INTERNATIONAL

 

Jan 17 - 30, 2005

 

1.INTERNATIONAL

2. PAKISTAN

3. GULF

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ASIA QUAKE INCREASES POVERTY RISK: ADB

Nearly two million people across Asia could be thrown into poverty because of the Indian Ocean tsunami, the Asian Development Bank (ADB) has said.
In its first overview of the disaster, the ADB said the impact on economic growth would be slight because major cities and factories escaped damage.
But the blow to many low-income people could be "enormous".
The Paris Club of rich creditor nations recently offered to freeze debts owed by tsunami-hit countries.

 

 

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 it up.

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 Nations.

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 nearly $3bn.

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 currency markets.

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 $1,8923.

"The dollar's fall has been sudden, violent and appropriate given this number," said Brian Taylor of Wells Fargo in Minneapolis.

"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 statement.

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 ($311bn; 165bn).

According to the Ministry of Commerce, China's exports totalled $63.8bn in December, taking the annual total up 35.4% to $593.4bn.

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 October's 5bn.

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 2003.

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 Commerce Department.

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 RESULTS

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 years ago.

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 disease.

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 lifted.

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 said.

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 study said.

Leading High Street names such as Marks & Spencer and Woolworths have reported disappointing festive sales.