Business

AMMAN — Cooperation between the public and private sectors is essential to bolster the Free Trade Agreement between Jordan and Canada, Industry, Trade and Supply Minister Maha Ali said Sunday.  She was speaking to representatives of industry and commerce chambers, the Jordan Exporters Association and the Canadian embassy in Amman besides the president of the Jordanian-Canadian Business Association, according to ministry statement.

Ali urged a follow up on the recent visit by a Jordanian delegation to Canada in order to increase national exports to the Canadian market. The Jordanian private sector is crucial in helping exporters penetrate the Canadian market and acquaint them with the free trade agreement which went into effect in 2012, Ali added.

The agreement contributed to the growth of bilateral commercial movement by 42 per cent between 2012 and 2014, with Jordanian exports to Canada improving by threefold during the same period. In the first eight months of 2015, the value of national exports to Canada stood at $37 million, marking an increase of 15.6 per cent compared to the same period of 2014, while Jordanian imports from Canada valued $23 million, with a drop of 22.7 per cent during the same comparison periods. 

AMMAN — Remittances of Jordanian expatriates stood at $3.798 billion in the year 2015, 1.5 per cent higher than the $3.743 billion in 2014, the Central Bank of Jordan (CBJ) announced Sunday.

These remittances, in addition to the tourism revenues, contribute to boosting foreign currency reserves and improving the current account of the Kingdom, the CBJ said.

DAVOS, Switzerland — Financial markets need more clarity on how Chinese authorities are managing their currency, particularly the relationship of the yuan to the US dollar, International Monetary Fund (IMF) Managing Director Christine Lagarde said on Saturday.

Sharp swings in the yuan have contributed, along with a dramatic fall in the price of oil, to global market volatility since the beginning of 2016.

Bank of Japan Governor Haruhiko Kuroda, speaking on the same panel at the World Economic Forum (WEF) in Davos, said he believed China should use capital controls to stabilise its currency while keeping domestic monetary policy loose.

Asked whether she would back capital controls by China for a period, Lagarde avoided a direct reply but said: "Certainly a massive use of reserves would not be a particularly good idea... Some of it was already used."

She added that the market needed "clarity and certainty" about China's exchange rate basket "in particular with reference to the dollar, which has always been the reference".

"That would be the right move to make," she indicated.

According to Kuroda, China was right to keep monetary policy accommodative to help cushion the country's transition from a export-led industrial economy to a demand-driven consumer economy without excessive depreciation of the yuan.

"This is my personal view and may not be shared by Chinese authorities, but in this kind of contradictory situation, capital controls could be useful to manage exchange rate as well as domestic monetary policy in a consistent, appropriate way," he said

He noted that Beijing was struggling to avoid either an excessive depreciation or an excessive appreciation of its currency.

Chinese economic data signalling slowing growth in the world's second-largest economy have sent investors into a panic globally in the first three weeks of 2016, with oil prices also plunging as a result of oversupply in the market.

Credit Suisse Chief Executive Officer Tidjane Thiam told the Davos panel that many people in the markets did not necessarily believe China's official growth figure of 6.9 per cent for 2015 and feared the Chinese economy was facing a "hard landing".

"We believe China will have a soft landing, not a hard landing. A lot in people in the market believe demand in China is decreasing. We don't agree," he said.

Part of the market slide was due to a massive distressed sales of assets by sovereign wealth funds and asset managers prompted by falling oil prices, Thiam added.

Both Lagarde and Kuroda suggested investors could trust China's official growth data.

The Chinese central bank has been generous with liquidity, pumping a net 315 billion yuan ($48 billion) into the banking system ahead of the Lunar New Year holiday in early February.

It was the biggest weekly injection since January 2014 and analysts suspected it was larger than that warranted to avoid any hint of a cash crunch during the long holiday.

According to sources, Zhang Xiaohui, an assistant governor of the central bank, said it would not rush to cut the amount of cash banks must hold in reserves, as doing so could send a strong signal on policy easing.

Yi Gang, a vice governor of the central bank, also said it would keep the yuan basically stable against a basket of currencies.

Italian Economy Minister Pier Carlo Padoan told Reuters the IMF board's decision to include China's yuan in the basket of major currencies used to calculate the Special Drawing Right in which the fund lends to members was "an additional positive constraint" on China's management of its currency.

Lagarde described China's slowdown as "very normal" but the road ahead will be bumpy.

Lagarde told the WEF that China's transition to an economy led by consumer demand instead of state investment was unlikely to lead to a "hard landing" for the world's second-largest economy.

She said on the final day of the Davos meeting: "We are not seeing a hard landing... We are seeing an evolution, a big transition which is going to be bumpy.

"We have to get used to it and it's a very normal and proper way to actually move towards a more sustainable and a more quality growth, we all hope," she added.

"[It] is simply the worst start of any year on the record on financial markets ever, it's simple," Thiam said. "The market is very worried about China, of course. They fear we will fall into a global recession." 

British Finance Minister George Osborne remarked that China had overshadowed proceedings at the annual gathering of the rich and powerful.

"The world has not been very good over previous centuries at accommodating rising powers and it has often led to unhappy outcomes," Osborne said bleakly. "I think it is massively in our interest that we bring China into the multilateral institutions of the world." 

Support for Lagarde repeat 

Lagarde herself was also an issue at Davos, as she quietly campaigned to win backing for a second mandate as IMF managing director.

With her term coming to an end in July, the IMF formally began accepting nominations on Thursday for who will guide the global crisis lender for the next five years.

The biggest powers governing the Washington-based fund, including Britain, Germany and France, all gave their support to Lagarde.

In her first term, she was deeply involved in the decision to add the Chinese yuan to the IMF's basket of reserve currencies, a highly symbolic move that was greatly appreciated by Beijing.

Lagarde's plans to run again nonetheless face a potential hurdle. She could have to stand trial in France over her role in a banking scandal that predates her arrival at the IMF.

In December, French judges placed her under formal investigation in the long-running affair of former Adidas owner Bernard Tapie, who received a large state payout for his dispute with a state bank during her time as finance minister.

Lagarde has said she will fight the trial order, and the IMF executive board at the time reiterated its confidence in her.

ALGIERS — Algeria is turning to China to finance several infrastructure projects, including a new $3.2 billion port, as the North African country, a member of the Organisation of Petroleum Exporting Countries (OPEC), looks for ways to weather the collapse in global oil prices.

Algeria, where oil and gas production account for 60 per cent of the state budget, saw energy earnings collapse 40 per cent last year, forcing the government to slash spending, raise some subsidised fuel prices and freeze major projects.

With little foreign debt and more than $130 billion in reserves, Algeria's government says its economy can manage the fall in crude prices. Nevertheless, it appears Algiers is willing to move out of its comfort zone to help it cope. The Chinese funding represents the first time it has sought external funding in a decade.

Chinese businesses are already well-established in Algeria, especially in housing and construction. In one flagship project, Chinese firms are helping to build a huge new mosque worth $5 billion in the capital Algiers.

Now Chinese banks will fund the port in Cherchell, east of Algiers, for a mega-port of 23 docks capable of processing 26 million tonnes of goods per year, according to a source at transport ministry.

"The port will be funded by China," the official told Reuters.

China's Shanghai Ports Group will manage the project, he said. Another source at the Algerian trade ministry confirmed this.

"This is an important and strategic project [port] not only for Algeria, but for Africa," China's ambassador in Algeria told reporters this week.

China is Africa's largest trading partner and its investments in the continent amounted to $32 billion at the end of 2014, according to London-based BMI Research.

China has offered loans totalling $32 billion to African nations in the past two years and investments range from Zambian power plants, cobalt mines in Congo, rail links in East Africa and other infrastructure in Equatorial Guinea.

"We have $60 billion available for projects in Africa in the next three years, and Algeria is in a good position to take advantage of this amount," the ambassador said.

Trucks, houses

The total amount of the loans requested by Algeria from China is not known, but a vehicle and trucks assembly plant and thousands of houses are among the Chinese-funded projects planned for the next couple of years.

In one sign of the growing trade between the two countries, Algeria uses the yuan in exchanges with China instead of the dollar. As a result, traders on the black currency market in Algiers have begun to make the yuan available to clients.

"There is a big demand over the yuan,” Salim, a young trader at Algiers Port Said Square, told Reuters.

For Algeria, the Chinese funding may also be more politically palatable than multilateral lenders such as the International Monetary Fund (IMF), analysts said.

After it signed a debt restructuring agreement with the IMF in 1994, Algeria saw social tensions rocket as a result of a raft of unpopular measures such as closing state firms, sacking thousands of workers and lifting subsidies on primary consumption items. It also devaluated its currency by 40 per cent.

Many Algerians blamed the IMF, seeing it as a foreign tool that created poverty.

But the presence of China is widely seen as beneficial for Algeria and its economy. There are 35,000 to 40,000 Chinese workers in Algeria, according to the Chinese ambassador.

Algeria, a key US ally in its fight against Islamist insurgency and a top gas supplier for Europe, avoided the upheaval of the 2011 Arab Spring revolts that toppled leaders in neighbouring Tunisia, Egypt and Libya.

Tapping its energy wealth, the government increased handouts, subsidies and cheap loans to help ease protests calling for reforms. Memories of the country's 1990s war with Islamists in which 200,000 people died also keeps many Algerians wary of turmoil.

BEIJING — China's economic slowdown is hitting profits at more foreign companies, a survey by an American business lobby showed, while the vast majority of respondents believed China's growth in 2016 would fall short of the central bank's forecast.

The number of foreign companies rating their business profitable dropped to a five-year low in 2015, while 45 per cent of about 500 respondents in the American Chamber of Commerce in China's annual survey reported that revenues in 2015 were down or remained flat from a year earlier.

Data from China's statistics bureau on Tuesday showed growth for 2015 was 6.9 per cent, its weakest pace in a quarter of a century, capping a tumultuous year that witnessed a huge outflow of capital, a slide in the currency and a summer stocks crash. .

"Although many respondents remain optimistic about China's domestic market growth potential, almost half of survey respondents expect that China's overall gross domestic product growth in 2016 will be lower than 6.25 per cent," the American Chamber said in its business climate survey.

‘Unclear laws’

The People's Bank of China (PBoC) in December forecast that the country's annual economic growth will slow to 6.8 per cent in 2016.

The American Chamber survey results, published on Wednesday, underscore the growing unease and challenges faced by some overseas companies in the world's second-biggest economy.

Forty-eight per cent of respondents expected gross domestic product growth this year to reach 6.25 per cent or less, while 35 per cent said the economy would increase between 6.25 and 6.75 per cent.

Business confidence also was impacted by regulatory and protectionist concerns, following a series of government investigations targeting foreign companies and the roll-out of a national security law limiting the use of overseas technology.

For the first time in five years, respondents cited "inconsistent regulatory interpretation and unclear laws" as the top business challenge, the report said.

Seventy-seven per cent of respondents said they believed foreign companies were less welcome than before.

"While the Chinese leadership has emphasised that the country will follow the rule of law, our members continue to report that the regulatory and judicial process are less than fair and lack adequate oversight," James Zimmerman, chairman of AmCham, said in the report.

Overall, 64 per cent of respondents said their companies were financially profitable in the last year, compared with 73 per cent in 2014.

Revenues at 45 per cent of the firms remained flat or declined compared with a year earlier, compared with 39 per cent in 2014, the report indicated.

"While China remains a top investment priority, fewer compaies are increasing their investment levels in China," the report concluded. 

Concerns about Beijing's grip on economic policy have shot to the top of global investors' risk list for 2016 after a renewed plunge in its stock markets and the yuan stoked worries that the economy may be rapidly deteriorating.

China's slowdown, along with the slump in commmodity prices, prompted the International Monetary Fund to cut its global growth forecasts again on Tuesday, and it said it expected the world's second-largest economy to see growth of only 6.3 per cent in 2016.

Data from China's statistics bureau showed that industrial output for December missed expectations with a rise of just 5.9 per cent, while electric power and steel output fell for the first time in decades last year, and coal production dropped for a second year in row, illustrating how a slowing economy and shift to consumer-led growth is hurting industry.

December retail sales growth was also weaker than expected at 11.1 per cent last month, disappointing those counting on the consumer to be the new engine of growth.

"While headline growth looks fine, the breakdown of the figures points to overall weakness in the economy," said Zhou Hao, senior emerging markets economist for Asia at Commerzbank Singapore.

"All in all, we believe that China will experience a 'bumpy landing' in the coming year," he added.

There was relief in the markets, however, that growth at least matched forecasts, and a growing expectation that more monetary easing measures were imminent, possibly before Lunar New Year holidays in early February.

Angus Nicholson, market analyst at IG in Melbourne, said in a note that further cuts in interest rates and the reserves that banks have to set aside were already looking "a foregone conclusion" before the data release, and now it was a question of timing.

"That gives investors an excuse to buy stocks, after sharp falls recently," said Linus Yip, strategist at First Shanghai Securities Ltd.

Currency risk

The PBoC did its bit to calm nerves by keeping the yuan largely steady, setting the currency's daily midpoint fix at 6.5596 per dollar.

That followed news of plans requiring overseas banks to hold a certain level of yuan in reserves, a move that could raise the cost of wagering on further falls in the currency, which has lost about 5 per cent since August.

Tommy Xie, economist at OCBC Bank in Singapore, said he expected more stimulus to the economy from the PBoC, but the stability of the yuan, also known as the renminbi, was critical to maintaining growth.

"This is a new risk for China. If the renminbi continues to weaken, the volatility and capital outflows get worse, then that is likely to pose a challenge to growth," he added.

Confusion over China's currency policy and its commitment to reforms has sparked mayhem in financial markets in recent weeks, as the PBoC allowed the yuan to fall sharply in early January then switched to aggressive intervention to steady it.

Likewise, concerns have mounted that the economy's troubles might be beyond Beijing's ability to fix.

Markets have long harboured doubts about the veracity of China's growth data, given their habit of closely matching official forecasts year after year despite wildly changing circumstances at home and globally.

Investors used to comfort themselves with the assumption that the authorities, while often inscrutable, were competent managers who could be trusted to ultimately guide the economy to a more consumer-driven model.

That trust has been challenged by perceived policy missteps over the yuan and stock markets, giving weight to a voluble clique of China bears who claim high debt levels and massive overcapacity are bound to end in tears.

Even relative optimists are worried.

"A recent trip back to China suggests the economy remains in a rather bad shape. Public confidence and expectations are very low," indicated Wei Li, China and Asia economist at Commonwealth Bank of Australia.

"Faced with rising non-performing loans, banks are cutting credit lines despite policymakers calling for more support. New credits are mainly used to repay existing debts, rather than flowing into new investment projects," he said.

LONDON — Oil plunged to fresh 12-year lows under $27 on Wednesday, slammed by gloomy economic forecasts, China's slowdown and abundant crude supplies.

In late afternoon deals, US benchmark West Texas Intermediate (WTI) for February delivery tanked to $26.3 per barrel, a level last seen in early May 2003.

The contract later stood at $26.50, down $1.96 from Tuesday's closing level.

The global oil market has collapsed further since the International Energy Agency (IEA) warned Tuesday that the oil market could "drown in oversupply".

Prices have crashed about 75 per cent since mid-2014, hit by a perfect storm of a stubborn supply glut, the slowing global economy and the rebounding US dollar.

"A stronger dollar continues to present significant headwinds and supply increases show little sign of letting up any time soon," Sucden analyst Kash Kamal said.

"This is very much a supply issue, as global demand has on the whole been quite healthy — but it is likely we will see additional price declines and tighter margins before producers are prompted to cut output," he added.

The strong dollar, meanwhile, makes dollar-priced crude more expensive for buyers using weaker currencies. In turn, that dents demand and prices.

In London, meanwhile, Brent North Sea crude for delivery in March tumbled to $27.11, a low last witnessed in early November 2003.

Brent later stood at $27.34, down $1.42 from the close on Tuesday.

Crude futures are also in freefall with the supply glut set to worsen, as Iran pumps out extra barrels after the lifting of Western sanctions on Tehran.

The IEA predicted Tuesday that prices would fall further this year as supply vastly exceeds demand, with major oil exporter Iran's return to the market offsetting any production cuts from other countries.

Supply glut 

The market has been awash with supplies owing to high production levels by the United States and the Organisation of Petroleum Exporting Countries (OPEC), which last year refused to slash output as it looks to maintain market share.

Iran on Monday ordered a boost to crude production a day after the West lifted sanctions on the country in response to Tehran's compliance with a deal on curbing its nuclear programme.

Iran's National Iranian Oil Company said it had ordered an increase in output of 500,000 barrels per day (bpd). The country currently produces 2.8 million bpd and exports just over a million.

"The market is already awash with the stuff and now Iran is adding to the mix, so we may witness even lower oil prices and for longer," predicted analyst Fawad Razaqzada at traders Gain Capital.

Kamal noted that the 12-nation OPEC group has continued to pump above its official output target, adding to the supply glut.

"Prices are forecast to remain under pressure and will likely fall further as crude output from OPEC remained well above its 30 million bpd production quota in December, estimated at 32.89 million bpd," he said.

"The group lacks production discipline and we expect this production glut to persist at the start of 2016," he added. "With Iranian crude set to hit the market imminently, to the tune of 500,000 bpd, we could see the [oil] price come under additional pressure in the short term."

WTI is currently down more than 20 per cent from its value from the start of 2016 after dropping by 30 per cent last year.

Brent is down about 22 per cent from the start of the year, in addition to the almost 35 per cent plunge it suffered in 2015.

IMF: oil price collapse is a drag on global economy 

The International Monetary Fund (IMF) said Tuesday that the sharp collapse in the price of oil is proving more of a drag on the global economy than a stimulus.

The financial strains on exporters and the deep investment cutbacks in the industry are more than offsetting the expected gains from cheap oil enjoyed by key importers like Japan and the United States, the IMF added.

Lower crude prices would normally stimulate some demand in countries where it is a key household and business cost, and spur more economic activity, the fund explained in its updated outlook on the world economy.

However, it elaborated, after a 70 per cent fall in prices over 18 months, other factors have dampened the expected gains from that decline.

Firstly, it indicated, "financial strains in many oil exporters reduce their ability to smooth the shock, entailing a sizeable reduction in their domestic demand”.

Secondly, the price fall has forced oil and gas companies to cut back investment, a negative for economic growth.

Moreover, the fund noted that demand for oil had not picked up as the price has plummeted.

It said that factors behind that included, possibly, that cheaper crude prices were not being fully passed on to consumers, and, secondly, that businesses and consumers in some areas might still be reducing spending and debts. 

The IMF report was finalised before crude prices fell some 22 per cent in the first two weeks of the year as traders prepared for Iran to return to the international market.

Even so, the IMF forecast included another 17.6 per cent decline in crude prices this year after nearly 50 per cent in 2015, and only a partial rebound in 2017.

Separately, two top US bankers said Wednesday that the oil price collapse is likely to help economies long term, even as markets slump in reaction. 

JPMorgan Chief Executive Jamie Dimon said he is still hoping the stock rout of early 2016 that worsened Wednesday will turn out to be only a "speedy adjustment" that does not signal a major global slowdown.

"You've got to separate fluctuations in the market from the economy," Dimon told CNBC in an interview broadcast from the World Economic Forum in Davos, Switzerland.

Lower oil prices benefit some leading economies, such as India and Japan, as well as US consumers, even as they prompt sovereign wealth funds from petroleum-dependent countries to liquidate investments to raise funds, he said.

Dimon's remarks were echoed by Goldman Sachs Chief Financial Officer Harvey Schwartz, who said that the oil slump may not translate into "a real drag on long-term economic activity”.

"It feels like the degree to which the market is focused on the energy exposure has managed to discount the long-term tailwinds to the consumer in a reduction of costs across the globe," he told an analyst conference call.

The comments came as global stock markets registered another bruising session, with leading bourses in Europe and New York off between 2.5 per cent and 4 per cent.

AMMAN — Several commercial sectors face challenges in importing their products due to the stop of land transportation to Iraq and Syria under regional conflicts, Jordan European Business Association (JEBA) President Jamal Fariz said Wednesday.

At a meeting JEBA held in the presence of EU Ambassador to Jordan Andrea Matteo Fontana, Fariz called on European Union (EU) countries to reduce the commercial deficit between the EU and Jordan, noting that the commercial balance volume is in favour of the EU with $4 billion, according to a JEBA statement. He also called for reconsidering bilateral agreements and helping Jordan through facilitating the flow of national products to the EU.

Also speaking at the meeting, held on the occasion of the 20th anniversary of establishing JEBA, Fontana highlighted the importance for Jordanian products to access European markets and to enhance the private sector's role in supporting the economy. The ambassador also commended JEBA's role in facilitating contacts between Jordanian and European companies and boosting commercial relations, according to the statement.

DAVOS, Switzerland — More than a trillion dollars of investment flows has fled emerging markets over the past 18 months but the exodus may not even be halfway done, as once-booming economies appear trapped in a slow-bleeding cycle of weak growth and investment.

While developing economies are no stranger to financial crises, with several currency and debt cataclysms infecting all emerging markets in waves over recent decades, leaders gathering for this year's World Economic Forum (WEF) in Davos in the Swiss Alps are fearful that this episode is much harder to shake off.

Seeded by fears of tighter US credit and a rising US dollar, and coming alongside a secular slowdown of China's economy and an implosion of the related commodity “supercycle”, there's growing anxiety that there will be no sharp rebound at the end of this downturn to reward investors who braved out the worst moments.

"The global backdrop and the drivers for emerging markets are very different from 2001," David Spegel, head of emerging markets at ICBC Standard Bank said, referring to the time Asia, Russia and Brazil were recovering from the crisis waves of the late-1990s.

"Back then all the stars were aligned for globalisation and emerging markets benefited the most. This time around, we just don't have those multiple catalysts," he added.

The chief catalyst in 2001 was of course China. Its entry to the World Trade Organisation (WTO) unleashed a decade-long export and investment miracle that propelled its economy from sixth place globally, to the world's second biggest.

Its ascent hauled up much of the developing world, from Latin American exporters of soy and steel to the Asian workshops which became part of its gigantic factory supply chain. But its slowdown is whacking these countries equally hard.

Exports from emerging markets, from Korean cars to Chilean copper, are declining year-on-year at the sharpest rate since the 2008-09 crisis, according to UBS.

Global trade in fact likely grew slower than the world economy for the fourth straight year in 2015, according to the WTO, a United Nations body. That contrasts with previous decades when commerce expanded at least twice as fast as world growth.

The gloomy conclusion some are reaching is that the China effect was possibly a once-in-a-lifetime shift, whose effects are now dissipating forever.

"Rather than expecting emerging markets to mean-revert towards the golden years of 2002-2007, there is a risk that in terms of trade, what we are reverting to is the environment of 1980s," UBS strategist Manik Narain said.

Flight

One feature of the "golden years" was the extraordinary amount of capital that poured into the developing world; according to the Washington DC-based Institute of International Finance (IIF) net inflows in 2001-2011 totalled nearly $3 trillion.

Some of this is starting to reverse as last year saw the first net capital outflow since 1988, a $540 billion loss, says the IIF which predicts more flight in 2016.

Other forecasters such as JPMorgan reckon nearly a trillion dollars have fled China alone since mid-2014; its central bank reserves alone declined more than $500 billion last year.

Redemptions from emerging stock and bond funds hit a record $60 billion last year, according to fund tracker EPFR Global.

IIF Executive Director Hung Tran says emerging markets' problems are not just external. They must overcome a key homegrown issue — falling productivity.

Tran estimates productivity, which provides clues on future economic growth, is growing at just 0.9 per cent a year across much of the developing world, a quarter the rate seen before 2007 and not far from richer countries' 0.4 per cent.

"Productivity advantage of emerging markets countries, which is key for attracting capital flows and investment, has collapsed," Tran said. "There is a cycle of diminishing returns on investment."

Slow-burn crisis

There are some bright spots such as India and Mexico. But with China fears on the rise and Brazil and Russia in recession for the second straight year, investment returns across the sector are unlikely to recover soon, many fear.

Emerging stock market performance has lagged developed peers for five years now, and corporate earnings have shrunk for more than four years, Morgan Stanley (MS) has calculated.

This is the longest decline in the MSCI equity index's history, MS says, noting the longest prior earnings recession in the asset class was after the 1997 crisis and lasted two years.

Richard House, head of emerging market debt at Standard Life Investments, notes the strengthening dollar is spooking investors in emerging currency bonds too.

"Fund performance hasn't been good across the industry... Local market funds have been an outflow asset class for a while and that experience is going to impact people's mindset going forward," House said.

The fear of large-scale outflows is clearly on policymakers' minds. To combat such an exodus, emerging economies may have to resort to radical measures such as coordinated securities market interventions, of the kind done in the West after 2008, Mexican central bank head, Agustin Carstens, as suggested

Ultimately though he said that to boost long-term growth, there was only one solution — tough economic reform.

Separately, , the WEF's founder is in somber mood.

Klaus Schwab, the 77-year-old chief of the world's most recognised annual economic meeting, said he's worried about Europe's future, the fallout from plunging oil prices and gaping inequalities worldwide.

In an interview with The Associated Press, Schwab said he wanted a "forward-looking" theme to dominate discussions this year, which officially runs from Wednesday through to Saturday: and has built this edition around the idea of the Fourth Industrial Revolution.

He said vast, speedy technological advances in the digital age in areas like nanotechnology and automation threaten to leave many unskilled workers without jobs or at an economic disadvantage.

In Davos, about two-thirds of the 2,500-plus attendees are decision makers from the business world: The boardroom, not the shop room floor, has an outsize representation in this snow-capped, ultra-chic Alpine resort. 

World leaders, including US Vice President Joe Biden, prime ministers David Cameron of Britain and Nawaz Sharif of Pakistan, and German President Joachim Gauck are set to attend.

Iranian Foreign Minister Mohammad Javad Zarif is likely to be a headline-act after international sanctions against his country were lifted over the weekend under a deal on Tehran's nuclear programme. Some business leaders will be contemplating a resumption of economic ties with the long-isolated, oil-rich Islamic republic.

Iran's oil ministry announced plans Monday to boost oil production by 500,000 barrels per day after the sanctions were lifted, and Schwab noted the possible harmful impact of even more supply on developing countries that depend on oil revenues at a time when crude prices have already slumped to their lowest level in more than 12 years.

"Of course, we will have to absorb now a larger supply dimension. What concerns me is the impact, the social impact, it has on certain countries," said Schwab. "Just think of Nigeria, which so much depends on oil, and other African countries... not to speak about what's the impact on Russia and so on."

As for Europe's struggle to manage an influx of more than 1 million refugees and migrants last year, he said the continent was at a "crossing point". Europe needs to find the right balance between its values and its capabilities of taking them in, and assuage tensions that have put the Schengen zone, which eases cross-border travel, to the test, he said.

"My concern is that Europe, at the moment, is in a phase of disintegration," Schwab said. "Europe would be completely marginalised if we break up into different nation-states again."

He said solidarity with refugees was a core European value.

"It's not a question whether we should have solidarity or not, it's how much can we afford? And here I think we haven't found the right answer yet," he added.

LONDON — Unseasonably warm weather and rising supply will keep the crude oil market oversupplied until at least late 2016 and could push the price below its current 12-year lows, the International Energy Agency (IEA) said on Tuesday.

The addition of Iranian supply to a market where production looks set to outpace consumption for a third year in a row could not come at a worse time for crude oil exporters, who are grappling with prices at their lowest in more than a decade.

Brent crude futures have fallen to their lowest level since late 2003, tumbling below $30 a barrel, after the Organisation of Petroleum Exporting Countries (OPEC) said in December it would not cut output to halt the price slide despite global oversupply.

The IEA, which issues regular reviews of the health of the energy market, said more price weakness could lie ahead as a result.

"Although we do not formally forecast OPEC oil production, in a scenario whereby Iran adds 600,000 barrels per day to the market by mid-year and other members maintain current output, global oil supply could exceed demand by 1.5 million barrels per day in the first half of 2016," the agency indicated in a monthly report.

"While the pace of stock-building eases in the second half of the year as supply from non-OPEC producers falls, unless something changes, the oil market could drown in over-supply. So the answer to our question is an emphatic yes. It could go lower," it said.

Responding to Tehran's compliance with a nuclear deal, the United States and other major powers have revoked international sanctions that sharply cut Iran's oil exports.

Warm winter weather around the world cut global oil demand growth to a one-year low of 1 million barrels per day in the fourth quarter of 2015, down from a near five-year high of 2.1 million barrels per day (bpd) in the third quarter.

The IEA left its estimate of growth in global demand for 2016 unchanged from its previous monthly report at around 1.2 million bpd.

"We conclude that the oil market faces the prospect of a third successive year when supply will exceed demand by 1 million bpd and there will be enormous strain on the ability of the oil system to absorb it efficiently," the IEA said.

With the world economy slowing, the IEA added that it had cut its forecast for 2016 OPEC crude oil demand by 300,000 bpd to 31.7 million bpd.

Iran has said it will raise output by an initial 500,000 bpd now that international sanctions have been lifted, but the IEA said it believes the increase will be of a more modest 300,000 bpd by the end of the first quarter of 2016.

The IEA is sticking with its forecast for a decline of around 600,000bpd in non-OPEC output, which it said had been surprisingly resilient in the face of tumbling crude oil prices.

LONDON – The wealthiest 62 people now own as much as half the world's population, some 3.5 billion people, as the super-rich have grown richer and the poor poorer, an international charity said on Monday.

The wealth of the richest 62 people has risen by 44 per cent since 2010, while the wealth of the poorest 3.5 billion fell 41 per cent, Oxfam indicated in a report released ahead of the World Economic Forum's (WEF) annual meeting in Davos, Switzerland.

Almost half the super-rich individuals are from the United States, 17 from Europe, and the rest from countries including China, Brazil, Mexico, Japan and Saudi Arabia.

"World leaders' concern about the escalating inequality crisis has so far not translated into concrete action — the world has become a much more unequal place and the trend is accelerating," Oxfam International's Executive Director Winnie Byanima, said in a statement accompanying the report.

"We cannot continue to allow hundreds of millions of people to go hungry while resources that could be used to help them are sucked up by those at the top," Byanima added.

About $7.6 trillion of individuals' wealth sits in offshore tax havens, and if tax were paid on the income that this wealth generates, an extra $190 billion would be available to governments every year, Gabriel Zucman, assistant professor at University of California, Berkeley, has estimated.

As much as 30 per cent of all African financial wealth is held offshore, costing about $14 billion in lost tax revenues every year, Oxfam indicated, referring to Zucman's work.

This is enough money to pay for healthcare that could save 4 million children's lives a year, and employ enough teachers to get every African child into school, Oxfam said in its report.

"Multinational companies and wealthy elites are playing by different rules to everyone else, refusing to pay the taxes that society needs to function. The fact that 188 of 201 leading companies have a presence in at least one tax haven shows it is time to act," Byanima said.

Ensuring governments collect the taxes they are owed by companies and rich individuals will be vital if world leaders are to meet their goal to eliminate extreme poverty by 2030, one of 17 Sustainable Development Goals set in September, Oxfam added.

Extreme poverty falling

The number of people living in extreme poverty has fallen by 650 million since 1981, even though the global population grew by 2 billion in that time, according to the Organisation for Economic Cooperation and Development (OECD).

Much of this change has been because of the rise of China, which alone accounted for half a billion people moving out of extreme poverty.

Most of the world's poorest no longer live in the poorest countries, but in middle-income countries like India, the OECD said in a recent report.

The inequalities are partly to do with differences in income, especially between urban and rural areas, but also differences in access to healthcare, education and jobs, the OECD added.

"The figures suggest that the biggest causes of poverty are ... political, economic and social marginalisation of particular groups in countries that are otherwise doing quite well," development economist Owen Barder is quoted as saying in the OECD report.

Barder is director for Europe at the Centre for Global Development.

Although taxes and transfers help reduce income inequality in developed countries, these systems are less robust in many developing countries, according to the OECD.

An exception is Brazil, which makes payments to more than 13.3 million poor families on condition they enrol children in school and take part in health programmes.

"That has helped to reduce rates of both child poverty as well as inequality," the OECD report concluded.

Separately, a report prepared for the Davos forum of business and political elites said that the latest industrial revolution will not only bring us 3-D printing and biotechnology advances, but the loss of 5 million jobs in the next five years.

The so-called fourth industrial revolution "will cause widespread disruption not only to business models but also to labour markets over the next five years", the WEF said announcing a study released ahead of the Davos forum this week.

Following the first industrial revolution of steam engines, then electricity and assembly lines, followed by electronics and robotics, the fourth industrial revolution will include a number of developments like big data and smart systems to transform the economy.

But that transformation will lead "... to a net loss of over 5 million jobs in 15 major developed and emerging economies," said the WEF, after analysing the potential impact on the economies of the United States, Germany, France, China, Brazil and other countries.

It sees as many as 7.1 million jobs being lost, mostly in white-collar office and administrative roles, with the creation of 2.1 million new jobs in fields such as computer engineering and mathematics.

"Without urgent and targeted action today to manage the near-term transition and build a workforce with futureproof skills, governments will have to cope with ever-growing unemployment and inequality, and businesses with a shrinking consumer base," the WEF's Executive Chairman Klaus Schwab warned in a statement.

A separate study found women will be "in the firing line" of the changes, which "may have a disproportionately negative impact on women".

While the job losses will be relatively equal, with 52 per cent of the expected 5.1 million job losses hitting men, in fact men still dominate the labour markets, so at 48 per cent the job losses among women will be relatively higher than their participation in the job market.

Moreover, women are underrepresented in the technical fields where new jobs are to be created.