AFX European Focus | January 26, 2004
Following are the main points from this year's World Economic Forum here.
ECONOMY
- US Commerce Secretary Donald Evans told the forum he felt the US budget deficit as it stands is 'appropriate', but will come down
- US Vice-President Dick Cheney echoed those comments, saying "deficits do matter" but would not be drastically cut at the expense of military spending or pro-growth fiscal measures
- OECD chief economist Jean-Philippe Cotis said the European Central Bank has room to cut interest rates in order to cap the sustained rise of the euro
- Cotis also predicted US first quarter growth of 1.3 pct, and 1.6 pct in the euro zone.
- Deputy Dean of Peking University and a highly-regarded Chinese economist Fu Jun tried to calm delegates' fears of the Chinese economy overheating, and said annual growth rates of some 8 pct are sustainable
- Goldman Sachs added to the upbeat tone on China, predicting the country could be the world's largest economy by 2041 with only the US and Japan holding on to places in the top six
- Inter-American Development Bank president Enrique Iglesias said the IADB expects the Latin America economy as a whole to grow by 4 pct this year, with Argentina the star with a 6 pct spike
- Saudi Arabia's oil minister Ali al-Nuaimi said he wants to see oil prices in the 22-28 usd per barrel range, preferably at around 25 usd.
TRADE
- A meeting of around 20 trade representatives convened in a bid to reignite the WTO's Doha round of trade talks.
- Serious doubts persist, though, WTO director general Supachai Panitchpakdi told AFX News. Swiss president Joseph Deiss said it would not be possible to meet the Doha round's deadline for the end of this year
- Brazil's minister of Development, Industry and Trade, Luiz Fernando Furlan, said the informal talks here had given him confidence for good progress during the year
- Germany's deputy finance minister Caio Koch-Weser told AFX News that Europe has a "complete consensus" on currency fluctuations ahead of the G7 meeting in Florida on Feb 6-7. He also expresses concern about the strong dollar's impact on the euro and, consequently, on growth in Europe
- German labour and economy minister Wolfgang Clement, meanwhile, said he expects a "signal" to be sent to both the US and Asia at the upcoming G7 meeting - European Central Bank president Jean-Claude Trichet said the bank is "concerned about excessive foreign exchange movements."
- There were also questions about the possibility of China reassessing the dollar peg on the renminbi. Victor Chu, chairman and chief executive of Hong Kong-based First Eastern Investment Group, told a WEF debate the Chinese authorities could revalue by year's end. The OECD said such a move was unlikely
POLITICS
- In a speech on Saturday, US Vice President Dick Cheney called for increased world cooperation and effective international institutions to help wage its war on terrorism
- UK Foreign Secretary Jack Straw said the US-led coalition will not dictate the future composition of any Iraqi government, but would not be drawn on press reports the coalition is poised to give in to Shiite demands for early elections
- Turkish Prime Minister Recep Tayyip Erdogan said Turkey is set to act as a mediator between long-time enemies Syria and Israel. He said foreign minister Abdullah Gul will start work on the mediation very shortly
- President Mohammad Khatami of Iran used his speech to the forum to deny that his country has received nuclear material from North Korea, and reiterate that Iran's nuclear program is for peaceful purposes only
- US Attorney General John Ashcroft denied that the US has abused civil liberties in its anti-terror drive, insisting the country was at war and respecting rights "at the highest level possible"
- Making frequent allusions to the US concentration on security issues, UN secretary general Kofi Annan expressed concern that the US-led war on terror has overshadowed crucial development issues facing the world. He said attention has been diverted from critical areas such as poverty, health and education.
- Pakistan's President Pervez Musharraf voiced optimism over the possibility of peace in the Kashmir region long-disputed with India
BUSINESS NEWS
- Infineon Technologies CEO Ulrich Schumacher told AFX News he does not expect the chipmaker to have any more "low-end" manufacturing capacity left in Germany in ten years' time
- Boeing Corp senior vice-president Thomas Pickering told AFX News he expects no real recovery in the commercial aviation market before 2006 because the economic turnaround will take time to filter through to orders and deliveries for new aircraft
- Siemens CEO Heinrich von Pierer told AFX News the company's telecoms operations are looking at tie-ups and acquisitions, possibly involving Motorola Corp, after confirming a turnaround with the announcement of a second straight quarterly profit.
- Dell CEO Michael Dell told AFX News he expects renewed profits and confidence will prompt businesses to increase spending and spur "pretty good" growth in the technology sector this year.
- Deutsche Bank CEO Josef Ackermann told AFX News the bank is not pursuing any merger at present and that a statement on consolidation will be made when results are released on Feb 5
- Pfizer CEO Hank McKinnell told AFX News the weak dollar is "adding enormously" to the company's top line, and said Viagra can still expand sales despite stiff competition from rival drugs
- Alcan CEO Travis Engen told AFX News he expects "modest" growth in demand for aluminium this year, and for the bulk of its strategic review following the recent acquisition of France's Pechiney
- SABMiller chief executive Graham Mackay sounded a sobering note on the Chinese beer market in an interview with AFX News, saying that returns there are currently "inadequate" and that prices show no signs of increasing
- Renault chief executive Louis Schweitzer told AFX News he expects the European passenger car market to grow by a sluggish 1 pct in 2004
- Deutsche Post chairman Klaus Zumwinkel told AFX News that the company's dividend payment for 2003 will "probably" be higher than the pay-out for 2002, and that 2004 earnings are set to rise
- Lloyd's of London chairman Lord Peter Levene of Portsoken told AFX News that insurers are "more experienced" since the events of Sept 11, 2001, and are "better equipped" to meet claims resulting from terrorist attacks and natural disasters
- AstraZeneca CEO Sir Tom McKillop told AFX News the company is pursuing approval for use of its lung cancer treatment Iressa in the early stages of the disease, a breakthrough which would expand the market for the drug "several-fold."
- Unilever PLC chief executive Niall Fitzgerald told AFX News the company's Slim-Fast products will begin to recover from the impact of the popular Atkins diet this year, but there are no guarantees the slimming foods range will regain all of the lost ground.
- WPP PLC chief executive Sir Martin Sorrell told AFX News downward pressure on fees is still being felt among advertising companies, and will drive industry players into consolidation.
- General Secretary of the UK's Trades Union Congress (TUC) Brendan Barber told AFX News that businesses are still a "long, long, long way away" from rebuilding a relationship with the country's unions left strained after 2003
- Morgan Stanley president Stephan Newhouse said that European banks have to consolidate in order for them to be able to compete globally, and he called on governments to remove some of the structural barriers to such a process
- Nissan Motor chief executive officer Carlos Ghosn said that he expects China to be exporting cars within the next five to ten years. He also said he expects a sharp pick-up this year in the company's share of revenues from the US
- Sol Trujillo, chief executive of France Telecom's mobile unit Orange, said the group posted "very good" sales over the Christmas period, in an interview with CNBC televisionAFX European Focus:
