U. S. And euope hint at economic cooling

Signs of cooling emerged in the global economy Tuesday, as the European Commission reported slower growth in the euro zone and the U.S. government disclosed a dramatic drop in inflation for the month of October.

Economic growth in the euro zone slowed more than expected in the third quarter, pulled down by stagnation in France and weakness in Italy, despite a relatively strong German expansion. Germany said its economy had grown at almost half the pace of the second quarter.

Meanwhile, inflation in the United States decelerated sharply. The combination of falling prices and a pullback in consumer spending would make it easier for the Federal Reserve to delay further increasing interest rates, and perhaps to begin reducing them. The U.S. economy, the destination of about one-fifth of European exports, grew 0.4 percent in the three months through September from the previous quarter, less than 0.6 percent growth in the prior period, according to Eurostat figures.

Higher interest rates and a slowdown in the U.S. economy curbed expansion in Germany, France and Italy, the three largest economies in the euro zone. Still, growth in the 12 countries sharing the euro outpaced growth in the United States for a second quarter and was on course to expand this year at the fastest rate in six years.

The International Herald Tribune, November 15^th, 2006

№ 4.

GROWTH IN CHINA SLOWS AS CONTROLS TAKE HOLD

Economic growth in China slowed to an annualized rate of 10.4 percent in the third quarter, indicating that measures put in place to moderate business activity are taking effect, the government said Thursday.

The rate was down from 11.3 percent in the second quarter, which was the fastest expansion in China in a decade, according to figures released by the National Bureau of Statistics.

Beijing has raised interest rates twice this year and restricted construction and other investment, warning that runaway spending could ignite inflation or a financial crisis.

The Chinese economy, powered mainly by investment and exports, grew 10.1 percent in 2004 and 10 percent in 2003.

The growth rate for industrial output also slowed to 16.2 percent in the third quarter, down 1.9 percentage points from the previous quarter.

Among other indicators, inflation stayed low, with consumer prices rising just 1.3 percent in the first nine months of the year.

Total trade in the January-September period was up 24.3 percent, with exports rising 26.5 percent and import growing 21.7 percent, the bureau’s report said.

The International Herald Tribune, October 20-th, 2006

UNIT II

№ 5

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