The move was aimed at helping South Asian governments
find budgets to rebuild devastated coastal areas, though so far only Sri
Lanka, Indonesia and the Seychelles have indicated that they will take
Other countries believe their economies are strong
enough to cope or wish to avoid being viewed as credit risks.
Donor nations have promised to give $717m (£379m) in
disaster relief over the next six months, according to the United
There are 1.9 billion people in Asia living on less
than $2 a day.
The ADB fears that 1 million Indonesians could join
them, while in India just over half a million people — 645,000 — are
at risk of falling into poverty.
A quarter of a million Sri Lankans and 23,500 people
in the Maldives are also facing poverty.
In the Maldives, where 43% of the population already
lives on less than $2 a day, this could rise to half.
Sri Lanka and the Maldives are the two countries the
ADB fears are most at risk of suffering lasting economic damage from the
tsunami. Sri Lanka's government has estimated reconstruction costs at
US TRADE DEFICIT WIDENS SHARPLY
The gap between US exports and imports has widened to
more than $60bn (£31.7bn), an all-time record.
Figures from the Commerce Department for November
showed exports down 2.3% to $95.6bn, while imports grew 1.3% to $155.8bn
on rising consumer demand.
Part of the expanding deficit came from high prices
for oil imports.
But the numbers suggested the sliding dollar —
which makes exports less expensive — has had little impact, and could
indicate slowing economic growth.
The trade deficit — far bigger than the $54bn
widely expected on Wall Street — prompted a rapid response from the
The dollar was trading against the euro at $1.3280,
almost a cent and a half weaker than before the announcement.
Against the pound, the dollar was down about 0.7% at
"The dollar's fall has been sudden, violent and
appropriate given this number," said Brian Taylor of Wells Fargo in
"Recent exchange rate movements certainly
haven't had any impact yet."
Treasury Secretary John Snow put a brave face on the
news, saying it was a sign of strong economic expansion.
"The economy is growing at such a fast rate that
it is generating lots of disposable income... some of which is used to
buy goods from our trading partners."
Although the White House officially still backs the
US's traditional "strong dollar" policy, it has tacitly
indicated that it would be happy if the slide continued.
The dollar has fallen by 50% against the euro — as
well as by 30% against the yen — in the past three years.
DEBT FREEZE FOR TSUNAMI NATIONS
The Paris Club of rich creditor nations has recently
offered to freeze debts owed to them by tsunami-hit countries.
The offer is immediate and without conditions. But so
far only Indonesia, Sri Lanka and the Seychelles have signalled that
they will take it up.
But other affected countries have indicated that they
will not, to avoid being regarded as credit risks.
The announcement by the Paris Club follows an
initiative from the G-7 group of developed nations.
The move had been agreed "in order to allow
these countries to dedicate all available resources to address
humanitarian and reconstruction needs", the Paris Club said in a
Member countries are owed about $5bn this year in
debt repayments by nations affected by the Indian Ocean tsunami.
GERMAN ECONOMY REBOUNDS IN 2004
Germany's economy, the biggest among the 12 countries
sharing the euro, grew at its fastest rate in four years during 2004,
driven by strong exports.
Gross domestic product (GDP) rose by 1.7% last year,
the statistical office said. The economy contracted in 2003.
Concerns remain, however, over domestic demand and
the labour market where, there is the threat of job losses.
The euro's strength against the US dollar is also a
worry, and may dent foreign sales, analysts said.
CHINESE EXPORTS RISE 25% IN 2004
Exports from China leapt during 2004 over the
previous year as the country continued to show breakneck growth.
The spurt put China's trade surplus — a sore point
with some of its trading partners — at a six-year high.
It may also increase pressure on China to relax the
peg joining its currency, the yuan, with the weakening dollar.
The figures released by the Ministry of Commerce come
as China's tax chief confirmed that growth had topped 9% in 2004 for the
second year in a row.
State Administration of Taxation head Xie Xuren said
a tightening of controls on tax evasion had combined with the rapid
expansion to produce a 25.7% rise in tax revenues to 2.572 trillion yuan
According to the Ministry of Commerce, China's
exports totalled $63.8bn in December, taking the annual total up 35.4%
UK'S TRADE GAP NARROWS AS EXPORTS RISE
The UK's trade gap narrowed in November, helped by a
7.5% rise in exports outside the European Union.
According to the Office for National Statistics, the
difference between what the UK exported and imported was £3.1bn
($5.8bn), down from October's £3.6bn.
Overall UK exports — including both goods and
services — rose by more than 3.2% to £24.8bn, although total imports
rose again to a new record of £27.9bn.
The deficit for goods alone was £4.6bn, down from
During November the UK exported £16.9bn worth of
goods, but imported £21.5bn.
The cumulative deficit for the first eleven months of
2004 now stands at £36.3bn, £4.5bn higher than the same period in
US RETAIL SALES SURGE IN DECEMBER
US retail sales ended the year on a high note with
solid gains in December, boosted by strong car sales according to the
Seasonally adjusted sales rose 1.2% in the month,
compared to 0.1% a month earlier, boosted by a surge in shopping just
before and after Christmas.
Sales climbed 8% for the year, the best performance
since an 8.5% rise in 1999, the Commerce Department added.
The gains were led by a 4.3% jump in auto sales as
dealers used enhanced offers to get cars out of showrooms.
CHINA BANS NEW TOBACCO FACTORIES
The world's biggest tobacco consumer, China, has said
it will not allow any new tobacco factories to be built.
China already has more than enough cigarette-making
capacity, according to a spokesman for the tobacco industry regulator
quoted in China Daily.
The ban threatens to reignite tensions between the
regulator and British American Tobacco, which plans to become China's
first foreign cigarette maker.
BOE HOLDS INTEREST RATE AT 4.75%
The Bank of England has left interest rates on hold
again at 4.75%, in a widely-predicted move.
Rates went up five times from November 2003 — as
the bank sought to cool the housing market and consumer debt — but
have remained unchanged since August.
Recent data has indicated a slowdown in manufacturing
and consumer spending, as well as in mortgage approvals.
And retail sales disappointed over Christmas, with
analysts putting the drop down to less consumer confidence.
TATA CONSULTANCY SERVICES
Tata Consultancy Services, India's largest software
services firm, has reported a surge in quarterly earnings.
Profit in the last three months of 2004 was 7.1bn
rupees ($162m;£86m) compared with 4.6bn a year earlier. Sales hit
25.8bn rupees, up from 18.7 in 2003.
Apple revealed that profits for the three months to
December more than quadrupled to $295m (£156m) from $63m in 2003.
INFOSYS PROFIT JUMP
Profits at Indian software firm Infosys leapt by more
than 50% in the final three months of 2004.
Alongside a 52% rise in net earnings to 4.97bn rupees
($114m; £61m), Infosys said its profit for the year to March would be
up 47% on the year before.
ECB HOLDS RATES AMID GROWTH FEARS
The European Central Bank (ECB) has left its key
interest rate unchanged at 2% for the 19th month in succession.
Borrowing costs have remained on hold amid concerns
about the strength of economic growth in the 12 nations sharing the
euro, analysts said.
KRAFT CUTS SNACK ADS FOR CHILDREN
Kraft plans to cut back on advertising of products
like Oreo cookies and sugary Kool-Aid drinks as part of an effort to
promote healthy eating.
The largest US food maker will also add a label to
its more nutritional and low-fat brands to promote the benefits.
ARGENTINA OUTLINES DEBT SWAP PLAN
Argentina's government has announced the terms of a
proposed restructuring of its debt to its private creditors. The offer
is the largest and most complex in recent times.
Argentina owes investors more than $100bn after
defaulting on bonds during the country's worst economic crisis three
But some investors are unhappy that the government is
offering only around $40bn worth of new bonds in exchange and have
called for a better deal.
Under the terms of the deal — announced recently by
Economy Minister Roberto Lavagna — for every old bond with a face
value of $1, creditors will receive a new bond with a market value of
around 30 cents.
MORGAN STANLEY HIT BY RECORD FINE
The New York Stock Exchange (NYSE) has hit US
investment bank Morgan Stanley with a record $19m (£10m) fine.
The penalty, the largest so far imposed by the
exchange, was the result of regulatory and supervisory lapses at Morgan
Stanley, the NYSE said.
NORTEL IN $300M PROFIT REVISION
Telecoms equipment maker Nortel Networks has sharply
revised downwards its profits for the 2003 fiscal year.
In a long-awaited filing, Nortel said it had made
$434m (£231m), compared to the previously reported $732m.
CANADA REPORTS THIRD MAD COW CASE
Canada says it has uncovered a new case of mad cow
Its Food Inspection Agency reported the case in the
western province of Alberta but said no part of the cow had entered the
human or animal food chains.
The cow, born after Canada tightened feed
restrictions in 1997, was not linked to another instance of the disease
announced earlier this month.
The new case is Canada's third home-grown case of
bovine spongiform encephalopathy (BSE).
EU-US SEEKING DEAL ON AIR DISPUTE
The EU and US have agreed to begin talks on ending
subsidies given to aircraft makers, EU Trade Commissioner Peter
Mandelson has announced.
Both sides hope to reach a negotiated deal over state
aid received by European aircraft maker Airbus and its US rival Boeing,
Mr Mandelson said.
CHINESE ARMS BAN 'TO BE LIFTED'
The EU embargo on arms exports to China is likely to
be lifted in the next six months despite US objections, UK Foreign
Secretary Jack Straw has said.
The 15-year-old ban was imposed in the aftermath of
China's crackdown on protesters in Tiananmen Square.
Mr Straw told a Commons select committee human rights
concerns over China remained.
But he said it was wrong to put China under the same
embargo as countries such as Zimbabwe and Burma.
In December, the EU pledged to work towards lifting
the ban but said it was not ready to do so yet.
The EU's move was welcomed at the time by Beijing,
which described the embargo as a "product of the Cold War".
German Chancellor Gerhard Schroeder and French
President Jacques Chirac have repeatedly called for the embargo to be
Britain has been more cautious on the issue, but on
last week Mr Straw said he also wanted it to end.
FESTIVE SALES IN UK 'WORST IN 10 YEARS'
British retailers have suffered their worst Christmas
in 10 years with like-for-like sales lower than in 2003, a survey has
Like-for-like sales in December, which exclude new
stores, were down 0.4% on a year ago, a survey by the British Retail
Consortium (BRC) and KPMG found.
Only sales of food and drink showed real growth, the
Leading High Street names such as Marks & Spencer
and Woolworths have reported disappointing festive sales.