Business

AMMAN — The Second Arab-British Economic Forum, to be held in London next week, will offer a "big" opportunity to promote Jordan's investment environment, according to Jordan Chamber of Commerce President Nael Kabariti. In a statement, he said the forum is organised in cooperation between several bodies, including the chamber and the Arab League, adding that a delegation of officials and representatives of the private sector will take part in the event. Kabariti noted that the trade volume between Jordan and the UK reaches £11 billion each year. 

KUWAIT CITY — Kuwaiti Oil Minister Ali Al Omair said Sunday he expects falling crude prices to recover in winter indicating that the Organisation of Petroleum Exporting Countries (OPEC) was unlikely to counter the slide in the short term.

"We expect [oil prices] to increase in the winter season or at least preserve its current level," said Omair, cited by the official KUNA news agency.

The minister also said he believes that oil prices will not drop below $76-$77 a barrel, which is the production cost in Russia and the United States.

The decline was expected due to geopolitical factors, a rise in supplies and negative forecasts for global economic growth, Omair explained.

He said Kuwait has not received any invitation for an emergency OPEC meeting to discuss prices but would attend if the call came up.

However, a cut in OPEC production "may not necessarily boost prices" because of high output by other producers, especially Russia and the United States, he said.

Oil prices closed slightly higher Friday following massive losses in a market gripped by worries about weakening global demand and a supply glut.

US benchmark West Texas Intermediate for November delivery edged up five cents to close at $85.82 a barrel on the New York Mercantile Exchange after sinking to $83.59 in early Asian trade.

Brent North Sea crude for delivery in November recovered from a four-year low to score a gain of 16 cents, settling at $90.21 a barrel in London. Since June, Brent has lost around $25 a barrel.

Separately, Venezuela will ask for an emergency meeting of OPEC countries to try to halt sliding oil prices, Foreign Minister Rafael Ramirez said Friday.

A barrel of Venezuelan crude closed at $82.72 on Friday, a drop of $3.17 for the week, one of the lowest levels in the past three years.

"We are going to ask for an extraordinary OPEC meeting. We need to try to coordinate some sort of action to stop falling oil prices," Ramirez said at a Caracas news conference.

"I am convinced this is not due to market conditions, but is price manipulation to create economic problems for large oil-producing businesses," added Ramirez, who is the former oil minister and ex-head of the public oil company PDVSA.

This year, Venezuelan crude has averaged $94.99 per barrel, compared to $98.08 in 2013 and $103.42 in 2012.

"It doesn't suit anyone if the price of oil falls below $100 a barrel," Ramirez said.

The next regular OPEC meeting is scheduled for November 27 at the group's Vienna headquarters in Austria.

According to Ramirez, the price drop is due to an overproduction in non-OPEC countries — a reference to shale oil, of which the United States is the world's top producer.

While it has some of the world's biggest oil reserves, Venezuela only produces 2.4 million barrels a day, which bring in 96 per cent of its foreign currency reserves.

The 12 members of OPEC, who pump about a third of the world's crude, said Friday that world demand will grow by 1.05 million barrels per day (mbpd) to 91.19 mbpd this year.

For 2015, OPEC predicted demand to reach 92.38 mbpd, unchanged from its previous forecast.

AMMAN — Jordan Enterprise Development Corporation (JEDCO) announced on Sunday in a press statement that the deadline for receiving applications for  the Development of Exports Programme through the virtual marketplace had been extended to October 30, 2014. Small- and medium-sized enterprises (SMEs) in Jordan are set to increase their exports by tapping trade opportunities in virtual marketplaces (VMPs), as part of a new joint project of the World Bank and the International Trade Centre (ITC). As part of the “increasing SMEs” exports through virtual marketplaces’ project, Jordanian SMEs will learn to use VMPs as new export channels to connect with business partners and buyers, increase sales and reach out to new markets. ITC will train and certify 20 specialised export advisers to provide SMEs with coaching and advisory services in three priority product groups: Specialised gourmet agro-processed foods, handcrafts and information technology-based services. The selected SMEs will receive training and support to become active exporters on the VMPs, managing online transactions and sales, as well as developing functions such as client-relationship management, digital marketing and after-sales service among others. The “increasing SMEs” exports through virtual marketplaces’ project is funded by the Transition Fund and established under the Deauville Partnership. 

AMMAN — Amman Chamber of Industry announced Sunday in a press statement that six companies have so far benefited from the services offered by German-Jordanian Economic Cooperation Office, which was opened earlier this year in the chamber building, with the support of the German Federal Enterprise for International Cooperation GIZ. The statement indicated that one of the firms was able to enter the German market in a very short time after providing it with information about the German institutions that issue importing licences, as well as linking other companies with similar companies in Germany. Senator Ziad Al Homsi urged the industrial sector to benefit from the German expertise to develop the national industry.

WASHINGTON — The International Monetary Fund's (IMF) member countries on Saturday said bold action was needed to bolster the global economic recovery, and they urged governments to take care not to squelch growth by tightening budgets too drastically.

With Japan's economy floundering, the eurozone at risk of recession and the US recovery too weak to generate a rise in incomes, the IMF's steering committee said focusing on growth was the priority.

"A number of countries face the prospect of low or slowing growth, with unemployment remaining unacceptably high," the International Monetary and Financial Committee said on behalf of the fund's 188 member countries.

The fund last week cut its 2014 global growth forecast to 3.3 per cent from 3.4 per cent, the third reduction this year as the prospects for a sustainable recovery from the 2007-2009 global financial crisis have ebbed, despite hefty injections of cash by the world's central banks.

The IMF has flagged Europe's weakness as the top concern, a sentiment echoed by many policy makers, economists and investors gathered in Washington for the fund's fall meetings, which wrap up on Sunday.

European officials have sought to dispel the gloom, with European Central Bank President Mario Draghi on Saturday talking about a delay, not an end, to the region's recovery.

But efforts to provide more room for France to meet its European Union deficit target looked set to founder on Germany's insistence that the agreement on fiscal rectitude was set in stone.

The IMF panel urged countries to carry out politically tough reforms to labour markets and social security to free up government money to invest in infrastructure to create jobs and lift growth.

It called on central banks to be careful when communicating changes in policy in order to avoid financial market shocks. While not naming any central banks, the warning appeared aimed at the US Federal Reserve, which will end its quantitative easing policy this month and appears poised to begin raising interest rates around the middle of next year.

The Fed has debated a change to its commitment to holding rates near zero for a "considerable time" at its recent policy meetings, but is stepping gingerly to avoid roiling financial markets. 

It wants to avoid a repeat of the "taper tantrum" it touched off last year when it signalled its easing of monetary policy was drawing to a close.

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.