EU finance ministers said yesterday that soaring oil prices are threatening the union's growth and called on oil producing companies to increase investment and production.
In a statement issued at the end of the two-day meeting, the EU's Council of Finance Ministers added that the threats to European economies could be minimized if managed properly and said its members should avoid any "distortionary" tax cuts to ease the burden of high oil prices.
"While recognizing that higher ... oil prices present risks to growth, ministers are determined ... that with the appropriate policy response the economic consequences of higher oil prices are likely to be limited," the ministers said.
Britain's Chancellor of the Exchequer Gordon Brown, who hosted the meeting, said oil prices were a "further threat to fragile and slow growth."
"There are significant downside risks not just to the European economy but to global growth," he told a news conference.
Brown called for oil-producing companies to increase supplies and said he had spoken with his Saudi Arabian counterpart earlier in the day.
"The OPEC countries are on standby to increase oil production," he said.
Brown added that OPEC should maintain its oil output at the slightly higher levels that have followed the destruction wrought by Hurricane Katrina on the US Gulf Coast. OPEC next meets on Sept. 19.
The finance ministers said oil companies should use the increased revenues they have gained from high oil prices to raise investment and production, and called for more comprehensive, accurate and timely information on global oil reserves and the demand for oil.
"With a focus on supply and production targets, a focus on proper information from markets and a focus on investing in new productive capacity and refining capacity, we can get oil prices down," Brown said.
Luxembourg Prime Minister Jean-Claude Juncker said on Friday that high oil prices will cut euro-zone growth to 1.1 percent to 1.3 percent this year, well down from the European Commission's previous forecast of 1.6 percent.
He said the growth estimate was based on average oil prices around US$67 a barrel in the fourth quarter of this year and next year. Oil settled at US$64.08 a barrel on Friday on the New York Mercantile Exchange, down from its high above US$70 a barrel but almost 50 percent higher than a year ago.
The European ministers also agreed that further economic reforms were needed to ensure the EU's economy is better able to deal with external shocks.
Ministers also discussed the UK's initiative to counter terrorist financing. The initiative was lent new emphasis after the London bombings in July that killed 52 commuters.
The EU head office also told ministers about ways they can boost aid to the Middle East and help boost the Palestinian economy in the wake of the Israeli withdrawal from the Gaza Strip this summer. The EU already donates some 250 million euros (US$310.45 million) a year to the Palestinians.
INVESTOR RESILIENCE? An analyst said that despite near-term pressures, foreign investors tend to view NT dollar strength as a positive signal for valuation multiples Morgan Stanley has flagged a potential 10 percent revenue decline for Taiwan’s tech hardware sector this year, as a sharp appreciation of the New Taiwan dollar begins to dent the earnings power of major exporters. In what appears to be the first such warning from a major foreign brokerage, the US investment bank said the currency’s strength — fueled by foreign capital inflows and expectations of US interest rate cuts — is compressing profit margins for manufacturers with heavy exposure to US dollar-denominated revenues. The local currency has surged about 10 percent against the greenback over the past quarter and yesterday breached
MARKET FACTORS: Navitas Semiconductor Inc said that Powerchip is to take over from TSMC as its supplier of high-voltage gallium nitride chips Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday in a statement said that it would phase out its compound semiconductor gallium nitride (GaN) business over the next two years, citing market dynamics. The decision would not affect its financial targets announced previously, the world’s biggest contract chipmaker said. “We are working closely with our customers to ensure a smooth transition and remain committed to meeting their needs during this period,” it said. “Our focus continues to be on delivering sustained value to our partners and the market.” TSMC’s latest move came unexpectedly, as the chipmaker had said in its annual report that it has
Gudeng Precision Industrial Co (家登精密), the sole extreme ultraviolet pod supplier to Taiwan Semiconductor Manufacturing Co (台積電), yesterday said it has trimmed its revenue growth target for this year as US tariffs are likely to depress customer demand and weigh on the whole supply chain. Gudeng’s remarks came after the US on Monday notified 14 countries, including Japan and South Korea, of new tariff rates that are set to take effect on Aug. 1. Taiwan is still negotiating for a rate lower than the 32 percent “reciprocal” tariffs announced by the US in April, which it later postponed to today. The
ELECTRONICS: Strong growth in cloud services and smart consumer electronics offset computing declines, helping the company to maintain sales momentum, Hon Hai said Hon Hai Precision Industry Co (鴻海精密) on Saturday announced that its sales for last month rose 10 percent year-on-year, driven by strong growth in cloud and networking products amid the ongoing artificial intelligence (AI) boom. The company, also known internationally as Foxconn Technology Group (富士康科技集團), reported consolidated sales of NT$540.24 billion (US$18.67 billion) for the month, the highest ever for the period, and a 10.09 percent increase from a year earlier, although it was down 12.26 percent from the previous month. Hon Hai, which is Apple Inc’s primary iPhone assembler and makes servers powered by Nvidia Corp’s AI accelerators, said its cloud
RSS