These rose 1.6% to a record $161.5bn while exports
rose 0.1% to $100.5bn.
Textile imports rose sharply after the abolition of
global quotas in January, with shipments from China to the US rising
9.8% in February.
The growth — fuelled by the ending of decades-old
restrictions on the level of textile trade between individual
countries — will increase pressure on the US government to introduce
measures to protect domestic manufacturers.
The US Commerce Department is considering putting
temporary curbs on some textile imports from China after US
manufacturers expressed concerns about a flood of Chinese goods
entering the country.
Although the overall US trade deficit with China
fell by 9% in February to $13.9bn, the US government is facing growing
calls to rebalance its trading relationship with China.
"You have a situation with China where imports
are up by 49.8% from a year ago but at the same time US exports to
China barely grew by 1.6%," John Lonski, an economist with
Moody's Investors Service, quoted as saying. "That is not going
to sit well with the members of the United States Congress."
MIGRANT REMITTANCES 'TOP $100BN'
Migrant workers are sending $100bn home every year
in what has become the biggest source of foreign funds for developing
countries, the IMF says.
In its World Economic Outlook, the International
Monetary Fund said remittances beat foreign investment, aid and
exports in magnitude.
Inflows of $100bn for 90 developing countries in
2003 were up 25% on 2002 – with a similar rise expected in 2004. But
it warned that transaction costs are still too high.
Unlike aid and investment, remittances have stayed
high despite downturns in the world economy.
The World Bank in particular believes that the
stereotype of money flowing from rich countries to poorer ones is only
part of the picture.
"My own belief is that South-South flows are a
lot larger than North-South flows," said World Bank economist
Governments in both host and recipient countries
needed to do more to ease the flow, which IMF and World Bank staff
have previously said is a key source of money for driving growth and
A typical deal to send $200 back to relatives in a
migrant worker's home country costs between $15 and $26 on average,
the IMF said.
Some host countries are taking action. The UK, for
example, estimates the cost of sending money from the UK at anything
from £2.50 to as much as £40 for a transaction involving £100.
HIGH OIL PRICES TO HIT GROWTH: IMF
Global economic growth is set to slow to 4.3
percent this year, the IMF said last Wednesday as it expressed anxiety
over high oil prices and the flagging performances of Europe and
In its semi-annual World Economic Outlook report,
the International Monetary Fund said growth was still "overly
dependent" on demand from the United States and China. The world
economy is likely to moderate this year from estimated growth of 5.1
percent registered in 2004, the report said.
Next year would see a slight rebound to 4.4
percent, but three main obstacles stand in the way of robust growth:
"higher (US) interest rates, high and volatile oil prices and
increasing current-account imbalances".
The IMF emphasised that a slowdown in the United
States could tip the global economy into recession in the absence of
stronger growth in the eurozone and Japan. All regions have to play
their part to redress global imbalances, IMF senior economist Raghuram
Rajan told a news conference.
The United States, China and most emerging markets
have powered ahead, the report said. "In contrast, growth in
Europe and Japan has been disappointing, reflecting — to different
extents — faltering exports and weak final domestic demand," it
The global economy is also out of kilter owing to
the record current-account deficit being run up in the US, the IMF
warned. The report said that Americans' insatiable demand for imported
goods, combined with the lacklustre demand for US exports in Europe
and Japan, have left the global system vulnerable to a shock.
The resulting pressure on the dollar is unwelcome
if it results in "further, and possibly disorderly,
depreciation" of the world's reserve currency. A sharp rise in US
interest rates would also have big knock-on effects. And having
recently surpassed $58 a barrel for the first time, the oil market
"remains highly vulnerable to shocks, with significant upside
risk over the longer term".
ASIAN STATES ASKED TO LIBERALIZE CURRENCIES
EU finance ministers, eager to ease the pain of the
euro's strength, stepped up pressure on Asian countries to let their
currencies appreciate ahead of an upcoming G7 meeting.
Luxembourg Prime Minister Jean-Claude Juncker,
whose country currently holds the EU's presidency, said EU finance
ministers believed an "orderly" appreciation of Asian
currencies was "absolutely necessary".
Juncker said he would voice European concerns about
exchange rates at a forthcoming meeting in Washington of finance
ministers of the Group of Seven (G7) most industrialized countries.
Speaking at a press conference after meeting with
eurozone finance ministers, he said they had agreed that he would
"repeat verbatim" at the Washington gathering a message he
gave in February in London at the last G7 summit.
"In other words, excessive volatility and
concern about exchange rates because the current position remains
contrary to the objective of robust economic growth," he said.
"We also repeated that exchange rates will not
cause undesirable economic imbalances. All important economies would
be expected to redress global economic imbalances ... so that if
appreciation has to take place, it will be orderly," he said.
"Appreciation of some Asian currencies is more
than highly desirable." Past calls for currency appreciation in
Asia have fallen on deaf ears, leaving policymakers in the euro zone
with the impression that their countries are bearing the brunt of the
dollar's weakness because many Asian currencies are either directly or
indirectly pegged to the US currency.
OIL TUMBLES AFTER SHARP JUMP IN US INVENTORIES
World oil prices dropped sharply last Wednesday,
hit by bigger-than-expected rises in US crude stockpiles, amid
forecasts of falling global demand for energy, analysts said.
New York's main contract, light sweet crude for
delivery in May, fell $1.16 to $50.70 per barrel in early deals. In
London, the price of Brent North Sea crude oil for delivery in May
lost $1.06 to $50.80 per barrel.
New York prices have slumped by 13 percent since
supply worries pushed them to historic high points of $58.28 on April
4, the same day Brent crude rocketed to a record level $57.65.
"The market was shocked by the (inventories) data," Societe
Generale analyst Deborah White said.
INDIA, CHINA JOIN HANDS AS STRATEGIC PARTNERS
India and China last week agreed to join hands as
strategic partners to shore up peace and prosperity in Asia and
beyond, a joint statement signed by the prime ministers of the two
Celebrating a perceptible bonhomie between visiting
Chinese Premier Wen Jiabao and Indian Prime Minister Manmohan Singh,
Beijing also formally gave recognition to the Himalayan region of
Sikkim as an Indian state.
The two prime ministers exchanged notes on
Pakistan, but New Delhi did not raise the standard issue of Beijing's
arms supply to Islamabad during the summit talks, Indian Foreign
Secretary Shyam Saran told a news conference. "There was no
specific discussion on arms supply to Pakistan. The Chinese premier
expressed his support for the talks between India and Pakistan,"
Mr Saran displayed a map of India presented by the
Chinese side in which Sikkim was shown as part of India. A formal
recognition of the new status for Sikkim was written into the joint
ASIAN GIANTS KEEP UP WAR OF WORDS
China and Japan have kept up their war of words
over disputed gas reserves and Japan's wartime behaviour.
China said Tokyo's decision to issue drilling
rights in a disputed area of the East China Sea was a "serious
But Japan's Foreign Minister Nobutaka Machimura
signalled he would take a tough line in weekend talks in China.
China has seen violent protests over Japanese
textbooks which critics say play down Japan's wartime brutality.
The protests were also directed at Tokyo's bid for
a permanent UN Security Council seat.
The Chinese government said it had lodged a protest
with Japan following Tokyo's announcement that it was starting to
review applications to drill for gas in the East China Sea.
Chinese Foreign Ministry spokesman Qin Gang called
the decision a "serious provocation to the rights of China and
the norm of international relations", according to China's state
POVERTY TARGETS 'MAY BE MISSED'
The World Bank and IMF have called for urgent
action to enable the poorest countries to achieve targets known as the
Millennium Development Goals.
Ahead of their spring meetings, they have issued a
report saying many countries will fail to achieve the hoped-for levels
of poverty reduction.
African nations in particular are failing to meet
goals, the report says.
Rich nations should do more and poor countries must
create a climate for private business to thrive, it adds.
The World Bank and IMF argue that it is possible
for most countries to reduce poverty, as well as providing the primary
education and improved public health that the goals embody.
Economic growth is central to the effort to achieve
the goals and the IMF and bank's vision is one of expansion driven by
BLAIR BID TO SECURE LABOUR LEGACY
Tony Blair will ask voters to make Labour's changes
last "for all time" as he launches the party's manifesto.
After eight years in power, Mr Blair will say he is
fighting his last election as Labour leader but still has fresh ideas
on making Britain fairer.
The spotlight will be on which taxes the manifesto
says will be untouched.
The Conservatives insist Labour will have to raise
taxes to pay for its plans while the Liberal Democrats say the tax
system is too unfair.
The Tories are expected to launch a new cinema
advertisement to encourage people to vote against Mr Blair's
"smirking". The Lib Dems have highlighted plans to make the
EU 'TO APPROVE' TWO NEW COUNTRIES
The European parliament is expected to approve the
admission of Bulgaria and Romania to the European Union.
The decision will pave the way for the signing of
an accession treaty later this month. Both countries are set to join
the EU in 2007.
But their memberships could be delayed by one year
if they fail to make key reforms, such as curbing corruption and
At last the EU seems within reach for Bulgaria and
Romania, which missed the first big wave of expansion into the former
Communist bloc last year.
Many European deputies think that Romania — a
country of 23 million people — is still lagging behind.
FED WORRIES GROW ON US INFLATION
Inflation is a growing concern in the US economy
and interest rates may have to rise to nullify the threat, the Federal
Reserve has indicated.
Minutes from the Fed's monetary policy meeting in
March — at which it raised rates by 0.25% to 2.75% — suggest more
concern about inflationary pressures.
Fed policymakers, who voted unanimously for the
rise, noted a requirement for a "tightening" of monetary
However, they said they did not think
"accelerated" rate rises were needed.
Analysts interpreted the comments as a signal that
the Fed believed that the rate of economic growth was healthy and that
substantial hikes in interest rates were not on the cards.
DRUG SECTOR HITS SINGAPORE GROWTH
Singapore's economy shrank by an annualised rate of
5.8% in the first quarter of this year, official figures show, after
the drugs sector slowed.
The drop in gross domestic product (GDP) was far
worse than the markets had been expecting, and the weakest since the
Sars crisis of 2003.
The government had already forecast that the
pharmaceutical industry would see flat growth in 2005.
The sector has been hit by competition from generic
Analysts had expected that Singapore's economy
would only decline by an annualised rate of 0.8% during the first
quarter, after 7.9% growth in the last three months of 2003.
IMF RATE HIKE PROPOSAL IRKS BD TRADERS
The central bank of Bangladesh and leading trade
bodies of the country take diametrically opposite positions on a
recent IMF prescription that the country should raise lending rate and
tighten money supply to contain inflation.
The International Monetary Fund put forward the
prescription of 'contractionary' monetary policy by increasing the
lending rate and tightening credit growth. Subsequently, the central
bank, Bangladesh Bank, echoed the IMF's position.
In a meeting with the chief executives of
state-owned, private and foreign commercial banks, top BB officials
suggested that they should increase the lending as well as deposit
IPOD SALES FUEL APPLE PROFIT LEAP
Apple sold more than five million iPod digital
music players in the first three months of 2005, helping it to boost
quarterly income six-fold.
Buoyant sales of iPods helped the firm raise its
net income by 530% to $290m (£153m; 224m euros), compared with $46m
for the same period last year. Revenues rose 70% to $3.24bn after good
growth in all product categories.
CHIRAC LAUNCHES EU YES CAMPAIGN
President Jacques Chirac is set to launch the Yes
campaign in France's referendum on the European constitution in a TV
debate with 80 young people.
The Yes campaign, which includes most of the
country's political elite from left and right, is under pressure.
Two months ago they were well ahead but now the
opinion polls give the No campaign a clear lead.
It says the new European Union is too Anglo-Saxon
in its commitment to free market economics and open competition.
Those campaigning against the constitution argue
that it threatens France's cherished social model.
The No campaigners are also telling voters that
voting no in May is the best way to stop Turkey becoming a member of
LEBANON PM RESIGNS
Lebanon's pro-Syrian prime minister stepped down
last Wednesday, abandoning efforts to form a government to lead the
country to general elections, but said there was still time to hold
the poll next month.
Prime Minister Omar al Karami's resignation seemed
to make timely elections more unlikely and deepened the political
crisis triggered by the February assassination of former prime
minister Rafik al Hariri.
INDIA AND US IN 'OPEN SKIES' DEAL
India and the United States have signed an
agreement increasing the number of flights between the two countries.
The new "open skies" policy replaces a
decades-old agreement which restricts flights, the destinations they
can fly to and air fares.
The new agreement is expected to lead to lower air
fares between India and the United States.
BRAKES SLAMMED ON HARLEY GROWTH
Harley-Davidson, the iconic US motorbike
manufacturer, has lowered 2005 profit forecasts and is reducing
shipments because of slowing demand.
Poor sales in the US have prompted Harley to reduce
its expectations for the year, despite reporting a strong performance
in the first quarter.
It is downgrading profit forecasts to between 5%
and 8% growth from its previous guidance of more than 10%.
PROTESTS BATTER UKRAINE'S ECONOMY
Ukraine saw growth in its economy halve in the
months following the country's disputed presidential elections.
Gross domestic product (GDP) rose by 5.4% between
January and March, compared with a 10.8% rise at the same time in
2004, official figures showed.
Much of Ukraine ground to a halt during last year's
political crisis, which eventually saw pro-Western opposition leader
Vickor Yushchenko win power. Thousands of people joined protests
during the so-called Orange Revolution.
UK JOBLESS TOTAL ON THE UP AGAIN
The number of jobless people in the UK has risen,
according to the latest set of official figures.
In the three months from December to February the
government's preferred ILO measure of unemployment rose by 29,000 to
1.43 million, a rate of 4.8%.
The number of people out of work and claiming
unemployment benefit rose by 11,000 to 828,700 in March.
Meanwhile, average earnings rose by 4.7% in the
year to February, up from the previous month's level of 4.4%.
DONORS PRESSURE KENYA OVER GRAFT
International donors have taken a tough line with
Kenya on aid, demanding fresh reforms to root out corruption.
At the end of a two-day World Bank-led meeting in
Nairobi, officials made no funding pledges and called on Kenya to
commitment itself to reforms.
Donor nations have expressed alarm at increased
reports of high-level corruption in the country.
However, World Bank representative Makhtar Diop
said he was optimistic an action plan on graft could succeed.
ROVER SUPPLIERS RECEIVE PAYOUTS
The task force set up to help suppliers of MG
Rover, the car company which is in administration, has made its first
payouts to suppliers.
So far, £63,000 has been paid to six companies,
saving 234 workers from being laid off.
The government has said a total of £40m will be
made available to support businesses who supplied Rover.
Suppliers who rely on MG Rover for 15% or more of
their total business are eligible for help.
LABS TOLD TO DESTROY DEADLY VIRUS
The US government has told more than 3,700
laboratories in 18 countries to destroy potentially lethal influenza
samples sent out in testing kits.
The samples are of "Asian flu", which
killed more than one million people in 1957 but disappeared by 1968.
Klaus Stohr of the World Health Organization (WHO)
told the BBC that people born after 1968 did not have antibodies
against the virus.
"If the virus gets loose, it can easily cause
an influenza epidemic," he said.
"If this virus were to infect one person, it
would spread very rapidly."
AIG BOSS GAVE WIFE $2BN IN SHARES
The ex-boss of US insurance giant AIG, Maurice
Greenberg, gave his wife more than $2bn (£1.2bn) of his shares in the
company days before stepping down.
The stock transfer was recorded in a document filed
with the US Securities and Exchange Commission (SEC).
The US regulator is investigating alleged fraud in
a suspect deal between American International Group and reinsurance
firm General Re.
Mr Greenberg quit as chief executive of AIG in the
wake of the scandal.
TESCO PROFITS BREAK THROUGH £2BN
Supermarket giant Tesco has become the first UK
retailer to unveil annual profits of more than £2bn. The UK's biggest
supermarket chain posted underlying pre-tax profits of £2.03bn
($3.83bn), up 20.5% on 2004.
INVESTORS APPROVE HUGE STEEL DEAL
Shareholders of three of the world's largest
steelmakers have agreed a merger which will create a business with
combined sales of $31.5bn.
The deal, uniting Dutch firms Ispat and LNM and US
business International Steel Group, was spearheaded by Indian-born
steel tycoon Lakshmi Mittal.
The Mittal family will own 88% of the newly created
Mittal Steel, which will employ 165,000 workers. The firm said it
would look to expand its interests in China and India.
GO-AHEAD FOR BALKAN OIL PIPELINE
Plans to build a trans-Balkan oil pipeline from the
Black Sea to the Mediterranean have been approved by Russia, Bulgaria
The 285km (178-mile) pipeline will go overland from
Bulgaria's Black Sea port of Bourgas to the northern Greek town of
Alexandroupolis on the Aegean.
The aim of the pipeline is to allow Russian crude
exports to sidestep the congested Bosphorus Strait. Separate ships
will instead unload at Bourgas and fill up at Alexandroupolis.
German unemployment hit a post-war high in March
after cold weather deterred many firms from hiring workers.
The number of people out of work increased by
92,000 to 4.97 million, according to seasonally adjusted figures from
the Federal Labour Office.
That pushed Germany's jobless rate to 12%, compared
with about 5% in the UK and the US.
The non-seasonally adjusted figure stayed above the
5 million level, falling by 41,000 to 5.176 million.
LABOUR ATTACK TORY ECONOMIC PLAN
Conservative plans for the economy have come under
fire from both Labour and the Lib Dems as Tory Oliver Letwin insisted
his proposals did add up.
Labour unveiled a dossier claiming the Tory figures
were an "incoherent mess".
But the Tories retaliated with their own document
saying they had already refuted all the claims. They accused Tony
Blair of "losing the plot".
The Lib Dems, whose leader Charles Kennedy is
celebrating becoming a father, focused on their own tax plans.
MICROSOFT IN $150M GATEWAY PAYOUT
Microsoft is to pay PC maker Gateway $150m
(£79.4m) over four years to settle an anti-trust case.
Shares of both firms rose in New York, after they
agreed to work together to develop and market Gateway products.
Microsoft will set aside more than $700m from first
quarter earnings to cover costs arising from the case.
That includes $123m of payments to Gateway, $41m in
payments to Burst.com, and $550m for a reserve fund to finance future
CHINA PHONE FIRMS WIN INDIA DEALS
Two of China's largest telecoms firms have
announced multi-million dollar contracts to supply equipment to India.
ZTE has won an order worth $208m (£110m) to
provide 500,000 broadband lines to India's Atlas Interactive.
And Huawei Technologies has secured a three-year
$70m deal to supply network equipment for both fixed line and mobile
services to HFCL Infotel.
ROVER'S PHOENIX FOUR PLEDGE £49M
The "Phoenix Four", who own MG Rover's
parent, Phoenix Venture Holdings, have pledged £49m ($92.6m) in
assets to help keep the troubled firm going.
Rover's administrators, PricewaterhouseCoopers (PwC),
said they had a letter committing the £49m.
GERMANY IN HUGE RUSSIAN GAS DEAL
German and Russian companies have signed natural
gas and rail equipment deals worth billions of dollars.
Russia's gas giant Gazprom and Germany's
Wintershall — part of BASF — will develop a west Siberian gas
field and invest in a Baltic Sea pipeline.
Construction of the $2bn pipeline (£1.05bn; 1.54bn
euros) is due to start later this year. Germany's Siemens signed a
deal with Russia's railways to build high-speed trains for Russian
UK HOUSE PRICE JITTERS CONTINUE
UK house prices fell 0.5% in February, according to
figures from the Office of the Deputy Prime Minister (ODPM).
The decline — which saw the average UK house
price fall from £180,465 in January to £179,491 — was smaller than
a 1% fall in the same period last year.
EU HOPES OVER AIRCRAFT AID ROW
The EU has said it believes there is still time to
strike a deal with the US over the level of state aid given to
aircraft makers Airbus and Boeing.
European negotiators are keen to avert a possible
economic showdown at the World Trade Organisation (WTO).
Both sides have missed an 11 April deadline to
reach an accord on cutting support to Airbus and Boeing.
The EU and US accuse each other of boosting their
industries with illegal state subsidies.
INDIA EXPORTS HIT RECORD LEVELS
India's exports reached record levels in the last
fiscal year as its economy continued to boom.
Figures showed exports rose 24% to $80bn (£42.7bn)
in the year to March — but soaring oil imports meant India still ran
up a trade deficit of $25bn.
The country imports more than 70% of its oil needs
and while demand has increased, so has the price of crude.
Economists say a global downturn would have an
impact on exports this year, with a 15% rise being forecast.