Business

AMMAN — Certificates of origin issued to exporters by the Amman Chamber of Industry are picking up and were close to JD3 billion by the end of September this year. Fresh statistics show that national exports according to certificates of origin issued by the chamber went up to JD2.981 billion during the first nine months of the year, compared with JD2.944 billion in the same period of 2013. Despite lower exports to Iraq, the country topped the list of markets importing Jordanian products, standing at JD641 million until September, compared with JD776 million last year.  Saudi Arabia came second importing around JD417 million worth of national products, followed by the US at JD278 million and India at JD265 million. Exports to Syria also increased by 131 per cent during the period in question, reaching JD90 million compared with JD38 million in 2013.  Goods sold to the Palestinian territories increased by 49 per cent to JD62 million from JD42 million.

AMMAN — Jordan European Business Association (JEBA) board members on Saturday discussed with Swiss Ambassador to Jordan Michael Winzap ways to develop bilateral economic and trade relations, especially between private sector institutions. The two sides considered organising a visit by a Jordanian economic delegation to Switzerland to enhance partnership between Jordanian companies and Swiss counterparts. The visit will aim to improve the investment environment in the Kingdom and attract Swiss investments. Issa Murad, head of the JEBA, touched upon the massive opportunities available in the Jordanian economy, which could pave the way to investment partnerships that would enhance the presence of Jordanian products in the European country. Winzap said bilateral relations have developed remarkably during the past few years through the Swiss support programme to Jordan in humanitarian aid to relief refugees, and through cooperation in environment protection, infrastructure development and healthcare. He noted that the two countries are currently discussing to liberalise trade, in addition to facilitating transportation, especially that Jordan has good relations with European countries.

WASHINGTON — World economic leaders are being urged to rally around a plan to let government do what it does best — spend money — in an effort to buoy a global economy that remains slack and slowing.

The effort comes as six years of crisis fighting have lapsed with little guarantee the global economy is on a stable footing. Even Germany is in danger of slipping into recession, China has slowed, and US policymakers are concerned a fresh world slowdown will stymie the US recovery as well.

International Monetary Fund (IMF) Managing Director Christine Lagarde made a blunt call on Thursday for the US and Germany in particular to open the taps and spend more on infrastructure projects — a stark reversal from the fund's recent fixation on government debt and "structural reform" that has proved politically difficult to implement.

"It is a question of doing it, not just talking about it," Lagarde said.

Her comments, and the rallying of top nations around the idea that government should begin spending again to boost growth and create jobs, comes amid recognition that the vast response of the past six years has not cured the world from the hangover of the Great Recession.

Developed economies have undertaken large fiscal adjustments and there is little sign political consensus will emerge in Washington for pump priming, let alone in Germany, the engine of the eurozone, where the top priority is to deliver on its promise of a federal budget that is in the black, or fully balanced, in 2015.

Historically loose monetary policy has pumped trillions of dollars into world markets, but much of the money remains idled as bank reserves or corporate cash holdings and too little has translated into investment and household spending. Trade and structural reform, touted as necessary to boost global growth, has proved too politically difficult to make a difference.

The aim now is to use an old-fashioned tool — the public purse — to step in where households, the private sector, banks and others have not.

"There has been a big drop in aggregate demand. Someone has to fill that gap," IMF Deputy Managing Director Min Zhu said at a panel as world finance ministers and central bankers here gathered for the IMF and World Bank fall meetings.

The IMF has couched its advice in typically prudent terms — that wise investments in infrastructure could boost jobs and growth in the short run, and pay for themselves over time by raising productivity and long-run economic potential.

Officials have estimated that developing nations like India and Brazil need trillions of dollars in capital spending in their own right, with Brazil often cited as a country whose economic growth is being hampered by an inefficient road and port system.

Economists at a panel on growth and government spending on Wednesday cited the United States as a developing nation whose roads, bridges and airports could use a facelift, improving growth and creating jobs in the near-term.

"We are looking at protracted low growth. There is a role for fiscal policy to play," said IMF Deputy Managing Director Naoyuki Shinohara, who added that even countries with high debt could find room to borrow for good projects. "There is fiscal room to be realised."

The IMF said Wednesday that advanced economies still hold too much debt, but even as they trim it they need to spend more to generate jobs.

After government debt loads soared in the crisis that began in 2008, they have now stabilised, the IMF's new assessment of global fiscal strength says. 

But debt, as a ratio to the gross domestic product (GDP), is still high and needs to be reduced further in the richest economies, it stressed.

The fund sees the average debt burden for advanced countries rising slightly to 106.5 per cent of GDP this year before slipping to 106 per cent by the end of next year.

For advanced economies as a group, "it is still expected to exceed 100 per cent of GDP at the end of the decade. It is important to continue to reduce debt to safer levels and rebuild fiscal buffers", the fund said.

Yet, with joblessness still high in many of the leading economies, the IMF cautioned governments against excessive spending cuts and debt reduction that would impact growth and job-creation activities.

"Hesitant recovery and persistent risks of lowflation and reform fatigue call for fiscal policy that carefully balances support for growth and employment creation with fiscal sustainability," the fund said.

While it stressed each country's situation is different, the fund added that in areas where the jobs market is stifled by regulations — an issue that arose in the IMF-supported rescue of Greece — a "transitory" loosening of government spending policy can buy time to implement labour market reforms.

In addition, governments can better target their spending to address labour market challenges, such as high youth unemployment and low participation by women.

"Measures targeted to specific segments of the labour force have been found to be more cost-effective than blanket ones," it indicated.

Also on Wednesday, the IMF said the world economy needs more productive investment and less in speculative assets, which in many cases are now overvalued and pose big stability risks.

Jose Vinals, the IMF's top financial counsellor, said that not enough of the easy money pumped into economies by advanced countries' central banks is going into economic activities that support growth. 

Instead, too much is going into financial risk-taking that poses challenges to global financial stability, he said, unveiling the IMF's newest assessment of financial risks in the world economy.

"More than six years after the start of the financial crisis, the global economy continues to rely heavily on accommodative monetary policies in advanced economies," Vinals indicated. "But the impact has been too limited and uneven."

The loose monetary policies of the US Federal Reserve, and central banks in Europe and Japan, have spurred some investment in activities that create jobs and spur production and consumption, Vinals acknowledged.

But too much has moved into assets and other speculation, which could backfire on growth if a sell-off is triggered.

According to Vinals, the world economy is at risk from "the buildup of certain excesses in financial risk taking." Many assets are "richly valued" and "way out of line from fundamentals."

In addition, a lot of risk capital has flowed into emerging-market economies — $4 trillion in their equities and bonds — that are more vulnerable to sharp shifts in the direction of flows.

"All of this has the potential of decompressing," Vinals said.

Two issues, he pointed out, that could turn the tide and set back growth are a rise in the tensions in the Russia-Ukraine crisis, and a poorly implemented tightening of monetary policy by the Federal Reserve (Fed).

Just beginning to "normalise" its easy-money policies of the past six years, the Fed needs to "be mindful of the repercussions for the rest of the world", Vinals cautioned.

"Shocks from advanced economies have the potential to more quickly propagate in emerging markets," he concluded.

FRANKFURT — Grappling with an ailing eurozone economy and stagnant prices, the European Central Bank (ECB) is hoping that help will come from something it cannot control: The value of the euro.

As Washington prepares to stop the supply of cheap money that has been helping it revive the United States, the euro has started to fall steeply against the dollar.

And that's just how the ECB likes it.

With prices in Europe rising at their slowest in five years and its economy stubbornly dormant, Frankfurt is starting to use similar tactics to those used by the Federal Reserve (Fed) — pumping cheap money into the system in the hope of awakening it.

But those efforts have at best an uncertain outcome. Now, however, the divergence of approach on either side of the Atlantic has presented the eurozone with an alternative that works — a weaker currency.

"The one sure-fire way to get things moving is to get the exchange rate down," said RBS economist Richard Barwell. "It's the best antidote to disinflation known to man."

A falling euro would drive up prices by making goods from abroad, whether cars or clothes, more expensive. It would also boost exports, cutting slack as companies work harder to meet demand. 

That in turn could bring a rise in inflation towards the ECB's target of just under 2 per cent — one of the building blocks for economic prosperity.

Last month, eurozone inflation slowed to just 0.3 per cent.

ECB President Mario Draghi has been at pains to stress that the central bank does not have an exchange rate target — eager to avoid antagonising the United States and other big economies with “beggar-thy-neighbour” tactics.

But last week Draghi dropped a hint that Europe's different position could be beneficial, noting "significant and increasing differences in the monetary policy cycle between major advanced economies".

For financial markets, this amounted to tacit encouragement to push down the euro, already trading close to 2-year lows. 

'Alternative path' 

Britain provides useful clues as to what might happen next.

A sharp drop in sterling's exchange rate against the dollar just before the financial crisis set in — from above $2 in mid-2008 to around $1.35 in early 2009 — fed through quickly. Consumer prices bounced from 1.1 per cent in September 2009 to 5.2 per cent two years' later — in large part due to the currency effect.

That evidence makes many officials in Kaiserstrasse, the Frankfurt address of the ECB, quietly optimistic, given the currency has dropped from nearly $1.4 in May to around $1.26 now.

Last month, the ECB published a report exploring "an alternative path for the euro" — a fall in its value to $1.24 by 2016 that is well on the way to becoming reality.

That would increase the eurozone's 8.5 trillion euros economy by up to 0.3 per cent next year and in 2016, and in turn lift the bloc's price inflation, the ECB's primary benchmark of health, by up to 0.3 per cent — doubling the current rate.

Some predict an even steeper drop, and implicitly, a greater boost to the economy. Deutsche Bank forecasts that one euro could be worth less than a dollar by late 2017. 

Short relief

However some economists believe any impact in Europe would be short-lived and that, just as in the case of Britain, further measures would be needed before a genuine recovery is possible.

"The depreciation of the euro is necessary. But it is not sufficient," says Paul De Grauwe, an economist with the London School of Economics. "We need to do other things, such as start country investment".

And while the weakening euro will help exporters selling around the globe, it will do little for trade between the 18 countries in the bloc.

"You need internal demand to grow and you have a serious limitation there," said Santiago Carbo-Valverde, a Spanish economist at Britain's Bangor University. "You can sell to China but you need the eurozone."

Proof: After Britain's currency tumbled, it discovered more was required to kick-start an economy.

London used a funding-for-lending scheme to spur mortgage loans and property prices — but directing one island economy is easier than forging change across the uneasy alliance of 18 countries in the eurozone, a mix of cultures and languages where views on saving and spending contrast sharply from Berlin to Athens.

On its own, the ECB has little hope of arresting decline.

Draghi has urged governments to reform their economies by paring back taxes or making labour rules more flexible, but his appeals have fallen largely on deaf ears: France recently issued a defiant budget plan that will flout European Union spending limits.

Ultimately, then, even a falling euro may not be enough to lift pressure on the ECB to embrace full-blown quantitative easing by buying government bonds.

"The falling euro would help but if you step back, currency value change is a zero sum game," said Hung Tran, executive managing director of the Institute of International Finance, a group representing banks and financial groups.

"One currency's gain is another currency's loss. It doesn't change the picture of the global economy and one of low growth for Europe," he added.

WASHINGTON — President Barack Obama urged top US market regulators this week to look for ways to tailor rules based on financial firms' size and complexity.

The White House, in a readout of the meeting, said Obama pushed the regulators to look for additional ways to prevent excessive risk in the financial system, possibly through bank pay rules and capital standards.

The meeting was attended by Federal Reserve (Fed) Chairman Janet Yellen and Treasury Secretary Jack Lew.

The statement did not specify how Obama wanted the regulators to tailor financial reforms.

Regulators are still finalising rules called for in the 2010 Dodd-Frank Wall Street reform act, which aims to strengthen the financial system after the 2007-2009 credit crisis shattered confidence throughout global markets.

Some firms have complained that certain rules are not a good fit. Lawmakers have sympathised with community banks that say compliance costs are unduly burdensome, and with large insurers that say capital rules designed for banks are inappropriate for their business model.

It was not immediately clear whether Obama's comments to regulators were specifically geared towards insurers.

The White House said participants in the closed-door meeting also discussed the importance of coordination through the financial stability oversight council and the need to address any areas of overlap or gaps in oversight.

Separately, the Congressional Budget Office (CBO) said Wednesday that the US budget deficit fell by nearly a third during fiscal 2014 to $486 billion as federal revenues grew far faster than spending.

Releasing preliminary estimates of final budget data for the year ended September 30, the CBO said receipts grew nearly 9 per cent from the previous year to $3.013 trillion, while outlays were up 1.4 per cent to $3.499 trillion.

The resulting fiscal 2014 deficit was down about $195 billion from the $680 billion budget gap recorded in fiscal 2013.

The CBO estimated a September budget surplus of $106 billion, up from a $75 billion surplus a year earlier. The US Treasury Department is expected to report final budget data for fiscal 2014 by October 17.

The fiscal 2014 deficit is slightly less than a $506 billion gap that the non-partisan agency forecast in August, when it predicted that many companies would reduce tax payments due to uncertainties over tax laws.

The CBO has forecast a $469 billion deficit for fiscal 2015, which started on October 1. Later in the decade, it expects deficits to rise again as costs associated with an aging population mount. 

Wage growth 

The fiscal 2014 receipt growth was driven by higher collections for individual income taxes and payroll taxes, up $114 billion or 6 per cent, as the economy expanded.

"Growth in wages and salaries explains most of the increase in withheld receipts, but almost one-third of it stemmed from changes in law," the CBO said, citing an increase in payroll tax rates that pushed up withholding.

Corporate tax receipts rose $48 billion, or 18 per cent, reflecting profit growth, while receipts from the Fed grew $23 billion or 31 per cent, due to the increased size of the central bank's bond portfolio and higher interest yields.

The CBO said the $44 billion increase in outlays during fiscal 2014 was fuelled by higher spending on low-income healthcare programmes as provisions of President Obama's health insurance reform law went into effect, including an expansion of Medicaid and $13 billion for new health insurance subsides for policies purchased through new exchanges.

Spending on social security rose $37 billion, or 5 per cent, while payments from housing finance groups Fannie Mae  and Freddie Mac, which are recorded as offsetting receipts to outlays, were $23 billion less than last year due to lower one-time payments.

But these higher outlays were offset by a $30 billion drop in spending by the defence department as war costs fell, a $24 billion decline in unemployment benefit checks, and lower outlays for flood insurance and disaster relief.

TEL AVIV — A group of Israelis living in Berlin has shocked compatriots back home by urging them to move to Germany as a much cheaper alternative to living in Israel.

"It is time to immigrate to Berlin," says the group's Hebrew-language Facebook page entitled "Let's Immigrate to Berlin" which offers practical tips for those seeking an alternative to the high cost of living in Israel. 

But the page has triggered anger in Israel, where leaving is regarded by many as a form of desertion.

And to abandon the biblical land of milk and honey for cheaper dairy products in the birthplace of the Nazi Holocaust has touched a particularly raw nerve.

High rents and food costs, particularly that of cottage cheese, an Israeli staple, were among the triggers of a popular protest movement that peaked in 2011 with record numbers of Israelis from all walks of life taking to the streets and squatting in urban tent camps.

"The page is organised by a group of Israelis who understand how you feel, who have also suffered from the extreme cost of accommodation and food in Israel," the group's page says. 

"We help you to fit in and acclimatise in the new city, a place where there are no worries about making ends meet. Where there is no need to choose between buying cottage cheese at the supermarket or sending your daughter to enrichment activities," it adds.

The site shows what it says is a typical grocery receipt, showing items such as orange juice, milk, dairy desserts, pasta and cheese at prices far lower than the cheapest Israeli discount chain. 

The existence of the site made the front page of Israeli tabloid Maariv on Monday, provoking the rage of political columnist Ben Caspit.

"Let's get into the incomprehensible fact that 75 years after Berlin shook under Nazi boots and... Hitler's SS, it's as if nothing happened," he wrote. "Israelis are flocking back to Berlin. It's hard for them here, in the only Jewish country... They're comfortable in Berlin. Out of all the places in the world, in Berlin."

The phenomenon is not a new one.

Just a year ago, Finance Minister Yair Lapid, who swept into government on the coattails of the 2011 protests, decried "all the people who are fed up and leaving for Europe".

"I have little patience for people who are willing to throw into the garbage the only country the Jews have, because it's more comfortable in Berlin," he posted on Facebook.

Separately, Israel plans to fully or partly privatise a number of state-owned companies in a move aimed at boosting efficiency, reducing the national debt and fighting corruption.

The decision, approved by the ministerial socio-economic Cabinet, was expected to add 15 billion shekels ($4.07 billion, 3.26 billion euros) to state coffers over the next three years, the finance ministry indicated this week.

Minority stocks will be issued for firms "in which the state has an interest in retaining long-term governmental control" such as Israel's electricity corporation, aviation, trains, water, mail and natural gas industries, a ministry statement read.

It will also sell companies in which it has "no long-term interest", such as the ports at Ashdod and Haifa, a modified and declassified military industry [with the state retaining the right to determine the ownership], the Dead Sea Works and others.

Workers at Haifa port walked off the job in protest at the plans but were ordered by a court to return to work on Monday evening, media reported.

Prime Minister Benjamin Netanyahu said in a statement the "reform" will "increase the state's income and enable greater transparency in government companies".

Lapid called the move "an additional measure to end the politicisation of companies and reduce corruption in them".

Netanyahu had previously overseen a series of privatisations when he was himself finance minister some 10 years ago.

But the companies sold off then were "easy" compared to what was currently on the privatisation list, one economics expert remarked.

"I can't see these things going ahead," said Michael Beenstock of the Hebrew University's economics department, noting that powerful unions at Ashdod port and in the electricity company have prevented any reform or change for decades.

While Lapid and Netanyahu may be successful in privatising some smaller estate enterprises, the electricity corporation and Ashdod port are "not going to take this lying down". 

"To break these things you have to put the country into misery for a long time," Beenstock added, and Netanyahu and Lapid are "not going to do it".

NEW YORK — Hewlett-Packard (HP) Co. said it would split into two listed companies, separating its computer and printer businesses from its faster-growing corporate hardware and services operations, and eliminate another 5,000 jobs as part of its turnaround plan.

HP said its shareholders would own a stake in both  businesses through a tax-free transaction next year. Each business contributes about half of HP's revenue and profit.

The 75-year-old company has struggled to adapt to the new era of mobile and online computing.

Chief Executive Meg Whitman told Reuters the newly created HP Inc. would mostly stick to its knitting — PCs and printers — for now, while exploring related markets such as 3D printing.

The company has no plans to venture into the hotly contested consumer mobile devices market, where it stumbled years ago.

"There's still lots of opportunities in other adjacencies, where we don't chase the market leaders," said Whitman, who will be chief executive officer of HP Enterprise, the business that will sell computer servers and networking gear and data storage to businesses.

Whitman said HP's balance sheet had improved markedly over the past few years, allowing the company to come to the decision to split up from a position of strength.

"This would not have been possible three years ago," she said, referring to a proposal to spin off PCs in 2011.

Some analysts expressed scepticism about the latest move.

Barclays analysts noted that the sudden announcement in 2011 was disruptive to HP's sales, its sales force and demand.

"If the [latest] decision by HP isn't well communicated or is not well executed, the negative share shifts could be material," they said in a note.

Analysts at Bernstein Research also warned of "material negative synergies" and one-time costs associated with the spinoff, largely in purchasing but also in distribution. The separation, they said, was fuelled by weakness, not strength.

A spinoff of the PC business was last proposed in 2011 by then-chief executive Leo Apotheker. HP later ditched the plan — and Apotheker, replacing him with Whitman.

HP said it planned to cut 5,000 more jobs as part of its multiyear restructuring, raising the total under Whitman to 55,000. The company currently has more than 300,000 employees.

The separation will result in a fundamental reshaping of one of technology's most important pioneers, which is on track to generate $112 billion in revenue in the fiscal year this month.

While there were sceptics, many investors and analysts had called for a break-up of HP or a sale of the PC business so that HP could focus on the more profitable side of its operations.

"Shareholders will now be able to invest in the respective asset groups without the fear of cross-subsidies and inefficiencies that invariably plague large business conglomerates," Ralph Whitworth, former HP chairman and founder of Relational Investors LLC, said in a statement.

Relational owns a 1.49 per cent stake in HP.

HP is the latest in a line of companies to spin off operations in an attempt to become more agile and capitalise on faster-growing businesses.

Online auction company eBay Inc., which was formerly run by Whitman, said last week it would spin off electronic payment service PayPal.

"We like the spin and believe it could create additional value over time," UBS analyst Steven Milunovich wrote. "In our view, focus is more important than synergies, and it is hard to be good at both consumer and enterprise computing."

MOSCOW — President Vladimir Putin dismissed Western sanctions as "utter foolishness" on Thursday and said they would not stop Russia developing into a stronger economic power.

Attempting to take the higher ground in a speech to foreign and Russian investors, Putin said he was relaxed about the measures imposed on his country over Ukraine even though they had broken the fundamental principles of the global economy.

Addressing financiers worried about the weakening economy, capital flight and a possible increase in state intervention, he said Russia was well placed to weather the storm.

"We truly want a country that is strong, flourishing, free and open to the world," he told the VTB Russia Calling investment conference, ruling out restrictions on capital and currency movements out of Russia.

Making clear his aim was to soothe worried investors, he later began a question-and-answer session by saying with a wry smile: "All I have to do is smile to show the devil is not as frightening as he seems."

Contradicting some businessmen who fear sanctions could drive Russia into a new period of isolation, Putin underlined that he saw the country as part of the world economy, and, compared with others, a member playing by the rules.

He said sanctions violated the principles of the World Trade Organisation, undermined the credibility of international financial institutions and reserve currencies, and would cause long-term damage to the entire global economy.

"It is utter foolishness from those governments, which are limiting their business, preventing it working, reducing its competitiveness, freeing up niches for competitors on as promising a market as Russia," he indicated.

"I would like to hope that we can get over this period of misunderstanding," he added to applause. 

Calm and relaxed 

It was a calm performance by the 61-year-old president, who won popularity in his first spell as president from 2000 until 2008 by overseeing nearly a decade of economic growth.

Now some economists, including the World Bank, see Russia entering a period of near stagnation, with growth of the $2 trillion economy barely climbing above zero.

Inflation is running at an annual rate of almost 8 per cent, the ruble has fallen around 17 per cent against the US dollar this year and the price of oil — vital to Russia's economy — has dropped below the point at which it balances its budget.  Capital flight was $75 billion in the first half of the year.

Plenty of experts see more problems than Putin appears ready to acknowledge, including the absence of a clear strategy to pull the world's eighth largest economy around.

"Right now it is clear that in this crisis situation for business there is no clear 'Plan B' from the state," said Diana  Kaplinskaya, an economic analyst.

Acknowledging the "difficult times", Putin said he was sure the sanctions would spur domestic growth and reduce Russia's dependence on imports, enabling the economy to develop.

He expressed confidence that a recent rise in inflation, linked to Russia's restrictions on Western food imports as a response to sanctions, would be temporary given the central bank's policy — which is "balanced and flexible".

Putin reiterated the importance of developing ties with Russia's partners to the east, congratulating companies which had already done deals with Chinese companies and noted that Russia would aim to shift to national currencies in trade.

In a message to owners of firms privatised in the 1990s, when the Soviet Union's collapse gave way to chaotic capitalism, he said there would not be a wide-scale revision of such sales.

A Moscow court's decision last month to order the seizure of the stake in oil producer Bashneft belonging to oil-to-telecoms conglomerate Sistema, and the placing of its oligarch boss under house arrest, has raised investors' fears that the Kremlin wants to reclaim prized assets.

Putin said he would not interfere in the legal case.

Asked about the conflict in Ukraine, where Russia denies sending troops and weapons to support pro-Russian separatists, he said the former Soviet republic was Russia's "closest, most brotherly nation" and hoped a parliamentary election on October 26 would help bring stability to the country.

But overall, his message to those governments who imposed sanctions on Russia over its policy in Ukraine was clear — you will lose out.

Separately, the head of Russia's largest bank delivered on Thursday a blistering attack on Moscow's economic policies, warning that Russia could repeat the fate of the Soviet Union.

Speaking at an investment conference in Moscow, Herman Gref, chief executive of state-run Sberbank, pilloried a state-led model of economic development, pointing to a lack of competition and poor governance.

"Why did the Soviet Union break up?" Gref, a former liberal economy minister, told foreign and Russian investors.

"There is one key reason which determined the rest: it's mind-boggling incompetence of the Soviet leadership. They did not respect the laws of economic development," he said at the annual "Russia Calling" investment forum.

Citing a book by the key architect of Russia's market reforms, Yegor Gaidar, "Collapse of an Empire", Gref said Russia must learn lessons from history.

"We cannot allow the same situation," he said, noting that the Soviet Union also faced a combination of high oil prices and "huge structural problems”.

Russians officials are mulling how to mitigate the negative effects of Russia's confrontation with the West over Ukraine which include huge downward pressure on the ruble and intensified capital flight.

Washington and Brussels have introduced several rounds of sanctions against Moscow, and Russia responded by ordering a ban on European Union (EU) and US food and threatened to ban other imports.

The sanctions tit-for-tat coupled with the prosecution of billionaire Vladimir Yevtushenkov have severely undermined investor confidence and delivered a heavy blow to economy, which is on the brink of recession.

Gref appeared to question the Kremlin's policies including the ban on imports.

"I beg your pardon but we import nearly everything," said Gref, who has been widely praised for overhauling Russia's Soviet-era lender. 

He also pointed to an increasingly weakening ruble, saying that even if the national currency bounces back somewhat, consumer prices would not go down.

"We don't have enough competition. Half of our economy is monopolised," he indicated.

He appeared to target the state's increasingly repressive policies and what many analysts call the state's excessive role in the economy.

"You cannot motivate people through the Gulag — like in the Soviet Union," he said. "People cannot make creative products when they don't understand the current economic policies and business climate."

Gref said that "we won't fix anything before we fix the environment," and he lamented that his efforts to establish special economic zones while he served as economy minister did not bear much fruit.

"Zones have been created but there are no incentives," he said. "Zones are not something encircled by a fence, not always," he added, alluding to prison camps.

Economy Minister Alexei Ulyukayev for his part said the current combination of 8 per cent inflation and growth of gross domestic product below 1 per cent was a "crass and explosive situation".

NEW YORK — Oil prices fell for the third straight session on Thursday, with Brent hitting its lowest level since June 2012, continuing a three-month long rout as a global supply glut and concerns about demand persisted.

For US crude, some support was found from government data that showed an unexpected decrease in unemployment claims over the past week. Monthly employment data is due on Friday which economists expect to show an increase in the size of the labour force.

But overall, the sentiment remained bearish as supply from key producing regions including the United States and Middle East remained strong while economic data from Europe and Asia hinted at weak demand.

Sharp cuts in Saudi Arabia's oil sale price to Asian customers on Wednesday came as the clearest sign yet that the world's largest exporter is trying to compete for crude market share and keep the market well supplied.

"This is a structural change in the oil market, with Saudi Arabia explicitly stating that they are willing to compete on price," said Bjarne Schieldrop, chief commodities analyst at SEB in Oslo. "I think Brent will fall below $88 before we see the bottom of the market."

Brent crude for November delivery fell $1.76 to $92.40 by 1554 GMT. It earlier hit $91.55, its lowest since June 2012.

US November crude lost 71 cents to reach $90.02 per barrel, after earlier sinking to $88.18, its lowest intraday level since April 2013.

Brent's premium over US crude  was at about $2.4 on Thursday, its lowest since August 2013.

Oil declined alongside European stocks as the European Central Bank (ECB) left interest rates unchanged on Thursday, as expected. ECB President Mario Draghi said that a planned bond purchase programme would last at least two years. US stocks also fell.

Some analysts said a cut in production from the Organisation of the Petroleum Exporting Countries (OPEC) at its meeting next month was the only move that could enable a price recovery.

With such steep losses in oil prices since June, others said that oil prices were likely to move higher.

"I don't think we have much potential to keep going lower," said Carl Larry, head of consultancy Oil Outlooks. "We are at the bottom of the range and there is a lot of room to go up."

Oil production in Russia increased by almost 0.9 per cent month-on-month in September to 10.61 million barrels per day (bpd), energy ministry data showed. 

The price of oil, the world's most important fuel source, has dropped 20 per cent since the summer.

Energy analysts initially said the price declines were largely the result of greater supply, citing the North American shale boom, the tapping of new offshore reserves worldwide and greater output of coal.

But analysts have also begun pointing to a slowdown in demand. They cite China's ebbing thirst for oil and what could its first drop in demand for coal in over a decade as indicators of a sharper slowdown in the world's second-biggest economy.

"China's initial [economic] acceleration has faded. With the US acceleration reaching its limits, we have seen our GLI [Global Leading Indicator] slip into 'slowdown'," Goldman Sachs said on Thursday in a research note. "Without re-acceleration outside the US, this may not change quickly." 

According to Goldman, China could still get close to its economic growth target of 7.5 per cent for this year, but "there is a good chance of more slowing early next year".

That would have profound implications worldwide, since the economies of China and the United States have been growing, while Europe and Japan continue to struggle in the wake of the financial crisis.

Demand shrinks, supply rises

Further affecting demand for fossil fuels, households and industries in developed economies are becoming more efficient in using energy and are moving more to renewables and other alternative fuel sources.

"Ironically, as the global demand pie is getting smaller, supplies [of fossil fuels] are increasing," indicated Michal Meidan, a director at consultancy China Matters.

Coal, the world's most important source for electricity generation, has almost halved in value since spring 2011 to levels at which most producers are losing money.

Gas prices in Europe have fallen over 6 per cent this year despite the crisis between Russia, its main supplier, and Ukraine, a vital transit route for European Union (EU) imports.

China's gas demand growth is expected to ease to its slowest in three years in 2014 and dip again in 2015, due in part to its slowing economy.

In the oil market, moves by Saudi Arabia, the world's biggest exporter, are crucial to determine volumes and pricing.

"Serving as a bearish signal, Saudi Aramco has cut official selling prices [OSPs] for November loading cargoes to all regions... The biggest cuts were again seen in Asia, the third consecutive round of downwards adjustments there," JBC Energy indicated in a research note.

The recent rise in the dollar has mitigated oil price declines in Europe and Japan, but Reuters data show that the price drop in oil has far outpaced the fall in the euro and the yen against the greenback.

KUWAIT CITY — Kuwait posted Wednesday a budget surplus of $45 billion for the latest fiscal year, its second largest on record, but the International Monetary Fund (IMF) warned of underlying risks despite the bumper returns.

The finance ministry indicated in a statement on its website that the surplus came in at 12.9 billion dinars ($45 billion) in the 12 months to March, capping a run of 15 straight years of windfalls.

Revenues came in at 31.8 billion dinars, of which oil accounted for 29.3 billion dinars, and spending at 18.9 billion dinars.

It was the second biggest budget surplus on record, after the 13.2 billion dinars achieved in 2011-2012.

The oil-rich emirate of Kuwait has now posted a budget surplus in each of the past 15 fiscal years worth a total of 92.5 billion dinars, based on official figures compiled by AFP.

Sustained surpluses have boosted the assets of the Gulf state's sovereign wealth fund to more than $500 billion, according to unofficial estimates.

A majority of the dividends are attributed to high oil revenues which make up about 94 per cent of Kuwait's overall income.

The IMF warned, however, that a drop in oil prices could plunge Kuwait into deficit in the medium term if it fails to adopt measures to halt the rise of current spending.

"A $20 decline in oil prices... would result in reversing of the fiscal position from a surplus to a deficit in the medium term," the IMF said in its latest report on Kuwait.

The fund added that the breakeven oil price — needed to balance the budget at current expenditure levels — had risen in the past few years and was estimated at $75 a barrel in 2014-15.

The price of Kuwaiti oil averaged $103 a barrel in the latest fiscal year but is currently hovering around $94.

The IMF advised Kuwait to soon start implementing measures aimed at cutting spending which has trebled in the past decade.

These included containing the number of public jobs, gradually phasing out of subsidies worth $16 billion a year, subjecting Kuwaiti companies to corporate tax, and revising fees for public services.

According to the IMF, the government has decided in principle to end subsidies on diesel and is in advanced stage of proposing a similar end on power subsidies.

Kuwait has a native population of 1.25 million, in addition to 2.8 million foreigners, and pumps about 3 million barrels of oil per day.