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JACKSONVILLE, Florida — President Barack Obama used a trip to a lithium-ion battery factory on Friday to defend his economic record against arguments made by Republicans in the race to succeed him after the November 8 presidential election.

Obama said his policies, including the $760 billion economic stimulus he brought in when he first took office, helped the American economy bounce back from the 2007-2009 recession that he inherited much faster than European nations that adopted austerity measures.

"If we don't recognise the progress we've made and how that came about, then we may chase some snake oil and end up having policies that get us back in the swamp," Obama told workers at the plant built by French company Saft with $95.5 million from the stimulus.

"We knew that it's going to take more than one year or even one president to get to where we need to go, but we can see real tangible evidence of what a new economy looks like. It looks like this facility right here," he said.

The Saft plant, which opened in 2011, created almost 300 jobs in the region but has struggled with sluggish demand for lithium-ion batteries. The French company had to take a writedown and its chief executive has said it would probably take two to three years to become profitable.

Obama acknowledged the pace of changes in the economy has been “scary sometimes”.

Those economic fears have helped propel the campaign of Donald Trump, the billionaire businessman who is the front-runner in the race to be the Republican candidate for the November 8 presidential election.

Florida, home to Republican presidential candidate Senator Marco Rubio, is critical to both the March 15 primary vote and the general election that follows.

Obama brought Democratic US Representative Patrick Murphy from Florida with him on the trip. Murphy is running for Rubio's Senate seat.

Stimulus investments to advanced battery makers were panned by Republican lawmakers after A123 Systems, a lithium-ion battery maker, went bankrupt in 2012 and was bought by Chinese auto parts maker Wanxiang.

Battery maker LG Chem came under fire after a 2013 Energy Department Inspector General report found that the company used some of its funding for a Michigan battery plant to pay employees to watch movies, volunteer at non-profits and play games because there was little work for them to do.

But Obama said the stimulus helped America compete in the global race to boost solar and wind power. "Taxpayers are getting their money back, and some," he added.

Separately, Warren Buffett bemoaned the "negative drumbeat" on the US economy from presidential candidates in his annual Berkshire Hathaway Inc. shareholder letter on Saturday, saying they are misleading Americans into believing their children will be worse off then they are.

"It's an election year, and candidates can't stop speaking about our country's problems [which, of course, only they can solve]," Buffett wrote, italicising "they" for emphasis.

As a result of their dour outlook on the US economy, many Americans now believe that their children will not live as prosperously as they themselves do, the 85-year-old Buffett said.

"That view is dead wrong: the babies being born in America today are the luckiest crop in history," Buffett added.

Buffett did not single out any presidential candidates by name. The billionaire in December officially threw his backing behind Hillary Clinton, a Democrat.

"During presidential elections where no incumbent is running, both sides who are running for president always say they are the ones to solve the nation's problems and point out what those problems are," said Bill Smead, who invests $2.1 billion at Smead Capital Management in Seattle.

Trump, who won New Jersey Governor Chris Christie's endorsement on Friday, has offered  a bleak assessment of the US economy, repeatedly saying it is in a "bubble" that he hopes will pop before he takes office. 

"I don't want to inherit all this stuff," he has said.

In his letter, Buffett said "some commentators bemoan our current 2 per cent per year growth" in real gross domestic product (GDP), "and, yes, we would all like to see a higher rate".

But he added America's population is growing about 0.8 per cent per year, and that 2 per cent GDP growth equates to a 1.2 per cent per capita growth rate.

"That may not sound impressive," Buffett elaborated. "But in a single generation of, say, 25 years, that rate of growth leads to a gain of 34.4 per cent in real GDP per capita."

Buffett, whose home in Omaha, Nebraska sits on less than an acre, said society has advanced significantly since he grew up during and after the Great Depression.

"All families in my upper middle-class neighbourhood regularly enjoy a living standard better than that achieved by John D. Rockefeller Sr. at the time of my birth," he indicated.

"His unparalleled fortune couldn't buy what we now take for granted, whether the field is, to name just a few, transportation, entertainment, communication or medical services. Rockefeller certainly had power and fame; he could not, however, live as well as my neighbours now do," he concluded.

CAPE TOWN — South Africa's finance minister on Wednesday hiked taxes and targeted what he called wasteful and corrupt government spending in a "crisis" budget, aimed at staving off a ratings downgrade to junk status.

Africa's most developed economy is struggling with shrinking growth, unemployment running at 25 per cent, and widespread poverty.

"We cannot spend money we do not have. We cannot borrow beyond our ability to repay," Finance Minister Pravin Gordhan told parliament. "Until we can ignite growth and generate more revenue, we have to be tough on ourselves."

In a press conference before he delivered the budget, Gordhan was even more direct.

"There is no doubt about the fact that we are in crisis," he said.

The local rand currency fell by 2.25 per cent against the dollar shortly after the minister spoke to parliament.

"I expected a much firmer austerity budget," Mohammed Nalla, head of strategic research at Nedbank, told AFP. "This budget will not be enough to help us avoid a credit downgrade in the near future, but it may have helped us buy a bit of time."

Presenting the budget, Gordhan announced greater cooperation with the private sector in an effort to boost growth, which he forecast would drop to below one per cent this year. 

Although he denied moving towards privatisation, the minister opened the way for private sector investment in under-performing state-owned enterprises. 

These include the loss-making national carrier South African Airways, long a target of government critics.

Increased taxes on excise duties, capital gains, fuel, sugary drinks, alcohol and tobacco and environmental levies are expected to bring in an extra 18 billion rand ($1.18 billion).

Personal income tax was not increased, but "current taxes on wealth are under review", Gordhan said.

The government spending ceiling will be cut by 25 billion rand ($1.64 billion) over the next three years, mainly by trimming posts in the bloated public service.

Confidence issues 

Government corruption will be tackled through a crackdown on tender processes, while wasteful expenditure clamps will extend to a downgrade in the value of cars bought for politicians.

Abuses in the private sector will also be targeted.

"We will continue to act aggressively against the evasion of tax through transfer pricing abuses, misuse of tax treaties and illegal money flows," Gordhan said.

Winning the confidence of the ratings agencies, which help determine how much countries pay to borrow money, was made more difficult when President Jacob Zuma shocked markets in December by firing two finance ministers within four days.

Gordhan, who was widely respected when he held the position from 2009 to 2014, was recalled in a panicked attempt to limit the damage to the country's credibility.

In an immediate reaction to the budget, the main opposition party, the Democratic Alliance, said the minister had "announced no significant new measures to boost economic growth and create jobs".

Gordhan faced the difficult balancing act of trying to please both the financial world and a government facing voters in municipal elections this year.

He said in his press conference that spending cuts would be made without affecting social services.

South Africa is regularly rocked by protests over service delivery for the poor, and in the past year the unrest has spread to university campuses with students pressing for free education. 

Gordhan announced an extra 16 billion rand ($1.05 billion) for higher education, saying "we are crafting solutions to the voices of students regarding fees and housing."

A central objective of the budget was to stabilise debt as a percentage of gross domestic product (GDP), he said. 

"Net national debt is projected to stabilise at 46.2 per cent of GDP in 2017/18, and to decline after that," the minister added. 

Efforts are also being made to rein in the budget deficit, which is expected to be 3.2 per cent of GDP this year on total spending of 1,324 billion rand ($86.9 billion), declining to 2.4 per cent in 2018/19.

Apart from policy missteps, the resource-rich economy has been hard hit by falling commodity prices on reduced demand by China, and an agricultural sector hobbled by the worst drought in more than a century.

WASHINGTON — The International Monetary Fund (IMF) warned Wednesday that the world economy is "highly vulnerable" and called for new mechanisms to protect the most vulnerable countries.

In a report on economic challenges ahead of the Shanghai meeting of finance chiefs of the powerful Group of 20 (G-20) economies, the global crisis lender said world growth had slowed and could be derailed by market turbulence, the oil price crash and geopolitical conflicts.

"The global recovery has weakened further amid increasing financial turbulence and falling asset prices," the IMF said.

"Strong policy responses both at national and multilateral levels are needed to contain risks and propel the global economy to a more prosperous path," it added.

The report, to be presented to the finance ministers and central bank chiefs of the G-20 leading economies meeting in Shanghai on Friday and Saturday, said the fund expects to lower its forecast for world growth in 2016, barely six weeks after making its most recent estimate of 3.4 per cent.

"Global activity has slowed unexpectedly at the end of 2015, and it has weakened further in early 2016 amid falling asset prices," the report said.

How countries should react to the threats will be the main agenda in the Shanghai talks. The IMF is urging countries to boost fiscal stimulus and to push through reforms in order to increase demand.

It added that central banks, including the US Federal Reserve, need to keep monetary policy accommodative to be sure tighter financial conditions do not stifle growth momentum.

However, the fund stressed, "to avoid over-reliance on monetary policy, near-term fiscal policy should support the recovery where appropriate and provided there is fiscal space, focusing on investment".

Besides the shocks to the world economy from China's slowdown and the crash in commodity prices, the IMF said geopolitical issues like the Syrian refugee crisis and the rising infections in Latin America from the Zika virus pose economic threats.

For countries shouldering the biggest burden of those crises, and countries otherwise fit but left vulnerable by the commodities downturn, the IMF said the world's financial safety net, which includes the fund's own programmes, could be enhanced.

Without any specifics, it called for new financing mechanisms to help countries in financial turmoil.

"Many countries at the centre of such shocks are shouldering a burden for others, with often limited capacity and fiscal space," the report said.

"Recognising the global public good nature of their actions, they could be backed up by a coordinated worldwide initiative to provide financial support," it added.

The IMF continued that uncertainty over Britain's future in the European Union (EU) risks negatively affecting the country's growth outlook.

Britain's economy was set to grow by 2.2 per cent this year and next, matching official gross domestic product for 2015, it remarked.

But it warned that "uncertainty associated with the outcome of the forthcoming referendum on EU membership could also weigh on the outlook" along with various other factors including "potential shocks to global growth and asset prices".

As Britain prepares for a June 23 referendum on its EU future, British Prime Minister David Cameron has warned that the country's departure from the European Union would threaten its economic and national security.

But London Mayor and Conservative rival Boris Johnson has dealt a blow by backing a "Brexit" despite Cameron winning a deal on EU reforms.

"Quantifying how a decision to leave the EU would affect the economy is difficult, given that the terms of staying in the EU are still being negotiated and the nature of post-exit relations with the EU are unknown," the IMF said in its latest outlook for Britain. 

"However, analysts have raised concerns that the exit debate could bring a period of uncertainty that could weigh on investment," it added.

Almost 200 bosses of top British companies on Tuesday urged voters to keep Britain in the EU, warning that an exit from the 28-nation bloc would threaten jobs.

Some 198 business leaders including Roger Carr, chairman of BAE Systems, BP Chief Executive Bob Dudley and Ron Dennis, chief of F1 team McLaren, wrote a joint letter published in The Times newspaper, backing Cameron's deal to reform the EU.

BEIJING — China's overcapacity in heavy industries is wreaking "far-reaching" damage on the global economy, with steel production "completely untethered" from market demand, the European Union Chamber of Commerce in China said this week.

The Asian giant's steel industry manufactures more than the next four largest producers combined — Japan, India, the US, and Russia — the chamber indicated in a report, warning that more than 60 per cent of China's aluminium industry has negative cash flow. 

And in just two years, its cement production equalled the amount produced in the United States during the entire 20th Century.

"China has not followed through on the attempts it has made over the last decade to address overcapacity," chamber president Joerg Wuttke said in a statement. 

Brussels has launched new anti-dumping probes into Chinese steel imports, as producers in both Europe and Asia struggle with global prices that have plummeted in the face of oversupply.

"Overcapacity has been a blight on China's industrial landscape for many years now, affecting dozens of industries and wreaking far-reaching damage on the global economy in general, and China's economic growth in particular," the chamber's report said.

The issue has led to trade tensions between the world's second-largest economy and developed countries that accuse it of dumping in their markets. 

China accounts for half of global steel production but internal demand has slowed sharply along with economic growth, forcing it to look overseas. Its steel exports soared 20 per cent in 2015, according to Chinese Customs data.

The European Union (EU) launched probes this month into imports of Chinese steel, with trade commissioner Cecilia Malmstroem warning: "We cannot allow unfair competition from artificially cheap imports to threaten our industry."

This month, Luxembourg-based world leader in steelmaking ArcelorMittal blamed China for a colossal $8 billion loss in 2015, at a time when thousands of jobs are being cut across the industry.

But many Chinese steel firms are also losing money, and Beijing has announced plans to cut production by as much as 150 million tonnes over the next five years.

Protectionism 

Despite authorities' vows to tackle excess production, the EU chamber report said Beijing's prioritisation of industrial policies over consumption meant "the Chinese government's current role in the economy is part of the problem".

To achieve change, it added that the government needed "a willingness to change itself".

Wuttke told reporters: "We are now in a far more worse position than we were before."

"Beijing increasingly has the same problems as Brussels:  making things happen. That was not the case 10 or 15 years ago. Local protectionism is very strong," he said.

Beijing hopes to soak up overcapacity by selling its excess production to markets in Central Asia and the Middle East as part of President Xi Jinping's One Belt One Road plan, which has been touted as a revival of ancient Silk Road trade routes. 

But those markets were not big enough to absorb China's overcapacity, Wuttke remarked. 

It "is a complete mismatch, it will not put even a minor dent in the overcapacities in China", he said.

With traditional heavy industries facing persistent weakness, foreign investors favoured the more robust services sector and higher-value, hi-tech manufacturing last year, data from commerce ministry showed recently.

China attracted $126.3 billion, or 781.4 billion yuan, in non-financial foreign direct investment (FDI) in 2015, up 6.4 per cent from 2014, despite its cooling economy.

The services sector has utilised $77.2 billion, or 477.1 billion yuan of foreign investment, up 17.3 per cent from 2014.

United States ride-hailing firm Uber has committed to invest 6.3 billion yuan ($956.33 million) in China as it aims to break into its huge tourism industry with businesses ranging from transportation services to automotive financing.

The world's largest coffee chain, Starbucks Corp., said it aims to open 500 stores in China this year, its largest market outside of the US, and aims to create 10,000 jobs in China every year through 2019.

At present, investment from overseas companies contributes to half of all foreign trade in China, one-quarter of industrial output, one-seventh of urban employment and one-fifth of tax income, the ministry statement indicated.

While FDI is a key measure of general overseas investment interest in China, it is a small factor within overall capital flows and when compared to the huge export sector.

According to Reuters calculations, China attracted $12.23 billion, or 77.02 billion yuan, in non-financial FDI in December.

High-tech manufacturing accounted for $9.41 billion, or 58.35 billion yuan, of foreign direct investment in 2015, up 9.5 per cent from 2014 and accounting for 23.8 per cent of investment in China's manufacturing sector, according to the commerce ministry's statement.

Almost no FDI was approved for industries suffering from overcapacity such as steel, cement and ship-building, the statement said.

Free trade zones in Guangdong, Tianjin and Fujian attracted investment of 445.81 billion yuan from 6,040 overseas companies between January and November 2015, according to the statement.

The government has encouraged firms recently to expand investment abroad to gain global competitiveness.

DUBAI — Like the prototype drone of Emirati student Talib Alhinai, the ambitions of young people across the Gulf Arab states need to soar if they, and their economies, are to prosper in the age of cheap oil.

The 23-year-old now researching for his Ph.D is just the kind of innovator that the region requires, along with youngsters who want the risky life of an entrepreneur rather than a safe but unproductive job working for the state.

Wearing a crisp white Arabian robe and headdress, Alhinai cranes his glasses upward as his drone climbs above an outdoor amphitheatre in downtown Dubai, and explains how it can swoop down and squirt 3D printed sealant onto damaged oil pipelines.

Petrodollars won Gulf Arab states decades of prosperity, when loyalty and stability could be bought by giving graduates with subpar education cushy government posts.

No more. The collapse in oil prices is forcing governments to make good on old promises to turn their growing youth populations into a workforce that can compete globally.

Showing off the prototype he built with classmates at Imperial College London, winning a state-sponsored "Drones for Good" competition at the amphitheatre, Alhinai said Gulf Arab youngsters were eager to make livelihoods from their ideas, not handouts.

"There's a realisation, an awakening, among my generation that the age of oil can't last forever and that we need to pick up the pace to give back to our societies, especially through innovation and technology, to shred this stereotype about us being idle," said Alhinai.

Over half of Gulf Arab nationals are employed in public sector jobs; in Kuwait the figure is nearly 80 per cent.

But now the International Monetary Fund (IMF) predicts economic growth in six oil-exporting states of the Gulf Cooperation Council will slip to 2.8 per cent in 2016 from 3.25 in 2014, and private sector growth has likewise fallen.

The United Arab Emirates (UAE) and Saudi Arabia have both launched initiatives this year to outsource services from the state to the private sector, rein in spending and invest in education and vocational training.

Reckoning

Nowhere is the problem so acute as in top oil exporter Saudi Arabia, which is running a $100 billion budget deficit and has used up $90 billion of its foreign assets in the past 18 months. At that rate they would be gone in just a few years.

Underlining the problem, the Standard & Poor's agency downgraded the credit ratings of Saudi Arabia, Bahrain and Oman last week in its second mass cut of large oil producers in almost a year.

Vast energy reserves and tiny populations in Qatar and Kuwait mean they have more time to get their nationals into more productive work, but Saudi Arabia can no longer buy off its 20 million citizens with public sector welfare.

State-owned oil giant Aramco, the largest Saudi company and a paragon of efficiency in the kingdom's often hidebound economy, is trying to encourage innovation by giving entrepreneurs training and loans.

One such beneficiary is 28-year-old Loai Labani, who owns tech company Innosoft based in Dhahran Techno Valley in the country's east. 

He said risk-taking was still foreign to Saudi job culture and few of his peers understood why he would strive for his own success rather than take a plum official post.

"My family and my friends were trying to tell me you shouldn't focus on this, just get a government job and the security that comes with it," Labani added.

"Of my 20 employees, half are Saudi and I need 10 more, but it's a struggle to get the quality developers, web-designers and programmers. We have to do 2-300 interviews to hire just one Saudi, because not just the knowledge but the personality for private enterprise is so hard to find," he indicated.

According to a study by the Centre for Strategic and International Studies, promoting those skills will be one of the greatest challenges for Gulf countries and will entail a rethinking of the "social contract" under which state generosity won stability in a turbulent region.

"There is a clear tension between countries' wish to encourage economic creativity and risk-taking on the one hand and their desire to maintain relative social and political quiescence on the other," wrote author Carolyn Barnett.

Igniting the imagination

The UAE leads its neighbours in trying to diversify away from oil. In June last year, the IMF said the country could keep spending at current rates for 30-40 years — but then the oil price promptly halved.

This month, the UAE staged its largest ever government restructuring, merging ministries to reduce costs and creating state bodies to advance science, human capital and youth.

"Education is the essential prerequisite to creating a generation that's productive," said Sultan Bin Zayed Al Nahyan, a senior member of the ruling family in Abu Dhabi, the largest of the emirates.

"We want it so that when a student graduates — whether in engineering, humanities or anything else — they can open doors," he told reporters at his  palace before dog and camel races that he sponsors. 

"We want the education standards to be strong, not weak like they are now, which can't be denied," Sultan added.

At the reception, tables groaned under lobster and gazelle meat for his guests, and costumed desert knights on horseback held aloft banners of the ruling sheikhs' faces — trappings of largesse and reverence familiar to the Gulf.

But at Dubai's Museum of the Future, a glimpse of what may await Gulf Arabs was on show. Emirati boys in robes and groups of young women dressed from head to toe in black roamed the exhibition's purple-lit chambers, gazing at concept inventions: goggles that detect others' moods, earpieces that translate and brain implants that can transmit thoughts.

The Museum, set to open fully in 2018, aims to work with research companies and universities to turn such gizmos into "Made in the UAE" reality, and also to inspire.

"Some of the technology highlighted here is not set to be realised until 2030," said museum director Saif Al Aleeli. "We present it here to ignite the imagination of our young people, so they can get an idea of the world that they will live in and hopefully create themselves."

AMMAN — Jordan Investment Commission (JIC) President Thabet Al Wir on Wednesday said the commission has prepared necessary arrangements to acquaint Georgian sovereign funds with high-value added investment opportunities in the Kingdom.

The JIC will join an economic delegation scheduled to visit Georgia next month to sign a technical cooperation protocol with the Georgia State Financing and Investment Commission to enhance Jordanian exports to Tbilisi and invite Georgian businesspeople to invest in the Kingdom, Wir said.

It is important to benefit from Georgia, home to sovereign funds of assets worth some $10 billion, the JIC president added, noting that he received confirmations of possible cooperation with the Georgian embassy in Amman to attract these funds to invest in Jordan. Wir also voiced his aspiration to enhance Jordanian exports to Georgia, encourage commercial exchange between the two countries, promote tourism and boost agricultural cooperation. Commercial exchange volume between Amman and Tbilisi in 2015 stood at around JD6.5 million.

ANKARA — Turkish Prime Minister Ahmet Davutoglu on Monday announced a multi-million-dollar aid package for the country's struggling tourism industry, which has been hit by a crisis with Russia and security concerns.

Davutoglu said that a total of 255 million Turkish lira ($86.5 million) in financial aid would be given to Turkish tourist agencies while there would also be measures to help firms restructure debt.

"These measures will be implemented quickly and we think that the package will rejuvenate the tourism sector," Davutoglu told reporters in Ankara.

"We are in a sensitive time but we will overcome the difficulties of the tourism sector and we will defend our positions as one of the most attractive destinations," he added.

Davutoglu denounced what he said was a campaign of "black propaganda" carried out from abroad against Turkey's tourism industry which was being helped by opponents of the ruling party.

The industry has been shaken by security concerns as Turkey wages a two-pronged offensive against militants.

A suicide bombing on January 12 killed 11 German tourists in the heart of Istanbul's tourist district.

Last week, 28 people were killed in the capital Ankara in an attack on buses carrying military staff. A radical Kurdish group that claimed the attack then threatened to attack tourist sites.

TUI, the world's biggest tourism group, said earlier this month it had seen bookings to Turkey drop by 40 per cent while several prominent cruise operators have cancelled lucrative port calls in Turkey this summer.

The sector is key to the economy: according to official statistics, foreign tourism brought in almost $31.5 billion in revenues in 2015.

Turkey's tourism industry also suffered a huge blow with the crisis between Ankara and Moscow which began when Turkish jets shot down a Russian war plane on the Syrian border on November 24.

The Russian foreign ministry recommended that its citizens do not visit Turkey and Russian agencies stopped selling package tours to the country.

The number of Russians visiting Turkey almost halved in December from the same period a year earlier, official statistics showed.

But Davutoglu expressed confidence that Russians would return and emphasised they were still welcome.

"Russian tourists have not been coming to Turkey for a short time. They came, liked it, and came again. You won't change this with a political decision," he said. "I am sure that Russian tourists will once again find their way" to Turkey.

Separately, Turkey's central bank left its benchmark interest rate unchanged at 7.5 per cent for the 12th month running on Tuesday, a widely expected move likely to heighten concerns about its reluctance to tackle inflation head-on.

The bank has refrained from tightening even as rising food costs and a weakening lira currency have sent inflation to its highest in more than a year. 

Now at more than 9.5 per cent, inflation could seriously threaten the economy's growth potential, Deputy Prime Minister Mehmet Simsek has said.

All 17 analysts polled by Reuters predicted the bank would keep rates on hold. Still, market participants said the lack of action only deepened concerns the bank is bowing to political pressure to keep borrowing costs down.

"Today's decision reinforces the impression that interest rate decisions are being swayed by pressure from the government," William Jackson of Capital Economics said in a note to clients.

President Recep Tayyip Erdogan has repeatedly railed against high interest rates. In a speech this month, he reiterated his belief that high interest rates caused inflation, a departure from orthodox economics, and said he would continue to issue warnings against high rates.

"Whoever defends hiking interests rates is the enemy of investment and employment in this country," he said.

Erdogan has emphasised consumption-led growth, to the consternation of investors who have hoped for greater fiscal discipline. 

The ruling AK Party, founded by Erdogan, introduced a 30 per cent hike in the minimum wage this year, following through on a main campaign promise that is likely to further fuel inflation.

Credibility problem

"True to form, Turkey's central bank has delayed a much-needed tightening in policy in the face of a headline inflation rate veering towards 10 per cent," said Nicholas Spiro, a partner at Lauressa Advisory, a consultancy.

"It's still unclear what it will take for the [bank] to hike rates. What is clear is that the inflation-fighting credibility of Turkey's central bank shows no sign of improving," he added.

The minimum wage increase, as well as food prices, pose an upward risk to inflation this year, Simsek, the government's economy czar, said on Tuesday.

Some of that may be tempered by lower commodities prices, he added, noting that the government's target was to get inflation to 5-7 per cent in the near term.

In a statement following its decision, the central bank said it would stick to a tight monetary policy, taking into account expectations of inflation and pricing behaviour.

The bank kept its overnight borrowing rate at 7.25 per cent and its overnight lending rate at 10.75 per cent.

PARIS — Oil prices will remain low at least until next year, the International Energy Agency (IEA) warned on Monday, expecting any 2017 recovery to be slow as massive oil stocks feed into the market.

"We must say that today's oil market conditions do not suggest that prices can recover sharply in the immediate future — unless, of course, there is a major geopolitical event," the IEA said in its medium-term report, which looks five years ahead.

"Only in 2017 we will finally see oil supply and demand aligned but the enormous stocks being accumulated will act as a dampener on the pace of recovery in oil prices when the market, having balanced, then starts to draw down those stocks," it added.

"While oil prices should start to rise gradually once the market begins rebalancing, the availability of resources that can be easily and quickly tapped will limit the scope of rallies," the report continued.

The IEA acknowledged that predicting the oil market "is today a task of enormous complexity", noting that experts were still grappling with the implications of a dramatic drop in the oil price from over $100 per barrel in July 2014 to around $30 today.

A year ago, analysts predicted that oil oversupply would end by late 2015, "but that view has proved very wide of the mark", it admitted.

US shale production squeezed

The IEA's view is that supply will eventually be curtailed as investment cuts prompted by low prices translate into lower output.

Spending on oil exploration and equipment is projected to drop by 17 per cent this year after a 24-per cent cut in 2015 "which would be the first time since 1986 that upstream investment has fallen for two consecutive years", the IEA noted.

The low oil price is already squeezing profits at higher-cost producers, and the IEA said it expects the production of US light tight oil also known as shale, to fall back by 600 million barrels per day (mb/d) and by a further 200 mb/d next year before a gradual recovery in oil prices pushes production up again.

Worldwide demand for oil, meanwhile, will continue to increase, but at a weaker pace amid financial market turmoil and clear signs that "almost any economy you care to look at could see its gross domestic product growth prospects downgraded".

Global annual average demand growth over the next five years is expected at 1.2 mb/d, down from a 1.6 mb/d increase seen in 2015 when demand received an initial boost from oil price falls.

Bottlenecks ahead

But while the current supply/demand mix is keeping a lid on prices, the current slashing of investment in oil producing facilities may well hit the market with bottlenecks further down the road, possibly leading to abrupt price spikes, the IEA warned.

Only Saudi Arabia and Iran have any spare production capacity left and other countries are not investing enough even to keep current production going, let alone meet demand growth over coming years.

"The risk of a sharp oil price rise towards the later part of our forecast [around 2021] arising from insufficient investment is as potentially destabilising as the sharp oil price fall has proved to be," the IEA warned.

But in the short term, the IEA said that members of the Organisation of Petroleum Exporting Countries  had shown their "determination" to maintain and expand their market share and that rising oil production from Iraq and Saudi Arabia last year would now be joined by Iran in the wake of a deal with western powers to lift sanctions.

The IEA took note of an agreement this month between Saudi Arabia and Russia, the world's top crude producers, to stick to current production if others followed suit, but offered no opinion on the likelihood of such a deal gaining traction.

Oil prices have found support from some investors believing that the agreement could lead to steps to tackle a global supply glut that has dragged prices to their lowest levels in nearly 13 years.

Dealers also said they welcomed the outlook for US shale production cuts as this would help curtail supply.

NEW YORK — Standard & Poor's (S&P) downgraded Total, Statoil and BP on Monday, saying cheap oil prices would weaken the financial strength of the three top European oil companies.

S&P said that based on its new view that the oil market would only partially recover by  2018, it expected the three companies would struggle between the demands of lowering investment expenditures and continuing to fund shareholder dividends.

The rating for Britain's BP was reduced one notch to A-, a medium investment grade level, but given a "stable" outlook meaning it would not likely be revised in the medium term.

France's Total was cut one notch to A+ and put on a "negative" outlook, suggesting another downgrade was possible in the next 6-18 months.

Norway's Statoil also fell one level to A+ and was given a "stable" outlook.

S&P indicated that all three companies were undertaking "relatively weak" measures to keep up their financial strength and faced weaker cash flow as they strain to maintain dividend payments.

"We see the decision to cut investment and increase debt to facilitate shareholder distributions as negative from a credit perspective, because the reduction in investment will affect future cash-generating assets," S&P said.

Moreover, it added: "In contrast with some US peers, these largest European players have neither actually cut declared dividends nor cut capital investment aggressively."

S&P noted that the downgrades were based on its revised outlook for crude prices, after the 75 per cent plunge over the past 18 months.

S&P expects the price of Brent crude, which has been trading below $35 a barrel, to rise to $50 a barrel only by 2018.

It said the oil companies can only partly offset price declines by cutting capital investment. 

Refining margins are also expected to fall by 25-33 per cent this year, it added.

On February 2, S&P placed negative outlooks on US oil majors Chevron and ExxonMobil based on the weaker outlook for crude prices.

AMMAN — Jordan Investment Commission (JIC) President Thabet Al Wir highlighted the Jordanian experiments in Islamic banking and halal food as a gate for cooperation with Germany to support the Kingdom's investment and economic environment. 

At a meeting with a German delegation representing the Federation of German Industries (BDI) and the German Federal Ministry of Finance, Wir described the Jordanian expertise in Islamic banking as  top at the regional and international levels.

The Kingdom is also among the first countries to accredit the Islamic banking system, he said.

The presence of many Muslim communities in Germany provides a chance for the country to benefit from the Islamic system in its banking sector, the JIC president added.

There are many Jordanian industries that follow modern, developed methods in preparing and manufacturing halal foods, he continued, noting that several relevant businesses are present in European and East Asian countries as well as the US. 

Wir and the delegates also discussed ways to enhance economic relations between Jordan and Germany according to the outcomes of the London conference, stressing the significance of applying these results to support the Jordanian economy through providing jobs for Jordanians in the first place and then for Syrians. 

The German delegates, who are currently visiting the Kingdom to discuss ways to apply the outcomes of the London conference, had a firsthand look at investment opportunities in the King Hussein Development Zone in Mafraq.

The delegates stressed the importance of enhancing economic cooperation with the Kingdom, and providing investment opportunities to both countries' businesspeople, especially in the banking and food sectors, highlighting the need to support small- and medium-sized sectors to generate new jobs.