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Asia Business: The Week in Review - 2004-03-01


Singapore posts a deficit of a $1 billion in the wake of lackluster economic activity in 2003. And U.S. banking giant Citigroup says it plans to take over South Korea's Koram Bank.

Singapore's government says it will likely post its fourth consecutive budget deficit for the financial year ending in March.

Deputy Prime Minister Lee Hsien Loong announced that the deficit will total just over $1 billion - although that is smaller than last year's deficit.

Mr. Lee said last year's outbreak of Severe Acute Respiratory Syndrome and the war in Iraq dealt a blow to the island-state's economy, which had not yet recovered from the Asian Financial Crisis of 1997.

"We were all hoping for a quick turnaround last year. But SARS and the war on Iraq had dashed our hopes," said Mr. Lee. "We had a very difficult first half. But the economy showed clear signs of turning around towards the end of the year. In the fourth quarter GDP expand by 4.9 percent."

Mr. Lee also raised Singapore's growth target for 2004 to five percent from three percent as the economy showed signs of improvement.

Hong Kong's government announced that the territory's long-standing deflation eased in January for the sixth consecutive month, while the economy improved. The consumer price index fell by 1.5 percent, the narrowest decline in just over a year.

The city has seen 63 consecutive months of deflation. But the government said that rising prices in basic foodstuffs and outbound travel has helped to limit price declines.

In contrast to Hong Kong's deflation, China's economy is facing a quickening pace of inflation. The consumer price index in China rose by 3.2 percent in January - marking the second consecutive month of increases.

China's state media reported that leaders might raise interest rates in the coming months to slow the economy down.

U.S. based Citigroup says it will acquire a 36-percent stake in South Korea's sixth-largest lender, Koram Bank.

Under the agreement, Citigroup will buy the stakes currently owned by the U-S Carlyle Group and JP Morgan Corsair II, and will buy the remaining shares at approximately $13 dollars per share. Citigroup says the deal would cost $2.7 billion, and will be finalized in June.

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