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SINGAPORE — Singapore sovereign wealth fund GIC, which manages more than $100 billion of the city-state's foreign reserves, warned in its annual report of a tough investment outlook over the next decade as global central banks withdraw ultra-easy monetary policies.

According to GIC, prices of all major asset classes have been inflated by the massive stimulus measures, and now face weak future returns.  

"Global financial markets have been recovering strongly from the 2008/09 global financial crisis, supported by low interest rates and unconventional monetary policies," GIC indicated in the report.

As central banks unwind monetary stimulus measures and interest rates increase, "financial assets will see diminished returns", it said. 

The US Federal Reserve is expected to end multibillion-dollar bond purchases in October, winding up a five-year stimulus effort to support the world's biggest economy. The European Central Bank has said it will reassess its stimulus measures at the end of this year.  

"The investment environment for the next 10 years will, therefore, be more challenging for global investors, including GIC," the fund added. 

GIC indicated that its assets earned a 4.1 per cent annualised real rate of return over the past 20 years in the year to March 2014, almost the same as last year's 4 per cent. It does not report the value of its assets.  

Lim Siong Guan, GIC's president, said the fund is committed "to ride out significant short-term volatility and focus on long-term fundamentals".

GIC last year unveiled a new investment strategy that split its global portfolio into three segments, a move it said was in anticipation of a "more challenging and complex investment environment". 

In its annual report this year, the fund said the Americas region including the United States accounted for 42 per cent of its portfolio in the year to March 2014, 2 per cent lower than the previous year.   

Its exposure to Europe was at 29 per cent, 4 per cent higher than in 2013.

Its holdings in Asia stood at 27 per cent, 1 per cent lower than 2013, while the remaining 2 per cent was concentrated in the Australasia region. 

Twenty-nine per cent of its portfolio was in developed markets equities, 19 per cent in emerging markets equities, 31 per cent in nominal bonds and cash, 7 per cent in real estate, 9 per cent in private equity and the remaining 5 per cent in inflation-linked bonds.    

Among its latest investments, in June GIC acquired a stake in US-based anti-plagiarism software maker iParadigms, and in May bought into a Philippine hospital group as well as Brazilian online sports retailer Netshoes.  

GIC is one of two Singapore sovereign wealth funds, the other one being Temasek Holdings. 

The net investment returns from GIC, the central bank, and Temasek account for about 15 per cent of the total government budget in Singapore.

MADRID — Germany strongly signalled Monday it will continue to push for fiscal austerity in Europe alongside Spain, even as France was thrown into political turmoil over its economic policy.

German Chancellor Angela Merkel praised Madrid's austerity drive during a visit to Spain and gave her powerful backing to the country's economy minister in his bid to lead the Eurogroup forum of finance ministers.

Merkel hailed Luis de Guindos' handling of the Spanish crisis, saying he was "an excellent economy minister in Spain in difficult times" during a joint press conference with Spanish Prime Minister Mariano Rajoy.

The German leader's support could be crucial in landing him the job, which would give the austerity policies favoured by Berlin a powerful defender in the European Commission.

Both Merkel and Rajoy, who have been allies in stabilising the finances of heavily indebted Spain, defended the need for further austerity and economic reforms, saying this boosted economic growth.

"The public deficit and debt levels must be reasonable," Rajoy told the news conference in his northwestern home city of Santiago de Compostela. "Structural reforms are sometimes hard, they are sometimes difficult and complicated to explain, but they boost economic competitiveness and levels of well-being and wealth and jobs."

Rajoy's government claims to have overseen something of a recovery in Spain's economy, which emerged last year from a double-dip recession sparked by a 2008 property crash. 

"I share Mariano Rajoy's opinion regarding the combination of budget austerity and reforms," Merkel told the news conference.

The leaders' defence of austerity came as France lurched towards political turmoil after outgoing economy minister, Arnaud Montebourg, criticised Germany's austerity drive and warned Paris would no longer "be pushed around" by the European Union’s (EU) economic powerhouse.

This led French President Francois Hollande to instruct his Prime Minister Manuel Valls on Monday to form a new government.

France's economy is stalling and its central bank warned this month that Hollande had no hope of reaching his target of 1 per cent growth for 2014.

The French economy has been stagnant for the past six months and the government was forced to halve its growth forecast to 0.5 per cent for this year.

'Tightening is much weaker'  

Germany earlier this month snubbed a request from Hollande for an EU-wide shift of economic policy in order to encourage growth.

Since the start of the eurozone debt crisis in 2010, Germany has faced accusations that by failing to use its standing as Europe's biggest economy to do more to kickstart growth, it is leaving struggling partners in the lurch.

But European markets and bonds shrugged off the upheaval in France, boosted by comments last week from European Central Bank (ECB) chief Mario Draghi who suggested recent monetary policy measures would get the eurozone back on its feet.

Hollande and Italian Prime Minister Matteo Renzi have been especially vocal in calling for an easing of the fiscal austerity imposed by Germany.

International Monetary Fund (IMF) chief Christine Lagarde, a former French finance minister, waded into the debate on Monday, saying in an interview that Germany should play a bigger role in propelling economic recovery in Europe.

"What I think is very important for Germany is to participate in the recovery movement in a very intense way. It has the means to do so," she told Swiss public broadcaster RTS.

"We have seen a process of very strong budget tightening over the past three years," she said, adding that "fortunately, in 2014 and 2015, this budget tightening is much weaker".

Describing the European economic recovery as "labourious", the head of the IMF stressed that the continent's economic powerhouse had "room for manoeuvre", as seen in recent wage negotiations.

"That leeway has been disclosed in the salary negotiations between the unions and the employers' organisations," she said, adding that "hopefully that movement will be amplified and will help propel the European recovery".

Last month, Bundesbank chief Jens Weidmann said that German wages had scope to rise by up to three per cent because "we are practically in a situation of full employment".

But this runs counter to many on the German right, including Chancellor Angela Merkel, who believe that low-wage policy has given the country its competitive edge.

But France, which remains mired in a stubbornly slow economic recovery, and other European states have argued that Berlin's big foreign trade surplus is hurting them.

Since the start of the eurozone debt crisis in 2010, Germany has faced accusations that by not using its standing as Europe's biggest economy to do more to kickstart growth, it is leaving struggling partners in the lurch.

On Saturday, Montebourg criticised German austerity measures and warned that France would no longer "be pushed around".

He told the Le Monde newspaper: "You have to raise your voice. Germany is trapped in an austerity policy that it imposed across Europe."

NEW DELHI — India's pricing regulator has fined more than a dozen global and local carmakers a total of 25.5 billion rupees ($420 million) after a probe found they had engaged in anti-competitive practices in the world's sixth largest auto market.

The Indian penalty follows heightened regulatory scrutiny of the auto industry in China, the world's largest auto market. Several global car and spare parts makers have been fined, or are being investigated, by China's anti-monopoly regulator, the National Development and Reform Commission.

The Competition Commission of India (CCI) said in a statement it had fined the 14 automakers after its investigation showed they were restricting access to spare parts, which in turn made them more expensive for consumers.

It listed the automakers fined as the local unit of Honda Motor Co., Toyota Motor Co., Volkswagen AG  and its unit Skoda Auto, BMW AG, Daimler AG's Mercedes-Benz, Fiat SpA, Ford Motor Co., General Motors Co. and Nissan Motor Co.

Local carmaker Tata Motors Ltd. was handed the highest penalty of 13.46 billion rupees. The other Indian carmakers fined were Maruti Suzuki Ltd., Hindustan Motors Ltd. and Mahindra & Mahindra Ltd.

The fine, equivalent to 2 per cent of the carmakers' three-year average India revenue, is payable within 60 days, the regulator noted.

"The anti-competitive conduct... has restricted the expansion of spare parts and independent repairers segment of the economy to its full potential, at the cost of the consumers, service providers and dealers," it said in the statement.

In a statement, Ford's India unit said it was reviewing the order and its implications, adding that the company had been working to enhance the availability of parts.

A Tata Motors spokeswoman also said the company would study the CCI order before making any comment.

Mahindra & Mahindra said it planned to appeal the watchdog's order.  A Honda executive in India was not available for a comment, while a Maruti spokesman declined to comment.

The India representatives of the other carmakers did not immediately respond to request for comment.

The CCI said it had launched its investigation in 2011 after receiving information that spare parts made by some companies in India were not freely available in the market, resulting in higher prices for the parts and repair and maintenance services.

It said it had asked the carmakers to rectify their anti-competitive behaviour, which it said impacted 20 million customers.

TEL AVIV — The Manufacturers’ Association of Israel (MAI) head has urged his European counterparts not to boycott Israeli businesses, warning that such a move could hit Palestinians as well, in a letter seen Monday.

The open letter to European industry leaders comes a week before Israel is due to end exports of poultry and dairy produce from its West Bank settlements to the European Union (EU).

It also comes at a time of growing calls by activists for a general boycott of Israel over its alleged human rights violations in the Palestinian territories.

“I am asking for your support and assistance to convince the business community in your country not to use economic means to penalise their fellow Israeli manufacturers and exporters,” Zvi Oren wrote in the letter obtained by AFP Monday.

“Such actions can only affect our region in a negative way by loss of jobs and growth on both sides [Israeli and Palestinian],” the letter said.

Israeli and European officials on August 17 said the country would from September 1 halt illegal exports to the EU of poultry and dairy produce from its settlements in occupied Palestinian territory.

The EU in 2013 issued guidelines banning European institutions from dealing with Israeli entities operating in settlements.

And there have been growing calls for an economic, academic and cultural boycott of Israel over alleged human rights violations, including in Gaza, where a 49-day conflict has killed more than 2,100 Palestinians, most of them civilians.

Some 22,500 Palestinians are employed in West Bank settlements, 6,000 of whom work in Israeli-owned businesses, according to the MAI.

The chief of the MAI’s international section, Dan Catarivas, told AFP it was “clear that if businesses [in the occupied territories] were affected by the boycott, so would be their Palestinian employees”.

Catarivas said the wider boycott campaign would have an “insignificant” effect on Israel’s economy, given that settlements accounted for at most $300 million of its $45 billion of annual exports.

Some European funds have already been withdrawn from Israeli financial institutions with branches in the West Bank.      

TEL AVIV — Fears that weeks of fighting with Hamas will harm an Israeli economy already hurt by a global slowdown led the Bank of Israel to reduce interest rates for a second month in a row on Monday.

After a surprise reduction a month ago, the central bank again lowered its benchmark short-term interest rate by a quarter-point to 0.25 per cent — an all time low. All 10 economists polled by Reuters had forecast no move.

“Karnit joined the war effort,” said Ofer Klein, head of economics and research at Harel Insurance and Finance, referring to Bank of Israel Governor Karnit Flug.

“It is hard to imagine that without the military operation in the background, the Bank of Israel would choose such an extreme move especially when the United States is already talking about raising interest rates,” he added.

Israel launched an offensive against Hamas fighters in Gaza on July 8 after cross-border rocket strikes by fighters intensified. Thousands of rockets have been fired into Israel, putting consumers off shopping, damaging tourism and curtailing manufacturing activity — particularly in southern plants near Gaza.

“We’re not in a recession but we are definitely in a slowdown in activity,” Flug told Israel Radio following the rate cut.

“We saw this [slowing] in the quarter before the fighting... mainly because of the situation in the global economy, the reduced demands in our main markets and joining this trend now is an additional slowdown as a result of the effects of the fighting,” she explained.

The central bank has estimated the conflict will knock half a point off economic growth. 

“That’s not negligible, and of course businesses in the south [where most Gaza rockets are targeted] feel it much more strongly,” Flug said.

The bank previously forecast an expansion of 2.9 per cent this year but it will publish an updated estimate next month.

In the second quarter, the economy grew an annualised 1.7 per cent according to the government’s preliminary estimate, well below expectations of a 2.5 per cent rise and slower than a 2.8 per cent pace in the first three months of the year.

“There was a further slowdown in economic growth, particularly in goods exports, even before the deterioration in the security situation,” the Bank of Israel said in a statement accompanying the rates decision.

It added that labour market data indicate a halt to the improvement in employment and it foresaw in particular an extended negative impact in tourism and in private consumption. 

Low inflation

The previous rate of 0.5 per cent had matched that seen during the height of the global financial crisis in 2009 but the benchmark rate had never been lower until today. The rate has gradually fallen from a high of 3.25 per cent in mid-2011.

Two moves in as many months is rare in Israel — last seen in May 2013 when the central bank cut rates twice. But the reduction came amid a seven-year low in the inflation rate and data showing Israel’s economy was weakening.

Israel’s annual inflation rate eased to 0.3 per cent in July — below the government’s target range of 1-3 per cent. Some policy makers have blamed weak consumer demand for the benign inflation.

“There was an additional decline in the inflation environment this month,” the central bank said. It added that expectations in the coming year are close to 1 per cent.

Israel’s shekel weakened by 1.7 per cent this month versus a basket of currencies and “continued depreciation will support a recovery in exports and in the tradable sector”, the Bank of Israel indicated.

Jonathan Katz, economist at Leader Capital Markets, said he thought the central bank would wait a few months before lowering rates again.

“The combination of the decline in inflation, a decline in inflation expectations, a moderation of economic activity in the second quarter even before the Gaza operation and a global picture that is not really encouraging — especially in Europe and Japan — supported the decision to lower interest rates,” he added.

After the rates announcement, the shekel weakened to 3.57 per dollar  from 3.5430 while key Tel Aviv stock indexes rose 0.8 per cent.

Flug said the main short-term influence is expected to be in the foreign exchange market, in which the shekel has weakened more than 3 per cent against the dollar the past month to a six-month low — after reaching a three-year high last month and prompting calls from exporters for aggressive action.

“I think that this lowering of the interest rates will contribute to the depreciation, and this will strengthen the ability of exporters to compete in the world, remembering that the world is still in very moderate growth and our main markets are suffering so the ability to strengthen the competitiveness of exports is very important especially at a time like this,” she explained.

Harel’s Klein does not believe the low rate environment will remain for long. “When interest rates start to rise around the world around the middle of 2015, Israel’s rates will also rise,” he said.

AMMAN — Zambia is a promising market to Jordanian exporters, according to the honorary consul of Zambia to Jordan Yousef Uzaizi. He said Monday that medicines and agricultural products achieved positive results, noting that several companies signed contracts to export their products to Zambia benefiting from the economic growth the 14-million-people country has witnessed. The consul urged firms to tap religious tourism as Catholics are eager to visit the Christian holy places in the Kingdom, noting that Zambian officials who visited these sites are willing to organise religious trips to them. He said although the copper industry tops the Zambian economy, the country wants to encourage agriculture, but lacks technologies, especially in the fertilisers field. Uzaizi added that he started contacting Jordanian producers of fertilisers to acquaint them with export opportunities. Uzaizi also pointed to the construction sector as a potential area for Jordanian  contractors. 

FRANKFURT — German Economy Minister Sigmar Gabriel has given the go-ahead for defence technology company Rheinmetall to build an amoured vehicle factory in Algeria, the weekly Der Spiegel reported on Sunday. The 28-million-euro ($37 million) contract covers an assembly line for Fuchs armoured personnel carriers and their parts, the magazine said, quoting the economy ministry. The plant is to be built around 400 kilometres east of Algier, the report stated. The contract dates back to a visit to Algeria by Chancellor Angela Merkel in 2008 and had already been largely approved by her previous administration, it added.

MADRID — Shoppers risk paying more for their olive oil this year as a drought in Spain and a blight in Italy wither trees in the two top producers, driving up prices.

Months of dry weather have struck Andalusia in the south of Spain, the world's biggest producer of the "yellow gold".

In the second-biggest grower Italy, the bacteria xylella fastidiosa has shrivelled olive branches in the southern Puglia region.

"Prices will rise by 30 to 40 per cent because there will be fewer olives and therefore less oil produced," indicated one olive farmer in Puglia, Raffaele Piano. "But quality will not be affected." 

"There is no cure. The only solution is to burn the infected trees to stop the bacteria spreading quickly," he said.

Producers in parched Spain say they expect their prices to rise too over the coming months as the October harvest approaches, but hesitate to forecast by how much.

In an early warning sign, the market price of virgin olive oil has crept up over recent weeks from 2.40 euros to 2.70 euros ($3.59) a kilogramme, says the Spanish olive oil federation Infaoliva. It warns the rise will continue.

Fewer olives rolling into farmers' nets this autumn makes a recipe for higher prices when combined with ever-mounting demand worldwide.

Olive oil has long been a staple of the Mediterranean diet, and over recent decades it has become popular in cooking in many parts of the world because of its perceived benefits for health.

Demand has surged by 60 per cent in the past 20 years, driven by China, the United States, Australia and Canada, according to the International Olive Oil Council.

Praying for rain 

Spain produced 1.77 million tonnes of olives in the last harvest from October 2013 to June 2014, according to the agriculture ministry.

"Last season was exceptional. Production was very big," 40 per cent higher than the average of the previous four years, indicated Cristobal Gallego, an olive oil official for a cooperative of food producers in Andalusia.

"Everything indicates that the next harvest will be very close to the level of the one two years ago" which was just 618,000 tonnes, he warned.

Enrique Delgado Hidalgo, secretary general of Infaoliva, forecast that the harvest could be "between 800,000 and a million tonnes".

"The harvest will be limited but sufficient to supply the domestic and international markets," he said.

The Germany-based analysis institute Oil World gave a more optimistic forecast, estimating that Spain will produce between 900,000 and 1.1 million tonnes this coming harvest.

A price rise, meanwhile, would be "good news for producers", who suffered losses when strong production last year drove prices down, said Thomas Mielke, director of Oil World.

In the life cycle of olive groves, "there is often a decline in production per tree after a year of strong production", which will be aggravated this year in Spain by the drought, he added.

Watering the olive trees cannot make up for the lack of rain in sweltering Andalusia, Gallego warned.

In the heart of the poor farming region of Andalusia, where olive groves blanket the hillsides as far as the eye can see, the province of Jaen alone accounts for 45 per cent of Spain's production. It is among the areas hit by the drought.

Ahead of the harvest which starts in October, farmers will be watching the skies for signs of September rain which could change their fortunes.

AMMAN — Amman Chamber of Industry Chairman Senator Ziyad Homsi on Saturday called for activating the National Product Protection Law and the Competitiveness Law to face importation practices that harm Jordanian products. He said the government needs more international expertise to safeguard national interests in the face of harmful practices and accompanying trade violations within the import process from various countries around the world.  Homsi called for having reciprocal relations in the foreign trade policy the government uses with international partners, stressing the existing practices negatively affect national products in trade exchange in some export markets. Homsi said the Jordanian industry faces obstacles and sudden decisions at customs crossings in some markets due to administrative measures and technical constraints other than the credited standards. He added that the chamber will enhance its relation with educational, training and research institutions to provide the industrial sector with suitable expertise and needs. This procedure aims to develop the sector’s products and increase their technological component in a way that would improve relative characteristics and competitiveness in the national industry. 

MOSCOW — Russia's farm sector needs an additional 636 billion rubles ($17.6 billion, 13.2 billion euros) of investment to replace the products it banned in response to Western sanctions, Agriculture Minister Nikolai Fyodorov said on Friday.

"We prepared a reasonably optimistic scenario of the sector's development that foresees additional financing of not one trillion, but just 636 billion rubles from 2015 through 2020," the minister was quoted as saying by the state-run RIA Novosti news agency. 

Russia earlier this month imposed sweeping bans on food from the United States, the European Union (EU) and a handful of other countries in response to Western economic sanctions. 

The trade war is part of a broader crisis in East-West relations sparked by Russia's perceived attempts to split strife-torn Ukraine in two after Kiev's decision to seek a closer political and economic alliance with Europe.

Officials expressed confidence at the time that Russia would be able to make up for the shortfall with imports from Latin American and other allied countries as well as additional investments in its own agricultural sector.

But the cost of doing so is only now becoming clear. The figure cited by Fyodorov is as much as three times a recent estimate from Deputy Prime Minister Arkady Dvorkovich.

Russia relies heavily on foreign fruit and vegetables because its long winters and inhospitable climate keep farmers from growing produce desired by the country's booming middle class.

It imports huge volumes of Australian and European meat along with US poultry and Norwegian salmon — all banned under Russian President Vladimir Putin's orders earlier this month.

Russia also depends to a large degree on foreign seeds for the foods it does grow.

While the Russian government has considerable revenue from oil and gas exports, the slowing economy and uncertainty has nearly choked off growth.

Separately, Russia has lifted a ban on dairy imports from two firms in Serbia, the government's food health service said on Saturday, in an apparent attempt to woo the EU membership candidate amid Moscow's stand-off with the West.

The veterinary and phytosanitary service Rosselkhoznadzor said on Saturday that it has included two Serbian firms in the list of the companies which are allowed to sell dairy produce to Russia and its Customs Union with Belarus and Kazakhstan.

It said the firms had previously been banned for unspecified breaches of food regulations on a recent, unspecified date.

The service has lifted the ban just as the EU has asked new candidates, including Serbia, not to exploit the Kremlin's ban on Western food imports.

"Why now? Maybe the Serbs want to use the current situation and get into the [Russian] market as far as it can get," a spokesman for the service told Reuters.

Some Serbian food producers, particularly fruit farmers, have reported a spike in demand from Russia, but capacity is limited. In 2013, just 7.2 per cent of Serbia's total exports worth some $65 million, went to Russia.

Serbia said it would honour a call from Brussels not to profit from Russia's ban on Western food — but stopped short of saying it would curb its own exports.

Prime Minister Aleksandar Vucic said his government would not intervene to stop Serbian farmers from shipping their produce to Russia as that would be "contrary to the interests of the state".

But he pledged to "comply with the EU recommendations" and not provide any subsidies to Serbian producers to help them boost exports to Russia. 

Serbia's food and agriculture exports to Russia totalled $117 million in the first half of the year, according to official figures.

Agriculture Minister Snezana Boskovic Bogosavljevic, who has been in Moscow for talks meat and dairy trade talks, said that represented just 0.2 per cent of Russia's annual food imports.

"Even if Serbia reaches a peak of its export to Russia, it would be only 0.4 to 0.5 per cent of Russian imports, an insignificant percentage that threatens no one," she said.

Last week Russia said it will allow imports from neighbouring Belarus and Kazakhstan of food processed from Western raw materials.

"Our Customs Union colleagues can win in this situation because some products, which were previously coming to us directly, will be processed there," Russian news agencies quoted Dvorkovich as saying.

A duty-free Customs Union was set up this year by Russia, Kazakhstan and Belarus to boost economic ties and trade.

Russian Prime Minister Dmitry Medvedev said he hoped Western food import bans would not last too long.

Belarus and Kazakhstan said they will continue to import food banned by Russia but Minsk has said it will make sure sanctioned goods do not cross into Russia.

However, since Moscow announced the bans some traders have been looking for ways to sidestep them.

Last year, Russia imported $17.2 billion worth of food from the countries covered by the sanctions, of which $9.2 billion was in the affected categories, according to the International Trade Centre, a joint venture of the United Nations and World Trade Organisation.