INTERNATIONAL

 

Feb 21 - 27, 2005

 

1.INTERNATIONAL

2. PAKISTAN

3. GULF

 

GERMAN GROWTH GOES INTO REVERSE

Germany's economy shrank 0.2% in the last three months of 2004, upsetting hopes of a sustained recovery.
The figures confounded hopes of a 0.2% expansion in the fourth quarter in Europe's biggest economy.
The Federal Statistics Office said growth for the whole of 2004 was 1.6%, after a year of contraction in 2003, down from an earlier estimate of 1.7%.
It said growth in the third quarter had been zero, putting the economy at a standstill from July onward.

 

 

Germany has been reliant on exports to get its economy back on track, as unemployment of more than five million and impending cuts to welfare mean German consumers have kept their money to themselves.

Major companies including Volkswagen, DaimlerChrysler and Siemens have spent much of 2004 in tough talks with unions about trimming jobs and costs.

According to the statistics office, Destatis, rising exports were outweighed in the fourth quarter by the continuing weakness of domestic demand.

But the relentless rise in the value of the euro last year has also hit the competitiveness of German products overseas.

The effect has been to depress prospects for the 12-nation eurozone as a whole, as well as Germany.

Eurozone interest rates are at 2%, but senior officials at the rate-setting European Central Bank are beginning to talk about the threat of inflation, prompting fears that interest rates may rise.

The ECB's mandate is to fight rising prices by boosting interest rates and that could further threaten Germany's hopes of recovery.

JAPAN ECONOMY SLIDES TO RECESSION

The Japanese economy has officially gone back into recession for the fourth time in a decade. Gross domestic product fell by 0.1% in the last three months of 2004.

The fall reflects weak exports and a slowdown in consumer spending, and follows similar falls in GDP in the two previous quarters.

The Tokyo stock market fell after the figures were announced and the Nikkei share index closed trading down 44.81 points, or 0.38%, at 11,601.68.

The government revised growth figures from earlier in 2004 which, when taking into account performance in the most recent period, effectively tips Japan into recession.

A previous estimate of 0.1% growth between July and September was downgraded to a 0.3% decline.

A recession is commonly defined as two consecutive quarters of negative growth, although the Japanese government takes other factors into account when judging the status of its economy.

Figures released by the government's Cabinet Office showed that GDP, on an annualised basis, fell 0.5% in the last three months of 2004.

However, politicians remain upbeat about prospects for an economic boost later in the year.

"The economy has some soft patches but if you look at the bigger picture, it is in a recovery stage," said Economic and Fiscal Policy Minister Heizo Takenaka.

Gross domestic product measures the overall value of goods and services produced in a country.

"The economy must be assessed comprehensively and we cannot look at GDP alone," Takenaka stressed.

CHINA CONSUMES MOST

China has overtaken the United States in the consumption of basic agricultural and industrial goods, a new survey says.

It is now the world's biggest consumer of grain, meat, coal and steel. Only in oil does the US consume more.

China is well ahead of the US in the consumption of goods such as television sets, refrigerators and mobile phones.

The Washington-based Earth Policy Institute says that China is now an emerging economic superpower.

However, per capita consumption in China, the world's most populous country, remains far below that of the US.

According to the report: 64m tonnes of meat were consumed in China in 2004 compared to 38m tonnes in the US 258m tonnes of steel were used in China in 2003 compared to 104m in the US.

China's factories and homes burned 40% more coal than in the US. The number of PCs in China is doubling every 28 months.

The latest official figures for the Chinese economy, the sixth-largest in the world, show that it is growing even faster than expected.

UK ENJOYS SERVICES TRADE SURPLUS

The UK was the world's second largest exporter and third largest importer of services in 2003, according to the Office for National Statistics. Its latest annual figures for the services sectors, show that exports grew by 4.5% to 91bn in 2003, while imports rose 5.4% to 76bn. This created a surplus of 15.6bn ($29.4bn), unchanged from 2002.

The US is both the world's largest exporter and importer of services, followed by the UK and Germany.

Britain's services exports have now more than doubled since 1993 when sales totalled 41bn.

In 2003, the UK recorded a services surplus with every continent except Europe, where there was a deficit of 1.8bn, up from 1.2bn in 2002. Its surplus with the Americas was 10.2bn.

This included a 8.6bn surplus with the United States, which alone represented 55% of the UK's total surplus.

MIXED SIGNALS FROM FRENCH ECONOMY

The French economy picked up speed at the end of 2004, official figures show but still looks set to have fallen short of the government's hopes.

According to state statistics body INSEE, growth for the three months to December was a seasonally-adjusted 0.7-0.8%, ahead of the 0.6% forecast.

If confirmed, that would be the best quarterly showing since early 2002. It leaves GDP up 2.3% for the full year, but short of the 2.5% which the French government had predicted.

RECORD YEAR FOR TOURISM IN MEXICO

Mexico's tourism industry had a record year in 2004, with visitor numbers up 10%, the Mexican government has said.

Tourism Secretary Rodolfo Elizondo said 20.6 million foreigners visited the country, spending $10.83bn (5.73bn).

The dollar's relative strength against the peso made the country good value for US tourists while its fall against the euro had made Europe costlier.

The perception of Mexico as a safe destination also helped the country attract US tourists, analysts said.

Europe was weakened in its competition for US tourists because of the euro's strength and the perception of some that it was more dangerous, they said. Oil, remittances and tourism are Mexico's main sources of income.

QANTAS SEES PROFITS

Australian airline Qantas has posted a record fiscal first-half profit thanks to cost cutting measures.

Net profit in the six months ending 31 December jumped 28% to A$458.4m ($357.6m) from a year earlier. Analysts expected a figure closer to A$431m.

HP'S PROFITS UP ACROSS

Hewlett-Packard has reported a slim rise in profits, after increased sales across all of its businesses.

The firm, which last week parted with chief executive Carly Fiorina, said net profits for the three months to 31 January were $943m (500m).

GREENSPAN URGES CAUTIOUS GROWTH

Federal Reserve chairman Alan Greenspan has said the US economy is continuing to grow in 2005, but warned there was no room for complacency.

Speaking to the Senate Banking Committee, he said future inflation must always be kept in check to prevent the economy from overheating.

HYUNDAI TO BUILD NEW INDIA PLANT

South Korea's Hyundai Motor has announced that it plans to build a second plant in India to meet the country's growing demand for cars.

The company didn't give details of its investment but it said the new plant would produce 150,000 cars a year.

This will boost the annual production capacity of the company India's second-largest car manufacturer to 400,000 units. Hyundai expects its sales in India to grow 16% to 250,000 in 2005.

 

 

COKE RESULTS

Coca-Cola has said it is disappointed with last year's performance. During the three months to 31 December it made profits of $1.2bn (640m), up from $927m a year earlier.

UK INFLATION 'ON TARGET' FOR 2006

UK inflation is likely to hit its 2.0% target in 2006 before heading even higher, the Bank of England has said.

Some experts said the Bank's quarterly inflation report suggested that rate rises could be needed later this year to keep inflation under control.

The Bank said higher import prices and rising demand were likely to push up inflation in coming months.

MOBILE FIRMS PLAN CHEAP HANDSET

An alliance of mobile phone firms has launched an ultra-cheap handset in the hope of connecting millions more customers in developing countries.

Motorola is to make the first device at a wholesale price below $40 (21), and aims to sell 6 million in six months.

The initiative comes from the GSM Association, 18 of whose member operators are behind the plan.

UK JOBLESS TOTAL ROSE

The UK's jobless total rose for the second month in a row in December, official figures show.

The number of people out of work rose 32,000 to 1.41 million in the last three months of 2004, even as 90,000 more people were in employment.

Average earnings rose by 4.3% in the year to December up from November's 4.2%, the Office for National Statistics (ONS) added.

SONY ERICSSON LAUNCHES WALKMAN

Sony Ericsson has announced it will sell music-playing mobiles under its Walkman brand and will work closely with Sony Connect and Sony BMG, its music division, on content.

The company will unveil further details of its Walkman mobile in March.

It made the announcement at the 3GSM World Congress mobile phone trade fair held in the French town of Cannes.

Music by Sony BMG artist Natasha Bedingfield was played over a phone connected to loudspeakers at the event.

CIRCUIT CITY GETS TAKEOVER OFFER

Circuit City Stores, the second-largest electronics retailer in the US, has received a $3.25bn (1.7bn) takeover offer.

The bid has come from Boston-based private investment firm Highfields Capital Management, which already owns 6.7% of Circuit City's shares.

EU AIMING TO FUEL DEVELOPMENT AID

European Union finance ministers meet to discuss proposals, including a tax on jet fuel, to boost development aid for poorer nations.

The policy makers are to ask for a report into how more development money can be raised, the EU said.

The world's richest countries have said they want to increase the amount of aid they give to 0.7% of their annual gross national income by 2015. Airlines have reacted strongly against the proposed fuel levy.

WEAK DOLLAR HITS REUTERS REVENUES

Revenues at media group Reuters slipped 11% during 2004, mainly due to the weakness of the dollar, the group said.

The company said it was optimistic about growth even as revenues slipped 11% from 3.24bn ($6.13bn) in 2003 to 2.89bn in 2004.

Reuters beat profit forecasts, posting a 52% rise in profits for the year to 198m from the 130m seen a year earlier.

BOEING UNVEILS 777

US aircraft firm Boeing has unveiled its new long-distance 777 plane, as it tries to regain its position as the industry's leading manufacturer.

The 777-200LR will be capable of flying almost 11,000 miles non-stop, linking cities such as London and Sydney.

Boeing, in contrast to European rival Airbus, hopes airlines will want to fly smaller aircraft over longer distances.

Airbus, which overtook Boeing as the number one civilian planemaker in 2003, is focusing on so-called super jumbos.

GM PAYS $2BN TO EVADE FIAT BUYOUT

General Motors of the US is to pay Fiat 1.55bn euros ($2bn; 1.1bn) to get out of a deal which could have forced it to buy the Italian car maker outright. Fiat had sold GM a stake in 2000, as part of a partnership agreement.

SMALL FIRMS 'HIT BY RISING COSTS'

Rising fuel and materials costs are hitting confidence among the UK's small manufacturers despite a rise in output, business lobby group the CBI said.

 

 

A CBI quarterly survey found output had risen by the fastest rate in seven years but many firms were seeing the benefits offset by increasing expenses. The CBI also found spending on innovation, training and retraining is forecast to go up over the next year. However, firms continue to scale back investment in buildings and machinery.