Sep 12 - 18, 2005






US growth is likely to slow in the remaining months of this year because of Hurricane Katrina's destruction, US Treasury Secretary John Snow says.
Mr Snow forecast that as much as 0.5% may be knocked off the US's annual gross domestic product (GDP).
The US, the world's largest economy, had been expected to grow by close to 3.5% this year.
However, that was before Katrina blew ashore, killing thousands and causing damages of close to $100bn (55bn).

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.


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 year.

In response, the EU agreed quotas on the hardest-hit goods, to come into force in July. The US is considering similar limitations.

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'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.


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 own reserves.


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 permanently.

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.


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 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 iPod Shuffle.

Developed by Motorola for Apple, the gadget, dubbed Rokr, will first be available on the network of US mobile operator Cingular.

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.


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.


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 the industry.


Shares on India's benchmark Bombay Stock Exchange (BSE) have crossed the 8,000 point mark for the first time, reaching a new historic high.

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.


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.


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 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.


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.


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.


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 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.