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 UNVEILS ANTI-POVERTY BUDGET
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
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
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.
IMF 'CUTS' GERMAN GROWTH ESTIMATE
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
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
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%.
US ECONOMY SHOWS SOLID GDP GROWTH
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
In the January-to-March quarter, the economy is
expected to grow at an annual rate of about 4%, economists forecast.
US LOSES COTTON FIGHT WITH BRAZIL
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
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.
LIBERIAN ECONOMY STARTS TO GROW
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.
DEUTSCHE TELEKOM SEES MOBILE GAIN
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.
HIV 'SET TO INFECT 90M AFRICANS'
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.
US GIVES FOREIGN FIRMS EXTRA TIME
Foreign firms have been given an extra year to meet
tough new corporate governance regulations imposed by the US stock
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
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.
BROWN ALLY REJECTS BUDGET SPREE
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
FED CHIEF WARNING ON US DEFICIT
Federal Reserve chairman Alan Greenspan has warned
that allowing huge US budget deficits to continue could have
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 GIVES BACK 11 BOEINGS
US Airways will return 11 Boeing 737 aircraft to
the company it leases them from starting in May, the company said last
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.
GM, FORD CUT OUTPUT
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 RATES AT HIGH
Australia is raising its benchmark interest rate to
its highest level in four years despite signs of a slowdown in the
The Reserve Bank of Australia lifted interest rates
0.25% to 5.5%, their first upwards move in more than a year.
GERMAN JOBLESS RATE AT NEW RECORD
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.
SLOWDOWN HITS US FACTORY GROWTH
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,"
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 LIFTS ISLAMIC BANK LIMIT
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 CLOSES $102.6BN DEBT SWAP
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."