Business

AMMAN — Consumer price index (CPI) average dropped by 1.2 per cent at the end of the first five months of 2016 compared with the figure recorded at the end of May last year, according to a Department of Statistics (DoS) statement.

The figure was the computed outcome of an increase in the prices of some commodities coupled with a drop in the prices of others. 

The DoS statement, which followed its release of a monthly report on inflation, said the decline was due to a slowdown in transport, fuel and lighting prices, reflecting international trends and a base effect (the elimination of fuel subsidies in 2012 had triggered a one-off upward adjustment in fuel prices). 

Since then, the contribution of these commodities to inflation has dropped. 

Also, the prices of meat and poultry dropped by 7.6 per cent, according to the DoS statement. 

While rents continued to be the main driver for the increase, recreation, clothing and education expenses ticked up, though at a lesser degree.  

The increase in rents partly reflects additional demand by Syrian refugees on housing, especially in the northern governorates. 

GAZA CITY, Palestinian Territories — Instead of going to school, Walid and Ibrahim spend hours each day rummaging through houses destroyed in Gaza’s wars in search of scrap to raise a few shekels for their families.

They were once good students but Walid Maaruf, 11, and Ibrahim Ghaben, 12, had to quit school and earn a living when their fathers lost their jobs.

Israel and Palestinians in the Gaza Strip have fought three wars since 2008, including a devastating 50-day conflict in 2014 in the tiny Mediterranean territory.

Residents have lived under a punitive Israeli blockade imposed 10 years ago and their options are further limited by Egypt, which has largely kept its border with Gaza closed since 2013.

Nearly half the enclave’s 1.9 million inhabitants live under the poverty line, with 80 per cent surviving on humanitarian aid.

Unemployment has risen dramatically to reach around 45 per cent — one of the highest in the world — forcing many children to become bread-winners.

On Sunday, the International Labour Organisation marks World Day Against Child Labour, an initiative that has seen the number of child labourers drop to 168 million from 246 million in 2000.

But in Gaza the trend has been upward.

According to Palestinian estimates, child labour has doubled over the past five years, with 9,700 children aged between 10 and 17 now working in the enclave.

“My father is unemployed, he used to gather stones and scrap metal... but now I work,” said Ibrahim who earns about 20 shekels [$5] a day — toiling six to 12 hours — to feed his family of nine.

The boy, who looks much older than his age, said he and his father used to transport their find on a donkey-drawn cart “but the donkey died”.

All day long, often under a searing sun or howling wind, boys like Walid and Ibrahim scour flashpoint Beit Lahiya — near the border fence with Israel in northern Gaza — for scrap to sell to recycling firms.

The area is attractive because of potential finds of lead from Israeli munitions, but also carries the risk of drawing gunfire from border guards.

“Most of the children who work do so in neighbourhoods along the border fence, and these are the poorest areas,” said psychologist Aida Kassab from the Gaza Community Mental Health Programme.

Labour law flouted

“Sometimes these children are only five and yet they are forced to do a job which is not appropriate for their age, their physical or psychological state,” said Kassab.

Akram Saeed, 14, said he spent years gathering scrap but now he wants out and would like to “learn a useful skill” to improve the lot of his four siblings and parents.

Help came in the form of a Swiss children’s relief agency, Terre des Hommes, which helps families send their children back to school or to attend vocational courses.

“The phenomenon of children who work reflects the economic and social situation of the Gaza Strip,” said Khitam Abu Hamad, who represents the NGO in Gaza.

“There is no job market in Gaza,” she said.

Palestinian law bans children under 15 from working but “it is rarely applied”, said Iyad Abu Hujayr of the Palestinian Centre for Democracy and Conflict Resolution.

He said enforcement has been hampered by divisions between the Islamist movement Hamas, which rules Gaza, and the West Bank-based Palestinian Authority.

These divisions have also allowed abuse by some employers who often force children to work a 12-hour day for as little as 20 shekels, he said. 

The situation is far from improving, said Hyam Al Jarjawi, who is in charge of children’s affairs at the Hamas-run ministry of social affairs.

With each war, “there is more poverty and the more the number of child labourers increases”, she said.

AMMAN —  Investors on Saturday urged different parties and entities representing the industrial sector to join and coordinate efforts to push industry chambers to introduce policy changes leading to sector improvements.

At a meeting, organised by the Jordan Investors Association, they agreed that the chambers should be able to bring about change, especially at the current time of increasing challenges.

Association President Nabil Ismaeil highlighted the absence of a clear strategy for the sector, stressing that the current government should work to ensure economic recovery.

AMMAN — Netherlands' Ambassador to Jordan Paul Van Den IJssel has stressed the importance of cooperation between the private sectors in Jordan and the Netherlands to increase joint trade exchange, which is still very modest.

The ambassador made the remark at a seminar held at Irbid Chamber of Industry last week. The seminar is part of Netherlands Senior Experts Programme, implemented by the Jordan Europe Business Association (JEBA), in cooperation with Dutch embassy in Amman, according to a JEBA statement.

The programme, funded by the Dutch government, seeks to develop the economy in more than 80 countries and to provide technical assistance and advisory experience. The programme promotes better economic cooperation, especially in serving the industrial sectors, according to the statement.

UNHCR - 

AMMAN — For Abu Ahmad, Ramadan got off to a shaky start this year. As the 44-year-old from Homs and his family looked forward to breaking their first day of fasting with the traditional iftar meal in their small apartment in the Jordanian capital, Amman, the gas for their cooker ran out.

“This month I am covered in debt, and I didn’t even have the seven dinars [$10] for a new gas bottle. I had to go to our Jordanian neighbours and borrow the money so that we could eat,” he told UNHCR, the UN Refugee Agency.

Back in Syria, Abu Ahmad described Ramadan as a special time, when his extended family would come together to perform evening prayers and, after breaking their fast, spend long nights in the parks that dotted their neighbourhood of Homs, buying sweets and other treats for their children.

This year marks the family’s third Ramadan in exile, and the contrast with their happy memories back home is stark. “Here we never have enough money for food, even on a normal day, but especially during Ramadan. My children crave things that I know I can’t afford, like apples and juice. That’s why Ramadan here is basically spent indoors, as we can’t afford the expense.”

With the crisis now in its sixth year, Abu Ahmad’s experience is a familiar one for millions inside Syria and in exile in neighbouring countries. The latest UNHCR data from two major refugee-hosting countries — Jordan and Lebanon — reveals an alarming rise in personal debt and impoverishment, ensuring that this Ramadan it will be harder than ever for Syrians to put food on the table at the end of the day.

In Jordan, 85 per cent of the 655,000 registered Syrian refugees are living hand-to-mouth in towns and cities across the country, with 93 per cent now falling below the national poverty line of $88 per person per month. The latest figures from January 2016 show that almost three-quarters of families outside the country’s main refugee camps now live in debt, owing on average US$1,038 including unpaid rent.

Close to half of all Syrian households are forced to borrow money or use credit to buy food, while more than a quarter reported reducing expenditure on other essentials including education and health to meet their basic food needs.

Caught in a spiral of poverty and debt, refugees in Jordan are taking ever-more extreme measures to make ends meet. Only 20 per cent of households reported eating fruit at least once per week, while 40 per cent of families have members who have taken high-risk, illegal, degrading or exploitative temporary jobs to help pay for food and rent.

In Lebanon, which is host to 1.05 million registered Syrian refugees, figures from the end of March show the proportion of families living in debt has increased sharply to 91 per cent, with families owing on average $940. Of the total refugee population, 70 per cent live below the poverty line of $3.84 per person per day, in a country where almost 80 per cent of Syrian refugees are women and children.

The number of cooked meals eaten daily by refugees in Lebanon is steadily declining. In 2015 — the most recent year for which data are available — one in three family members reported eating one or no cooked meals a day, up from one in four the previous year. Increasing poverty is also resulting in less nutritious eating habits, with 60 per cent of households saying they were unable to consume fruit or vegetables on a daily basis last year.

Inside Syria, meanwhile, two thirds of the total population is living in extreme poverty and unable to afford the minimum food needed for survival. The situation has been exacerbated by skyrocketing prices, with the cost of many staples such as bread having doubled in the past year.

In hard to reach and besieged areas, where food availability is often severely limited, some residents have resorted to extreme measures in order to survive, including drinking unsafe water and eating grass.

AMMAN — The World Bank (WB) is downgrading its 2016 global growth forecast to 2.4 per cent from the 2.9 per cent pace projected in January. 

The move is due to sluggish growth in advanced economies, stubbornly low commodity prices, weak global trade and diminishing capital flows, according to a WB statement. 

According to the latest update of its Global Economic Prospects report, commodity-exporting emerging market and developing economies have struggled to adapt to lower prices for oil and other key commodities, and this accounts for half of the downward revision. 

Growth in these economies is projected to advance at a meager 0.4 per cent pace this year, a downward revision of 1.2 percentage points from the January outlook.

“This sluggish growth underscores why it’s critically important for countries to pursue policies that will boost economic growth and improve the lives of those living in extreme poverty,” said World Bank Group President Jim Yong Kim. 

“Economic growth remains the most important driver of poverty reduction, and that’s why we’re very concerned that growth is slowing sharply in commodity-exporting developing countries due to depressed commodity prices.”

Commodity-importing emerging markets and developing economies have been more resilient than exporters, although the benefits of lower prices for energy and other commodities have been slow to materialise, according to the report. 

These economies are forecast to expand at a 5.8 per cent rate in 2016, down modestly from the 5.9 per cent pace estimated for 2015, as low energy prices and the modest recovery in advanced economies support economic activity. 

Among major emerging market economies, China is forecast to grow at 6.7 per cent in 2016 after 6.9 per cent last year. India’s robust economic expansion is expected to hold steady at 7.6 per cent, while Brazil and Russia are projected to remain in deeper recessions than forecast in January. South Africa is forecast to grow at a 0.6 per cent rate in 2016, 0.8 of a percentage point more slowly than the January forecast.

A significant increase in private sector credit — fueled by an era of low interest rates and, more recently, rising financing needs — raise potential risks for several emerging market and developing economies, the report revealed. 

 “As advanced economies struggle to gain traction, most economies in South and East Asia are growing solidly, as are commodity-importing emerging economies around the world,” World Bank Chief Economist and Senior Vice President Kaushik Basu said.  

“However, one development that bears caution is the rapid rise of private debt in several emerging and developing economies. In the wake of a borrowing boom, it is not uncommon to find non-performing bank loans, as a share of gross loans, to quadruple.”

In an environment of anaemic growth, the global economy faces pronounced risks, including a further slowdown in major emerging markets, sharp changes in financial market sentiment, stagnation in advanced economies, a longer-than-expected period of low commodity prices, geopolitical risks in different parts of the world, and concerns about the effectiveness of monetary policy in spurring stronger growth. 

 Growth in the Middle East and North Africa region is forecast to pick up slightly to 2.9 per cent in 2016, 1.1 percentage points less than expected in the January outlook.

The downward revision comes as oil prices are expected to track lower for the year, at an average of $41 per barrel.

The main reason for the slight improvement in regional growth in 2016 is an expected strong recovery in Iran, following the lifting of sanctions in January. 

An envisaged upturn in average oil prices in 2017 is projected to support a recovery in regional growth to 3.5 per cent in 2017.

AMMAN — Jordan faces ongoing trade and investment challenges stemming from the conflict in Syria and across the region, according to the WB latest update of Global Economic Prospects report.

Domestic political and security challenges coupled with continued spillover from external conflicts slowed growth in Jordan in 2015, the WB report update released late Tuesday added.  

Jordan, whose currency is pegged to the US dollar, has experienced deflation since 2015, it indicated. 

The extended period of low oil prices has not been followed by a significant boost to growth in oil-importing countries in the region, but the Kingdom has worked on its subsidies’ policy to contain deteriorating public finances by providing cash transfers to households. 

Yet, deficits remain above 3 per cent of the gross domestic product (GDP) in all oil-importing countries in the Middle East and North Africa region, and are financed by a combination of domestic and international borrowing, the World Bank said. 

This also includes concessional loans from international financial institutions, as is the case in Jordan, Morocco and Tunisia.  

Budget shortfalls are contributing to high and growing government debt as a share of the GDP, most prominently in Egypt, Jordan, and Lebanon, the report indicated. 

In Egypt, interest on this debt absorbs nearly one-third of government revenue, and in Lebanon nearly half, according to the WB revision. 

Unemployment 

Unemployment remains high in oil-importing countries, particularly among youth. The unemployment rate in Jordan rose to 13.7 per cent in the second half of 2015, almost 2 per cent above the 2014 average, continuing an upward trend underway since mid-2014, the report said.  

Estimates indicate that direct and indirect losses of the war in Syria and the advance of the terror group, Daesh, had been a cumulative $35 billion in Egypt, Iraq, Jordan, Lebanon, Syria, and Turkey as of mid-2014.

In several countries not grappling with widespread domestic conflict, including Jordan, a worsening of fragile domestic security or political stability could sap domestic sentiment and investor confidence and undermine economic activity, the report noted. 

In oil importing countries, government debt-to-GDP ratios need to be reduced to more manageable levels, the Bank advised. This applies to Egypt, Jordan, and especially Lebanon, where debt levels are among the highest of all emerging and developing economies.

The complex situation posed by the continued presence of a large number of Syrian refugees will complicate debt reduction in Jordan and Lebanon, the report pointed out. 

JEDDAH, Saudi Arabia — Saudi Arabia has unveiled the first concrete targets in its ambitious effort to move its crude-dependent economy away from oil.

In a press conference in the early hours of Tuesday in Jeddah, officials revealed plans to create some 450,000 non-government jobs by 2020 boost non-oil revenues’ and cut the cost of public wages.

The National Transformation Programme (NTP), endorsed by the Saudi Cabinet late on Monday, is part of Saudi Vision 2030, a reform drive led by Deputy Crown Prince Mohammed Bin Salman, the 30-year-old son of Saudi Arabia's King Salman.

It aims to transform the state-dominated economy of the world's largest oil exporter into a private-sector powerhouse with diverse industrial interests and major international investments.

Saudi authorities have for years discussed plans to diversify the economy, but this effort has been given fresh urgency by the collapse in oil prices by more than half since mid-2014, which has led to a dramatic drop in state revenues.

Addressing reporters, Minister of State Mohammed Al Sheikh explained that the NTP is a five-year roadmap, laying out targets to be met by government ministries and departments.

"This is phase one of addressing the challenges," he said, adding there will be "no substantial fiscal impact" on the state budget, partly because some savings have already been made.

At the heart of the reform effort is a previously announced plan to float less than five per cent of oil giant Saudi Aramco on the stock market, with the proceeds to help form what will become the world's largest state investment fund, with some $2 trillion in assets.

Sheikh said the NTP will be implemented through more than 500 initiatives at a cost of 270 billion riyals ($72 billion) over the next five years, with 40 per cent of the funding coming from the private sector.

A plan to cut the share of public wages in the budget from 45 per cent to 40 per cent will decrease the total cost of state salaries from 480 billion to 456 billion riyals by 2020.

The plan also foresees a huge increase in non-oil revenues from 163.5 billion to 530 billion riyals by 2020, in a major shift in how state coffers are filled.

Officials said no income taxes are planned, but the plan does envisage measures including increases in government fees and taxes on "harmful products".

Further cuts to water and electricity subsidies — already imposed last year after the country posted a record budget deficit — will lead to an additional 200 billion riyals in savings, the plan says.

The creation of non-government jobs will focus on developing Saudi industry in a range of sectors, from renewable energy to car manufacturing to tourism.

Energy, Industry and Mineral Resources Minister Khaled Al Falih said that under the plan Saudi Arabia will be "a very strong competitor in renewable energy", and will implement "massive" projects to produce more natural gas.

He said the ministry plans to build an international complex for marine industries that will provide 80,000 jobs and cut imports by $12 billion annually.

A number of industrial cities are also planned and slated to generate 150,000 jobs, Falih said.

Unemployment is to fall from 11.6 to 9.0 per cent by 2020 under the plan, with the proportion of women in the workforce rising from 23 to 28 per cent.

Education reforms will aim to push more Saudis into the private sector, with the number of students in technical and vocational training programmes rising from about 104,000 to 950,000.

Noting that "transparency is crucial to the success" of the plan, it calls for regular updates on progress in reaching the targets — an unusual display of openness from Saudi authorities. 

Local and foreign reporters were invited to Jeddah for the unveiling of the targets and government ministers were to be available for three days to answer questions.

AMMAN — Danish companies say they found "great opportunities" in the Jordanian markets during a recent tour of the Kingdom. 

“This was a great visit to Jordan. It gave us networks and special insights into which problems that need to be solved. I will bring this with me back home," said Kim Skibsted, director of pump manufacturer Grundfos.

"Then we have to decide, how we in the best possible way will develop our cooperation with partners, especially civil society organisations," Skibsted added, according to a statement by the Confederation of Danish Industry (DI) which organised the visit.

Thirteen Danish companies, two universities, a civil society organisation and the Danish ministry of foreign affairs travelled across Jordan to find opportunities in the market and ways to deliver solutions to refugee camps and host communities, the confederation said in a statement. 

DI Deputy Director General Thomas Bustrup said cooperation between businesses, civil society and government could help to solve complex challenges.

“It takes all parties to engage in solution-oriented partnerships with respect for the values and the purpose of the various parties. The Danish culture with a high degree of trust between the parties gives the opportunity to take the lead in promoting this development,” he said.

AMMAN — The local market is well-stocked with all commodities to meet consumer demand in the holy month of Ramadan, the government confirmed on Monday.

Deputy Prime Minister for Economic Affairs and Minister of Industry, Trade and Supply Jawad Anani said large quantities of household supplies were available, speaking at a ministerial meeting attended by public and private sector representatives on the first day of Ramadan, according to the Jordan News Agency, Petra. 

Anani also highlighted the market’s stability, in terms of prices, pointing out that the ministry has intensified its monitoring efforts, which will continue throughout the month. 

He stressed the importance of the government’s partnership with the private sector to meet citizens’ needs. 

The ministry has recently stopped the export of some food items that are in high demand during Ramadan, he added.  

Ramadan, a holy month for Muslims, sees lots of festivities and banquets and sometimes extravagant hospitality at the end of the daytime fast, after sunset.

 Households often prepare ahead of the month to meet extra expenses, and middle- and low-income families struggle to make ends meet during the month. 

Food costs have risen in Jordan, and prices usually go up in Ramadan due to increased demand, pinching the pockets of consumers.

Anani urged citizens not to rush to buy produce in bulk, but to purchase only what they need, reiterating that all commodities are available at the market at all times.

 To report any market-related violations or complaints, he urged the public to call 06/5661176.