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TOKYO — Japanese Prime Minister Shinzo Abe announced on Wednesday his widely expected decision to delay a scheduled sales tax increase by two-and-a-half years, putting his plans for fiscal reforms on the back burner due to growing signs of weakness in the economy.

While the decision may help Abe win votes at an upper house election on July 10, it could fan doubts about his plans to curb Japan's huge public debt and fund ballooning social welfare costs of a fast-ageing population.

Mindful of opposition criticism that the delay is a sign his "Abenomics" stimulus policies have failed to spur growth, Abe justified the decision, saying it was needed to forestall risks posed by external factors — notably slowing Chinese growth.

"Abenomics has been steadily producing results, but the global economic environment has changed unexpectedly quickly in the past year. The biggest risk is the slowdown in emerging economies," Abe told a news conference.

"Faced with global risks, we must fully reignite the engine of Abenomics and speed up efforts to escape deflation," he said.

It is the second time Abe has delayed an increase in the sales tax to 10 per cent from 8 per cent, after a rise from 5 per cent in April 2014 tipped the economy back into recession.

"From an economic standpoint, the market is likely to view the delay as a positive surprise for domestic demand," said Lee Jin Yang, macro research analyst for Aberdeen Asset Management in Singapore.

Abe, whose premiership will end when his term as LDP president finishes in September 2018, had repeatedly said he would raise the tax as planned unless the economy faced a shock from a financial crisis or natural disaster.

But he laid the groundwork for a delay at last week's Group of Seven summit, insisting his G-7 partners shared a "strong sense of crisis" about the global economy, and he drew parallels to the 2008 world financial crisis that followed the bankruptcy of Lehman Brothers.

Abe said that while the global economy was not on the verge of another financial crisis, Japan must spearhead efforts to boost global demand by loosening fiscal policy.

"We'll deploy a comprehensive, bold economic package this autumn," he said, without indicating the scale of spending envisaged.

Many economists found Abe's comparisons to the Lehman Brothers failure far-fetched, but there is consensus that Japan's economic data has been disappointingly weak.

Manufacturing activity in May contracted by the most in more than three years. Corporate profits fell at the fastest pace in more than four years in January-March, which could hurt capital expenditure plans.

Slow wage growth has also weighed on consumer spending.

"I'm not sure whether it's bad enough to delay the tax hike but we can't be too optimistic about consumption," Sadanobu Takemasu, president and chief operating officer of major convenience store chain Lawson, told Reuters.

Budget target stays

Abe said he has not abandoned a pledge to bring the primary budget balance into surplus by the fiscal year starting April 2020, and rein in public debt which is already more than double Japan's annual economic output.

But that target had already looked elusive, even based on the government's rosy forecast of real economic growth of 2 per cent on average in coming years.

Abe offered few clues on how Japan will make up the funding gap created by the delay in the tax hike to October 2019, saying only that he will keep reflating growth so tax revenues will continue to increase.

"I have very strong concern about fiscal discipline," said Hiroshi Shiraishi, senior economist at BNP Paribas Securities.

"We are stepping onto a potentially dangerous path because once you start this policy it is difficult to stop, and once you do, the economy will thank."

Abe also ruled out calling a snap general election for parliament's powerful lower house as he did in 2014 after announcing the first tax hike delay.

Speculation had simmered that Abe would call a snap poll in a bid to lock in his ruling bloc's two-thirds "super majority" in the lower house.

PARIS — The world risks getting caught in a low-growth trap, denting the future of generations to come, unless governments step up spending quickly, the Organisation for Economic Cooperation and Development (OECD) warned on Wednesday.

Tepid worldwide recovery since the global economic crisis in 2008 "has precipitated a self-fulfilling low-growth trap" said the organisation's chief economist Catherine Mann in its twice-yearly economic outlook.

"Without comprehensive, coherent and collective action, disappointing and sluggish growth will persist, making it increasingly difficult to make good on promises to current and future generations," she added.

The OECD chopped its forecast for global growth this year to 3 per cent, down from the 3.6 per cent it forecast in October. For 2017 it now sees 3.3 per cent growth.

The dismal economic recovery has created forces that are now working to perpetuate slow growth, it said.

In particular, businesses have little incentive to invest given soft demand, while muted wage gains, unemployment and income inequality have held back consumption. Uncertainty also puts the brakes on spending.

Spend, spend, spend 

After years during which international economic institutions urged governments to practise austerity, Mann said that now "fiscal policy must be deployed more extensively".

The OECD said "almost all countries have room to reallocate spending and taxation towards items that offer more support to growth" like investments in infrastructure as well as education. 

While central banks have been supporting the global recovery with ultra-low interest rates and stimulus measures, the OECD said, "it is clear that reliance on monetary policy alone has failed to deliver satisfactory growth and inflation."

Moreover today's low interest rates also provide an opportunity for governments to step up investment.

Mann said the need for governments to shift up spending is urgent.

"The longer the global economy remains in the low-growth trap, the more difficult it will be to break the negative feedback loops, revive market forces, and boost economies to the high-growth path," she said.

She warned that as things stand, negative shocks "could tip the world back into another deep downturn" while geopolitical risks to the global economy are on the rise.

Brexit risks 

The OECD sees the potential exit of Britain from the European Union following a referendum later this month as one major risk. 

If voters chose to leave, hits to trade, investment and spending would likely see the British economy grow by 3 percentage points less in the next four years than if voters choose to stay, according to the OECD.

Already, uncertainty surrounding a possible Brexit "has led to a significant slowdown in economic activity", although if voters choose to stay the OECD says it expects growth to pick up in the second half of this year. 

Ireland, Luxembourg and the Netherlands would be the first of Britain's European partners to bear the brunt in the event of Brexit, it said.

Britain itself could be buffeted by financial market turbulence akin to that seen at the height of the eurozone crisis in 2011 and 2012.

However, if Britain opts to remain in the EU in the referendum, which according to polls is a close call, growth will come in at 1.75 per cent this year, the OECD expects.

World markets went into a panic at the beginning of this year over the prospect of a sharp slowdown in China, which has been the source of most of global growth in recent years, but the OECD now sees growth moderating gradually thanks to recent government fiscal policy measures to support the economy.

It forecasts China's growth rate will slip to 6.5 per cent this year, and then 6.2 per cent in 2017.

China's economy grew by 6.9 per cent last year.

The strong dollar is expected to slow growth in the United States to 1.8 per cent this year, from 2.4 per cent last year.

Meanwhile, the eurozone is seen as marking time at 1.6 per cent growth.

Japan should get a marginal boost, with growth of 0.7 per cent this year, but then stumble to a mere 0.4 per cent expansion in 2017.

Brazil's outlook slashed

For Brazil, the OECD slashed its economic growth forecast, citing political uncertainty and corruption worries.

The Brazilian economy is now expected to contract by 4.3 per cent this year, against the 4 per cent downturn the OECD predicted only in February.

The OECD's view is much more pessimistic than market expectations compiled by Brazil's central bank, which currently point to a fall of around 3.8 per cent in growth.

"The deep recession is set to continue in 2016 and in 2017," it said.

For next year, the OECD now expects GDP to dive again, by 1.7 per cent, a sharp downward revision from its zero-growth forecast in February.

DOHA, Qatar — The economic slowdown gripping countries across the Arab Gulf can be seen in layoffs, slowed construction projects and government cutbacks. For the millions of foreign workers drawn by brighter job prospects, it can have a far-darker side if they find themselves deep in debt.

Gulf countries like Qatar largely don’t have bankruptcy laws, leaving laid-off workers on the hook for huge outstanding sums while often banned from traveling outside of the country. That leaves many unemployed begging friends and family for help while frantically selling off all their belongings. Others have killed themselves out of desperation.

“It was kind of scary for a while there,” said Robert Foster, an American from Beaufort, South Carolina, who found himself trapped for months in Qatar. “We sold everything we had.”

The Middle East has weathered several boom-and-bust cycles over the last decades, both buoyed and beaten by the global price of crude oil, as well as the recent recession. In 2009, the financial meltdown in Dubai saw dusty luxury cars parked and abandoned at its international airport and across the city as foreigners fled their debts.

This recent financial collapse began with oil prices falling from over $100 a barrel in the summer of 2014 to bottom out this January to under $30, a 12-year low. In the time since, oil has clawed back to $50 on supply disruptions and lowered reserves, but the damage already had been done in the Mideast.

Among those hard hit was Qatar, a small oil-and-gas-rich country on the Arabian Peninsula where construction accelerated with the announcement it would host the 2022 FIFA World Cup. As oil and gas prices sank, so too did Qatar’s coffers, leading to layoffs across both private and public companies.

The state-run Qatar Petroleum fired at least 1,500 foreign workers in recent restructuring, said Mohammed Bin Saleh Al Sada, Qatar’s energy and industry minister.

“We did not start with the idea of laying off people for the sake of laying off people,” he recently told The Associated Press. “Nationals were not affected whatsoever, and that was part of our solid policy.”

Maersk Oil said in October it would cut as much as 12 per cent of its staff in Qatar. Vodafone’s Qatar subsidiary announced on May 17 it would cut about 10 percent of its workforce, while mobile phone competitor Ooredoo also made layoffs this year. Al Jazeera, the peninsula nation’s satellite news broadcaster, also shut down its American channel in April.

Foster, 50, a former senior operation manager for the state-linked Hamad Medical Corp.’s ambulance services, began work in March 2014 on a three-year contract, hoping to stay for at least six years to make enough to buy a house in the United States.

However, he said he didn’t receive his first paycheck until three months into his job, which forced him to get a loan of 300,000 Qatari riyals ($82,000) to cover his living expenses, debts and child support payments in the US.

“A lot of us had to get loans to catch up,” Foster said. “And that’s where it started, right there.”

In January, Foster said his boss called him into his office and laid him off, along with other staffers. Four days later, Qatar National Bank closed his account, putting all he had toward his remaining loan, he said.

“There was no notification. It was just a text that said: ‘You’re now overdrawn’,” Foster said.

Under Qatari law, foreign workers must apply for an exit permit through their employer to leave the country. When Foster couldn’t leave for a cruise he planned before with his wife, he realised he was trapped.

Foster said he put his wife, Pepper, on a flight out, then sold all of his belongings, sleeping at night on the floor of his company-provided villa and hiding his remaining cash in the freezer, fearful he could be arrested as a debtor. He dodged phone calls and knocks at the door while trying to pull together the cash needed to pay off his debt.

“I had to give them my retirement and my dad’s retirement to leave,” he said.

Hamad Medical Corp., Qatar’s main health care provider, and Qatari officials did not respond to requests for comment.

But Foster said he knew others in far worse shape, including one colleague who even purchased a rope at one point to hang himself. Others have taken their own lives.

A British coroner investigating the suspected suicide of an engineer from Gloucestershire found hanging in his Doha home in February 2015 ruled this March that “financial worries” may have played a part. The case remains open as Qatari authorities provided only “limited information”, according to the inquest report obtained by the AP.

Suicides also affect those coming to Gulf countries for work as labourers, taxi drivers and other low-paying jobs. They often pay recruiters back home in Asia or Africa huge sums that take several years to pay off.

AMMAN — Finance experts on Tuesday urged the Jordanian banking sector to further support small- and medium-size enterprises (SMEs), which largely contribute to the gross domestic product.

At a discussion session held on the sidelines of the Jordan Afaq Economic Forum, which was inaugurated in Amman recently, the experts criticised the banking sector for not doing enough to assist SMEs, and for mainly "hoarding" cash in its vaults, the Jordan News Agency, Petra, reported.

According to a 2014 financial stability report issued by the Central Bank of Jordan (CBJ), the public sector received 7.9 per cent of credit facilities extended by banks in Jordan.

SMEs received 8.5 per cent, while households' (which include the majority of personal loans) share was 20.5 per cent, followed by the real-estate sector, whose share was 21.3 per cent.

Large companies received the lion's share (41.7 per cent), according to Adli Kandah, director general of the Association of Banks in Jordan.

At the discussion session, participants said banks support only 15 per cent of the SMEs in the country, whereas the remaining 85 per cent rely on their own resources.

Speakers also highlighted the importance of raising awareness among the public on the role of banks and their services.

Meanwhile, Akram Karmoul, president of the association for Investment Protection, said the investment climate in Jordan suffers from many problems, mainly bureaucratic measures, in addition to high production costs.

"Bureaucracy is disgusting," he told The Jordan Times, accusing public sector employees of being "snobbish" and difficult to talk to.

Investments are costly due to production costs, coupled with high living expenses, taxes and fines, thus rendering Jordanian products non-competitive in many cases, Karmoul said.

That is why a good number of investors choose to join the service sector, where there are fewer hardships and less costs, he noted, adding that more and more people choose not to invest their money and prefer to save it.

Also, there is a great need for feasibility studies to be done ahead of venturing into any business, Karmoul said. 

The CBJ should also cut its interests down to encourage investments, he noted.

AMMAN — Amman Chamber of Industry (ACI) on Tuesday said it will organise an annual exhibition of Jordanian industries in the main Palestinian cities.

The ACI said the decision follows the success of the exhibition of Jordanian industries that was held recently in Nablus.

Forty-five Jordanian industrial companies took part in the exhibition, according to the Jordan News Agency, Petra. 

AMMAN — Representatives of 10 Korean electricity specialised companies held business to business (B2B) meetings in Amman on Monday to promote their products in Jordan. 

Also, representatives of the National Electric Power Company (NEPCO) and Korea Electric Power Corporation (KEPCO) held a forum on Sunday to share electricity-related expertise. 

The B2B meetings, attended by Korean Ambassador to Jordan Lee Bom-yon, drew active participation from the Jordanian side, according to a statement by Korea Business Centre, Amman (KOTRA).   

The visiting Korean delegation is specialised in manufacturing and exporting electricity, and electricity-related products like voltage regulators, insulating oil, distribution network management systems, electric actuators, boiler monitoring systems, valves and seals, according to KOTRA.

At the forum, participants looked into means to benefit from current electricity solutions. 

At the forum, NEPCO's representatives highlighted the electricity situation of Jordan, while KEPCO officials shared their expertise on "electric smart grids" and Energy Storage Systems. 

Moreover, representatives of the visiting Korean companies briefed the Jordanian side on their products.

The delegates' visit, which concluded on Monday, is aimed at strengthening and developing trade cooperation.

The delegates also explored the possibility of establishing joint investment projects. 

Korean businesspeople seek business opportunities and economic cooperation with Jordan in light of its stability and qualified human resources. Jordan is also considered a gateway to regional markets, the statement added.

TRIPOLI —Turkey’s foreign minister said during a visit to Tripoli on Monday that his country hoped to be the first to reopen its embassy in the Libyan capital, following the arrival of a UN-backed unity government at the end of March.

Security in Tripoli remains fragile and the unity government’s leadership has been operating out of a heavily guarded naval base as it gradually tries to gain control of ministries.

Tunisia and several Western European states including France and Britain said shortly after the unity government’s leadership moved to Tripoli that they hoped to reopen their embassies, but no dates have yet been announced.

“God willing, we will be the first country to resume our embassy’s work in Tripoli,” Turkish Foreign Minister Mevlut Cavusoglu said, after meeting his Libyan counterpart Mohammed Siyala and Prime Minister Fayez Seraj at the naval base.

He also pledged Turkish support for the government’s efforts to restore stability and security to Libya, and said Turkey hoped to boost its economic presence in the North African state.

“Turkish companies are looking forward with determination to continue their work and resume their activities in Libya in the sectors of transport and energy,” he said.

Libya’s oil-dependent economy has been hit hard by conflict and political chaos, with production dropping to about one fifth of the level it stood at before the 2011 uprising that toppled Muammar Qadhafi.

Most foreign employees working in the oil sector have left the country, and most Western diplomatic staff were evacuated from Tripoli in 2014 amid heavy fighting between rival factions.

As a result of the fighting, Libya’s parliament and government moved to the east of the country, whilst a rival set of institutions were set up in the west in Tripoli.

Terror group (Daesh) militants took advantage of a security vacuum to establish a foothold in Libya, seizing control of the coastal city of Sirte last year.

The unity government is designed to end divisions between the rival political groups and the armed brigades who back them, but it has struggled to win support on the ground.

AMMAN — Jordanian Businessmen Association (JBA) will work with concerned business parties to facilitate investment procedures, including those related to taxes and customs, JBA President Hamdi Tabbaa said on Monday.

Tabbaa made the remark following a meeting with UAE Ambassador to Jordan Bilal Al Budoor. The UAE has around $15 billion in investment in the Kingdom, according to a JBA statement.

FRANKFURT — Germany's economy minister lashed out at Chancellor Angela Merkel for her "wrong" stance on a huge EU-US free trade pact in an interview to be published Monday, signalling a deepening rift within the government over the controversial accord.

Sigmar Gabriel, also the vice chancellor, told the RND group of regional papers that his Social Democratic Party "doesn't wish to be part of a bad deal", as he warned against a hastily negotiated agreement on the so-called Transatlantic Trade and Investment Partnership (TTIP).

He said Merkel "was wrong to say, in the euphoria of (US President Barack) Obama's visit to Germany, that we will be able under all scenarios to conclude negotiations this year".

Washington and Brussels want the TTIP completed this year before Obama leaves office, but it has faced mounting opposition on both sides of the Atlantic.

Gabriel, whose party is the junior partner in Merkel's coalition government, already said earlier this month that the deal "will fail" if the United States refuses to make concessions.

Opinion polls show that people in the eurozone's biggest economy are growing increasingly wary of the proposed pact despite Merkel's continued support.

Some 70 per cent of Germans polled this month said they believed the TTIP would bring "mostly disadvantages".

Tens of thousands of Germans have so far taken to the streets in protest against the treaty, including during last month's visit by Obama.

Meeting in Japan this week, leaders of the G-7 nations — the US, Germany, Japan, Britain, Italy, France and Canada — expressed their support for a TTIP agreement this year, as long as it is "ambitious, comprehensive, high standard and mutually beneficial".

The next round of TTIP talks is set to take place in June.

The wide-ranging pact would create a free-trade zone covering 850 million people. Critics say it would come at the expense of jobs, consumers and the environment. 

KUWAIT CITY — OPEC member Kuwait has earmarked 34.5 billion dinars ($115 billion) to spend on oil projects over the next five years, despite the slump in oil prices, a senior executive said Sunday.

"We have earmarked 34.5 billion dinars for spending on oil projects over the next five years," Wafa Al Zaabi, the head of planning at Kuwait Petroleum Corp., told an oil conference.

"Over 30 billion dinars [$100 billion] will be spent on the local market and the rest abroad," she said.

Over two-thirds of the spending, or 23 billion dinars, has been allocated for exploration and production, Zaabi said.

Kuwait aims to raise its production capacity, currently just over 3 million barrels per day, to 4 million bpd by 2020 and maintain it for another decade.

Among its main projects, it plans to build four gathering centres, carry out a key project to boost heavy oil production and raise output of free natural gas to over two billion cubic feet daily, from 150 million cubic feet currently, Zaabi said.

Besides the upstream projects, Kuwait is currently implementing three downstream ventures costing over $30 billion.

These include a new 615,000-bpd refinery and a clean fuel project to upgrade two of the three existing refineries, and a platform for liquefied natural gas imports.

Like other Gulf oil-exporting nations, Kuwait's revenues have sharply dropped in the past 20 months, due to a slump in oil prices.

But the government has insisted it will continue capital investment as planned. 

Kuwait has amassed around $600 billion in surpluses in the 16 years to 2014 due to high oil prices. 

Around 95 per cent of Kuwait's revenues comes from oil.