INTERNATIONAL

 

Feb 28 - Mar 06, 2005

 

1.INTERNATIONAL

2. PAKISTAN

3. GULF

 

ITALY TO GET ECONOMIC ACTION PLAN

Italian Prime Minister Silvio Berlusconi will unveil plans aimed at kickstarting the country's sputtering economy. He will present an "Action Plan for the Development of Italy" in a meeting with industrialists and trade union leaders.
Berlusconi is expected to table reforms aimed at boosting research and development (R&D) spending, and the competitiveness of small firms. Also in focus will be bankruptcy laws and the slow pace of the legal system.

 

 

The government has been accused of underfunding R&D, making it harder for Italy to compete with other European nations and leading to a "brain-drain" of the country's brightest talents.

Analysts say that hiring and firing staff is still too difficult and expensive, hampering the development of small and medium-sized businesses.

As a result, they say, Italy's corporate landscape is filled with numerous smaller companies that are often reluctant to become bigger because of all the extra hassle that would accompany the running of a larger firm.

At the same time, bankruptcy laws make it difficult for failed company directors to set up new businesses and emerge from their debts, a situation that is hampering Italy's entrepreneurial spirit.

The government says that it has set about tackling the problems, adding that getting growth going was the responsibility of all of Italy's 60 million population.

GERMAN BUSINESS CONFIDENCE SLIDES

German business confidence fell in February knocking hopes of a speedy recovery in Europe's largest economy.

Munich-based research institute Ifo said that its confidence index fell to 95.5 in February from 97.5 in January, its first decline in three months.

The study found that the outlook in both the manufacturing and retail sectors had worsened.

Observers had been hoping that a more confident business sector would signal that economic activity was picking up.

"We're surprised that the Ifo index has taken such a knock," said DZ bank economist Bernd Weidensteiner.

"The main reason is probably that the domestic economy is still weak, particularly in the retail trade."

Economy and Labour Minister Wolfgang Clement called the dip in February's Ifo confidence figure "a very mild decline".

He said that despite the retreat, the index remained at a relatively high level and that he expected "a modest economic upswing" to continue.

Germany's economy grew 1.6% last year after shrinking in 2003.

However, the economy contracted by 0.2% during the last three months of 2004, mainly due to the reluctance of consumers to spend.

Latest indications are that growth is still proving elusive and Ifo president Hans-Werner Sinn said any improvement in German domestic demand was sluggish.

Exports had kept things going during the first half of 2004, but demand for exports was then hit as the value of the euro hit record levels making German products less competitive overseas.

ASIAN BANKS HALT DOLLAR'S SLIDE

The dollar regained some lost ground against most major currencies Feb 23 after South Korea and Japan denied they were planning a sell-off.

The dollar suffered its biggest one-day fall in four months day earlier on fears that Asian central banks were about to lower their reserves of dollars.

Japan is the biggest holder of dollar reserves in the world, with South Korea the fourth largest.

The dollar was buying 104.76 yen at 0950 GMT, 0.5% stronger on the day. It also edged higher against both the euro and the pound, with one euro worth $1.3218, and one pound buying $1.9094.

Concerns over rising oil prices and the outlook for the dollar pushed down US stock markets on Feb 22; the Dow Jones industrial average closed down 1.6%, while the Nasdaq lost 1.3%.

BUSH MAKES FINAL STOP FOR PUTIN

US President George W Bush has arrived in Slovakia ahead of a summit with his Russian counterpart on the last leg of his fence-mending European tour.

During a visit to Germany, Bush and German Chancellor Gerhard Schroeder agreed to put aside their differences over Iraq.

They also united in calling for Iran not to develop nuclear weapons. Moscow's close ties with Iran are expected to be addressed by Bush when he meets President Vladimir Putin.

He is also expected to discuss US concerns about democracy in Russia, following the Yukos affair, media clampdowns and alleged interfering in the Ukraine elections. Bush said he had been told of concerns about Russia by other EU leaders during his talks in Brussels.

NEWEST EU MEMBERS UNDERPIN GROWTH

The European Union's newest members will bolster Europe's economic growth in 2005, according to a new report.

The eight central European states which joined the EU last year will see 4.6% growth, the United Nations Economic Commission for Europe (UNECE) said.

In contrast, the 12 eurozone countries will put in a "lacklustre" performance, generating growth of only 1.8%.

The global economy will slow in 2005, the UNECE forecasts, due to widespread weakness in consumer demand.

It warned that growth could also be threatened by attempts to reduce the United States' huge current account deficit which, in turn, might lead to significant volatility in exchange rates.

UNECE is forecasting average economic growth of 2.2% across the European Union in 2005.

However, total output across the Euro zone is forecast to fall in 2004 from 1.9% to 1.8%.

FRENCH CONSUMER SPENDING RISING

French consumers increased their spending by 1.5% in January, a figure which bodes well for the country's economic growth, figures revealed.

The National Statistic Institute (INSEE) added that consumer spending in January rose 3.8% on a year-on-year basis.

Rising sales of household equipment were behind the increase.

The INSEE also said that French consumer prices fell 0.6% in January, but were up 1.6% on an annual basis.

 

 

Despite the general increase in spending in January, French households bought fewer cars in January.

According to the INSEE, car sales fell 2.8% in January, following a fall of 0.6% in December. But on a year-on-year basis, the sector still saw a sales increase of 6.5%.

Consumer spending fuelled France's economic growth in the last quarter of 2004 and analysts expect that it will continue to support the economy.

BAD WEATHER DAMPENS NESTLE SALES

A combination of bad weather, rising raw material costs and the sluggish European economy has hit sales at Swiss food and drink giant Nestle.

Revenue dipped 1.4% to 86.7bn Swiss francs ($74.6bn; 39.1bn) in 2004 as sales of ice cream and mineral water were dampened by the wet summer.

RYANAIR IN $4BN BOEING PLANE DEAL

Budget airline Ryanair has placed an order for 70 Boeing 737-800 planes, in a deal valued at $4bn (2.1bn) which should lead to 2,500 new Ryanair jobs.

It also has an option for a further 70 aircraft, a move which brings the Ryanair/Boeing order book up to 225 firm orders and options on 193 more.

GOOGLE AND YAHOO SEE RATINGS CUT

Shares in search engine companies Google and Yahoo fell in the US markets on Feb 24 after RBC Capital Markets cut its ratings on the companies.

New competition also entered the field as AOL, the search engine and email service owned by Time Warner, launched a local search service.

Google shares fell 6%, but recovered to close down 2.6%, or $5.06, at $188.89 on the Nasdaq. Yahoo dipped 5.6% initially but closed just 2% lower at $31.48 on the Nasdaq.

FED WARNS OF YET MORE RATE RISES

US interest rates look set to keep rising after the Federal Reserve said the current 2.5% level may be too low to keep inflation in check.

The comments came in recent release of the minutes from the last Fed rates meeting on February 1 and 2.

Although at that meeting the Fed voted to raise rates by 0.25% to 2.5%, it said they may have to continue to rise, at least over the medium term.

SA UNVEILS 'MORE FOR ALL' BUDGET

The South African government has put tax cuts and increased social spending at the centre of its latest budget.

Aiming to both stir economic growth and aid the country's poor, finance minister Trevor Manuel said the focus of the 2005 budget was "more for all".

The tax cuts target firms and individuals, cutting corporate tax from 30% to 29% and offering income tax cuts worth 6.8bn rand ($1.2bn; 910m).

Spending on health and education will rise by 9.4% and 8.1% respectively.

Spending on housing and sanitation will rise by 12%. All the spending increases will run over the next three years.

ORE COSTS HIT GLOBAL STEEL FIRMS

Shares in steel firms have dropped worldwide amid concerns that higher iron ore costs will hit profit growth.

Shares in Germany's ThyssenKrupp, the UK's Corus and France's Arcleor fell while Japan's Nippon Steel slid after it agreed to pay 72% more for iron ore.

China's Baoshan Iron and Steel Co. said it was delaying a share sale because of weak market conditions, adding it would raise steel prices to offset ore costs.

BOE VOTED 8-1 FOR NO RATE CHANGE

The decision to keep interest rates on hold at 4.75% earlier this month was passed 8-1 by the Bank of England's rate-setting body, latest minutes have shown.

One member of the Bank's Monetary Policy Committee (MPC) Paul Tucker voted to raise rates to 5%. 

BROWN ANNOUNCES BUDGET DATE

Chancellor Gordon Brown will deliver his budget to the House of Commons on March 16, the Treasury has announced.

The budget, likely to be the last before the General Election. The annual event is when the chancellor outlines the government's taxation and broader economic predictions.

INDIA AND RUSSIA IN ENERGY TALKS

India and Russia are to work together in a series of energy deals, part of a pact which could see India invest up to $20bn in oil and gas projects.

On the agenda are oil and gas extraction as well as transportation deals, to be led by Russian energy giant Gazprom and India's ONGC. 

BROWN CALLS FOR CHINA PARTNERSHIP

The rise of China as an economic power should be seen as an opportunity not a threat, Gordon Brown has said in a keynote speech in Beijing.

Partnership between China and the industrialised nations is vital, the UK chancellor said on his first visit to the world's most populous nation. He also pushed for a shared agenda in facing global economic challenges. After meeting Chinese premier Wen Jiabao, Brown urged China to ease its currency peg to the US dollar.

US DATA SPARK INFLATION WORRIES

Wholesale prices in the US rose at the fastest rate in more than six years in January, according to government data.

New figures show the Labor Department producer price index (PPI) rose by 0.3% - in line with forecasts.

But core producer prices, which exclude food and energy costs, surged by 0.8%, the biggest rise since December 1998, increasing inflationary concerns.

In contrast, the University of Michigan barometer of US retail consumer confidence showed a slight dip.

The university's index of consumer spending fell to 94.2 in early February from 95.5 in January, which could indicate a fall in retail spending by the US public. The mixed set of data last week led to volatile early Wall Street trade, as the Dow Jones, Standard and Poor's 500, and Nasdaq swung between positive and negative territory.

LATIN AMERICA SEES STRONG GROWTH

Some of the main economies in Latin America have posted better-than-expected economic growth.

Venezuela, Argentina and Mexico confirmed growth of 17.3%, 8.8% and 4.4% respectively for 2004 while at 5% Peru saw its strongest growth since 1997.

Growth was based on strong exports, fuelled by demand for commodities, especially in the US and China. Forecasts are for strong growth in 2005, if global demand stays strong.

Argentina expects to see GDP growth of 5.5% in 2005 while Peru, Mexico and Venezuela forecast growth rates of 4.5%, 4.8% and 5% for 2005.