Mar 07 - 13, 2005







Japanese industry is growing faster than expected, boosting hopes that the country's retreat back into recession is over.
Industrial output rose 2.1% adjusted for the time of year in January from a month earlier, according to latest data.
At the same time, retail sales picked up faster than at any time since 1997.
The news sent Tokyo shares to an eight-month high, as investors hoped for a recovery from the three quarters of contraction seen from April 2004 on.



The Nikkei 225 index ended the day up 0.7% at 11,740.60 points, with the yen strengthening 0.7% against the dollar to 104.53 yen.

Weaker exports, normally the engine for Japan's economy in the face of weak domestic demand, had helped trigger a 0.1% contraction in the final three months of last year after two previous quarters of shrinking GDP.

Only an exceptionally strong performance in the early months of 2004 kept the year as a whole from showing a decline.

The output figures brought a cautiously optimistic response from economic officials.

"Overall I see a low risk of the economy falling into serious recession," said Bank of Japan chief Toshihiko Fukui, despite warning that other indicators such as the growth numbers had been worrying.

Within the overall industrial output figure, there were signs of a pullback from the export slowdown.

Among the best-performing sectors were key overseas sales areas such as cars, chemicals and electronic goods.


India is to boost spending on primary schools and health in a budget flagged as a boost for the ordinary citizen.

India's defence budget has also been raised 7.8% to 830bn rupees ($19bn).

The priority for Finance Minister Palaniappan Chidambaram is to fight poverty and keep the government's Communist allies onside.

But his options are limited by a new law which makes him cut the budget deficit, which he said would be 4.5% of GDP in the year to March 2005.

The country's overall deficit is thought to be more than 10%, if the spending of India's 35 states and territories is included.

Under the fiscal responsibility law, Chidambaram has to trim the deficit by 0.3 percentage points each year, a target he says he has now met for the current year.

But the heavy spending on poverty reduction means the 2005-6 target for the deficit will be 4.3%, Chidambaram said falling short of the new law's requirement.

"I was left with no option but to press the pause button vis a vis the act," he said.

The following year, though, would have to be back on track, he warned.

"I may add that we are perilously close to the limits of fiscal prudence and there is no more room for spending beyond our means," he said.

The coming year's reduction has meant bringing more of the businesses in India's burgeoning services sector into the tax system and restructuring the personal tax system, although there are numerous corporate tax and duty reductions built into the budget.

Presenting his budget in the lower house of parliament, Chidambaram said the Indian economy was performing strongly and that inflation has been reined in. He said India's economy grew 6.9% in 2004.


The International Monetary Fund is to cut its 2005 growth forecast for the German economy from 1.8% to 0.8%, the Financial Times Deutschland reported.

The IMF will also reduce its growth estimate for the 12-member eurozone economy from 2.2% to 1.6%, the newspaper reported.

The German economy has been faltering, with unemployment levels rising to a seventy-year high of 5.2 million.

Its sluggish performance continues to hamper the entire eurozone.

The IMF's draft World Economic Outlook - due to be published in April would point to a marked deterioration in Germany's economy, the FT report said.

In September, the IMF had said that German growth for the current year would be 1.8%.


The US economy has grown more than expected, expanding at an annual rate of 3.8% in the last quarter of 2004.

The gross domestic product figure was ahead of the 3.1% the government estimated a month ago.

The rise reflects stronger spending by businesses on capital equipment and a smaller-than-expected trade deficit.

GDP is a measure of a country's economic health, reflecting the value of the goods and services it produces.

The new GDP figure, announced by the Commerce Department on Friday, also topped the 3.5% growth rate that economists had forecast ahead of announcement.

Growth was at an annual rate of 4% in the third quarter of 2004 and for the year it came in at 4.4%, the best figure in five years.

However, the positive economic climate may lead to a rise in interest rates, with many expecting US rates to rise on 22 March.

In the January-to-March quarter, the economy is expected to grow at an annual rate of about 4%, economists forecast.


The United States has lost the final round of a high-profile dispute with Brazil over US cotton subsidies.

A World Trade Organisation (WTO) appeals body upheld an earlier ruling ordering the US to stop the payments to its farmers.

The organisation had found in its initial September ruling that the subsidies violated global trade rules.

Brazil said the US practice depressed world prices and hurt cotton producers both in Brazil and other countries.

The US will now have to bring its cotton subsidies, which wrongly include export credits for producers, in line with global trade rules.


The Liberian economy started to grow in 2004, but "sustained and deep reform efforts" are needed to ensure long term growth, the International Monetary Fund (IMF) has said.

An IMF mission made the comments in a report published following 10 days of talks with the transition government.

The IMF said that, according to data provided by the Liberians, the country's GDP rose by 2% in 2004, after a 31% decline in 2003.

Liberia is recovering from a 14-year civil war that came to an end in 2003.

The power-sharing National Transition Government of Liberia will remain in place until elections on 11 October, the first presidential and parliamentary ballots since the conflict ended.




German telecoms firm Deutsche Telekom saw strong fourth quarter profits on the back of upbeat US mobile earnings and better-than-expected asset sales.

Net profit came in at 1.4bn euros (960m; $1.85bn), a dramatic change from the loss of 364m euros in 2003. Sales rose 2.8% to 14.96bn euros.

Sales of stakes in firms including Russia's OAO Mobile Telesystems raised 1.17bn euros. This was more than expected and helped to bring debt down to 35.8bn euros.


Nearly 90 million Africans could be infected by the HIV virus in the next 20 years if more is not done to combat the epidemic, the UN has warned.

Some 25 million Africans have HIV, the virus that causes Aids, at present.

The world body estimates the next two decades could see 89 million new cases of the disease in Africa or up to 10% of the continent's population.

The UN recommends a committed campaign against HIV/Aids and $200bn (105bn) of investment - to stem its spread.

At best, taking more action against Aids could save 16 million people from dying of the disease and a further 43 million people from contracting it, the UN says.


Foreign firms have been given an extra year to meet tough new corporate governance regulations imposed by the US stock market watchdog.

The Securities and Exchange Commission has extended the deadline to get in line with the rules until 15 July 2006.

Many foreign firms had protested that the SEC was imposing an unfair burden.

The new rules are the result of the Sarbanes-Oxley Act, part of the US clean-up after corporate scandals such as Enron and Worldcom.

Section 404 of the Sox Act, as the legislation is nicknamed, calls for all firms to certify that their financial reporting is in line with US rules.


Chancellor Gordon Brown's closest ally has denied suggestions there will be a Budget giveaway on 16 March.

Ed Balls, ex-chief economic adviser to the Treasury, said there would be no spending spree before polling day.

But Mr Balls, a prospective Labour MP, said he was confident the chancellor would meet his fiscal rules.

He was speaking as Sir Digby Jones, CBI director general, warned Mr Brown not to be tempted to use any extra cash on pre-election bribes.


Federal Reserve chairman Alan Greenspan has warned that allowing huge US budget deficits to continue could have "severe" consequences.

Speaking to the House Budget Committee he urged Congress to take action to cut the deficit, such as increasing taxes.

While the US economy is growing at a "reasonably good pace" he warned that budget concerns were clouding the economic outlook for the US.

Pension and healthcare costs posed the greatest risks to the economy, he said.


US Airways will return 11 Boeing 737 aircraft to the company it leases them from starting in May, the company said last week.

High fuel costs and a low-fares environment coupled with over-capacity in the airline industry has forced US Airways to take this step.

The return of aircraft will result in the firm cutting 14 flights across its network compared to February schedules.


US car firms General Motors (GM) and Ford have been forced to cut production in the face of falling car sales.

US sales at GM sank 12.7% in February compared to a year ago while Ford sales dropped 3% as foreign rivals took a bigger share of the market.


Australia is raising its benchmark interest rate to its highest level in four years despite signs of a slowdown in the country's economy.

The Reserve Bank of Australia lifted interest rates 0.25% to 5.5%, their first upwards move in more than a year.


More than 5.2 million Germans were out of work in February, new figures show.

The figure of 5.216 million people, or 12.6% of the working-age population, is the highest jobless rate in Europe's biggest economy since the 1930s.


US industrial production increased for the 21st month in a row in February, but at a slower pace than in January, official figures show.

The Institute for Supply Management (ISM) index fell to 55.3 in February, from an adjusted 56.4 in January.

Although the index was lower than in January, the fact that it held above 50 shows continued growth in the sector.

"February was another good month in the manufacturing sector," said ISM survey chairman Norbert Ore.

"While the overall rate of growth is slowing, the overall picture is improving as price increases and shortages are becoming less of a problem. Exports and imports remain strong," he said.

Analysts had expected February's figure to be stronger than January's and come in at 57.

Of the 20 manufacturing sectors surveyed by ISM, 13 reported growth. They included the textiles, apparel, tobacco, chemicals and transportation sectors.


Malaysia's central bank is to relax restrictions on foreign ownership to encourage Islamic banking.

Banks in Malaysia will now be able to sell up to 49% of their Islamic banking units, while the limit on other kinds of bank remains at 30%.


Argentina closed its $102.6bn (53.51bn) debt restructuring offer for bondholders, with the government hopeful that most creditors would accept the deal.

The estimated loss to bondholders is up to 70% of the original value of the bonds, yet the majority are expected to accept the government's offer.

Argentina defaulted on its debt three years ago, the biggest sovereign default in modern history.

Argentina's President, Nestor Kirchner, said: "A year ago when we started the swap (negotiations), they told us we were crazy, that we were irrational."