The leaders of Russia and four other former Soviet countries have created a new economic trade zone which they hope will one day rival the European Union.

"We are creating an international economic organisation which will probably be like the European Union," said Belaru President Alexander Lukashenko.

The presidents of Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan signed an accord on the formation of a Eurasian Economic Community to further integrate their economics at a meeting in the Kazakh Capital.

Kazakh President Nursultan Nazarbayev said the organisation would lead to the creation of a single economic space and could increase trade turnover between the five countries.

Poorest nations need more than just debt relief : UNCTAD

The world’s poorest countries need help in the form of global aid policies combined with greater private capital, the United Nations Conference on Trade and Development (UNCTAD) said recently.

Debt relief alone is not enough to help the 48 least developed countries (LDCs) climb out of what the UN agency calls "an aid and-debt trap", UNCTAD said in a statement accompanying its 2000 report on LDCs.

High levels of debt impede effective aid and ineffective aid prevents a solution to the debt problem for LDCs which include Mozambique, Bangladesh, Afghanistan and Haiti.

"Uncoordinated aid flows have contributed to financial uncertainty and distorted government finances in many LDCs," the United Nations agency said.

The UN agency said many countries are caught in a trap where slow growth and low income hinder increases in savings rates, hitting in turn domestic investment and growth.

"The only way to escape the trap of low economic development is through external finance," the report said.

More than 45 percent of LDCs saw economic stagnation or regression in the nineties. Three quarters of their 640 million peoples live on less than two dollars a day, UNCTAD said.

"By the year 2015, only eight LDCs are on target to reach the United Nations goal of universal primary education, and only four will reduce infant mortality by two thirds," UNCTAD said.

Highlighting that two thirds of the LDCs have an external debt burden which is unsustainable, it said the Highly Indebted Poor Countries (HIPC) initiative is based on over-optimistic forecasts in the medium term.

The scheme, introduced by the World Bank and International Monetary Fund (IMF) with the support of developed countries focuses on debt relief running parallel to the poor countries’ own moves towards structural reforms.

"It is not just that the debt relief being provided is coming too late and too slowly, but that the magnitude of assistance is quite simply too little," the report noted.

German inflation high

Inflation in Germany reached the highest level for nearly six years in September, owing mainly to high oil prices, final data published by the Federal Statistics Office.

The German consumer price index (CPI) rose by 2.5 percent in September on a 12 month basis, the strongest annual increase since December 1994, the office said in a statement.

On a monthly basis, CPI rose by 0.5 percent in September from August, the statement said.

The final data for September, calculated on the basis of cost of living data for all 16 German regional states, therefore show a slightly faster rate of inflation than provisional figures released at the end of September.

Those data, calculated on the basis of data for six so-called indicator states, had showed a 12 month increase of 2.4 percent and a monthly increase of 0.4percent in September.

The office explained that the high level of inflation resulted primarily from the continued sharp increase in oil and fuel prices.

For example, consumers paid 78.4 percent more for light heating oil in ‘September than they had done in September 1999 and 32.6 percent more than they had done in August.

German inflation, as calculated according to the European harmonised index of consumer prices (HICP), the yardstick used by the European Central Bank, showed a 12 month increase of 2.6 percent in September and a monthly rise of 0.5 percent.

French economic growth will continue

The French economy is a period of sustained growth that will continue into next year and the government will maintain efforts to control spending, Finance Minister Laurent Fabius said recently.

"We are in a period of sustained growth and next year, we will continue," he said in a presentation of the draft budget for 2001 in the lower house National Assembly.

Fabius confirmed that the government expected growth in gross domestic product of 3.0-to-3.1 percent next year.

The government would make efforts to control spending and reduce public deficits, he added.

The draft budget made "a very sustained effort to control spending and deficits," he told deputies.

The government will seek to reduce the budget deficit to 186 billion francs (28.36 billion euros, 24 billion dollars) in 2000 from "at least 2000 billion francs" in 2000, and cut the public deficit to one percent of gross domestic product.

Global chip market seen rising 20% in 2001

The world semiconductor market is set to grow in value by 20.3 percent in 2001 from a year earlier to $250.02 billion driven by Internet expansion and brisk demand for cell phones, a Japanese industry group said.

The projection, based on a statistics from the world’s major semiconductor markers, was in line with a previous forecast of 20.2 percent growth, despite emerging concern about weakening demand for chips.

The Electronics Industries Association of Japan said it expected the global chip market in 2000 to climb 39.2 percent to $ 207.89 billion, up from its May forecast of a 30.6 percent.

The estimate was tabulated by the World Semiconductor trade Statistics organisation.

Australian economy is still very strong

The Australian economy is still very strong, although troubles in the Middle East could push up gasoline prices, Prime Minister John Howard said recently.

Howard cited unemployment figures, which showed the jobless rate at the lowest in 10 years, as an indicator of the healthy state of the economy.

"In human terms, we had the best unemployment figures for 10 years," he told Australian Broadcasting Corporation radio.

"The current projections from both the Treasury and the Reserve Bank regarding employment as advised to me very recently are still very strong," he added.

However he said the growing conflict between the Palestinians and the Israelis could push gasoline prices further up.

"Clearly with what is happening in the Middle East, it’s only natural that there will be a short term kickup in the price of crude oil and that may go on for a while," he said.

Howard said the economy’s consistently strong growth, lower unemployment, low inflation and lower interest rates despite recent rises meant Australia is in good shape.

"Looking at the whole picture, the economy remains very strong," he said.

Howard refused to speculate on the likelihood of further interest rate rises in the country.

Growing US funds to boost emerging companies

The US investors' growing appetite for foreign equities will give a tremendous boost to several emerging companies loking to list on the US markets. The total US investment in foreign equities is projected in India to touch $ 2 tn by 2003 from its present level of $ 1.4 tn. In 1991 US investment in foreign equities stood at just $ 279 bn.

It’s not just technology and internet stocks that the US investor is looking for. Equity offerings from old economy companies are as much in demand.

"Technology stocks may have been the flavour of the season for some time now, but there is still tremendous investor appetite for stock of old economy companies," Tim Oldfield, sales director (depository receipts), Citibank, told ET. Indian companies in the areas of infrastructure, chemicals, pharmaceuticals etc. have already expressed interest in going for issues of ADRs.

Of the $ 600 bn that US investors are expected to invest in foreign equities over the next three years, a good deal of funds are expected to find their way into offerings from companies in the emerging markets. "There is no doubt that the faster growth rate of emerging economics is what is drawing the US invest or to equity offering made by companies from these regions. Last Year, Just over half of every dollar raised came out of depository receipts issued by companies in the emerging markets," said Mr. Oldfield. In 1999, $ 21.6 bn was raised through the issue of depository receipts while in the first half of calendar year 2000, this figures has been $ 16.5 bn.

Since 1991, US investors’ demand for depository receipts has grown more than six-fold to $ 362 bn and is projected to reach almost $ 800 bn by the year 2003. Depository receipts as a percentage of total US investments have doubled from an estimated 18 percent in 1991 to 36 percent in 1997 and is projected to reach 40 percent within the next three years.