The growth in the current account surplus was
mostly the result of a surge in income from Japanese investments
overseas, the finance ministry's figures showed.
Much of the 18.3% growth from April 2004 in
investment income came from US and European bonds. Japan is one of the
world's biggest buyers of US government debt.
On the other hand, while exports grew 7%, imports
were up 12%.
Japan has traditionally shown strength in export
industries such as cars and electronics which has helped it counteract
weakness in domestic demand.
Although the consumer at home is spending more and
corporate investment has also grown, economists said the export
picture remained gloomy.
"I don't expect a clear recovery in export
growth until the second half of this fiscal year (which ends in
March)," said Naoki Iizuka, chief economist at Dai-Ichi Research
Institute. The Japanese fiscal year finishes in March. High prices for
raw materials such as oil also contributed to the trade problems.
WHITE HOUSE SEES 'STRONG' GROWTH
The US economy is growing in a "strong"
and "robust" manner, the White House has said.
Giving its forecasts for the year, the White House
said the economy is on track to grow by 3.4% this year, down from an
earlier target of 3.5%.
Despite the dip, growth is set to be almost double
that of the European Union and eurozone.
The US rate of inflation, however, has picked up as
a result of high oil prices and is now forecast at 2.3%.
The US Federal Reserve has been raising its
benchmark borrowing costs in an effort to control price growth as the
world's biggest economy emerges from of a slowdown.
At the start of May it lifted the benchmark rate to
3%, the eighth time the Fed has tweaked rates since June.
Higher rates do not seem to have halted the
"Economic growth is steady, it is strong and
our economy's underlying fundamentals are robust," Treasury
Secretary John Snow said in a statement.
Job creation, one of the hot issues at the last US
presidential election, has picked up slightly and the unemployment
rate is forecast at 5.2%.
The US should add about 178,000 jobs a month, the
White House has said.
It needs to create at least 150,000 jobs every
month in order to keep pace with population growth, economists have
CHIRAC, SCHROEDER TO MEET AHEAD OF EU SUMMIT
French President Jacques Chirac and German
Chancellor Gerhard Schroeder are due to meet in Paris ahead of next
week's crucial EU summit.
The talks are likely to be overshadowed by
Thursday's war of words between UK Prime Minister Tony Blair and the
Mr Blair made it clear he would not give up the
British EU budget rebate, worth £3bn ($5bn) each year.
The Paris talks will also focus on the future of
the European constitution.
Mr Chirac and Mr Schroeder will be working out how
best to counter Tony Blair's strong riposte on the British rebate.
In Luxembourg on Thursday, the French president
said it was time for Britain to compromise on the money it gets back
from the EU budget each year.
The response from Downing Street was swift and
Mr Blair said Britain would not give up that money
because the UK was still paying in twice as much as France and that
without the rebate, it would have been 15 times as much.
This war of words has set the scene for a deeply
uncomfortable EU summit next week, during which Britain will be
isolated on the rebate, with the 24 other member states arguing that
it should be scrapped.
The French and German leaders meeting in Paris are
determined to force Britain to compromise on the budget, although it
is not clear whether they are willing to do the same.
LAST-DITCH PUSH FOR POVERTY DEAL
The finance ministers of the leading industrial
countries are meeting in London in a final effort to agree a deal on
relieving Africa's debts.
The talks come just one month before world leaders
— and thousands of anti-poverty campaigners — converge at
Gleneagles for a G8 summit.
Britain has vowed to make poverty reduction a key
plank of the summit.
Development campaigners warned that the meeting
would be seen as a test of political will and honesty of the rich.
Supermodel Claudia Schiffer lent her support for
the coalition of development groups who are campaigning for 100% debt
"I have two children, but if I was living in
parts of Africa I'd have a one in five chance of dying during
childbirth," she said at a press conference called by the Global
Call to Action Against Poverty (GCAP), a global coalition of
organisations representing 150m people in 72 countries.
The spokesperson for the coalition, South African
Kumi Naidoo, told that he believed that growing pressure from the
public is beginning to have an effect on governments.
And Richard Curtis, a leading figure in the UK's
Make Poverty History Campaign, said that the campaign had sent a
million e-mails to Tony Blair, and told the BBC that it demonstrated
that "this generation is not non-political and disengaged".
The development lobby wants the finance ministers
to agree to debt relief for all poor countries, to back calls for the
doubling of foreign aid to $100bn per year, and to support plans for
changes in the world trading system that would cut subsidies enjoyed
by rich world farmers.
GREENSPAN HINTS AT HIGHER RATES
Federal Reserve chairman Alan Greenspan has said
the US economy is continuing to grow in 2005, and hinted that the Fed
would continue to raise rates.
He told the US Congress that the economy
"seems to be on a reasonably firm footing, while underlying
inflation remains contained".
But he warned that rapidly-rising house prices,
linked to speculation, could add to inflationary pressures.
Analysts had hoped Mr Greenspan would point to a
pause in the rate rises.
Bond prices fell while share prices continued to be
soft on the news.
The US rate-setting body has increased rates from
1% to 3% in the past year, in a series of 0.25% increases, to try to
curb the rapidly-expanding economy.
After his testimony, analysts said they expected
another rate rise to 3.25% at the next Fed meeting on 29-30 June.
EU AND CHINA START TEXTILE TALKS
European Union Trade Commissioner Peter Mandelson
is in Shanghai amid rising temperatures in a trade row over textiles.
Mr Mandelson will talk to Bo Xilai, China's
Commerce Minister, to seek an agreement to restrict Chinese exports.
The EU fears China could overwhelm Europe's textile
producers and is threatening sanctions if China does not curb its
China says the EU and the US are acting unfairly by
seeking to limit imports.
The explosion in China's textile trade has followed
the scrapping of the Multi Fibre Agreement on 31 December 2004.
Since then, both the EU and US have complained that
textile exports have soared, in some cases fourfold.
BANGLADESH GETS 'POPULIST BUDGET'
Bangladesh's Finance Minister Saifur Rahman has
unveiled the national budget for the next fiscal year.
Effective from July, it contains some populist
measures like doubling agricultural subsidies and soft loans.
Mr Rahman proposed spending a little over $10bn for
government administration and to meet "development
But the opposition parties rejected the budget as
over-ambitious, predicting it would cost the government too much.
Members of the ruling Bangladesh Nationalist Party
cheered Mr Rahman as he presented the budget in parliament. He
proposed to double agricultural subsidies to the equivalent of about
KUWAITI FIRM SECURES US ARMY DEAL
Kuwaiti distribution and warehousing firm PWC
Logistics has secured a second major contract from the US military.
The deal, which could be worth as much as $14bn
(£8bn) over five years, will see PWC Logistics supply US and allied
troops across the Middle East.
The company secured a similar $3.27bn logistics
contract with the Pentagon in February.
The new deal covers US and allied troops and
operations in Kuwait, Iraq, Jordan and Turkey.
Under the deal, PWC Logistics will also assist in
the supply of US operations in Afghanistan.
The overall contract will run for an initial
18-month period, with options to extend it by up to five years.
DUBAI PARALYSED BY POWER CUT
The Emirati boom town of Dubai was paralysed for
several hours by a power blackout on Thursday amid the sweltering
temperatures of the southern Gulf.
The electricity went out at 9.50am (0550 GMT) and
about four hours later an official said power was restored at 80 per
The official said the power cut was caused by an
'unexpected technical fault', adding that teams of electricians were
working to restore power.
KUWAITI OILFIELD PROJECT
A Kuwaiti parliamentary committee last Wednesday
approved a huge oilfield development project which has been held up
for years because of the need for massive foreign investment.
"The committee unanimously approved the
government draft law to seek the help of foreign companies to develop
four oilfields" near the border with Iraq," MP Abdul Wahab
The dollar held steady at lower levels against the
euro last Wednesday as players treaded water on the eve of US Federal
Reserve Chairman Alan Greenspan's testimony on the US economy. The
euro rose to $1.2315 in late European trading, from $1.2286 late on
Tuesday in New York. The dollar rose to 106.90 yen, from 106.58 on
Tuesday. On the London Bullion Market, the price of an ounce of gold
stood at $424.55 against $424.10 late on Tuesday.
WTO FAVOURS US IN RICE DISPUTE WITH MEXICO
A World Trade Organization panel last week ruled in
favour of the United States in a dispute with Mexico over import
restrictions that hit US beef and long-grain rice.
The WTO dispute settlement panel found that
Mexico's imposition of anti-dumping duties breached international
trade rules and called on Mexico to abide by them.
The panel's report was issued to the US and Mexico
last month, and the Mexican economics ministry had said it planned to
THAILAND'S ECONOMY SLIPS
Thailand's economy slowed sharply in the first
quarter of 2005, growing 3.3 percent due to a sharp spike in oil
prices and a rise in consumer prices, the government's economic think
The first quarter growth compared with 6.1 percent
in all of 2004, the National Economics and Social Development Board (NESDB),
the government's economic advisory body, said in its latest quarterly
The NESDB, however, expects a better economic
performance in the second half of 2005 as "temporary hindering
factors diminish," public spending increases, and exports of
agricultural products are further stimulated.
UGANDA TO 'REDUCE' DONOR RELIANCE
Uganda has imposed extra excise duties and upped
VAT in an attempt to reduce the country's dependence on money from
The budget published last week also cut taxes on
schoolbooks and medicines.
The government promised to fund 60% of spending in
2005-6 from tax revenues, up from 54% the previous year.
Donors have warned that President Yoweri Museveni
could be trying to make himself president for life, and the UK has cut
financial support by £5m. Museveni has responded by calling for
Uganda to make itself more self-sufficient.
INTEL OUTLOOK BOOSTS CHIP MARKET
Strong worldwide demand for laptop computers is to
deliver another boost to chipmaker Intel, the firm has said.
According to the US chip giant, sales and profits
for the three months to June are set to match or exceed its previous
A switch by consumers and businesses to laptops
from desktop PCs is driving sales of the Centrino chip, Intel said.
Intel stock has risen more than 25% in the past two
months. Intel's mid-quarter update said it expected to make sales of
between $9.1bn (£5bn) and $9.3bn, up from its previous estimate of
between $8.6bn and $9.2bn.
OIL PRICES RISE ON HURRICANE FEAR
Crude oil prices topped $54 a barrel last Thursday
as the first storm of the Caribbean hurricane season headed for oil
fields in the Gulf of Mexico.
The price of oil markets' benchmark crudes rose
more than $1.
Raising oil output will be on the agenda at next
week's meeting of the Organisation of Oil Producing Nations (Opec),
the cartel's president said.
Sheikh Ahmad al-Fahd al-Sabah said Opec members
were interested in seeing oil prices did not damage global growth.
INDIA 'TOPS FOR ASIAN INVESTMENT'
India has come out as a top Asian destination for
investment in a survey of fund managers' top picks.
The survey, carried out by the Reuters news agency,
found that over the next three months India tied with Taiwan as
Over the longer timeframe of a year, India came
second only to China as the best place to put clients' money.
China's attraction, managers said, was growing
consumer demand, while in India the prospect of solid reform appealed.
GLOBAL ELECTRICITY GRIDS STRAINED
Electricity supply in developed countries is
straining to cope with demand, an International Energy Agency (IEA)
In a report called 'Saving Electricity In A Hurry',
the agency predicts there will be outages like those experienced in
the United States, Japan and Canada.
Several developed countries have experienced power
shortages and more are likely to occur, it says.
A mix of factors lead to power cuts but
pre-planning rarely happens, it adds.
The report lists recent electricity outages in the
United States, Japan, New Zealand and Canada and says there is
"reason to believe that this list will grow".
ISRAELI COURT BACKS PULLOUT PLAN
Israel's Supreme Court has upheld the government's
plan to withdraw from the Gaza Strip, removing the last legal obstacle
in the way of a pullout.
The court rejected an appeal by Jewish settlers,
who said the plan was a violation of their human rights.
Israel plans to withdraw from the Gaza Strip and
four settlements in the West Bank, beginning in August.
The move is fiercely opposed by settlers and their
supporters, who have tried to thwart it for months.
Ten of the 11 judges upheld the plan as legal. One
judge said the move was unconstitutional and should be cancelled.
BP IN $2BN SAUDI INVESTMENT DEAL
Oil giant BP has announced plans to invest up to
$2bn (£1.1bn) in Saudi Arabia's petrochemicals industry.
The UK company said its subsidiary Innovene has
signed a memorandum of understanding with Saudi development firm Delta
"The memorandum marks the beginning of
detailed negotiations between Innovene and Delta," BP said.
The company said the investment would form a
"platform for long-term growth opportunities" in Saudi
BP reported a 29% jump in first-quarter net profits
in April, boosted by a sharp increase in world oil prices.
$80BN GOOGLE TAKES TOP MEDIA SPOT
Internet search phenomenon Google has overtaken a
swathe of venerable rivals to become the world's biggest media company
by stock market value.
After its shares hit an all-time high on the New
York markets on Tuesday, Google is now worth $80bn (£44bn).
This takes it ahead of media leviathan Time Warner,
which is valued at $78bn.
The valuation comes in spite of the fact that
Google's annual sales total just $3.2bn, a fraction of Time Warner's
SIEMENS SELLS MOBILE-PHONE UNIT
Siemens is to sell its loss-making mobile phone
unit to Taiwanese technology firm BenQ.
No price was announced, but the German giant said
the sale would cost it 350m euros ($429m; £235m) in 2005.
The deal sees Siemens take a 50m euro stake in BenQ,
which will retain rights to the Siemens brand for five years and
supply phones to the German firm.
The mobile unit has long been a key weakness for
Siemens, and rumours of a sell-off have been rife for months.
Siemens said it hoped to complete the deal by the
end of September, subject to approval by regulators and its
BOE MAINTAINS RATES AT 4.75%
The Bank of England has kept UK interest rates on
hold at 4.75% for the tenth month in a row.
The Bank's Monetary Policy Committee (MPC) had been
widely expected to keep rates on hold due to slowing spending and
fears of rising consumer bad debt.
The EEF, which represents manufacturers, has
welcomed the decision.
However, the British Retail Consortium (BRC) had
wanted a rate cut to boost consumer spending in the High Street.
UK'S MANUFACTURING OUTPUT BOUNCES BACK
Manufacturing output bounced back in April, rising
0.9%, its highest monthly gain in a year.
Analysts had expected a rise of only 0.4%, after a
1.6% drop in March.
But the three-month data from the Office for
National Statistics showed a drop of 1.4%, the biggest three-month on
three-month fall since August 2002.
Separate figures showed Britain's trade gap was
worse than expected at £4.8bn ($3.29bn), higher than the £4.7bn
forecast and the £4.6bn seen in March.
FRENCH PM SETS OUT ECONOMY PLANS
French Prime Minister Dominique de Villepin has set
out his plans to revitalise the country's economy and get France
In his first policy speech, he said job creation
was a priority. He suspended previously planned income tax cuts.
Mr de Villepin took office after Jean-Pierre
Raffarin stepped down in the wake of the French public's rejection of
the European constitution.
But the prime minister insisted France was still
committed to the EU project.
Focusing on employment he said 2.5m people were
unemployed and yet 500,000 jobs remained unfilled.
In an apparent reference to US-style capitalism, he
promised not to impose an alien culture on the French social model. At
the same time, he said France must strike a balance between social
protection and the need to create jobs.
APPLE MAKES SWITCH TO INTEL CHIPS
Apple has confirmed that it is dropping IBM chips
from its Mac computers in favour of those made by Intel.
The first Apple computers with the Intel chips
onboard will be on the market by this time next year.
"We think Intel's technology will help us
create the best personal computers for the next 10 years," Steve
Jobs, the head of Apple, said.
The move is being seen as a big gamble for Apple
strategy, and a boost to Intel at the expense of IBM.
It ends a decade-long relationship between Apple
and IBM, which have recently wrangled over supply problems.
UK SERVICE FIRMS GET CONSUMER WOE
UK consumer service firms, such as cinemas and
travel agents, are feeling the pinch as higher interest rates and
slower growth hit High Street spending.
According to a survey by business group the CBI and
auditor Grant Thornton, business volumes fell for the first time in 18
months in the past quarter.
At the same time, profits stopped rising and costs
As a result, business confidence was dented and a
number of firms said they will take a tighter control of costs.
GREENSPAN ADDS TO YUAN PRESSURE
US Federal Reserve chairman Alan Greenspan has
added his weight to calls for China to allow the yuan to trade freely
against other currencies.
America has long argued that China artificially
pegs the yuan below its true market value, so as to give Chinese
exports an unfair advantage.
Mr Greenspan said he was sure that China would
remedy the situation "reasonably soon".
Yet his Chinese opposite number Zhou Xiaochuan said
it was some time away.
JAPANESE FIRMS RAISE INVESTMENT
Japanese companies increased their spending on
plant and equipment during the first three months of this year,
official figures have shown.
The latest survey to indicate that the Japanese
economy is continuing to grow, firms raised their capital spending for
an eighth consecutive quarter.
It increased by a year-on-year 7.4%, compared to
the 3.5% annual growth seen during October to December 2004.
WEAPONS SPENDING TOPS $1 TRILLION
Spending on weapons around the world topped $1
trillion (£560bn) for the first time in 2004, a new report says.
A study by the Stockholm International Peace
Research Institute (Sipri) found that countries around the world spent
$162 on weapons for each person alive.
The US alone accounted for 47% of the global total,
mainly because of soaring spending on its "global war on
Arms companies were benefiting from the demand,
with sales at the top 100 firms up 25% in 2003 on the year before.
The pace of mega-mergers in the arms trade in
recent years had slackened, Sipri said, but had left major military
suppliers comparable in size and influence to top multinational
EUROPE URGED TO WELCOME WEAK EURO
The current weak euro is good news for Europe as it
helps its exporters, says the International Monetary Fund (IMF).
The comments came from Michael Deppler, director of
the IMF's European department, as the euro remained near eight-month
lows against the dollar.
While the euro stayed at about the $1.23 level, Mr
Deppler said somewhere between $1.20 and $1.30 was "about
right" for the currency. The euro has fallen amid political and
economic uncertainty in Europe.
EU BUDGET BATTLE
The European Parliament has entered a dispute over
the 2007-2013 EU budget by backing a proposal to spend 1.07% of member
states' gross national income.
The figure falls between the 1.14% suggested by the
European Commission, and the 1% insisted on by the six biggest net
contributors to EU coffers.
A European summit in Luxembourg next week will
attempt to resolve the row.
The UK is under pressure to give up its rebate, won
in 1984, but has threatened to use its veto to preserve it.
The Luxembourg presidency of the European Union is
working on its own compromise proposal and is holding a series of
bilateral "confessional" talks with European leaders.