Business

WASHINGTON — Income inequality can lead to slower or less sustainable economic growth, while redistribution of income, when measured, does not hurt and can even help an economy, according to a research study by International Monetary Fund (IMF) staff.

Although the study by IMF economists does not reflect the fund’s official position, it is another sign of a shift in its thinking about income disparity.

“It would still be a mistake to focus on growth and let inequality take care of itself, not only because inequality may be ethically undesirable but also because the resulting growth may be low and unsustainable,” the study said.

The IMF analyses the economies of each of its 188 member countries and offers advice on government budget and monetary policies. It is also a lender of last resort, tasked with supporting global financial stability.

It has traditionally advised countries to promote growth and reduce debt, but has not explicitly focused on income inequalities. In the past year, IMF Managing Director Christine Lagarde has said that creating economic stability is impossible without also addressing inequality.

Oxfam, the international development group, has long argued that organisations like the IMF need to address rising gaps between the rich and poor, and stop encouraging low public spending.

“In the bad old days, the IMF asked governments to cut public spending and taxes,” said Nicolas Mombrial, the head of Oxfam’s Washington office. “We hope this research and Christine Lagarde’s recent statements are a sign that they are changing their tune.”

Economists are still divided about the relationship between growth and income inequality, which has spiked around the world as economies struggle in the wake of the 2007-2009 financial crisis.

Some have also blamed rising income inequality for contributing to the crisis in the first place, by encouraging more borrowing by people who wanted to maintain their standards of living. 

Jonathan Ostry and Andrew Berg, two of the authors of the IMF paper, also researched the link between income inequality and growth in 2011.

At the time, Ostry said the response was that income redistribution rather than inequality was responsible for hurting growth: some argued that inequality prompted governments to transfer money to the poor, which reduced incentives to work.

Their follow-up paper on Wednesday showed redistribution was not to blame.

“We find that inequality is bad for growth... in and of itself,” Ostry told reporters on Wednesday. “And we can say that redistribution by itself doesn’t seem to be bad for growth, unless it’s very large.”

They said there was evidence that extremely high taxes or transfers to the poor, such as which occurs in some European countries, could hurt growth. But they found that redistribution also helped growth by reducing inequality.

The researchers cited the benefits of taxes on activities of the wealthy that could hurt an economy, like excessive financial speculation, and payments to the poor to support their children going to school.

Much of the thinking has been that, even if a large wealth gap is bad, that the cures of taxes and wealth transfers to correct the problem usually hamper growth.

“Many argue that redistribution undermines growth, and even that efforts to redistribute to address high inequality are the source of the correlation between inequality and low growth,” they said. “If this is right, then taxes and transfers may be precisely the wrong remedy: A cure that may be worse than the disease itself.”

But the authors said experience across a number of countries has provided “remarkably little evidence” for that conclusion.

Indeed, they said, “faster and more durable growth seems to have followed the associated reduction in inequality”.

“The average redistribution, and the associated reduction in inequality, seem to be robustly associated with higher and more durable growth,” the economists added.

The authors are cautious to avoid saying the effects of redistribution are positive in every case or situation, and note that extreme efforts can have a bad outcome.

But overall, they argue that redistribution programmes should not be excluded from policy out of fear they would hold back an economy.

“It would still be a mistake to focus on growth and let inequality take care of itself, if only because the resulting growth may be low and unsustainable. “Inequality and unsustainable growth may be two sides of the same coin.”

BARCELONA — Once the mobile world’s pioneers, Nokia, Motorola and BlackBerry are now the industry’s sorry laggards, searching for lost glory.

Analysts hold out little hope for them as they struggle to get back in a game now lorded over by Samsung and Apple.

“All those historic handset makers like Nokia, Motorola and BlackBerry completely missed the boat when the smartphone arrived,” said Bengt Nordstrom, head of the Swedish consultancy Northstream. “They missed the touch screen step.”

Finland’s Nokia, Canada’s BlackBerry and the United States’ Motorola; they all lost a lot of money in 2013.

Nokia’s handset business, in the process of being taken over by Microsoft, reported losses of 780 million euros ($1.07 billion) last year.

Motorola posted a loss of $1.03 billion in the same period.

This month, Motorola’s owner, Google, shed the business, selling it to rising Chinese smartphone manufacturer Lenovo for $2.91 million.

BlackBerry, in which Canada’s Fairfax Financial Holdings is a major investor, racked up a loss of $5.4 billion in just the nine months to November 30.

“We are definitely here to compete and to win back some lost ground before the end of the year,” BlackBerry’s recently appointed Chief Executive John Chen told reporters at the February 24-27 World Mobile Congress in Barcelona, Spain.

BlackBerry’s budget Z3 

BlackBerry showed off two devices — the Q20 with its trademark physical keyboard and the budget-priced Z3 with a touchscreen aimed at the Indonesian market — to help it try to claw back market share.

The two BlackBerry smartphones were the first to be produced under a five-year partnership with Foxconn, the Taiwanese manufacturer that is also a key supplier to a major rival, Apple.

BlackBerry aims to target corporate customers.

“Our turnaround strategy is to focus on enterprise,” Chen indicated. “We are always known as the number one in security.” 

Analysts were pessimistic about his chances.

“BlackBerry; that is a lost cause, I think,” said Nordstrom.

Lawrence Lundy, analyst at Frost & Sullivan, agreed.

“They have tried so many things in past years and nothing has worked. I can’t see BlackBerry maintaining a device presence much longer,” Lundy added. “They missed the touch input, they really believed in the keyboard even seeing the success of iPhone.”

Nokia remains the world’s second-largest handset manufacturer with 13.9 per cent of the market in 2013, but that share is dwindling and it relies largely on traditional mobiles. 

In the smartphone market, Nokia did not even rank among the top five last year.

At the industry fair this week, Nokia showed off a new range of Nokia X smartphones powered by a version of Google’s Android operating system.

It was a surprise move because Android competes directly with Windows Phone, owned by Microsoft, which is wrapping up its Nokia takeover during this quarter.

According to Nokia France Managing Director Thierry Amarger, the manufacturer used the cheaper Android operating system because it aims to sell the devices for less than 150 euros, targeting a fast-growing entry-level market for smartphones.

But Microsoft will determine the next move for Nokia’s handsets.

“Nokia are in a fairly good position with Microsoft as their backer,” said Nordstrom.

Microsoft rebranding 

“For Microsoft, there will be a rebranding exercise and they will spend a lot of money on it but there is no evidence they will catch up with Apple and Samsung,” he cautioned.

“When Nokia was a dominant player, it was twice as big as the third player. Today Samsung is 8-10 times bigger than the third player,” Nordstrom indicated

Nokia will be hampered, too, he remarked, by being tied to Microsoft’s Windows Phone system, which is dwarfed by Android and Apple’s iOS.

Motorola, however, may have a slightly brighter outlook after its takeover by China’s Lenovo, said Julian Jest, analyst at research group Informa.

“That will change the dynamics of how Motorola operates,” Jest noted.

However, Motorola could struggle to innovate, he said, because Google had retained most of its patents and creative staff. 

Motorola was the only one of the three strugglers not to launch a new product during the world’s largest mobile fair.

Motorola is “pretty strong” in Latin America and in North America, where it remains the number-three manufacturer, said its product management director, Rick Osterloh.

Lenovo’s scale and position in the PC business would give Motorola unprecedented access to technology, he added in Barcelona.

SINGAPORE — The apparent collapse of Tokyo-based bitcoin exchange Mt. Gox isn’t bothering Anthony Hope and others who have ditched steady careers in government and finance to build bitcoin companies — and who stand to lose money they have in Mt. Gox.

Hope, a former British Treasury official and now head of compliance at Hong Kong-based MatrixVision, says that while Mt. Gox’s fate is unclear, its troubles form part of a wider shift as more professional players move into the bitcoin mainstream. 

“It’s good for us as a business, not so good for us as consumers,” he said. “Over the longer term it will be good for bitcoin because over time the entire ecosystem will be made more robust.”

Steve Beauregard, chief executive officer and founder of Singapore-based GoCoin, is more blunt about Mt. Gox’s woes: “It’s important in the sense of sweeping away a lot of the early unsophisticated folk who got into this and made a name for themselves, but didn’t have the management horsepower to manage a company.”

Mt. Gox, at one time the biggest bitcoin exchange, abruptly stopped trading this week amid reports on the Internet that more than 744,000 bitcoins — worth around $380 million at prevailing rates — had been stolen. If accurate, that would mean around 6 per cent of the world’s 12.4 million bitcoins minted would be missing. The exchange’s Chief Executive Officer Mark Karpeles told Reuters in an e-mail that his company was “at a turning point” and would issue a statement “soon-ish”. His LinkedIn profile reads: “I have a long experience in company creation, and experienced almost any imaginable kind of trouble.”

On Wednesday, Japan said its authorities were looking into the Mt. Gox closure, and The Wall Street Journal reported that the virtual currency’s exchange had received a subpoena from federal prosecutors in New York. A spokesman for the US Attorney’s office in Manhattan did not respond to requests for comment.

Also, the European Banking Authority warned bitcoin users they were on their own when it comes to losses from using unregulated online currencies, noting there is no safety net as with mainstream bank deposits. 

“Currently, no specific regulatory protections exist in the EU that would protect consumers from financial losses if a platform that exchanges or holds virtual currencies fails or goes out of business,” it said in a statement.

Bitcoins rallied more than 10 per cent on Wednesday, trading at close to $580, according to coinorama.net, which tracks the rate on various exchanges. 

‘Finance has got boring’ 

While bitcoin’s public image remains one of a network of subversive, libertarian geeks, the past year or so has seen a change in the kind of people launching start-ups, say Hope, Beauregard and others in the fledgling industry.

Hope’s colleagues, for example, include a serial entrepreneur, a former Morgan Stanley mergers and acquisitions specialist and a respected figure from the bitcoin community. Hope handled banking policy, taxation rules and freezing suspected terrorists’ assets for the UK government before he moved to Hong Kong. 

Antony Lewis, meanwhile, joined Singapore-based bitcoin exchange itBit from Credit Suisse last November. His colleagues include a former hedge fund analyst, a venture capitalist who invested in IT start-ups on behalf of the Singapore government and a former forex spot trader. 

“Finance has got boring in the past five years,” Lewis said. “It’s not fun, it’s very backward looking and all the innovation is in virtual currencies.”

Such companies are examples of a maturing — not just of the kinds of people attracted to bitcoin, but of the specialist roles companies play in the nascent bitcoin ecosystem.

MatrixVision, for example, helps bitcoin exchanges integrate with the traditional banking system by complying with local laws and regulations, while GoCoin acts as a “PayPal for bitcoin users”, allowing merchants and others to accept bitcoins without the problems of currency volatility and security risk. 

More discerning users 

For sure, the crisis surrounding Mt. Gox is the worst the young crypto-currency has faced, damaging trust and challenging all bitcoin-related companies to respond. 

“Other major players need to show they avoid the mistakes Mt. Gox made, which they are trying hard to do,” said Tomas Forgac, who founded Singapore-based Coin Of Sale, a service for merchants to accept bitcoins as payment.

That, adds Masa Nakatsu, a Japanese entrepreneur who this month founded his own bitcoin start-up, means bringing in more professional technology companies which are able to work with governments and central banks — a skill he says some of the early bitcoin players have not shown. 

“Players will change,” he says, “as the characteristics of the market change”.

This shake-out is already under way as users learn to be more discerning about where to put or exchange their money.

ItBiT’s Lewis says his exchange has seen a steady flow of funds and new accounts, with trading jumping to 10 times normal levels in just the past few days. “ItBit represents the next wave of exchanges where we care about customers and want to have a go at this,” he says. 

Lewis points to key questions that users need to ask of exchanges before entrusting money to them: How easy are they to hack? How well capitalised is the company? Are the deposits insured? 

ItBit, he says, ticks most of those boxes. Clients’ bitcoin funds are held on a computer that’s not connected to the Internet, and doesn’t even have a hard drive or network card. Only itBit’s funds are used for transactions. It has reached out to auditing firms to inspect its procedures and holds regular meetings with global regulators. Such things aren’t cheap, says Lewis, noting ItBit has raised $5.5 million “and we’ll need more as regulation gets tighter”. 

“The next generation of bitcoin companies will be run by people with previous experience of financial service companies and they will need to be capitalised like financial service companies,” he says.

Beauregard, who divides his time between his Singapore start-up and his California home, says financing this won’t be a problem. His GoCoin has raised $500,000 and is about to close out another round of funding. While the number of bitcoin companies raising six figure sums is limited, that will change, he said. 

“Every venture capital firm will have to have their bitcoin plays in 2014,” he added. “Otherwise they’ll be missing the single greatest asset class that’s emerging at the moment.” 

Hakim Mamoni, Hong Kong-based chief technology officer at bitcoin incubator Seedcoin, says a new raft of exchanges are set to appear in the months ahead. He declined to identify them, since most are operating in what the start-up world calls “stealth mode”. 

“That’s why the Mt. Gox event is not troubling me,” he said. “I know we’ll have a vibrant ecosystem in a few months.”

AMMAN — Royal Jordanian (RJ) announced in a press statement on Wednesday that it will suspend operations to Alexandria starting April and to Colombo and Milan the month after. 

“RJ constantly reviews its route network and studies the stations in order to assess the economic feasibility of each destination,” the airline said in the statement.

“At the forefront of the set criteria that determine route profitability are the traffic, the operating expenses and the required fleet operated on these routes,” it  added.

In addition, the market share plays a big role in such decision, in light of the fierce competition witnessed by the air transport industry on a regional and international level. This year, RJ increased the number of flights to several of its 60 non-stop destinations and reduced the frequency to others, based on last year’s operating results and the opportunities and challenges expected to affect air transportation in 2014.

Separately, RJ told the Jordan Securities Commission in a disclosure about its financial results that net operating income fell last year to JD38.1 million from JD79.2 million at the end of 2012.

“Net income turned into a JD39.9 million loss on December 31, 2013,” the company’s disclosure showed.

At the end of 2012, the airline posted a JD1.3 million profit.

RJ attributed the plunge to political conditions in the region, especially the crisis in Syria, and the high fuel costs.

It revealed that the number of passengers dropped by 123,626 travellers last year bringing down the seat factor to 70 per cent in 2013 from 73 per cent in the previous year.

KUWAIT CITY — Kuwait Projects Co., the Gulf state’s biggest private holding firm, increased net profit by 27 per cent last year on the back of solid performance. Net profit reached 40.1 million dinars ($142.2 million/103.8 million euros), compared with 31.6 million dinars in 2012, the company indicated. Vice Chairman Faisal Al Ayyar said “the very positive performance trends in all our core sectors — including banking, media, real estate and insurance — were evident in the growth and profitability of our companies”. Fourth quarter profit soared 75 per cent to $50 million from $28.4 million a year earlier. Total revenues in 2013 increased 28 per cent to $1.8 billion from $1.4 billion, while consolidated assets at year-end rose to $30.5 billion from $25.6 billion. KIPCO, one of the largest holding firms in the Middle East and North Africa, has significant ownership interests in a portfolio of more than 60 companies operating across 24 countries. It also has interests in the educational and management advisory sectors.

DUBAI — Iran’s non-oil exports are starting to feel the benefits of  easing international tensions under new President Hassan Rouhani, Iranian businessmen at one of the world’s biggest food industry show say.

Organisers of the annual Gulfood fair in Dubai said 46 Iranian exporters have stands at this week’s event, roughly double last year’s number — a sign of Iran’s partial return to the global trading system since Rouhani took office in August.

Key banking sanctions remain in place, making it hard for some Iranian companies to obtain payments for their exports, and difficult business conditions at home continue to hurt.

But an interim agreement with world powers last November to limit Iran’s nuclear programme in exchange for a temporary, partial easing of the sanctions appears to have created conditions for Iranian trade to grow.

“Better political relations pave the way for us to introduce products into more markets,” such as Kuwait and Saudi Arabia, said Reza Rajabinasab, export manager at Amadeh Laziz, an Iranian maker of instant noodles, soups and other food products.

He indicated that his company’s exports, worth millions of dollars annually, had risen 10-15 per cent since Rouhani took power.

Iran Dairy Industries Commercial Co., which sells to Iraq, Pakistan and Malaysia among other countries, said its exports for the first 10 months of the Iranian year that started on March 21 had jumped to $15 million from $9 million in all of the previous year.

Sanctions

Iran’s oil exports, which traditionally account for about three-quarters of its total exports, have plunged by more than half since 2011 because of the sanctions, imposed over suspicions that Iran was trying to develop nuclear weapons.

The collapse has made non-oil exports not banned by the sanctions, such as food, more important to the country as it grapples with a recession and high inflation.

Iran exported $29.24 billion of non-oil goods in the first nine months of the Iranian year, according to customs data quoted by local media. That was down 7.7 per cent from a year earlier, but many of the Iranian firms at Gulfood said the trend had turned positive in the last few months.

Washington does not want to see a boom in Iran’s trade unless Tehran reaches a final agreement on its nuclear programme. President Barack Obama said this month that he would come down like a “tonne of bricks” on companies violating the sanctions.

As a result, most banks around the world — even in Dubai, a hub for Iranian business — still refuse to handle trade payments for Iran. This forces firms to use costly, inconvenient methods such as barter — Amadeh Laziz accepts shipments of food and raw materials as payment for some of its exports.

“Banks in the United Arab Emirates are not doing any business whatsoever with Iran. We are respecting the sanctions,” Abdul Aziz Al Ghurair, chief executive of Dubai’s Mashreq bank, told Reuters this month.

Nevertheless, Rouhani’s diplomacy seems to be helping Iranian exporters in at least two ways.

By creating hope for a resolution of Iran’s nuclear dispute, he has halted wild swings of the riyal currency, which lost roughly half its value against the US dollar in 2012.

“The stabilising of the dollar has helped a lot and decreased the risk of doing business. It’s stabilised our prices,” said Mohammad Ali Khoshbin, an executive at the  Khoshbin Agro Group, which exports pistachios and raisins to North Africa and Europe. 

With the risk of an immediate crisis over the nuclear programme receding, foreign buyers of Iranian products also feel safer signing contracts.

“Definitely, Europe has been in more contact with us” since Rouhani took office, Khoshbin said. 

Domestic environment

Iran’s export industries are also struggling with the legacy of years of chaotic economic management by Rouhani’s predecessor, Mahmoud Ahmadinejad. For example, interest rates have had to be hiked to offset high inflation.

“Companies can’t work well if they face interest rates above 20 per cent, compared to 3, 4 or 5 per cent for their competitors abroad,” said Ali Shariati Moghaddam, general director of Novin Saffron, which exports $30-$40 million of saffron annually.

But there are signs that the Rouhani administration is starting to reform some of the most damaging policies for business, executives said.

Ahmadinejad imposed a 7 per cent tax on dairy exports in order to ensure domestic supplies, but this backfired when some farmers lost money and slaughtered their cows, an official at Iran Dairy Industries said. Rouhani removed the tax, he added.

According to Rajabinasab at Amadeh Laziz, a full lifting of the sanctions would trigger a surge of Iranian exports into global markets, and compared his company to a runner waiting at the starting blocks.

“I am keeping my eye on a number of markets and when the way is clear, I will go after them,” he said.

BEIJING — The Chinese government will decentralise authority, be more transparent and adopt a “zero tolerance” attitude to corruption this year as it deepens its fight against graft, reported state media, citing Premier Li Keqiang.

President Xi Jinping has launched a sweeping crackdown on corruption since taking power, warning that the problem is a threat to the Communist Party’s very survival.

The latest measures were laid out in a speech by Li on February 11, in a meeting on tackling corruption, but only published by state news agency Xinhua late on Sunday.

Li criticised the over-concentration of power by the central government and urged the institution of an open government “as the most effective way to accept supervision”.

“When the government controls too much, directly intervenes in micro-economic activities, it not only influences the ability of the market to play a decisive role in the allocation of resources, it also increases transaction costs and makes it easy for corruption to breed,” Li said.    

In 2013, the government recouped 400 billion yuan ($65.67 billion) during its investigations into corruption, Li pointed out. More than 40,000 officials received disciplinary violations and 10,000 people have been fired, he indicated. 

According to Li, the government will have a “zero tolerance” approach to “corrupt elements” within the government.

“Regardless of who is involved, they must be investigated to the end, they must not be tolerated,” Li stressed.

Li’s speech comes as the investigation into China’s powerful ex-domestic security chief, Zhou Yongkang, has been gaining traction, with a number of close allies coming under scrutiny.  

Zhou was a member of the party’s Politburo Standing Committee — the apex of power — and held the immensely powerful post of security tsar until he retired in 2012. The government has yet to officially announce an investigation into him.    

Li said the government would open its budget and all its accounts further and urged top cadres to “strengthen constraints on their relatives and staff”.

Though the government has professed greater transparency in combating corruption, it has detained dozens of activists who have urged officials to disclose their assets, last month jailing one of those people, the prominent dissident Xu Zhiyong. 

The party has also shown no sign of wanting to set up an independent body to fight corruption, insisting that its internal mechanisms are sufficient. 

Separately, wealthy Chinese are likely to buy fewer luxury goods again this year after the steepest cut-back on spending in at least five years, changing the game for high-end retailers like Louis Vuitton which have staked their growth on China.

Overall spending by wealthy Chinese fell by 15 per cent in 2013, the third consecutive year of decline, according to a survey by the Hurun Report. Spending on gifts in particular also declined by a quarter.

The drop coincides with a government crackdown on corruption and gifting, as well as an a growing penchant for travelling and shopping overseas to circumvent Chinese consumption taxes on luxury goods as high as 40 per cent.

The shrinking ranks of wealthy residents in China has also reduced luxury spending. One in three so-called high net worth individuals have already left, or are planning to leave, the country, the report showed, mostly to seek better opportunities for their children’s education.

Chinese are the top consumers of luxury goods globally. A slowdown in their spending, or a change in shopping habits, would hurt high-end retailers already struggling with a weaker Chinese economy and a more sophisticated clientele that has moved away from logo-branded goods.

Luxury group Richemont, the maker of high-end IWC watches and Cartier jewellery, reported last month slower-than-expected sales growth in the third quarter, largely due to weaker Asian demand. 

LVMH, the world’s biggest luxury goods group, has also seen sales growth slow last year as Chinese demand cooled, prompting the company, and brands from rival Kering SA to offer goods with more discreet logos and in expensive materials.

“In terms of traditional luxury — leathers, accessories, watches — this year is going to be flat if not a little bit down,” Hurun Report founder and chief researcher Rupert Hoogewerf told Reuters.

“For luxuries like tea, healthcare, even education, we are still looking at a booming market,” he said.  

The crackdown on conspicuous spending, which began in 2012, is part of a vow made by Jinping to be tougher on graft. He has focused in particular on gifts made to government officials often in exchange for preferential treatment or contracts.

As a result, many wealthy Chinese now buy luxury goods for themselves, rather than as gifts, Hoogewerf indicated.

Products by Hermes, Chanel, LVMH’s Louis Vuitton brand, Apple Inc. and Gucci remained among the most sought-after brands for gifting, the survey showed.

Less popular were Bulgari — another LVMH brand — Salvatore Ferragamo, Tiffany and Co. and the fiery baijiu liquor made by Chinese firm Kweichow Moutai Co. Ltd., once the top tipple of Communist Party officials.

Affluent Chinese often shop online for the best price globally. They have also become more confident about their fashion choices, mixing high-street clothing and accessories with branded goods.

“There is a much savvier consumer out there,” Hoogewerf said. “There will be more purchasing done overseas than in China. For a brand that’s global it’s fine.”

Over two-thirds of luxury spending by mainland Chinese was overseas in 2013, a factor that contributed to the United States overtaking China as the world’s fastest growing luxury market, according to a study by consultancy firm Bain & company released in December.

China’s superrich are also avid collectors — 70 per cent of wealthy Chinese rank collecting as a hobby — but what they are coveting is changing.

Ancient calligraphy last year surpassed luxury watches as the most-collected, knocking watches out of the No. 1 spot for the first time in five years, the Hurun report showed, which could mean revenue losses for top watch makers but a boon for auctioneers.

Patek Philippe remained the most popular watch brand for collectors for the seventh year running while Christie’s was the top ranked foreign auction house, the report showed.

Besides spending less at home, more rich Chinese are leaving the country. The number of wealthy Chinese who have emigrated or are planning to do so rose to 64 per cent from 60 per cent in the previous year, the survey pointed out.

Most of those leaving, or planning to, are looking for permanent residency overseas — the United States, Europe and Canada are top picks. Very few want to give up their nationality, perhaps because their outlook for China is improving.

The report showed millionaires’ confidence in China’s economy rose for the first time in five years but those who felt “extremely confident” still accounted for only 31 per cent of those surveyed.

The survey’s results are based on responses from 393 Chinese millionaires, or those with personal wealth of at least 10 million yuan ($1.65 million). The Hurun Research Institute has conducted the survey for the past 10 years.

AMMAN –– Jordan’s oil imports went down considerably in 2013 compared with the year before, official data showed Sunday. 

According to the Department of Statistics (DoS) report on the Kingdom’s foreign trade, Jordan imported oil worth JD3.91 billion last year, down by JD545 million or 12 per cent from the JD4.45 billion in 2012. 

The drop in the oil bill was reflected on Jordan’s imports from Saudi Arabia, the Kingdom’s major oil supplier, as the data showed that imports from the Gulf country went down by nearly JD616 million in 2013 to JD2.85 billion from JD3.46 billion in 2012. 

However, the DoS report indicated that Jordanian exports to Saudi Arabia in 2013 increased by around JD127 million to over JD651 million compared to JD523 million the year before. 

Iraq remained the biggest Arab market for national exports, which also went up to JD883 million last year from JD716 million in 2012. 

Imports from Iraq also increased reaching JD269 million last year compared to JD230 million in 2012. 

Exports to crisis-hit Syria dropped by nearly one third, according to the statistics, which showed that Jordanian products exported to Syrian market stood at around JD95 million last year, while in 2012 they reached over JD140 million. 

Imports from Syria increased to JD184 million from JD171 million. 

According to the DoS report, national exports rose to 4.8 billion in 2013, 1.2 per cent higher than the JD4.7 billion recorded the year before. 

Imports rose by 5.4 per cent to JD15.5 billion last year compared with JD14.7 billion in 2012.

Subsequently, the trade deficit widened by 8.5 per cent last year to JD9.9 billion at current prices compared with JD9.1 billion in deficit recorded in 2012.

The DoS noted that the coverage ratio of total exports to imports has declined by 1.8 percentage points to 36.2 per cent from 38.1 per cent.

Topping the list of imports were petroleum products, cars/bikes and their spare parts, steel, grains, equipment and tools, and electrical appliances. 

Major exports were garment, potash, vegetables and fruits, pharmaceuticals and fertilisers. 

SYDNEY — The world’s top economies have embraced a goal of generating more than $2 trillion in additional output over five years while creating tens of million of new jobs, signalling optimism that the worst of crisis-era austerity was behind them.

The final communique from the two-day meeting of Group 20 (G-20) finance ministers and central bankers in Sydney said they would take concrete action to increase investment and employment, among other reforms. The group accounts for around 85 per cent of the global economy.

“We will develop ambitious but realistic policies with the aim to lift our collective gross domestic product by more than 2 per cent above the trajectory implied by current policies over the coming 5 years,” the G-20 statement said. 

Australian Treasurer Joe Hockey, who hosted the meeting, sold the plan as a new day for cooperation in the G-20.

“We are putting a number to it for the first time — putting a real number to what we are trying to achieve,” Hockey told a news conference. “We want to add over $2 trillion more in economic activity and tens of millions of new jobs.”

The targeted acceleration would boost global output by  more than the world’s eight largest economy Russia produces in a year.

The deal was also something of a feather in the cap of Hockey, who spearheaded the push for growth in the face of some scepticism, notably from Germany.

“What growth rates can be achieved is a result of a very complicated process,” Germany’s Finance Minister Wolfgang Schaeuble said after the meeting. “The results of this process cannot be guaranteed by politicians.”

Australia is acting as president of the G-20 this year, following Russia in 2013 and ahead of Turkey next year.

While shifting the focus to reforms that would lift and sustain global growth in years to come, the group acknowledged that monetary policy would need to “remain accommodative in many advanced economies and should normalise in due course”.

The growth plan borrows wholesale from an International Monetary Fund (IMF) paper prepared for the Sydney meeting, which estimated that structural reforms would raise world economic output by about 0.5 per cent per year over the next five years, boosting global output by $2.25 trillion.

The IMF has forecast global growth of 3.75 per cent for this year and 4 per cent in 2015.

As yet there was no roadmap on how nations intend to get there or repercussions if they never arrive. The aim was to come up with the goal now, then have each country develop an action plan and a growth strategy for delivery at a November summit of G-20 leaders in Brisbane.

“Each country will bring its own plan for economic growth,” said Hockey. “Each country has to do the heavy lifting.”

Agreeing on any goal is a step forward for the group that has failed in the past to agree on fiscal and current account targets. And it was a sea change from recent meetings where the debate was still on where their focus should lie: On growth or budget austerity. 

Financial markets had been wary of the possibility of friction between advanced and emerging economies, but nothing suggested the meeting would cause ripples on Monday.

“The text of the communique indicates that the standard US line that what is good for the core of the world economy is good for all seems to have won out,” said Huw McKay, a senior economist at Westpac, noting there was nothing that could be taken as “inflammatory” about recent volatility in markets.

There was a nod to concerns by emerging nations that the  Federal Reserve (Fed) consider the impact of its policy tapering, which has led to bouts of capital flight from some of the more vulnerable markets.

“All our central banks maintain their commitment that monetary policy settings will continue to be carefully calibrated and clearly communicated, in the context of ongoing exchange of information and being mindful of impacts on the global economy,” the communique read.

There was never much expectation the Fed would consider actually slowing the pace of tapering, but its emerging peers had at least hoped for more cooperation on policy.

Hockey said there had been honest discussions among members on the impact of tapering and that newly installed Fed Chair Janet Yellen was “hugely impressive” when dealing with them.

The G-20 also stated that it “deeply regrets” that progress on giving emerging nations more say in the IMF had stalled.

Major emerging powers including India, China, Brazil and Russia, have long lobbied for increased voting power in the IMF to reflect their growing share of the world economy, but the changes agreed in 2010 have been blocked by the US Congress.

The G-20 urged the United States to ratify the reforms before the next meeting of policy makers in April.   

 The group is also progressing with plans to “make sure multinational companies pay their fair share”, said US Treasury Secretary Jack Lew. 

Big budget deficits and revelations that companies such as Apple and Google use structures that lawmakers have labelled “contrived” to avoid billions of dollars in taxes, have led to growing calls to close corporate tax loopholes. The companies say they follow the existing tax rules.

AMMAN –– A delegation of Jordanian businesspeople and representatives of different economic sectors will pay a visit to Indonesia on Monday in an attempt to raise commercial exchange between the two countries. Jordan Chamber of Commerce (JCC) President Nael Kabariti underlined the Kingdom’s commitment to boost economic cooperation with the Asian country. The business delegation will include representatives from the sectors of trade, tourism, transport, construction, automobile, renewable energy, food, olive oil, IT and healthcare among other fields, according to Kabariti.