Business

TOKYO — Prime Minister Rishi Sunak Thursday announced Japanese investment of more than $22 billion into the UK, but accepted carmakers' concern about Brexit trade rules as he confirmed talks with the European Union.

Visiting Tokyo ahead of a G-7 summit in Hiroshima, Sunak said the investment by Japanese companies of £17.7 billion ($22.1 billion) was a "massive vote of confidence" in the UK economy.

It includes planned funding of about £10 billion for offshore wind and hydrogen energy projects from Japanese trading house Marubeni, Downing Street said.

Sunak said the deals showed the fruits of post-Brexit Britain becoming the first non-regional economy to accede to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). 

But the UK's divorce from the EU remains a serious headache for companies.

European carmaker Stellantis has warned it could close some UK factories should Sunak's government fail to tweak Brexit trade rules, to ease the supply of batteries for electric vehicles.

Ford, Jaguar Land Rover and German car industry lobby group VDA have all reportedly joined in calls for tariff-free access to be maintained despite a looming deadline under the EU-UK Brexit deal.

"It's something that car manufacturers across Europe, not just in the UK, have raised as a concern," Sunak told British media in Japan.

"And as a result of that we are engaged in a dialogue with the EU about how we might address those concerns when it comes to auto manufacturing more generally," he said.

BEIRUT — The World Bank has warned that nearly half of crisis-hit Lebanon's economy is now cash-based as trust in banks has plummeted, heightening money laundering risks and slashing hopes for recovery.

Lebanon has been mired since 2019 in an economic crisis that the World Bank has dubbed one of the worst in modern history, as the currency's market value has fallen by at least 98 per cent against the dollar.

As a result, the cash economy has nearly doubled in size from 26.2 per cent of gross domestic product in 2021 to nearly half of GDP last year, the Washington-based body said in a report Tuesday.

"A pervasive and growing dollarised cash economy is a major impediment to Lebanon's economic recovery," the report warned.

The trend has adverse implications on "fiscal and monetary policy, significantly heightens the risks of money laundering, increases informality and facilitates tax evasion", it added.

The World Bank estimated Lebanon's cash economy to be at around $9.9 billion, or 45.7 per cent of GDP in 2022.

"Cash economies make it easier to conceal the source of funds for illicit and illegal activities," it added.

Lebanon's currency plunge has driven price hikes including on fuel, food and other basic goods, with supermarkets pricing items in dollars and many private employers paying salaries in cash.

Banks have imposed draconian withdrawal restrictions, essentially locking depositors out of their life savings and prompting them to back away from a collapsing banking sector.

"A cash economy has come to gradually replace the banking sector," the report said, adding that "the root cause of a pervasive cash economy is the loss of confidence in the insolvent banking sector".

"An increasing reliance on cash transactions threatens to completely reverse the progress that Lebanon made towards enhancing its financial integrity... before the current crisis," the report said.

Despite the gravity of the crisis, Lebanon's political elite, which has been widely blamed for the financial collapse, has failed to take action.

Since last year, Lebanon has had no president and only a caretaker government, amid persistent deadlock between rival factions.

A French judge probing central bank chief Riad Salameh's wealth in Europe on Tuesday issued an international arrest warrant for him, a source close to the case had told AFP.

AMMAN — The economies of the Gulf Cooperation Council (GCC) are projected to grow at a slower pace in 2023 compared to the previous year, in the face of lower oil and gas earnings and a global economic slowdown, according to the new World Bank Gulf Economic Update (GEU). 

The GCC is expected to grow by 2.5 per cent in 2023 and 3.2 per cent in 2024. This compares to the region’s remarkable GDP growth of 7.3 per cent in 2022, which was fuelled by a strong increase in oil production for most of that year, said a statement from the World Bank.

The weaker performance is driven primarily by lower hydrocarbon GDP, which is expected to contract by 1.3 per centin 2023 after the OPEC+ April 2023 production cut announcement and the global economic slowdown. However, robust growth in the non-oil sectors, which is anticipated to reach 4.6 per cent in 2023, will dampen the shortfall in hydrocarbon activities, driven primarily by private consumption, fixed investments and looser fiscal policy in response to 2023’s relatively high oil revenues. 

The latest issue of the World Bank’s GEU states that this year’s more modest growth is nonetheless buoyed by the structural reforms undertaken in the past few years. Improvement to the business climate and competitiveness, and the overall improvements in female labor force participation in the GCC countries, especially in Saudi Arabia, have all paid off, though further diversification efforts are still needed and is underway.

This issue of the GEU, titled “The Health and Economic Burden of Non-Communicable Diseases in the GCC” focuses on how non-communicable diseases (NCDs) have become the leading cause of mortality and morbidity, accounting for close to 75 per cent of all deaths and disability in the region. Of these deaths and disability, more than 80 per cent are attributed to just four main NCD categories: Cardiovascular diseases, diabetes, cancer and respiratory diseases. 

The report also highlights the substantial cost of NCDs to the economies of the GCC countries. A recent study published in the Journal of Medical Economics, a collaborative effort between experts at the World Bank and key stakeholders from across the GCC, estimated the direct medical costs of seven major NCDs to be around $16.7 billion in 2019 alone. The same study found that NCDs also impose substantial indirect costs to their economies, through the adverse impact on human capital. The losses to workforce productivity alone cost the GCC economies more than $80 billion in 2019. With an ageing population, and with it the prevalence of NCDs, these costs are only expected to grow in the future.   

Addressing the health and economic burden of NCDs in the region requires addressing the underlying risk factors that cause NCDs in the first place. Central to those risk factors are the modifiable behavioural risk factors such as unhealthy diet, lack of physical exercise, and the use of tobacco and sugar products. Environmental risk factors such as air pollution are also important.  Air pollution levels in the GCC are currently far above OECD averages. 

“Many of the GCC countries have already taken impressive steps to address such risk factors, including taxing tobacco products and sugary drinks, restricting or banning the advertisement, promotion or sponsorship of tobacco, and reducing the amount of salt through reformulation. Several GCC countries have also set themselves important environmental targets. There is an opportunity to do much more to minimise NCDs and their costs in the future.” said Issam Abousleiman, World Bank Regional Director for the GCC. 

The report emphasises that to effectively address the health and economic burden of NCDs requires a whole of government approach, a strategic focus on prevention, the targeting of the young and adolescents, and the development and implementation of evidence informed and contextually relevant multi sectoral interventions. Government agencies need to work together now to minimise the future threat of NCDs.   

GCC country outlooks

Bahrain: Bahrain’s economic outlook hangs on oil market prospects and the results of the accelerated implementation of its structural reforms’ agenda under the revised Fiscal Balance Programme. Growth is projected to moderate to 2.7 per cent in 2023 before averaging 3.2 per cent during 2024-25 as fiscal adjustments continue. Growth in the hydrocarbon sector is expected to contract by 0.5 per cent in 2023 while the non-hydrocarbon sectors will continue expanding by 3.5 per centsupported by the recovery in the tourism and service sectors and the continuation of infrastructure projects.  

Kuwait: Economic growth is expected to slow to 1.3 per cent in 2023 in response to a more cautious OPEC+ production approach and sluggish global economic activity. The Oil sector is anticipated to contract by 2.2 per cent in 2023 despite the newly established Al Zour refinery.  Kuwait’s non-oil sectors are anticipated to grow by 4.4 per cent in 2023 driven primarily by private consumption. Policy uncertainty caused by political deadlock is expected to undermine the implementation of new infrastructure projects.  

Oman: Oman’s economy is forecast to continue to grow, but at a slower pace, driven primarily by accelerated implementation of structural reforms under Vision 2040. Overall growth is projected to moderate to 1.5 per cent in 2023 reflecting softening global demand. Accordingly, the hydrocarbon sector isanticipated to contract by 3.3 per cent reflecting OPEC+ recent production cuts while the non-oil economy is projected to continue its recovery trajectory by growing 3.1 per cent in 2023 supported by frontloading of infrastructure projects, increased industrial capacity from renewable energy, and the tourism sector.  

Qatar: Real GDP is estimated to slow down to 3.3 per cent in 2023 after the strong performance registered in 2022, with the hydrocarbon sector expanding by 0.8 per cent. The North Field expansion project is expected to boost the hydrocarbon sector in the medium term once the field enters commercial operation. Meanwhile, robust growth is anticipated during this year in the non-hydrocarbon sectors, reaching 4.3 per cent, driven by private and public consumption.

Saudi Arabia: Following a stellar GDP expansion of 8.7 per cent in 2022, economic growth is projected to decelerate to 2.2 per cent in 2023. A fall in oil production – as Saudi Arabia abides by OPEC+ agreed production cuts – will contract oil sector GDP by 2 per cent. However, with oil prices remaining at relatively high levels, loose fiscal policy and robust private credit growth are expected to cushion the contraction in the oil sector. As a result, non-oil sectors are anticipated to grow by 4.7 per cent in 2023. 

United Arab Emirates: Economic growth in 2023 is expected to slow compared to 2022 due to a decline in global economic activity, contraction in oil production, and tightening financial conditions. Accordingly, real GDP is projected to grow by 2.8 per cent in 2023 to reflect a decline in oil activity growth of 2.5 per cent while a strong non-oil sector growth of 4.8 per cent will soften the contraction in oil activities, driven by robust domestic demand, particularly in the tourism, real estate, construction, transportation and manufacturing sectors.  

DOHA — State-owned QatarEnergy on Tuesday said it awarded a contract worth around $10 billion to a joint venture of France's Technip Energies and Consolidated Contractors Company (CCC) for a landmark natural gas field.

The value of the engineering, procurement, and construction contract for the North Field South (NFS) project "is around $10 billion, and its scope covers the construction of two mega" liquefied natural gas trains with a combined capacity of 16 million tonnes per year, QatarEnergy said.

"Technip holds a comfortable majority of the capital," a source close to the French company told AFP.

CCC is a global engineering and construction firm.

The LNG trains, together with further expansion of North Field East, will boost Qatar's total production from 77 to 126 million tonnes per year, QatarEnergy said.

NFS and North Field East form the wider North Field Expansion project to increase LNG production. The North Field contains the world's biggest natural gas reserves and extends under the Gulf into Iranian territory.

Qatar's Energy Minister Saad Sherida al-Kaabi, who is also QatarEnergy's chief, called the latest deal "another significant milestone in the world's largest LNG project".

The project includes "a large CO2 carbon capture and sequestration facility... leading to 25 per cent-plus reduction of greenhouse gas emissions when compared to similar LNG facilities", Technip said in a statement.

Asian countries led by China, Japan and South Korea have been the main market for Qatar's gas, but it has been increasingly targeted by European countries since Russia's war on Ukraine threw supplies into doubt.

BRUSSELS — The EU on Monday gave the green light to Microsoft's $69 billion takeover bid for US video game giant Activision Blizzard, just weeks after the British competition regulator blocked the deal, putting it at risk.

The deal is also under threat in the US giant's homeland, where last year the Federal Trade Commission launched a legal action to block it, one of Washington's biggest ever interventions to stop tech industry consolidation. 

Xbox-owner Microsoft launched its gigantic bid for Activision Blizzard early last year to create the world's third biggest gaming firm by revenue after China's Tencent and Japan's PlayStation maker Sony, provoking antitrust concerns.

Activision Blizzard's hit titles also include "Candy Crush" and "World of Warcraft". If it goes ahead, it will be the biggest deal ever in gaming if it goes through.

The European Commission, the bloc's powerful anti-trust authority, said the approval was "conditional on full compliance with the commitments offered by Microsoft".

"The commitments fully address the competition concerns identified by the commission and represent a significant improvement for cloud gaming as compared to the current situation," it added in a statement.

The European Commission said that if Microsoft lives up to its promises, it will allow gamers to stream Activision's titles on any cloud gaming streaming services operating in Europe.

"The European Commission has required Microsoft to license popular Activision Blizzard games automatically to competing cloud gaming services," Microsoft Vice Chair Brad Smith said. 

"This will apply globally and will empower millions of consumers worldwide to play these games on any device they choose."

But, unless Microsoft wins an appeal against the block by Britain's Competition and Markets Authority (CMA) last month, experts say it will be game over for the bid.

The CMA blocked the bid over concerns it could kill competition in the fast-growing cloud gaming market, and lead to less choice for British gamers in the future.

"If Microsoft does not win the appeal in the CAT, it cannot proceed with the acquisition even if the European Commission now approves it," said Anne Witt, a professor of anti-trust law at EDHEC business school in France.

"Unless, of course, Microsoft decides to leave the UK market. But that seems unlikely," she told AFP earlier this year.

If a regulator in one country does not approve a takeover, the merged company would not be able to operate that market. 

While Britain is a smaller market compared with the European Union and the United States, millions use Microsoft products, including its ubiquitous Windows operating system.

This is the first major split decision between regulators in the EU and in Britain since the UK's exit from the bloc at the start of 2021. Japan has already approved the acquisition, and there is still a legal process ongoing challenging the merger in the United States.

Cloud gaming boom 

Technology firms, including Microsoft, want a slice of the growing demand for "cloud gaming" as gamers move away from physical consoles to subscriptions and virtual access, allowing users to play games over devices like mobile phones and tablets.

The CMA pointed out in an analysis, however, that Microsoft already accounts for between 60 per cent and 70 per cent of cloud gaming services.

Microsoft has insisted to regulators that the merger will not hurt competition, promising that it would give access to Activision's games to 150 million more people.

It has already agreed deals to bring the "Call of Duty" to the Nintendo console and cloud game streaming services offered by Nvidia, Boosteroid and Ubitus.

Sony has alleged that the deal will give Microsoft the power to limit rivals' access to the popular franchise but Brussels said in Monday's decision that it found Microsoft "would have no incentive to refuse to distribute Activision's games to Sony".

The commitments that Microsoft offered that eased the EU's fears include a free licence to European users to stream, via any cloud game streaming services, all current and future Activision Blizzard PC and console games for which they have a licence.

"In such a fast-growing and dynamic industry, it is crucial to protect competition and innovation. Our decision represents an important step in this direction," EU competition chief Margrethe Vestager said.

The US Federal Trade Commission last year filed a suit to block the takeover, alleging that Microsoft had previously acquired smaller gaming companies in order to take the games exclusive.

Erbil — Iraq is still waiting for a formal response from Turkey to resume oil exports from the autonomous Kurdish region, Kurdish officials said on Friday, a day after Baghdad announced they were to resume Saturday.

The Kurdish regional government had for years earned billions of dollars in revenues exporting crude oil to Turkey without the Iraqi federal government's approval.

But the exports were suspended in late March when international arbitrators ruled in favour of the Iraqi federal government's right to control oil exports going through Turkey.

Iraq's Oil Minister Hayan Abdel Ghani had on Thursday said that crude exports from the Kurdish region through the Turkish port of Ceyhan would resume Saturday.

But on Friday the Kurdish natural resources minister, Kamal Mohamed, told a Kurdish television channel that the resumption of exports was still awaiting approval from Ankara.

"We are waiting for a decision from Turkey regarding the date for the resumption of exports," he told the Rudaw news channel.

"Iraq is ready to resume exports," he said, noting that Iraq had sent a letter on Wednesday informing Turkey of the decision to resume exports and was awaiting a response on the date.

Following years of wrangling, the Iraqi federal and Kurdish governments had reached a preliminary deal in early April, granting the Baghdad government control over exports with a view to immediately resuming sales.

On Thursday the Kurdish authorities in Arbil said in a statement that they had reached a final deal with Baghdad.

Under the agreement, sales of Kurdistan's crude will be managed by the State Oil Marketing Organisation, with revenues paid into an account jointly held by Baghdad and Arbil.

The agreement is expected to boost federal government coffers, which in March raised $7.5 billion from oil exports.

It also puts an end to the independence claimed by the Kurdish authorities over oil exports for nearly a decade.

Oil has long been a lifeblood for the Kurdish region, with 475,000 barrels exported daily via Turkey.

The disruption of oil exports for more than a month had created a shortfall of around a billion dollars in revenue to authorities in Erbil, analyst Kovand Shirwani said.