Business

HONG KONG — Oil prices pressed on with fresh gains in Asian trade on Tuesday, boosting energy firms, after Russia and Saudi Arabia indicated they could extend an output cut into next year.

The world's top two crude-producing nations raised the idea at the weekend, with a deal agreed between OPEC — of which Saudi Arabia is the key player — and Russia coming to an end in six weeks.

The news sent oil prices soaring about 2 per cent on Monday, in turn dragging global energy firms with them.

Monday's gains come after the commodity was battered earlier this month on worries that the production cut was not enough to make a dent in a worldwide supply glut and increasing output from the US and other nations.

"The comments from Saudi Arabia and Russia are driving prices up but I'm sceptical that crude will see a new level," Hong Sung Ki, a commodities analyst at Samsung Futures, told Bloomberg News. 

"As producers in the US are expected to increase output, prices will continue to be restricted from rising."

But Greg McKenna, chief market strategist at AxiTrader, pointed out the fact that traders were overlooking the need for a further cut in oil output suggested problems persisted.

"That such a large output cut extension is a tacit admission of failure is for another day and discussion," he said in a note.

On Tuesday the International Energy Agency said supply and demand in the oil market are close to matching up but warned rising US supply could mitigate the OPEC-led production cuts. 

Hong Kong-listed PetroChina gained 0.4 per cent and CNOOC put on 0.3 per cent, while Woodside Petroleum in Sydney was up 0.2 per cent and Rio Tinto jumped 1.4 per cent.

Euro extends gains 

On equity markets, Tokyo edged up 0.3 per cent by the close, Hong Kong slipped 0.1 per cent on profit-taking following a six-day rally, while Shanghai finished up 0.7 per cent, marking a fourth straight day of gains.

Seoul and Sydney each added 0.2 per cent.

But Singapore, Taipei and Wellington were all lower.

In New York the S&P 500 and Nasdaq each ended at record highs, as did London and Frankfurt, with German traders cheering a strong win for Chancellor Angela Merkel's party in a regional vote.

In early European trade on Tuesday, London opened slightly higher but Frankfurt lost 0.2 per cent while Paris was 0.5 per cent lower.

On currency markets, the euro extended gains to break above $1.10 after the German election result while the dollar's weakness has also been caused by a series of below-par results out of the US, including on inflation. 

"The euro is strengthening as political concerns in Europe ease while the dollar is being sold" after the weak economic data, Marito Ueda, a senior dealer at FX Prime, told AFP.

The greenback was also down against most other higher-yielding currencies, with the South Korean won 0.7 per cent higher, the Thai baht up 0.2 per cent and the Malaysian ringgit 0.5 per cent stronger.

AMMAN — Growth in the global economy has picked up in the last six months in line with expectations, but in many regions, it remains below the levels needed for rapid progress towards achieving the Sustainable Development Goals, according to the UN World Economic Situation and Prospects as of mid-2017 report, released on Tuesday. 

The report identifies a tentative recovery in world industrial production, along with reviving global trade, driven by rising import demand from East Asia, in particular. 

World gross product is expected to expand by 2.7 per cent in 2017 and 2.9 per cent in 2018, unchanged from UN forecasts released in January this year. 

This marks a notable acceleration compared to just 2.3 per cent in 2016.

In a statement on the report, Lenni Montiel, assistant secretary general for economic development in the UN Department of Economic and Social Affairs, underscored the “need to reinvigorate global commitments to international policy coordination to achieve a balanced and sustained revival of global growth, ensuring that no regions are left behind”.

According to the report, underpinning global economic recovery is firmer growth in many developed economies and economies in transition, with East and South Asia remaining the world’s most dynamic regions. 

However, economic recovery in South America is emerging more slowly than anticipated, and gross domestic product (GDP) per capita is declining or stagnant in several parts of Africa.

Forecasts for GDP growth in some of the least developed countries (LDCs) have been revised downward since January, with growth in the group as a whole projected to remain well below the Sustainable Development Goals target of at least 7 per cent.

The report notes that under the current growth trajectory and assuming no decline in income inequality, nearly 35 per cent of the population in LDCs may remain in extreme poverty by 2030.

Additional policy efforts are needed to foster an environment that will accelerate medium-term growth and tackle poverty through policies that address inequalities in income and opportunity, according to the report. 

It points to a combination of short-term policies to support consumption among the most deprived and longer-term policies, such as improving access to healthcare and education and investment in rural infrastructure.

The UN report states that inflation dynamics in developed economies have reached a turning point, and risks of prolonged deflation have largely dissipated. 

By contrast, inflationary pressures have eased in many large emerging markets, allowing interest rates to come down.

The report further stresses heightened uncertainty over international policy, which will hinder a strong rebound in private investment globally. 

Corporate sectors in many emerging economies are vulnerable to sudden changes in financial conditions and destabilising capital outflows, which could be triggered by faster-than-expected interest rate hikes in the United States.

The report also highlights some positive developments related to environmental sustainability. 

The level of global carbon emissions has stalled for three consecutive years. 

This reflects growing renewable power generation, improvements in energy efficiency, transition from coal to natural gas, and also slower economic growth in some major emitters. 

But, the report also warns against waning commitments going forward.

Looking ahead, the report advocates for renewed global commitments to deeper international policy coordination in key areas, including aligning the multilateral trading system with the 2030 Agenda for Sustainable Development; expanding official development aid; supporting climate finance and clean technology transfer; and addressing the challenges posed by large movements of refugees and migrants.

BEIJING — China’s growth took a step back in April after a surprisingly strong start to the year, as factory output to investment to retail sales all tapered off as authorities clamped down on debt risks in an effort to stave off a potentially damaging hit to the economy.

Waking up to the systemic threat posed by cheap credit-fuelled stimulus since the 2008-9 global financial crisis, Beijing has continued to tighten the screws on speculative financing over the past several months.

Data on Monday highlighted the broad economic impact of these regulatory curbs, with below-forecast factory output in April and fixed-asset investment in the first four months of the year reinforcing evidence of a weakening manufacturing sector and slowing momentum in the world’s second-biggest economy.

“If anything [the slowdown] is even faster than we expected,” said Julian Evans-Pritchard at Capital Economics in Singapore in an interview before the data was released.

However, “we’re still some way off from the economy weakening to the point where it will test the tolerance of policymakers...as the urgency to address some of these financial risk issues [is even greater],” he said.

Factory output was up 6.5 per cent in April from a year earlier, down from 7.6 per cent in March, and fixed-asset investment rose 8.9 per cent in the first four months of the year, off the 9.2 per cent pace in January-March. 

Analysts polled by Reuters had predicted factory output would grow by 7.1 per cent in April, and tipped fixed asset investment to rise 9.1 per cent in January-April.

Output growth slowed on tumbling steel and iron ore prices amid concern over rising inventories after China’s mills cranked out as much metal as possible to drive factory production to its highest since December 2014.

However, on a volume basis, steel output hit a record in April, data Monday showed, stoking worries of a growing glut as demand remains flat even as China says it is ahead of schedule on capacity reduction targets.

Fixed asset investment in the manufacturing sector also slowed over January-April, with growth of 4.9 per cent down from 5.8 per cent in the first quarter. Infrastructure spending, however, continued to grow over 23 per cent year-on-year in the same period, supported by Beijing’s Belt and Road initiative to expand investment links with Asia, Africa and Europe.

Property cools 

Analysts say Beijing is keen to ensure steady economic growth ahead of the 19th Communist Party Congress later in the year. Chinese leaders have pledged to shift the emphasis to addressing financial risks and asset bubbles which analysts say may pose a threat to the Asian economic giant if not handed well.

China’s central bank has been guiding short-term interest rates higher to help contain debt perils, though it is treading cautiously to avoid hurting economic growth. 

A red-hot property market, fuelled by speculative investments, has been identified by analysts and policymakers as one of the biggest risks to growth.

Monday’s data showed investment in property development picked up in April, although sales growth was significantly slower, suggesting investment in the sector remained robust even as intensified government controls to rein in the market began to take effect.

The area of property sold grew 7.7 per cent year-on-year in April, the lowest since December 2015 and well short of the 14.7 per cent increase in March. 

AMMAN — A Korean delegation, comprising representatives of nine companies specialised in the manufacturing and exporting of pharmaceuticals, medical materials and equipment, held business meetings with their Jordanian counterparts in Amman on Sunday.

The delegates and the participants discussed ways to boost business cooperation during the meetings, which were attended by Korea’s Ambassador to Jordan Lee Bom-yon.

Organised by Korea Business Centre in Amman, The Commercial Office of the Embassy of the Republic of Korea, the meetings drew a large  number of participants from Jordan, according to a statement of the commercial office.

The delegation was accompanied by representatives of Korea Health Industry Development Institute who visited the Private Hospitals Association and Royal Medical Services to discuss the possibility of further cooperation. 

AMMAN — The 14th International Machinery and Electromechanical Exhibition (JIMEX) held along with the Solar Near East Exhibition (SONEX) will open on Monday at the Amman Motor Show, according to a statement of the organisers.

JIMEX is considered an important industrial, engineering and trading platform, targeting markets of near east countries.

It covers infrastructure sectors, different industries, energy, electricity, automation, water, contracting and consultancy services, while SONEX focuses on solar and renewable energy, according to the statement. Both events are organised with the support of Jordan Engineers Association and national / international energy and industrial organisations and institutes.

Renewable energy and industry digitalisation are major topics in the event.  This year’s exhibitors are from different countries, including China, Taiwan, Turkey, Greece, Germany, Portugal, Morocco, Saudi Arabia, Egypt and Jordan.

PARIS — French carmaker Renault on Saturday said it had been hit by the wave of cyber attacks sweeping the globe, forcing it to shut down production at several sites to keep the virus from spreading.

“We have been affected,” a spokeswoman told AFP, saying they were assessing the situation to try to find a solution. “Work is going on since last night. We are doing what is needed to counter this attack.”

The attack prompted Renault to stop production at several sites in France, part of measures being taken to stop the virus from spreading.

It did not identify the sites, but a union source said the factory at Sandouville in northern Normandy was one of the main sites affected.

A spokesman at the site, whose 3,400 employees normally produce about 640 utility vehicles a day, confirmed it had been a victim of the cyberattack.

“Production was affected overnight but luckily there was no full production scheduled for this weekend, only some ‘stamping’ operations,” he said.

Teams were working on the problem, and he estimated that work would resume on Monday morning.

Another factory that was hit, at Douai, also in northern France, was not paralysed because operations were halted for the weekend, but teams were working to evaluate the extent of the breach, a plant official said.

 ‘Bad surprises’ 

Car production was also halted in Slovenia after computers at the headquarters of Renault’s Revoz subsidiary in Novo Mesto were affected, a spokeswoman told AFP. 

“We can confirm that on Friday, May 12, some problems occurred on certain parts of Revoz’s information system that led to the halting of production during the night,” the spokeswoman said. 

Production remained suspended Saturday, she added.

Renault also said malfunctioning IT systems had led it to curtail activity at a plant operated by its Dacia subsidiary in Mioveni, Romania, that it was forced to send many employees home on Saturday.

Renault is the first French company to confirm it has been affected by Friday’s wave of cyberattacks, which apparently exploited a flaw exposed in documents leaked from the US National Security Agency.

France’s ANSSI digital security agency said that for the moment, it knew of no other French victims of the attack.

But the agency’s director, Guillaume Poupart, told AFP there were probably others who would discover breaches in the coming hours or days.

“There’s a fear that, on Monday morning especially, we’ll have some bad surprises when people turn on their computers,” he said.

CAIRO — In his workshop near Cairo’s pyramids, Ahmed Saeed Omar has manufactured a mini four-wheeled vehicle that he hopes will fill a gap in the market.

Omar’s “mini car”, a rectangular vehicle made of a solid steel body which seats up to six people, is cheaper than the widely-used imported auto rickshaw — not much more than a covered three-wheel scooter with a passenger bench — because it is almost entirely locally produced.

Prices of imported products have soared since Egypt devalued its currency in November as part of measures to stimulate the economy. 

A rickshaw can cost around 38,000 Egyptian pounds ($2,105) and has a 175cc engine, while Omar’s mini car costs 34,000 pounds and has 300cc engine.

“This is a better alternative to the [rickshaw], more cost-efficient and more spacious,” Omar, aged 35, told Reuters.

Three-wheeled rickshaws are widespread in many Egyptian cities, usually in neighbourhoods with narrow alleyways, and are mostly imported from India.

Since the cost of imports has soared, Omar thinks there may be market for his design.

“The cars are in some showrooms and people have bought them,” he said. “There is demand.” 

RIYADH — Saudi Arabia’s budget deficit dropped by 71 per cent in the first quarter of the year, the government said on Thursday, after spending cuts and a major rebound in oil revenues.

The world’s top crude exporter has made an aggressive push to diversify its traditionally oil-dependent economy after the drop in global prices since 2014 slashed its revenues. 

Finance Minister Mohammed Al Jadaan on Thursday said the deficit had dropped to 26 billion Saudi riyals ($6.93 billion) in the first three months of the 2017 fiscal year. 

Saudi Arabia’s budget deficit was initially projected at $53 billion for the whole year, after an even bigger deficit last year that prompted subsidy cuts, delays in projects and a temporary government salary freeze. 

“This is a very encouraging figure and clearly reflects our aim to achieve a balanced budget in 2020,” Jadaan said. 

This is the first time that Saudi Arabia has released budget figures on a quarterly basis, a measure it says is aimed at boosting transparency.

Total revenues for the first quarter were at 144.076 billion riyals ($38.41 billion), an increase of 72 per cent from the same quarter last year.

Oil revenues were notably up in the first quarter at 112 billion riyals ($29.86 billion) with a growth rate of 115 per cent from the same quarter last year, driven by a hike in crude prices in international markets.

Non-oil revenues for the first quarter were reported at 32 billion riyals ($8.53 billion), a 1 per cent increase from the same quarter last year.

Expenditure stood at 170 billion riyals ($45.3 billion) for the first quarter of this year, down 3 per cent from the corresponding period last year.

Expenditure is projected at $237 billion for this year, down from $260 billion last year. 

The Saudi government last year announced a sweeping “Vision 2030” plan aimed at developing its industrial and investment base and boosting small- and medium-sized businesses in a bid to create more jobs for Saudis and reduce reliance on oil revenue.

The plan also aims to include more women in the workforce in Saudi Arabia, which has some of the world’s tightest restrictions on women. It is the only country where women are not allowed to drive.

In September, the country froze salaries and reduced benefits for civil servants — who comprise the bulk of the workforce — as part of a package of austerity measures. 

King Salman revoked the measures in a royal decree last month.

High on the diversification agenda is the kingdom’s plan to sell some 5 per cent of state oil giant Aramco to private owners next year.

Saudi Arabia has also announced foreigners would no longer be allowed to work in Saudi Arabia’s numerous shopping malls, in a measure to boost employment of Saudis.

About nine million foreigners worked in the kingdom at the end of 2015, the most recent official figures available. 

CAIRO — Egypt’s inflation rose to a three-decade high in April, piling pressure on the government to keep a lid on prices as it embarks on politically sensitive economic reforms likely to push them higher.

Import-dependent Egypt has been hit by soaring inflation since it floated its currency in November, allowing it to roughly halve in value. The float marked the opening salvo in a three-year, $12 billion International Monetary Fund reform programme that includes tax hikes and subsidy cuts.

Annual urban inflation rose in April to 31.5 per cent from 30.9 per cent in March, the official statistics agency, CAPMAS, said. That was the highest since June 30, 1986, when it reached 35.1 per cent, according to Reuters data.

Core inflation, which strips out volatile items like food, decreased marginally to 32.06 per cent in April from 32.25 per cent in March.

Rising prices present a challenge for President Abdel Fattah Al Sisi and his government, which have pledged to push ahead with sensitive austerity measures like fuel and electricity price hikes.

Food prices have spiked, rising by 43.6 per cent year-on-year in April ahead of the holy month of Ramadan, when demand peaks because of heavy consumption following dawn-to-dusk fasting.

On Tuesday the government allocated 1 billion Egyptian pounds ($55 million) in subsidies to ease Ramadan food purchases.

“Everything is so expensive. We can’t afford to eat. I don’t know what to buy,” said Baheega Mostafa, a housewife shopping for food. “I voted for Sisi. Unfortunately. I regret it very much.”

Though month-on-month inflation has eased in recent months, suggesting the worst of the price rises has passed, yearly inflation above 30 per cent has confounded expectations and sown uncertainty into Egypt’s economic reforms, analysts said.

“The higher inflation comes contrary to what the ministry of finance, the prime minister and the IMF was expecting — that inflation should cool down so they would be ready for some kind of subsidy cuts starting in July,” said Allen Sandeep, head of research at Naeem Brokerage in Cairo.

An IMF delegation is in Cairo to review Egypt’s progress with the reforms, a condition for disbursing a second instalment of the loan programme, expected in June.

The fund said this month that lowering inflation is key to keeping the country’s economic reforms on track, but how Egypt can rein in prices remains uncertain.

The IMF has suggested that raising central bank rates could help bring down inflation, but analysts say lending activity has already slowed since Egypt hiked rates 300 basis points after the float, and further tightening could sap economic activity.

The central bank’s monetary policy committee is due to meet on May 21 to discuss interest rates.