Business

Donald Trump won the presidency by pledging to restore a vanished and golden economic era, when growth roared, factory jobs flourished and America sat unchallenged atop the global economy.

Yet, he never offered much of a roadmap.

Which is why it's far from clear how Trump will affect the economy, even though his agenda enjoys the advantage of Republican control of both the House and Senate. Trump has pledged to revitalise the mainly white working class that elevated him — a tough task given an ageing US workforce, dwindling options for people with little education and years of stagnant pay.

Trump has said he'd slash taxes, strong-arm US trading partners, end commitments to environmental rules and make it easier to drill for oil.

He would lift federal regulations, void President Barack Obama's healthcare law and curb immigration and, of course, build a wall on the Southern border — and force Mexico to pay for it.

Those steps, Trump says, would turbocharge the economy. Yet, many economists warn that his plans could spike the national debt, ignite trade wars and perhaps cause a recession.

It is impossible to tell how his presidency will affect the economy and financial system just because so much is unknown, said Michael Arone of State Street Global Advisors:

"What policies will he pursue? How he moves from election to governing is unknowable."

Here's how Trump's presidency might affect sectors of the US economy and financial system:

Economy and federal reserve

The president-elect has said he can get the economy to grow nearly 4 per cent a year; it is now running at half that pace.

He would ignite that growth, he's said, by cutting taxes by roughly $6 trillion over 10 years, expanding oil and natural gas production and slashing most federal regulations.

Yet few analysts think the economy can expand much faster. An ageing population means the workforce is adding fewer people, a recipe for tepid growth. Productivity — output per hour worked and vital to economic health — is chronically sluggish.

Those trends help explain why the Federal Reserve says the economy's long-term annual growth is a slow 1.8 per cent. That's a rationale for keeping interest rates near historic lows, especially with inflation tame. Trump has called Fed Chair Janet Yellen essentially a puppet of Obama. Yellen has inflated a stock bubble, Trump argues, by keeping rates too low for too long.

Yellen's term as chair will end in early 2018, and Trump will not likely re-nominate her for a second term. Still, analysts do not expect Yellen to resign before her term ends, in part because of the disruption it might cause in financial markets.

The Fed has been considered all but sure to raise rates at its next meeting in mid-December, reflecting a strengthened US economy. After Trump's victory, investors still peg the likelihood of a December rate hike at 81 per cent, according to the CME Group.

Infrastructure

Trump has vowed to fix roads, bridges and airports — a sticking point in recent years as Congress and Obama failed to compromise on ways to pay for repairs to ageing infrastructure. As president, he said, he'd rely on tax credits to incentivise development. 

Taxes

Trump's election could mean a big tax cut for affluent Americans, particularly the richest 1 per cent, and a much smaller tax cut for many others. Analysts say those tax cuts would likely boost growth in the short run. But if all his changes were enacted, they would balloon the budget deficit and potentially lift interest rates and shrink the overall economy, economists say.

Nearly half the benefits from Trump's proposed tax cuts would flow to the top 1 per cent, according to the non-partisan Tax Policy Centre. They'd receive an average tax cut of $215,000, lifting their after-tax income by 13.5 per cent, the policy centre found. The top 0.1 per cent would get a tax cut exceeding $1 million.

Trump has proposed reducing the top bracket's tax rate from 39.6 per cent to 33 per cent. He would end taxes on estates and repeal some taxes on investment income. The corporate income tax rate would sink to 15 per cent from 35 per cent.

On average, middle-income households would receive a tax cut of $1,010, lifting their after-tax income 1.8 per cent, the Tax Policy Centre says. But some middle- and lower-income households would face tax increases.

That's because his plan eliminates the personal exemption, which lets households reduce taxable income for each household member.

Trade

Trump says the economy's sluggish growth is due to trade deals negotiated by incompetent leaders who betrayed workers, choosing instead to favour rich donors.

Mexico, China and Japan, he argues, operate by rules that have hurt the United States. He says agreements to open markets, like the North American Free Trade Agreement, led firms to ship factory jobs abroad — a trend he would stop by renegotiating these deals and penalising US companies that move manufacturing operations offshore.

Trump says the result of these trade deals is a $500 billion trade gap that he would close by raising tariffs if necessary to restore factory jobs.

Healthcare

Within the healthcare industry, Trump is viewed with trepidation. Insurers, pharmaceutical firms and hospitals would stand to lose if a repeal of Obama's healthcare law, as Trump has vowed, increases the number of uninsured Americans. Even if, as critics like Trump say, the Obama's healthcare law is rife with complexity and complications for health care companies, it does offer the long-term prospect of more paying customers.

Insurance and hospital industry groups reminded Trump on Wednesday of his pledge to replace Obama's law with a system that provides affordable high quality coverage for Americans.

One of Trump's main proposals — allowing insurers to sell policies across state lines — draws mixed reviews within the industry. Smaller insurers tend not to like it, a reflection of the fact that health insurance is still a regional business.

Trump is a wild card for the pharmaceutical industry. At one point, he supported authorising Medicare to negotiate prescription drug prices. He also favours letting consumers buy lower-cost medications from overseas.

Financial reform

The fate of key piece of legislation passed after the financial crisis — the Dodd-Frank regulatory reform law — is now in question. House Republicans want to repeal all or parts of Dodd-Frank.

The twist is that Wall Street, generally, has little interest in repealing Dodd-Frank. Banks have spent billions restructuring themselves to comply with the requirements of Dodd-Frank and generally believe the banking system is stronger with the law.

But the fate of the Consumer Financial Protection Bureau, which was created by Dodd-Frank, now comes into question. Congress has wanted to restructure the bureau to make it a commission, not led by a single director, and to make it subject to the congressional appropriations process. That's now likelier.

LONDON — World stock markets sank Wednesday after maverick Republican Donald Trump surprisingly won the US election, triggering chronic uncertainty that sent investors fleeing for safe-haven assets, dealers said.

Asia kicked off the so-called "Trump slump", with Tokyo diving on concerns over the untested policies of the billionaire businessman and reality TV star, who has scored a surprise victory over Democrat market favourite Hillary Clinton.

Europe followed suit, tipping about two per cent lower at the open in Frankfurt, London and Paris, but the British market rebounded briefly into slender gains after Trump's conciliatory victory speech.

"This is a shock result. Twelve hours ago, people thought Clinton would win," City Index analyst Kathleen Brooks told AFP.

"Now the US has a commander-in-chief who has no political experience. This is the ultimate uncertainty — triggering a Trump slump”.

"Markets are pricing in the worst possible case scenario. If he is not as bad as people think he is, then markets could recover soon."

Trump, 70, will now become the 45th president of the United States at his inauguration on January 20.

"After that initial plunge, European markets have seen a remarkable recovery this post-election Wednesday," added Spreadex analyst Connor Campbell.

"A surprisingly presidential Trump victory speech seems to have reassured investors, the talk of infrastructure spending and a lack of usual vulgarity allowing for a relative aura of calm."

Brexit-style volatility 

The extraordinary US election outcome has drawn direct comparisons with Britain's shock Brexit vote in June to leave the European Union.

"Of course, just as Britain has not yet Brexited, America has not officially entered the era of Trump, suggesting that much of the trading that greeted the open was a gut-reaction rather than informed positioning," added Campbell.

"That does, however, leave plenty of room for volatility as 2016 begins to wrap up, let alone the months and years of an actual Trump presidency."

Investors fled to safe-haven assets, with gold prices rising more than five per cent and German government bonds rallying.

Rebecca O'Keeffe, head of investment at stockbroker Interactive Investor, noted there were "significant" worries over Trump's policies.

"Clinton was a continuation of the status quo, whereas Trump is a huge leap into the unknown, so investors, as well as the wider public, have significant concerns about what he will do and whether he is up to the job," O'Keeffe told AFP.

"Trump is likely to cut taxes, invest in US infrastructure, be very pro-growth at home but be highly protectionist when it comes to the rest of the world."

The incoming president insists he could bring jobs back to America by renegotiating international trade deals, while he has repeatedly vowed to ruthlessly pursue growth of the world's biggest economy.

'Sea change' in US politics 

"Equities opened to a sea change in the US political landscape," noted AJ Bell Investment Director Russ Mould.

Initial confidence that Clinton would win vanished as results showed the firebrand tycoon picking up the major scalps needed to take the White House.

After he won a swathe of states, Clinton called Trump to concede.

In Asia, Tokyo stocks collapsed 5.4 per cent and Hong fell 2.2 per cent.

Moscow however rose on hopes of improving US relations as Russian President Vladimir Putin congratulated Trump.

The peso — which has been battered by Trump's anti-Mexican promises that included the construction of a border wall — hit a record low against the dollar as the greenback soared to 20.7818 pesos.

DALLAS — OPEC now sees oil prices rising more slowly over the next few years than it had expected, as the oversupply of crude takes longer to work off.

The Organisation of the Petroleum Exporting Countries said on Tuesday it expects crude will rise $5 a year to $60 per barrel by 2020. A year ago, OPEC forecast that oil would hit $80 by 2020.

Brent crude, which is used to price international oils, fell 11 cents to $46.04 a barrel on Tuesday.

OPEC cited many factors that could limit energy demand, from slower growth in China to higher household debt. The cartel expects global economic growth of 3.4 per cent over six years, down from a 3.6 per cent prediction a year ago.

At the same time, OPEC said, the oil industry was surprised by the ability of producers in North America to keep pumping even as prices fell, maintaining crude supplies high.

The forecast was contained in OPEC's annual oil outlook and came just three weeks before its oil ministers are scheduled to meet to complete a September agreement on slightly reducing production to drive up prices.

It won't be easy for OPEC to nail down a price-boosting deal.

OPEC nations have been pumping record amounts of crude this fall even though prices are less than half what they were in mid-2014. Iran, Libya and Nigeria have reportedly argued to be exempted from production cuts, which could put pressure on Saudi Arabia to shoulder more of the reduction. It is unclear whether any OPEC pullback might be offset by production from countries outside the cartel.

Separately, the US government updated its short-term outlook and said that the recent decline in domestic oil production may not be as severe as expected just a month ago.

The Energy Department raised its forecast of US production for both this year and 2017, as drillers respond to higher crude prices. Still, output won't match 2015, which was the biggest year for US production since 1972.

The Energy Department predicted that domestic production will top 8.7 million barrels per day next year. That's 140,000 more barrels per day than the department estimated just a month ago. Forecasters also raised their estimate of 2016 daily oil production by 110,000 barrels to more than 8.8 million barrels.

That's still below 2015's output that hit 9.4 million barrels per day.

The rising forecast is because this year's rebound in oil prices has translated into more drilling, said Anthony Starkey, an energy analyst for S&P Global Platts. The number of active oil rigs in the US has risen by more than 100 since oil prices plunged below $30 a barrel early this year. About 20 rigs have been added in just the past month.

"Most analysts have been revising their production numbers higher as rig activity increases and the outlook for prices has improved with the rhetoric from OPEC that they will do something to help balance the market" when cartel members meet later this month, Starkey said.

WASHINGTON — International Monetary Fund (IMF) chief Christine Lagarde said Tuesday she will recommend the institution approve a $12 billion loan for Egypt when the board meets Friday to support the country's "ambitious" reform programme.

Lagarde praised the country's economic reforms, including floating the Egyptian pound last week, and said the loan is needed to help restore stability and growth to the economy.

The IMF had made floating the pound — which resulted in a steep devaluation and sharp price rises — a condition of the loan.

Egyptians are looking at a period of hardship as the government unrolls austerity measures ahead of the IMF programme. The country has endured months of shortages of products ranging from sugar to baby formula.

Cairo governments had avoided the measures fearing unrest, but President Abdel Fattah Al Sisi says Egypt no longer has the luxury of postponing them.

The November 3 move came amid a dollar crunch that led to a thriving black market and a slump in imports, and caused the pound to plunge to about 16 to the US dollar from 8.9.

The government also announced a 7 per cent salary increase for civil servants, who number about six million out of a total population of more than 90 million.

Lagarde said in a statement that the moves, which also include cutting fuel subsidies, "will notably improve Egypt's external competitiveness, address shortages of foreign currency, support exports and tourism and help attract foreign investment."

The programme aims "to put the country's economy on a sustainable path and achieve job-rich growth", she said.

GENEVA — The World Trade Organisation (WTO) said Tuesday it will set up a panel to resolve an escalating dispute between the United States and China over Beijing's export barriers for raw materials.

Washington claims that China's export duties, export quotas and limitations placed on businesses that want to export raw materials have hurt US businesses. 

The raw materials concerned in the dispute range from cobalt to copper and tin and China is facing a similar spat with the European Union. 

The US first requested arbitration at the WTO last month, with the country's trade representative Michael Froman questioning China's commitment to the WTO's goal of establishing a level-playing field in global trade. 

China rejected the first US request for arbitration. WTO rules state that a second request for arbitration automatically triggers the creation of a panel by the organisation's Dispute Settlement Body. 

Froman's office has insisted that Chinese raw materials are crucial to sustaining key American industries. 

Citing an example, the trade representative's office noted that Indium, used for the thin-film coating on flat-panel screens, helps drive a $10.1 billion (9.1 billion euros) computer equipment industry that employs 21,000 Americans.

CAIRO/ABU DHABI — Saudi Arabia has informed Egypt that shipments of oil products expected under a $23 billion aid deal would be halted indefinitely, suggesting a deepening rift between the Arab world's richest country and its most populous.

Saudi Arabia agreed to provide Egypt with 700,000 tonnes of refined oil products per month for five years in April, during a visit by Saudi Arabia’s King Salman Bin Abdulaziz .

The cargoes stopped arriving at the start of October, as festering political tensions burst into the open, but Egyptian officials said the contract remained valid and had appeared to hold out hope that oil would start flowing again soon.

Saudi Arabia's state oil firm Aramco has not commented on the halt. But on Monday, Egyptian Oil Minister Tarek El Molla confirmed it had halted the shipments indefinitely.

An oil ministry official told Reuters: "They did not give us a reason. They only informed the authority about halting shipments of petroleum products until further notice."

The move comes as a source in Molla's delegation said late on Sunday evening that he would visit Iran, Saudi Arabia's main political rival, to try to strike new oil deals.

Egypt and Iran's diplomatic relations have been strained since the 1970s. An Egyptian official visiting Iran would cement a break in its alliance with Saudi Arabia and mark a seismic shift in the regional political order.

The oil ministry spokesman declined to confirm or deny whether Molla was scheduled to visit Iran, saying he had gone to Abu Dhabi to attend a conference. Foreign Ministry spokesman Ahmed Abu Zeid said he had no information on the visit.

Speaking to reporters in Abu Dhabi, Molla said he was not going to Iran.

But two security sources and a source in Molla's delegation said the minister had been scheduled to go though the low-key visit was now likely to be delayed after the news became public.

Gulf Arab countries, led by Saudi Arabia, have pumped billions of dollars into Egypt's flagging economy since mid-2013, when general-turned-president Abdel Fattah Al Sisi seized power, ending a year of divisive Muslim Brotherhood rule.

But with the Brotherhood threat diminished, Gulf rulers have grown disillusioned at what they consider Sisi's inability to reform an economy that has become a black hole for aid, and his reluctance to back them on the regional stage.

Egypt has been reluctant to provide military backing for Riyadh's war against the Iranian-backed Houthi group in Yemen.

In Syria, where Saudi Arabia is a leading backer of rebels fighting against Iranian-backed Bashar Assad, Sisi has supported Russia's decision to bomb in support of the president.

A deal to hand over two Red Sea islands to Saudi Arabia, made at the same time as the oil aid agreement, has faced legal challenges and is now bogged down in an Egyptian court.

AMMAN — The government has expressed its readiness to provide financial and technical support for the setting up of a private sector-owned company to promote the country’s exports, Industry, Trade and Supply Minister Yarub Qudah said on Sunday.

At a meeting with Jordan Chamber of Commerce board members, Qudah stressed the importance of working to increase national exports and penetrate new markets. 

He urged traders to benefit from the recently adopted plan by the EU to simplify the rules of origin for made-in-Jordan products to increase exports, according to the Jordan News Agency, Petra. 

Describing the commercial sector as the driving force for economic growth, he said strong trade business attests to the presence of sound industrial and logistic activity.

As the Kingdom is facing  several challenges, in light of regional circumstances, the public and the private sectors should work together to mitigate their impact, he told the gathering, citing regressing economic indicators.   

He stressed the need for working out real solutions that can improve the economy, especially in terms of its exports and high unemployment.

Regarding the issue of companies’ oversight by more than one entity, Qudah said the government will work to unify the different monitoring agencies so that each one will be in charge of one task and a specific area. 

The chamber’s president, Nael Kabariti, underscored the importance of fostering the partnership between the public and private sectors, noting that the country’s good external ties can help it in promoting its investment opportunities.

He also drew attention to economy-related legislation. Laws  pertaining to taxes and customs need to be reconsidered to lead to better economic conditions, he noted.

AMMAN — The Ministry of Labour wants to build up a real partnership with the private sector as part of its endeavour to improve the living standard of citizens, Minister Ali Ghezawi said on Saturday. 

Speaking at a meeting with several Amman Chamber of Trade board members, he asserted the ministry’s support of employment initiatives targeting young unemployed people and working to assist them towards starting their own small business projects, according to a statement of the chamber. 

It is time to foster a culture of self-employment and encourage young people to establish their own small projects; thus they can become business owners rather than jobseekers, Ghezawi told the attendees, also comprising Social Security Corporation Director General Nadia Rawbdeh and the ministry’s secretary general, Farouq Hadidi. 

The ministry will take the commercial sector's remarks pertaining to labour legislation into consideration, in addition to those regarding training needs, he said, underscoring the importance that the ministry attaches to training initiatives that hone young people’s skills and lead to employment.

Ghezawi urged the private sector to pay more attention and make sure that the training initiatives reach out to young unemployed people outside Amman, especially those in remote areas which lack investment projects, highlighting the importance of enrolling in vocational and technical education.

He added that the ministry will also carry out inspection tours of business enterprises and make sure that they abide by the rules and regulations on hiring the required ratio of persons with disability.

Addressing the attendees, the chamber’s president, Issa Murad, highlighted the importance of adopting new procedures for commercial entities’ inspection.

Murad, who is also a senator, also stressed the need to raise business entities' awareness and provide them with guidelines on occupational hazards and safety standards, in lieu of issuing warnings or fines that end up with their closure. He also emphasised the importance of briefing them on work permit conditions.

LONDON — Deutsche Telekom is considering selling its 12 per cent stake in BT Group, two sources familiar with the matter said, paving the way for it to leave the British telecom market following Britain's vote to quit the European Union.

The German group is evaluating a potential sale of its stake, which has a market value of £4.4 billion ($5.47 billion), and will take a final decision once it has more clarity on the kind of deal Britain will strike with the EU next year, the sources said.

While there is no certainty a deal will happen, Deutsche Telekom's deliberations are one signal that foreign companies are rethinking their strategic investments in Britain in the wake of the Brexit vote.

The fall in the value of the pound and forecasts that economic growth will shrink as a result of Britain losing access to the European single market have cast a shadow over the country's attractiveness as a place for foreign companies to hold strategic investments.

Deutsche Telekom declined to comment and a spokesperson for BT Group said the British company does not comment on rumour and speculation.

Deutsche Telekom is restricted by a lock-up agreement to sell its stake in BT before August 2017 unless it agrees an off-market deal with financial investors.

The company also operates an IT and consulting business in Britain through its subsidiary T-Systems, which DT once tried to merge with BT's Global Services unit but is now rumoured to be selling.

Deutsche Telekom became BT's largest shareholder when the British telecom group bought mobile player EE for GBP 12.5 billion last year, in which France's Orange and DT had 50 per cent each.

An exit from Britain would allow Deutsche Telekom to concentrate on its larger business in the United States, which has been touted as a possible takeover target following a string of deals in the US telecoms, media and technology sector.

Freeing up capital from Britain would allow Deutsche Telekom the option to do a deal itself and remove the threat of an uninvited takeover bid.

Britain represents a relatively small part of Deutsche Telekom's value while its US operation accounts for 42 per cent of total revenue, exceeding its home market, which constitutes 32 per cent, according to Thomson Reuters data.

Analysts have identified the company's T-Mobile US business as a possible deal target in the US telecom space following AT&T's $85.4 billion acquisition of Time Warner last week. Potential bidders would include Comcast Corp., satellite-TV provider Dish Network Corp., and Mexican telecom company America Movil, they said.

"If DT wants to remain a competitive, independent player in the US, they'll need to team-up with a cable player like Sprint", said one of the sources.

Deutsche Telekom owns 65 per cent of the T-Mobile US which has a market value of $40 billion.

Deutsche Telekom would want to assess how much they need to spend on US spectrum and how much capital will be required to take part in sector consolidation in the United States and in Europe before making any final call on Britain, one of the sources said.