Oil production facilities in the Gulf of Mexico
were hit hard and the subsequent surge in crude and petrol prices are
likely to brake US growth, Mr Snow said.
"It would seem to make sense to think that we
could see a loss of GDP growth rate in the quarters ahead of a half a
percent or so," Mr Snow said last week.
The concern is that consumers will spend less in
shops as they have to pay more for fuel and heating, while companies
will either have to pass on their higher costs or let them eat into
their profits, analysts said.
Mr Snow's comments were echoing an earlier report
from the Organisation for Economic Co-operation and Development (OECD).
According to the economic think-tank, high world
oil prices are here to stay and the price shocks pose a threat to key
economies such as the US, UK and Germany.
Growth in the US might "somewhat more
subdued" in the second half of 2005, the OECD said.
Despite the concerns, the US is well placed for
growth and any slowdown should be short-lived.
Mr Snow said that he expected growth to pick up
again in 2006, adding that the reconstruction and repair effort
following Katrina would prove to be a powerful economic stimulus.
GDP growth in 2006 should get a boost of 0.5% from
rebuilding, Mr Snow estimated.
EU APPROVES CHINESE TEXTILE DEAL
Tony Blair said he expected European nations to
back the deal.
The European Union has approved a trade deal with
China that aims to end a row over import quotas and free up millions
of garments stuck in port warehouses.
The approval means the clothes - bras, trousers,
sweaters, and other items - could head for their final destinations in
Europe's shops within a week.
The agreement confounds fears that textile
producers such as Italy and Portugal might refuse to sign up.
The row blew up over a sudden surge in Chinese
imports this year.
The scrapping of a global tariff and quota system
for textiles at the start of this year opened the door for China's
low-cost producers to flood markets in Europe, the US and elsewhere.
The member states have given a green light to the
Commission Francoise Le Bail, EU spokeswoman said
In some categories of goods, Chinese imports so far
in 2005 have been five to seven times more plentiful than the previous
In response, the EU agreed quotas on the
hardest-hit goods, to come into force in July. The US is considering
But as European retailers rushed to order goods
between the agreement's signing and its implementation, several of the
categories in question rapidly filled up.
That raised the possibility that there would be no
further Chinese supplies till 2006, it stranded goods already ordered
and paid for on Europe's frontiers, and it triggered threats of empty
shelves from retailers.
To resolve the problem, EU Trade Commissioner Peter
Mandelson agreed with his Chinese counterparts to release the goods,
but half the stockpile will count against next year's quotas.
OPEC HEAD MOVES TO CALM FEARS
Opec's president has said he will ask for the
cartel to raise its output as oil prices surged to new records as
Hurricane Katrina hit US production.
In the US, crude contracts for October rose almost
$5 to $70.80 in electronic trade before ending $1.07 up at $67.20.
Opec head Sheikh Ahmad al-Fahd al-Sabah vowed to
call for a 500,000 barrels a day rise in output at its next meeting.
The move was a bid to calm supply fears which have
risen as the hurricane shut down production in the Gulf of Mexico.
Kuwaiti oil minister Sheikh Ahmad also made clear
the increase he wants will be above the amount Opec supplies to the
market - as the cartel usually produces more than its stated limit.
Concerns that supply will fail to meet demand along
with political uncertainty in key supplier nations have increased
fears that prices could breach the $100 a barrel mark.
At least eight refineries - equating to 2.37
million barrels a day of refining capacity - in the path of Katrina in
the Gulf shut down or cut their operations by Monday, according to
company and government reports.
REFINERIES RETURN AFTER KATRINA
US refineries closed by the onslaught of Hurricane
Katrina are trickling back on-stream, oil companies report.
Two refineries are fully operational, while others
are close to restarting.
The return of US refining capacity has combined
with the supply of oil from international stockpiles to help lower
prices from record levels.
Tuesday last saw US crude fall $1.61 to $66.96 a
barrel. Brent crude fell 18 cents to $64.67, having fallen 1.8% on
Monday when US markets were closed.
The refineries which are coming back to life are
receiving 12.6 million barrels of oil from the US's Strategic
Petroleum Reserve, the Department of Energy said.
Europe, Japan and other members of the
International Energy Agency are trying to provide stocks from their
IRAN OFFERS US KATRINA OIL RELIEF
Iran has offered to send 20m barrels of crude oil
to the US to help with the consequences of Hurricane Katrina.
The two countries have had no diplomatic relations
for decades, but America did send help to Iran when a severe
earthquake hit Bam in 2003.
Speaking on state-run radio, Iran's envoy to OPEC
said his country was ready to send up to five shiploads of crude oil
to the US.
But he said this could only happen if US sanctions
were lifted first.
The envoy, Hosein Kazempur-Arbedili, did not
clarify if he meant lifted temporarily for this aid shipment, or
The idea behind this offer is that Hurricane
Katrina has badly disrupted production in the Gulf of Mexico, which
supplies up to a quarter of America's oil.
BOE POISED TO LEAVE RATES STEADY
The Bank of England's rate setting committee is
widely expected to keep interest rates on hold at 4.5% at the end of
its two-day meeting last week.
The nine-member Monetary Policy Committee (MPC)
voted in August to cut base rates by a quarter point to stimulate
economic growth in the UK.
This was the first cut in rates since July 2003
when they were at 3.5%.
However, the decision to cut interest rates to 4.5%
was finely balanced, minutes of the August meeting show.
APPLE UNVEILS IPOD PHONE HYBRID
Apple has unveiled a gadget that combines its
hugely popular iPod music player with a mobile phone.
Announced by Apple boss Steve Jobs, the device will
be able to store about 100 songs and play them out randomly like the
Developed by Motorola for Apple, the gadget, dubbed
Rokr, will first be available on the network of US mobile operator
Since it was introduced in 2001, Apple has sold
more than 21 million iPods.
The colour-screen gadget is silver, has stereo
speakers and has a VGA quality camera onboard.
UPBEAT ITV TOASTS RISING PROFITS
ITV has reported a jump in half-year profits
despite a fall in advertising revenues at it flagship ITV1 channel.
Britain's biggest commercial broadcaster said its
pre-tax profits for the six months to the end of June were £205m
($378m), from £128m in 2004.
AIRBUS WINS $2.2BN INDIAN ORDER
Indian Airlines will buy 43 planes from European
producer Airbus in a deal worth $2.2bn (£1.2bn).
Prime Minister Manmohan Singh announced the deal on
the first day of a summit between India and the European Union.
Demand for air travel in India is increasing as
strong economic growth boosts consumer spending power.
Low cost airlines have begun offering domestic and
international routes and analysts are predicting further expansion in
NEW HIGH FOR INDIAN SHARE MARKET
Shares on India's benchmark Bombay Stock Exchange (BSE)
have crossed the 8,000 point mark for the first time, reaching a new
The BSE sensitive index (Sensex) rose immediately
after trading opened.
The gains were led by India's largest private
company, Reliance Industries which rose by nearly 2%, and the
state-owned oil giant, ONGC.
AB PORTS BUOYANT AS PROFITS CLIMB
Associated British Ports, Britain's biggest ports
group, has reported a jump in half-year profits on the back of
property sales and higher volumes.
Pre-tax profit before one-off items in the six
months to June 30 rose to £67m ($123.6m) from £61.9m a year ago.
ERICSSON TO INVEST $1BN IN CHINA
Phone equipment manufacturer Ericsson said it plans
to invest $1bn (£544m) in China over the next five years.
The money will fund research and development, as
well as expanding manufacturing facilities to meet the increase in
demand for phone services.
Ericsson said that it would focus on 3G systems,
which allow users to download larger amounts of data more quickly and
access services such as music videos.
CARIBBEAN LEADERS SIGN OIL PACT
Caribbean leaders have signed up to Petrocaribe, an
oil initiative put forward by Venezuela's President Hugo Chavez aimed
at offering cheap crude.
Venezuela is the world's fifth-largest oil producer
and will offer oil at preferential rates to those countries.
Signatories will be allowed to defer payments, as well as covering
costs with goods like rice, bananas or sugar.
Caribbean economies have been hurt by record oil
costs, and Wednesday saw protests against higher living costs.
IMF WORRIES OVER NIGER'S ECONOMY
The International Monetary Fund (IMF) has called
Niger's economic performance mixed and said it has been discussing
ways of speeding up reforms.
IMF officials visited Niger to conduct the first
review since approving a new plan for growth and poverty reduction.
However, the IMF said it was standing "ready
to increase financial assistance" to Niger.
A food crisis has hampered Niger's economy, leaving
about a quarter of the population with food shortages.
BUOYANT SPENDING BOOSTS AUSTRALIA
Australia's economy has expanded faster than
expected on the back of its buoyant mining industry and a spurt of
building and business investment.
Growth in the three months to June was 1.3%, well
up on the previous quarter's 0.5% and the best showing in 18 months.
The figures from the Australian Bureau of
Statistics mean Australia's economy is 2.6% bigger than a year ago.
OIL SHOCK THREATENS WORLD GROWTH
High world oil prices are here to stay and price
shocks pose threats to key economies, says the Organisation for
Economic Co-operation and Development.
The UK and Germany's prospects for 2005 are less
favourable as a result, the OECD said in its latest interim report.
But even after Hurricane Katrina's impact, the US
economy should expand fast, the economics think-tank said.
Its UK growth forecast is down from 2.4% to 1.9%,
but US growth is still predicted to reach 3.6% this year.
Germany's growth outlook has weakened from 1.2% to
1% since the Paris-based OECD last published its forecasts in May.
This was largely because of the soaring cost of
oil, which has risen by about $20 a barrel since then, the OECD said.
Its chief economist, Jean-Philippe Cotis, told a
news conference that the price of oil was not far from the level
reached at the end of the 1970s.
MANUFACTURING OUTPUT STILL RISING
Manufacturing output has risen for the fourth month
in a row, providing further evidence of a gradual recovery in a key
area of the British economy.
Office for National Statistics figures showed
output rose 0.1% in July, lifting the annual growth rate to 0.2%.
In the three months to the end of July,
manufacturing output grew by 0.3%.
The figures come ahead of the Bank of England's
latest interest rate meeting this week, when rates are expected to be
kept on hold at 4.5%.
Overall industrial production, which includes
figures from the oil, gas and mining industries, fell 0.3% in July.
This was largely due to routine maintenance at gas
and oil facilities, which disrupted production.