INTERNATIONAL

 

Aug 15 - 21, 2005

 

1.INTERNATIONAL

2. PAKISTAN

 

SOARING OIL HITS JAPANESE TRADE

Japan's normally buoyant trade balance is experiencing a slide as the soaring cost of oil hits home.
New figures show the current account surplus - a broad measure of exports and imports of goods and services - falling by 15.3% in June.
Japan has traditionally been an export led economy, particularly in recent years as deflation and recession at home hit domestic demand.
But now the recovering economy is reducing reliance on sales overseas.
The figures, released by the Ministry of Finance, showed exports up 3.7% in value from June 2004 - but imports rose by 13.1%.

The current account surplus dropped to 1.09 trillion yen ($9.9bn; 5.5bn), while the narrower trade surplus fell below 1 trillion yen.

Worries have been voiced recently that export-led growth could be in trouble.

Sales to China, now Japan's second most significant trading partner after the US, have flattened as the government in Beijing tries to cool its white-hot economy.

Late last year, the Japanese government had warned of a "soft patch" as exports to Asia slowed.

But the rise in imports, economists said, was almost entirely due to the cost of energy, while exports were healthier than they looked.

Japan has no indigenous hydrocarbons, and is therefore entirely reliant on oil imports - the cost of which is up more than 50% since the start of this year.

US 'HOPING FOR CHINA TRADE DEAL'

The US hopes to agree a long-term deal on textile trade with China during talks next week, the US trade representative's office has said.

Chinese clothing imports are currently limited under special World Trade Organisation (WTO) rules amid claims they are damaging US textile trade.

US manufacturers have been demanding measures to protect them when the current special limits end in 2008.

US figures show Chinese textile imports to the US have surged 54% year-on-year.

Imports grew to $5.6bn during the first three months of the year.

The National Council of Textile Organisations have been calling on the government to take action for a lasting solution to the current deadlock.

"We heard unambiguous calls for a more comprehensive approach to textile trade with China," chief US textile trade negotiator David Spooner said.

Mr Spooner pledged to "seek a long-time solution" to the row at consultations next week - part of WTO rules covering the current "safeground" limits on Chinese imports to the US.

Clothing imports into the US have surged since worldwide quotas were abolished at the beginning of this year.

Since then the US has been investigating the trade and has re-imposed quotas on three categories of Chinese textile imports, arguing that thousands of US jobs are at risk.

Under the rules of the World Trade Organisation, countries have the right to act if it is determined that serious market disruption has taken place.

UK TRADE DEFICIT SHRINKS SHARPLY

The UK's trade gap narrowed sharply in June, igniting hopes for improved economic growth, official figures show.

The difference between what the UK exported and imported was 4.27bn ($7.62bn), down from May's 4.98bn.

The figure was less than analysts' forecasts of a 4.9bn deficit, said the Office for National Statistics (ONS).

The deficit with the enlarged EU was 0.1bn higher than in May at 2.8bn as imports, in particular cars, rose by more than exports.

Meanwhile, the deficit with non-EU countries was 1.44bn compared with 2.28bn in May and forecasts for 2.3bn.

"The numbers were surprisingly positive, in particular the extent to which exports have rallied," said Peter Dixon, economist at Commerzbank.

Alan Clarke, economist at BNP Paribas, added: "The narrowing in the trade deficit on the face of it should help GDP (gross domestic product) growth going forward."

TRADE BOOSTS GERMAN OUTLOOK

Germany's struggling economy has received a boost with new data showing a larger-than-expected rise in the country's trade surplus.

The surplus rose from 12.2bn euros (8.3bn) to 14.8bn euros (10.2bn) in June as both exports and imports fell.

Experts said the data suggested Germany may maintain economic growth of about 1% in the second quarter, the same as in the first three months of 2005.

However, the fall in imports also implied weaker household spending.

Imports fell 5.5% to 49.6bn euros, outweighing a 0.4% decline in exports to 64.4bn euros.

Analysts are keenly awaiting the publication of second quarter GDP figures on Thursday to see whether the upturn in output witnessed in the first part of the year will continue.

AFRICA HUNGER 'LIKELY TO WORSEN'

The number of hungry children in Africa could increase by 3.3 million by 2025 if current policies remain in place, a new report has warned.

The number of malnourished people in sub-Saharan Africa has soared from 88 million in 1970 to 200 million in 1999-2001, the research found.

The overall percentage of malnourished Africans has actually remained constant over the past 30 years, at about 35%.

US DEMAND PUSHES OIL STILL HIGHER

The US thirst for gasoline has helped push the oil market further into uncharted territory, as US prices soar above $66 a barrel.

In Asian trading, a barrel of US crude peaked on Friday at $66.11, yet another record, while London's Brent crude got as high as $65.78 on Thursday last.

Worldwide petrol and gasoline prices are at unprecedented levels.

US refinery stoppages have come just as car sales and demand hit highs, and security fears are persisting as well.

The latest surge has been partly triggered by more than a dozen breakdowns at US installations, the latest of which hit a ConocoPhillips refinery in Illinois.

IRAN LEADER TO BE GRANTED US VISA

President George Bush has said Iran's new President Mahmoud Ahmadinejad will be allowed into the US to attend a UN meeting in New York next month.

There was speculation Mr Ahmadinejad may be refused a visa because of claims he was involved in the 1979 takeover of the US embassy in Iran.

ECONOMIC GROWTH ON TRACK IN JAPAN

Japan's recovery looks on course to continue, with growth remaining solid and the number of bankruptcies falling.

The economy expanded by 0.3% in the three months to June, which would mean 1.1% growth for the full year.

Although the figure was less than forecast, it comes at the same time as a 9% year-on-year fall in the number of companies going bust.

Economists said the signs pointed to a prolonged revival, after a mixed performance in 2004.

A full year of growth would mark Japan's return to something approaching economic health.

2004 had begun and ended well, but had produced contraction between March and September.

DELL PROFITS

The world's largest personal computer maker Dell has unveiled a rise in earnings, thanks to demand for laptops.

The US group said net profits for the three months to 29 July surged 28% to $1.02bn (563m), or 41 cents per share, against $799m a year ago.

ENERGY DRINK MARKET 'TO HIT 1BN'

Energy drinks will account for 1 in every 5 spent on soft drinks in the UK by the end of 2005, research claims.

Analyst Mintel has forecast that sales of the drinks, such as Red Bull, will break through 1bn mark this year.

Sales of the drinks, which contain sugars or stimulants such as caffeine, have risen by 75% since 2000.

The jump comes despite a quarter of respondents saying the drinks were too expensive. Mintel polled 1,537 people aged 15 and above for its research.

EUROZONE GROWTH NEAR STANDSTILL

European growth has flagged as several of the continent's biggest economies hit a rough patch.

The 12-nation eurozone saw growth of just 0.3% in the three months to June, down from 0.5% the previous quarter, for an annual rate of 1.2%.

Germany was a key culprit, registering zero growth for the period.

But the performance was slightly better than feared, and Brussels said a weakening euro should help produce a turnaround by the end of the year.

YAHOO IN $1BN CHINESE ONLINE DEAL

Web search giant Yahoo has paid $1bn (556m) for a stake in China's biggest e-commerce firm, Alibaba.com.

The US company will now hold a 40% stake - and 35% of the votes - in the Chinese firm, which runs the country's biggest auction and trading sites.

US CAR SECTOR DRIVES RETAIL SALES

A sharp surge in car buying helped drive US retail sales to a healthy gain in July, the Commerce Department said.

Overall US sales jumped 1.8% in July, after a 1.7% increase a month earlier - although the figures came in lower than forecasts of a 2.2% rise.

Car sales jumped 6.7% - their sharpest rise since October 2001 - boosted by discount sales incentives.

AVIVA

Aviva, the UK's biggest insurer, has reported a 21% rise in first-half operating profit to 1.32bn ($2.37bn) as European sales grew strongly.

NEWS CORP PROFITS

Rupert Murdoch's News Corporation has reported a 67% rise in quarterly profits, led by higher earnings at its Fox movie and TV networks. For its fourth quarter News Corp made net profits of $717m (400m), compared with $429m a year earlier, beating market expectations. Its turnover rose by 12% to $6.1bn, compared to $5.5bn a year previously.

BANK OF ENGLAND WARNS OF SLOWDOWN

Economic growth will remain subdued in the short term, the Bank of England said in its quarterly inflation report.

The Bank said the major risk to economic growth was a slowdown in consumer spending. But it said growth would be stronger in two years time.

The Bank also warned that inflation could move above its target of 2%.

It plans to cut its 2005 growth forecast from 2.5% to around 2%. But it expects growth of more than 3% in 2007, which might rule out further rate cuts.

CHINA LIFTS CURRENCY BASKET LID

China has revealed for the first time which international currencies it uses to measure its own yuan currency.

The US dollar, the euro, the Japanese yen and the South Korean won dominate a basket of currencies introduced last month after China revalued the yuan.

China's currency had been pegged at 8.28 against the dollar for a decade, but the adjustment allowed it to float against a number of currencies. The basket also contains the UK pound, the Thai baht and the Russian rouble.

UK PETROL PRICES HIT NEW RECORD

The average price of unleaded petrol in the UK has risen above 90p a litre for the first time.

Catalist, which monitors prices, says the average for unleaded is 90.2p a litre, and just under 94p for diesel.

The increase has been attributed to the soaring cost of oil, which hit a record high amid security fears in Saudi Arabia, the world's largest producer.

Pump prices are unlikely to fall and drivers are paying 7.5m more on fuel daily than in January, the AA has said.

FED RAISES INTEREST RATES TO 3.5%

The US Federal Reserve has voted to raise interest rates by one quarter of a percentage point from 3.25% to 3.5%.

Widely expected by analysts, it is the 10th increase in succession by the Fed's Open Market Committee.

The Fed has raised the base rate as it struggles to bring a torrid housing market under control amid signs high oil prices could boost inflation.

With the US economy continuing to grow strongly, the Fed appears determined to stamp out any inflationary pressures.

ASIAN ECONOMIES 'TO SEE SLOWDOWN'

The soaring price of oil will curb economic growth in East Asia this year curbing output in China and other countries, a report has claimed.

According to the Asian Development Bank(ADB), combined economic growth in the region will slow to 6.8% from 7.6%.

Other factors limiting growth were reduced demand for IT and a slowdown in economic activity in a number of major industrialised markets, ADB said.

Forecasts say China will experience a slight dip in growth from 9.5% to 8.9%.

The bank warned that current growth predictions would be affected by any further significant rise in crude oil prices.

Prices are currently 40% higher than a year ago amid concerns about security threats and disruptions to global output.

Of the 12 countries covered in the report - the 10 members of the Asean trade block, China and South Korea - only China managed to improve its export growth rate in the first half of the year.

China's own figures showed that its economy grew 9.5% in the first six months of the year, raising output to 6.7 trillion yuan (466bn, $811bn).

BUSH HAILS 'LANDMARK' ENERGY LAW

US President George W Bush has finally signed into law a $14.5bn (8.1bn) Energy Bill, after a four-year battle.

He says the legislation will strengthen the economy and help reduce dependence on foreign oil, but critics have called it a give-away to energy companies.

Tackling the vast energy needs of the US has been one of Mr Bush's top priorities since he became president.

But, even as he signed it, the price of oil rose again, and Mr Bush conceded the legislation was only a start.

Mr Bush said the law would strengthen the US economy, improve the environment and make the country more secure.

Mr Bush said the bill made an unprecedented commitment to conservation and would fund cleaner and more productive use of domestic resources - including coal, nuclear power, oil and gas - as well as alternative energy sources.