deal could eventually unite a quarter of the world's population in a free trade zone.

Participants at the Association of South East Nations (Asean) summit have also announced plans to hold another regular East Asian summit.

The new summit, like the trade agreement, would aim to strengthen economic ties in the region.

The Asean-China trade accord unites China and South East Asian countries in a single market worth $2 trillion.

BLAIR TO BACK 'OPTIMISTIC' BROWN

Tony Blair will use a speech in Edinburgh to congratulate Gordon Brown for creating and promoting economic stability.

The Chancellor's pre-Budget report forecast strong economic growth and high tax receipts.

Opposition parties and independent experts have raised doubts that the predictions are overly optimistic.

But Mr Blair will say Mr Brown has provided the cornerstone of Labour's achievements in government.

He will say that economic stability, opportunity and security are the key themes on which Labour has established the middle ground.

BUSH PICKS NEW US SECURITY CHIEF

Former New York police commissioner Bernard Kerik is set to be the new US homeland security secretary, US officials have said.

President George W Bush has chosen him to replace Tom Ridge, the only person so far to head the department created after the 11 September attacks.

Mr Kerik was head of the NYPD in 2001, when the Twin Towers were destroyed.

As Mr Bush builds a team for his second term, US ambassador to the United Nations, John Danforth, has resigned.

The former Republican senator only took on the UN job in July, after the previous US envoy, John Negroponte, became ambassador to Iraq.

INTEL SUNNY ABOUT HOLIDAY SALES

Strong demand and reduced stockpiles foretell a dramatic rise in chip giant Intel's sales outlook, the firm says.

The company, whose chips power most of the world's PCs, said it expected sales of $9.3-9.5bn (4.8-4.9bn) for the three months ending 25 December.

The forecast is far above both Intel's previous prediction of $8.6-9.2bn, and its all-time record of $8.74bn.

CHINA AVIATION SEEKS RESCUE PLAN

Crisis-hit jet fuel supplier China Aviation Oil (CAO) has launched a rescue plan after running up $550m (284m) in trading losses.

The Singapore-based firm said it had appointed consultant Deloitte & Touche to act as its financial adviser.

CAO collapsed on Dec 1 after amassing trading losses on oil futures in October, when global prices surged.

The financial scandal is the biggest to hit Singapore since trader Nick Leeson brought down Barings Bank in 1995.

The Singapore-based British trader famously lost $1.2bn in speculative currency deals, eventually causing the collapse of the UK bank.

EURO RATES ON HOLD FOR 18TH MONTH

The European Central Bank has kept the cost of borrowing at 2%, against a background of a soaring currency and lacklustre eurozone growth.

Dec 2 decision means the 12-nation eurozone base interest rate has remained unaltered for 18 months.

The announcement came as no surprise to economists, who had widely predicted an unchanged position.

ECB president Jean-Claude Trichet said the euro rise was "unwelcome", and that there was no thought of raising rates.

FRENCH PARTY'S 'YES TO EU TREATY'

Officials in France's Socialist party say its members have voted "yes" in an internal referendum on whether to back the EU constitution.

Final results of the vote are not expected until Dec 3.

But an aide to the party leader, Francois Hollande, estimated that 55% of members who voted were in favour of the constitution.

France is to hold a referendum on the text in 2005. Opinion polls show half the French are still undecided.

SOARING OIL 'HITS WORLD ECONOMY'

The soaring cost of oil has hit global economic growth, although world's major economies should weather the storm of price rises, according to the OECD.

In its latest bi-annual report, the OECD cut its growth predictions for the world's main industrialised regions.

US growth would reach 4.4% in 2004, but fall to 3.3% next year from a previous estimate of 3.7%, the OECD said.

However, the Paris-based economics think tank said it believed the global economy could still regain momentum.

Forecasts for Japanese growth were also scaled back to 4.0% from 4.4% this year and 2.1% from 2.8% in 2005.

But the outlook was worst for the 12-member eurozone bloc, with already sluggish growth forecasts slipping to 1.8% from 2.0% this year and 1.9% from 2.4% in 2005, the OECD said.

Overall, the report forecast total growth of 3.6% in 2004 for the 30 member countries of the OECD, slipping to 2.9% next year before recovering to 3.1% in 2006.

SAMSUNG SEES HIGHER MOBILE PROFIT

Korean electronics firm Samsung says it expects rising profits from mobiles in 2005 despite tough competition.

The three months to September produced profits of 2.69 trillion won ($2.35bn; 1.3bn), down from 3.13 trillion won in the previous quarter albeit up 46% from the same period in 2003.

GREECE WARNED ON FALSE EURO DATA

Greece has received a formal warning from the European Commission for publishing false data about its public finances.

The Commission found that Greece had hugely underreported its budget deficit between 1997 and 1999.

Greece had admitted that it would not have qualified to join the euro in 2001 if the true state of its budget deficit had been known at the time.

Greece could face legal proceedings if it does not change its procedures.

The warning follows an investigation into Greece's public finances by Eurostat, the Commission's statistical agency.

The body found that Greece's deficit in 1997 was actually 6.6% of its GDP, not 4% as was reported at the time.

Eurostat has also revised upwards Greece's deficit figures for 1998 and 1999.

In both years, Greece's deficit was above the 3% cap which the EU imposes on states wanting to join the euro.

NOKIA TO MAKE HANDSETS IN INDIA

Nokia, the world's biggest mobile phone manufacturer, is to start making handsets in India.

The company said it was investing in India in order to meet rising demand for its products in the country.

The Finnish firm said it expected to employ up to 2,000 workers and would invest $100m-150m (52m-78m), along with its suppliers, over four years.

CHRISTMAS SPENDING 'SET TO RISE'

Warnings of a poor Christmas for High Street retailers in the UK are unduly pessimistic, according to a survey from accountants Deloitte.

The survey is predicting a 2% increase in average spending, despite the impact of rising interest rates.

Consumers are expected to spend 614 ($1,163) on gifts, food, drink and socialising, compared to 602 in 2003.

But regional variations do emerge with people in Scotland and London saying they are planning to spend less.

LIMITS IMPOSED ON UKRAINIAN BANKS

Ukraine's central bank has imposed limits on how many dollars customers can buy to reduce the risk of a run on the country's currency, the hryvna.

The new rules cap currency exchange at $1,000 (523) in any location, and limit withdrawals from ATMs.

The tense political situation following the disputed presidential election, has provoked people into withdrawing their savings. The central bank has spent millions on intervention to keep the hryvna stable.