Business

AMMAN — The total trade exchange between Jordan and Egypt reached $656.5 million in 2014 compared to $817.8 million in 2013, Industry, Trade and Supply Secretary General Ramzi Shawish said Sunday.

He added at the 25th meeting of the technical preparatory committee for the Joint Higher Jordanian-Egyptian Committee that the total trade exchange in the first quarter of 2015 stood at $136.9 million, 27 per cent lower than the same period of 2014 when it reached $187.6 million.

Shawish called for benefiting from available opportunities through enhancing joint investments, and utilising the Grand Arab Free Trade Zone, which reached a full level of liberalisation in 2005, and the joint free trade agreement signed between Jordan and  Egypt in 1998.

Fathi Abdul Athim, head of the Egyptian side and first undersecretary of the Egyptian ministry of international cooperation, stressed the importance of enhancing bilateral cooperation at all levels, especially economic ones, urging the private sector to take advantage of available opportunities in both countries.

STOCKHOLM — With the latest effort by Sweden to cool its housing market postponed by a court, concerns are escalating that political stagnation, a faulty institutional set-up and high household debt risks sending the triple A economy into a tailspin.

A move to force homeowners to pay down the principal of their mortgages, what many economists say is the very least needed to avoid a housing bubble, was postponed after a court in April said the Swedish Financial Supervisory Authority (FSA) lacked a legal mandate.

"The housing market in this country is dysfunctional and households are borrowing more and more and more," said Stefan Ingves, the governor of Sweden's central bank.

"This is one of those places in the world where the indecision bias has figured prominently and we are still seriously heading in the wrong direction," he added.

His remarks highlight the bank's quandary, forced to cut rates and buy bonds to ward off deflation while a fast-growing economy and low rates are pushing home prices up at the same time. 

With a bubble already feared, gross domestic product grew 2.7 per cent in the fourth quarter, the fastest in more than three years.

The legal setback, which may only be resolved next year as lawmakers scramble to rewrite the FSA's mandate, could have been a small problem if other policies were on the cards.

But with nothing else in the pipeline, it showed the extent of political stagnation and institutional impasse after the central bank was stripped of regulatory powers, hindering regulatory reform.

"My firm opinion is that we should accelerate the pace," said former finance minister Anders Borg. "But I have the impression that the opposite is true."

TEHRAN — Iranian President Hassan Rouhani called Sunday for national unity to liberate the economy from international sanctions, which he compared to a form of occupation.

"We must join hands and free our economic territory which was unjustly occupied by the countries of the P5+1 [Britain, China, France, Russia, the United States and Germany] and the UN Security Council... through use of diplomatic and political tools," Rouhani said in a televised speech.

The P5+1 group is trying to negotiate a deal with Tehran aimed at preventing Iran from developing nuclear weapons, in exchange for an easing of punishing economic sanctions.

Iranian hardliners have opposed any deal curbing nuclear activities that Tehran says are for peaceful energy purposes.

The UN Security Council adopted six resolutions, four of which imposed sanctions, against Iran's nuclear and missile programmes between 2006 and 2010.

Since 2012, the United States and the European Union have also applied a series of unilateral sanctions that specifically target the energy and banking sectors.

Iranian oil exports have fallen from more than 2.2 million barrels per day (bpd) in 2011 to about 1.3 million bpd, and Iran is banned from the SWIFT global banking network.

"The enemies keep us from selling our oil," Rouhani said in the speech to mark the 33rd anniversary of the liberation of the Iranian city of Khorramshahr, a symbolic victory in the Iran-Iraq war of 1980-1988.

The banking industry is also under a form of occupation because "we cannot send or receive money" overseas, he said.

"It is as if blood was prevented from flowing in [our] veins," Rouhani added.

In early April Tehran and world powers concluded a framework agreement aiming to pave the way for a final nuclear agreement by June 30.

Political and technical experts from both sides held talks on drafting the text in Vienna on Friday with negotiations due to resume on Tuesday in the Austrian capital.

Separately, Iran's Oil Minister Bijan Zanganeh reportedly said on Sunday that the Organisation of petroleum Exporting Countries (OPEC) is unlikely to change its production ceiling when the group meets in June, according to the semi-official Mehr news agency.

"Lowering OPEC's production ceiling requires consensus between all members... under current conditions it seems unlikely that the OPEC production ceiling will change," Zanganeh was quoted by Mehr as saying.

Last month, Zanganeh said the producing group should cut its target daily crude production by at least 5 per cent, or approximately 1.5 million bpd.

OPEC will meet on June 5. At its last meeting in November, OPEC, led by oil kingpin Saudi Arabia, decided against cutting output to defend its market share, resisting calls by some members such as Iran and Venezuela to reduce production to shore up prices.

Brent oil settled down $1.17, or 1.8 per cent, at $65.37 a barrel on Friday.

Lower oil prices have caused pain for OPEC's less wealthy producers, including Iran. While the June 5 meeting in Vienna is likely to hear renewed demands from some OPEC members for a reduction in the amount of oil pumped, even officials from countries which favour a curb see it as unlikely.

Iran wants other OPEC members to make way for a rise in its exports if it succeeds in reaching a final deal with six world powers over its nuclear programme.

BRASILIA/RIO DE JANEIRO — Brazil will freeze 69.9 billion reais ($22.58 billion) worth of spending on investment, education and health programmes this year, limiting outlays in a bid to convince investors that President Dilma Rousseff is committed to saving the nation's investment-grade rating.

In addition to cutting the budget, Rousseff earlier on Friday raised the income tax for banks, another sign that her government is ready to push ahead with austerity despite stiff political opposition.

The budget freeze, which was in line with market expectations, was the largest since Rousseff took office in 2011 and will bring discretionary government spending back to levels of 2012.

"This is a big effort that indicates the government willingness to meet our goal," Planning Minister Nelson Barbosa told reporters in Brasilia. "This is the first step for Brazil to return to growth."

Still, most analysts believe the freeze will not be enough to meet Brazil's fiscal surplus goal of 1.1 per cent of the gross domestic product (GDP). The government lowered the goal from 1.2 per cent after a revision to GDP figures of recent years.

Last year's freeze, which is an annual commitment not to spend on already budgeted items, was 44 billion reais.

Barbosa said the government will freeze a total of 21.2 billion reais for education and health, but that priority social programmes will be preserved.

Since winning a close reelection in October, Rousseff has raised taxes on everything from cosmetics to cars and limited spending to rebalance public accounts and shield Brazil's credit rating after years of lavish spending.

That austerity faces fierce resistance from Rousseff's allies in Congress, who believe more tightening will only worsen an expected recession. Lawmakers have watered down two measures cutting pension and unemployment benefits.

To make up for the losses, Rousseff raised the income tax rate for banks to 20 per cent from 15 per cent to collect 4 billion reais in revenues annually.

International Monetary Fund (IMF) chief Christine Lagarde, visiting Rio for a central bank event, applauded Rousseff's austerity drive, saying the freeze "demonstrates the political courage and the determination" to hit the government's target.

As in Europe, fiscal austerity is raising political tensions and starting to weigh on Brazil's once-booming economy.

Economic activity tumbled in the first quarter and unemployment surged to a four-year high, official data showed. Economists expect the Brazilian economy will shrink 1.2 per cent this year, according to a central bank poll.    

The head of the IMF encouraged Brazil Thursday to pursue fiscal discipline, saying it was needed to protect social programmes benefitting the poorest members of society.

Lagarde made the link during a visit to Complexo do Alemao, one of Rio's largest and most dangerous slums, and a visible example of the challenges facing Brazil as it struggles with low growth and high inflation.

She chatted with a group of women, who had received government aid and training that enabled them to open small businesses in Complexo do Alemao and other favelas in Rio.

"Fiscal discipline is the necessary basis for financing programmes like these," Lagarde stressed. "They go together, they go hand in hand."

"The people who suffer the most with fiscal indiscipline at the end of the day are generally the poor," she said. 

The IMF earlier this year urged Brazil to "strengthen the credibility of economic policy".

The world's seventh largest economy has endured four years of slow growth and this year the IMF predicts a 1 per cent contraction amid rising inflation.

It is now cutting back spending with a goal of producing a surplus of 1.2 per cent of GDP.

Some 60,000 people live in the Complexo do Alemao, grouping 15 favelas where residents often have to run the gauntlet during shootouts between police and drug traffickers.

As well as offering economic advice, Lagarde watched a demonstration of capoeira, an Afro-Brazilian martial art comprising elements of dance and visited a centre where locals sign on to the Bolsa Familia family assistance programme.

The government-financed scheme and other social programmes are credited with lifting tens of millions of Brazilian families out of absolute poverty over the past decade.

To obtain the stipend, families must ensure that their children attend school and participate in vaccine programmes.

Lagarde saluted the Bolsa Familia scheme as having produced "absolutely exceptional" results.

"The fact that Brazil spends 0.5 per cent of GDP on the fight against poverty via its Bolsa Familia is remarkable," she told reporters.

KUWAIT CITY - Gulf oil producers, led by Saudi Arabia, will resist attempts to cut output at a Organisation of Petroleum Exporting Countries (OPEC) meeting next month as preserving market share remains their top priority, industry analysts said.

A decision by the 12-member OPEC not to cut production in November sent prices crashing 60 per cent before a partial recovery in recent weeks.

Gulf and other OPEC members said they wanted to safeguard their share of a market that has faced a supply glut as a result of sharp increases in the production of shale and sand crudes.

“Preserving market share still remains a top priority for Gulf states,” Saudi economist Abdul Wahab Abu Dahesh said.

“This time they are even encouraged by signs their November strategy is working after a drop in US shale oil production and in the number of rigs,” Abu Dahesh told AFP.

In the face of the sharp drop in their earnings, some OPEC members, led by Iran and Venezuela, have publicly called for the group to cut production to support prices.

“I don’t think that any change will happen at OPEC’s meeting,” a former member of Kuwait’s Supreme Petroleum Council, Musa Maarafi, said. “Gulf states will continue to defend their market share and it is their right to do so.” 

“They will not accept to cut output at their own expense unless an agreement is reached with non-OPEC producers,” he added.

The burden of any cut in OPEC output would likely fall on the group’s Gulf members, Saudi Arabia, Kuwait, the United Arab Emirates (UAE) and Qatar, whose production has risen by around 3.5 million barrels per day (bpd) since 2011.

Currently, they pump 16.8 million bpd, or 55 per cent of OPEC’s total, with Saudi Arabia accounting for 10.3 million bpd. They export around 12.5 million, almost two-thirds of the group’s total.

Mounting competition

Head of marketing at national oil conglomerate Kuwait Petroleum Corp. (KPC) Jamal Al Loughani told a symposium last week that a change in the global energy map has made market share a highly sensitive issue.

He said the sharp rise in US production to 9.4 million bpd had allowed Washington to stop light crude imports from Africa. 

It also cut imports of heavy oil from Latin America, substituting it with Canadian sand oil. 

“That led African and Latin American exporters to seek new markets in the east,” said Loughani, indicating that more than 3 million bpd of additional high good quality crudes are being pumped into these markets in competition with Gulf exports.

“That places additional pressure on OPEC members, especially Gulf exporters, to cooperate to maintain market share and even ensure new takers for additional quantities in the future,” he added.

A relative rebound in prices and a drop in US shale oil output is likely to convince OPEC to continue with its strategy.

Data from the US Department of Energy showed US crude production dropping 112,000 bpd to 9.26 million bpd in early May.

“Prices are improving, growth in supplies from outside OPEC, especially shale oil, is lower than before and demand is recovering,” Kuwait’s governor at OPEC Nawal Al Fuzai told reporters last week.

Over the past few weeks, oil prices have climbed about 40 per cent but remain well below their levels of more than $100 a barrel in June last year.

Fuzai said crude oversupply dropped from around 2 million bpd late last year to between 1 million and 1.2 million now.

But Commerzbank warned in early May that “the oil market will continue to be oversupplied until OPEC significantly cuts its output”.

And the International Energy Agency (IEA) reported that the group’s output hit 31.21 million bpd in April, the highest level since September 2012.

“It would thus be premature to suggest that OPEC has won the battle for market share,” the IEA said. “The battle, rather, has just started.”

Separately, Saudi Arabia and its main Middle East OPEC partners are turning down Chinese requests for extra oil as they hold back fuel for their own refineries just as demand from the world’s biggest crude importer hits new records.

While the Saudi and other refusals for additional crude supplies may not be part of a new pricing strategy, the rejections to their biggest client help explain a 40 per cent rise in oil prices this year as Chinese importers have had to seek more oil from other suppliers in what analysts say is still an oversupplied market.

Senior Chinese oil traders told Reuters the Saudis have turned down requests from Chinaoil and Unipec, the respective trading arms of PetroChina and Sinopec, for extra cargoes of crude for May and June loadings, forcing them to seek supplies from producers in West Africa, Oman and Russia.

Saudi Arabia “used to provide as and if we asked for extra cargoes on top of contract during the first four months of the year, but not for May and June”, said a trader with one of China’s biggest oil importers on condition of anonymity as he had no permission to talk to media.

Another source with a Chinese refinery that takes Saudi oil said Saudi heavy crude was “a bit tight” in May and June.

Reuters pricing and trade flow data show a 40 per cent rise in Brent crude since January has coincided with a more than 10 per cent fall in overall Middle East supplies to China , although in historical terms they remain high.

“Our analysis shows that Saudi flows to China have fallen quite a bit in May and their overall market share in China has also fallen,” said Yan Chong Yaw, Director of Thomson Reuters Oil Research and Forecasts in Asia.

The research group’s latest China crude report shows Saudi Arabia’s share of Chinese imports dropped to just over 30 per cent in May from 36.5 per cent in April.

Saudi Aramco, which was not available for comment, had already reduced contractual supplies to some Japanese and South Korean customers in April.

The trader with one of China’s big importers said requests for more crude to Kuwait and the UAE, Saudi Arabia’s closest partners in OPEC,  were similarly turned down.

PetroChina and Sinopec officials were not available and seldom comment on trading activity.

With imports of 7.4 million bpd, China overtook the United States as the world’s top crude oil buyer in April.

Needs of their own

Behind the stingier responses to requests for more oil lie mostly domestic factors. Saudi Arabia has traditionally been an exporter of crude oil but an importer of refined products.

That’s changing. Its new 400,000 bpd Yasref refinery became fully operational in April, taking in Saudi heavy crude oil to produce and export petroleum coke, diesel and gasoline.

Saudi Aramco started up its Jubail refinery of the same size last year and also plans to build a third 400,000 bpd facility by 2018.

Other Middle Eastern producers such as the UAE’s Abu Dhabi National Oil Co are also ramping up refineries, and the region is entering its peak burning season in which it uses more crude to generate power for air-conditioning.

“Over the summer, Middle East producers, particularly Saudi Arabia and Abu Dhabi, will have limited additional barrels for sale as new refineries continue their ramp up and increased summer burn absorbs supply,” said US-based research and analysis provider Pira Energy.

Supplies of heavy grades have also been tightened by the shutdown of two fields jointly operated by Saudi Arabia and Kuwait,  the Khafji in October for “environmental issues” and the Wafra last week for maintenance amid a land dispute, taking nearly 500,000 bpd of oil out of production.

Asian customers have as well been wary of the quality of Iraq’s new Basra Heavy grade and trying to switch to other crudes, according to industry sources.

Despite turning down some Asian requests, Saudi Arabia and its Middle East allies are still keen to meet as much Asian demand as possible.

The refusals come weeks after veteran Saudi oil minister Ali Al Naimi visited Asia and said demand for its oil was strong, but that Saudi Arabia’s record oil output of over 10 million bpd was ready to meet the needs of its clients.

OCCUPIED JERUSALEM — Gaza's economy is in a worse state than any other in the world, with unemployment at a global high, output contracting sharply and the long-term prospects worrying, the World Bank said on Friday.

Repeated rounds of conflict, internal divisions and the embargo Israel and Egypt impose have left the territory "on the verge of collapse", the report said, with its 1.8 million population facing poverty and destitution despite vast aid.

"Blockades, war and poor governance have strangled Gaza's economy and the unemployment rate is now the highest in the world," indicated the report, drafted by Steen Lau Jorgensen, the World Bank's director for Gaza and the West Bank.

It is to be presented in Brussels on May 27.

"Gaza's exports virtually disappeared and the manufacturing sector has shrunk by as much as 60 per cent. The economy cannot survive without being connected to the outside world," the report said.

Among the startling statistics cited in the report are:

Overall unemployment now stands at 43 per cent, and 68 per cent among those aged 20-24.

Gaza's current real gross domestic product (GDP) is only a couple of percentage points higher than it was 20 years ago. Over the same period, the population has increased by 230 per cent.

Last year's war between Israel and Hamas led to a 15 per cent contraction in GDP for the year.

Real per capita income in Gaza is now 31 per cent lower than it was in 1994.

Between 1994 and 2012, Gaza's manufacturing sector, which should be the driver of the economy, shrank by 60 per cent.

 Disease a threat

While the World Bank tracks Gaza's malaise back more than 20 years, the economic deterioration has accelerated since 2006, when Hamas won elections and began running the territory, taking over full control in 2007.

Since then, there have been three wars between Hamas and Israel, with Hamas firing rockets across the border and Israel responding with artillery, air strikes and ground forces.

The war in July-August 2014 was the most devastating, with more than 2,000 Palestinians killed and 120,000 houses damaged or destroyed. More than 70 Israelis were also killed.

On top of the conflicts, internal divisions have conspired against Gaza, with Palestinian leaders in the West Bank determined to freeze out Hamas and its authoritarian rule.

And then the blockade, first imposed by Israel in 2007 and later joined by Egypt, has compounded the problems: exports from Gaza have fallen to almost zero since 2007, while imports are equally small and heavily restricted.

As well as the raw economic impact, the World Bank highlighted the socioeconomic and mental toll the situation is having. More than 80 per cent of Gazans receive some form of aid, but 40 per cent remain below the poverty line. 

Mental health and trauma experts estimate that a third of children displayed signs of post-traumatic stress disorder even before the 2014 conflict.

"The status quo in Gaza is unsustainable," Jorgensen said in the 40-page analysis. "The feeling of hopelessness is pervasive, in particular following the summer 2014 war.”

"The access and quality of basic services such as electricity, water and sewerage is rapidly deteriorating and pandemics of infectious diseases are a real threat," he concluded.

AMMAN — Jordan Securities Commission last week authorised Philadelphia Pharmaceuticals Company to raise its capital to JD5 million.

The capital increase from JD3 million will be achieved through capitalising JD2 million of retained earnings and distributing them as bonus shares at a rate of two for every three shares held by shareholders on June 2, 2015.

The bonus shares mark the first dividends given to shareholders since Philadelphia Pharmaceuticals became a public shareholding company in 2006.

After few years of losses and weak performance, the company forged ahead in 2013 when sales shot up to JD4.5 million from JD1.2 million in the previous year and the JD0.5 million loss recorded in 2012 turned into a JD0.6 million profit that expanded significantly in 2014.

According to 9th annual report as of December 31, 2014, sales surged by 132 per cent reaching JD10.4 million, of which JD7.7 million were exports and JD2.7 million were local sales.

The net profit at the end of last year amounted to JD3 million, 364 per cent higher than the JD0.6 million generated in 2013.

During the first quarter of this year, Philadelphia Pharmaceuticals increased sales to JD3 million, 15.4 per cent higher than the JD2.6 million registered during the first three months of 2013.

Net profit at the end of March 2015 came at JD0.8 million compared to JD0.7 million at the end of March 2014.

The balance sheet as of March 31, 2015 showed total assets at JD9.3 million, of which JD1.9 million were property, equipment and machinery. Receivables accounted for JD4.8 million of the total assets.

As of March 31, 2014, total assets amounted to JD7.9 million, JD3.3 million of which were receivables.

Of the JD2.5 million in total liabilities, loans and bank credits stood at JD1.2 million, compared to JD0.9 million at the end of last year's first quarter when total liabilities were JD1.9 million.

Auditor PricewaterhouseCoopers Jordan indicated in a quarterly review report that the company's operations are marked by credit risk concentrations as sales to four principal clients represented 94 per cent of the total compared to an 88 per cent rate in 2013.

Although four primary customers also owe the company 96 per cent of total receivables, compared to 89 per cent in 2014, the auditor said the company did not encounter any problems in collecting its dues from those clients in the past.

Chairman Munther Ahmed Hussein wrote in the annual report that Philadelphia Pharmaceuticals changed the operation mechanism in one the company's main markets and also changed two of its agents abroad.

He highlighted Gestophil as a new hormone product that the company started marketing in Iraq besides the local market, indicating that new brands were acquired to be marketed and sold in Gulf Arab countries and Iraq.

"Based on set plans, several new products will be launched this year," the chairman said in a foreword, indicating that Philadelphia Pharmaceuticals will be entering in 2015 one of the big and promising markets within its field.

Noting that the company's top priority was to have distinguished and qualified staff, Hussein said that the number of employees increased last year to 134 from 88 workers to keep up with advancement, especially the research and business development departments.  

Hussein mentioned raising the manufacturing efficiency with new production, packing and packaging equipment, and stressed the importance of development and registration of new products.

According to the annual report, capital investment at the end of last year amounted to JD7.9 million.

Shareholders equity was higher at JD5.9 million compared to JD2.9 million at the end of 2013.

The factory, situated on a 4,479 square metres of land in Sahab, operates two main production lines spread over 3,599 square metres, Another 943 square metres are ready for future expansion.

WARSAW — Cushioned by growth and facing elections, Poland is becoming an outlier in central Europe, where other countries are trying to curb the growing strength of their currencies in the face of the eurozone's massive money-printing plan.

Hungary, Romania and Serbia have all cut rates this year to prevent their currencies from gaining too much, as the European Central Bank's (ECB) programme feeds 60 billion euros a month into the continent's economy through September 2016.

The Czech Republic has put a cap on the value of the crown and pledged to intervene to keep it from rising

Poland, on the other hand, says it will not cut interest rates from the current 1.5 per cent, even though the zloty has risen nearly 7 per cent against the euro since the start of 2015, more than any other regional currency.

And with Polish bonds providing a significant yield premium over negative or rock-bottom euro yields, more cash is likely to flood in, barring a major flare-up in neighbouring Ukraine or a Greek exit from the eurozone.

"Poland is clearly more confident than its neighbours of sustaining relatively strong growth without a weaker currency," said Manik Narain, a strategist at UBS in London.

Indeed, all recent data show a recovering economy, which the government expects will grow at 3.4 per cent this year. While inflation is currently at minus 1.5 per cent, the government expects it to reach 1.7 per cent by next year. The housing market, at least in Warsaw, is robust.

What's more, presidential and parliamentary elections are due this year, and a strong currency plays well with voters enjoying cheaper vacations and imported goods, analysts note.

There are also 550,000 Poles holding mortgages denominated in Swiss francs. They saw monthly payments jump after January, when the Swiss central bank abandoned its cap on the franc. A weaker zloty would exacerbate their plight, probably to the detriment of the ruling Civic Platform.

"Poland has some of the strongest cyclical numbers in terms of industrial output and retail sales, plus there is the fact that Europe's economy continues to improve. This is causing them to hold back," said Koon Chow, investment strategist at Swiss private bank UBP.

A side effect of Poland's reluctance to curtail zloty appreciation is likely to be more investment flows from funds fleeing the euro zone's negative yields, Polish 5-year bonds yield a respectable 2 per cent-plus.

In fact, Poland's inflation-adjusted rate of 3 per cent is the highest among 23 big economies, bar Brazil and Nigeria, Reuters data shows.

Negative yields

The zloty jumped 1 per cent on Monday, approaching recent 3 1/2-year highs.

Chow reckons if the zloty appreciates further, Poland will have no choice but to follow its neighbours' lead and stem appreciation. A 25 basis points (bps) rate cut by mid-year is likely, he says.

So far, of all the countries struggling to contain their currencies, the Czech Republic has gone furthest. It cut interest rates to near zero in 2012, and in late 2013 declared it would keep the crown weaker than 27 per euro to ward off deflation.

However, the Czech economy was in recession in 2012 until early 2013. In contrast, Poland has grown robustly for the last 20 years. That makes deflation a far greater threat for Prague.

Hungary, meanwhile, resumed policy easing in March, cutting rates to a record-low 1.8 per cent and signaling more ahead. Government plans to cut Hungary's high banking tax show its intention to ask banks to increase lending, analysts say. That makes low interest rates a necessity.

Romania and Serbia have also cut rates and both have intervened in currency markets to tamp down the leu and dinar  .

All that has taken some steam out of those currencies. The forint, for instance, is down about 1 per cent since the April 21 rate cut.

A key motivation, of course, is trade. Exports, mostly to the eurozone, accounted for 88 per cent of Hungary's annual economic output, World Bank data for 2013 showed. Czech exports were 77 per cent of gross domestic product (GDP).

Poland, by in contrast, with 40 million people, has a healthier domestic market, with exports comprising just 46 per cent of GDP.

Still, for some, central bankers' lack of concern is worrying, especially as the zloty's impact is already being felt among exporters. The exchange rate, currently 4 per euro, is just 3 per cent off 3.91. Beyond that level, companies say,  exports become unprofitable..

And business sentiment has worsened this year, with the zloty's appreciation and falling prices having "negatively affected sales margins, both export and domestic ones",  according to a central bank poll, which also predicted  "relatively low exports dynamics" ahead.

At less than 4 zloty to the euro, "exporters will be in a difficult situation," Chow said. "Also, you can't assume European growth will remain firm. It's not an environment where monetary conditions should be tight."

Many will agree. Analysts polled by Reuters see one chance in four that policymakers would intervene to weaken the zloty this year. But that is probably some way off.

"We probably need to see zloty closer to 3.9 before they take a more activist approach,"  Narain of UBS said.

PARIS — The gap between the rich and poor in most of the world's advanced economies is at record levels, according to an Organisation for Economic Cooperation and Development (OECD) study that also found glaring differences between men and women.

In most of the 34 countries in the OECD, the income gap is at its highest level in three decades, with the richest 10 per cent of the population earning 9.6 times the income of the poorest 10 per cent.

In the 1980s this ratio stood at 7 to 1, the OECD indicated in a report.

The wealth gap is even larger, with the top 1 per cent owning 18 per cent and the 40 per cent only 3 per cent of household wealth in 2012.

"We have reached a tipping point. Inequality in OECD countries is at its highest since records began," said OECD Secretary General Angel Gurria.

As high inequality harms growth prospects, there are economic as well as social arguments for governments to try to address the issue, he added.

"By not addressing inequality, governments are cutting into the social fabric of their countries and hurting their long-term economic growth," Gurria continued.

The study found that the rise in inequality between 1985 and 2005 in 19 OECD countries knocked an estimated 4.7 percentage points off cumulative growth between 1990 and 2010. 

An increase in part-time and temporary work contracts as well as self-employment was seen as an important driver of increased inequality, with half of all jobs created in OECD countries between 1995 and 2013 falling into these categories.

The report also found that as inequality rose, there were significant falls in educational attainment and skills among families in lower income groups, thus implying large amounts of wasted potential and lower social mobility.

As wages for women are 15 per cent less than for men, ensuring gender equality in employment is one way to reduce inequality.

Redistributive taxes and transfers is another effective option, said the OECD as it noted that existing mechanisms have been weakened in many countries. 

"To address this, policies need to ensure that wealthier individuals, but also multinational firms, pay their share of the tax burden," added the OECD, which has been playing a key role in an international effort to crack down on tax avoidance.

It also encouraged countries to broaden access to better jobs and encourage greater investment in education and skills throughout working life.

The report found inequality to be highest in Chile, Mexico, Turkey, the United States and Israel among OECD countries.

It was lowest in Denmark, Slovenia, Slovak Republic and Norway.

KUALA LUMPUR — Malaysia's Prime Minister Najib Razak laid out his government's growth strategy for the next five years on Thursday, mixing spending on infrastructure with populist pledges on jobs and housing as he looks to shore up support amid growing criticism.

Presenting the plan to parliament, Najib forecast gross national income (GNI) per capita would rise 7.9 per cent per annum, enough to hit the goal set two decades ago of joining the ranks of high-income nations by 2020.

Najib, who leads a government under fire over allegations of state corruption and mismanagement, indicated that Malaysia's real gross domestic product (GDP) would grow at a steady 5 to 6 per cent annually until 2020, despite the impact of falling energy prices on the oil and gas producer.

"We foresee greater volatility and uncertainty in the global economy as a result of the decline in oil prices, realignment of exchange rates, as well as geopolitical risks," Najib said in a foreword to the five-year blueprint.

"In order to sustain our growth momentum and ensure that the rakyat [people] continue to prosper, we need to forge ahead with greater resolve and introduce bold measures for the long-term benefit of all Malaysians," he added.

The target of becoming a fully developed economy by 2020 was first laid out by long-serving former prime minister Mahathir Mohamad, now a scathing critic of Najib over alleged corruption in debt-ridden state investment fund 1MDB.

The 11th Malaysian Economic Plan pledged 260 billion ringgit ($72.18 billion) to achieving its development goals over the next five years, and included promises of more jobs and affordable housing as the government seeks to rebuild popular support.

The plan comes as Malaysia navigates a tricky economic environment of slumping energy prices that threaten oil and gas revenues. The country's currency, the ringgit, has dropped to six-year lows against the dollar.

"The plan was drafted for an ideal environment," said Kenanga Investment Bank economist Wan Suhaimie Wan Saidie. "It's hard to judge if the plan would be successful after five years when anything can happen politically and economically."

Feel-good measures

In the blueprint, Najib said GNI per capita would reach 54,100 ringgit ($15,690) in 2020, just above the 2020 target of $15,000, with average monthly household income increasing to 10,540 ringgit from 6,141 ringgit in 2014.

Najib's "people-anchored growth" plan also included a slew of feel-good measures aimed to ease the burden of rising costs of living and poor infrastructure in his government's electoral heartland in rural parts of the Borneo region.

Besides promising resources to build more than 600,000 new affordable homes, the five-year plan offered more opportunities for the ethnic Malay community and other so-called Bumiputeras, or "sons of the soil", who together make up about 68 per cent of the population.

Bumiputeras have benefited from wide-ranging affirmative action privileges since the early 1970s, a policy that critics say has stunted the country's competitiveness.

Infrastructure projects outlined in the report included new power plants, the construction of airports in the Borneo state of Sarawak, a high-speed rail link with Singapore and urban light rail transit projects.

There were also promises of more schools and hospitals.

 The opposition criticised the plan as being light on details and containing little new.

"The 11th Malaysian Plan is not rooted in reality, is not transparent and is far from being a game changer," said opposition lawmaker Ong Kian Ming.

An unpopular new goods and services tax (GST), introduced to help offset the shortfall from falling energy revenues, would bring in about 31.4 billion ringgit per year over the next five years, versus 15.5 billion ringgit through the previous sales tax and services tax, Najib indicated.

Malaysia's dependence on oil-related revenue would decline to 15.5 per cent of revenue by 2020, from just under 30 per cent currently, the report said.

The federal government's total debt was projected to drop to 45 per cent of GDP by 2020, from 54.5 per cent as of December 2014.

Private investment was expected to grow at an annual 9.4 per cent between 2016-2020 with an estimated annual investment of 291 billion ringgit.

Public investment would grow at 2.7 per cent per annum at an annual average of 131 billion ringgit, the plan stated.

Financial markets showed little reaction to the announcement of the five-year plan, with the benchmark share index  dipping around 0.4 per cent.