World trade will continue to face strong headwinds in 2019 and 2020 after growing more slowly than expected in 2018 due to rising trade tensions and increased economic uncertainty, said the World Trade Organisation (WTO).
WTO economists expect merchandise trade volume growth to fall to 2.6 per cent in 2019 — down from 3.0 per cent in 2018. Trade growth could then rebound to 3.0 per cent in 2020; however, this is dependent on an easing of trade tensions.
WTO director-general Roberto Azevêdo said: “With trade tensions running high, no one should be surprised by this outlook. Trade cannot play its full role in driving growth when we see such high levels of uncertainty.”
“It is increasingly urgent that we resolve tensions and focus on charting a positive path forward for global trade which responds to the real challenges in today’s economy – such as the technological revolution and the imperative of creating jobs and boosting development.
“WTO members are working to do this and are discussing ways to strengthen and safeguard the trading system. This is vital. If we forget the fundamental importance of the rules-based trading system we would risk weakening it, which would be an historic mistake with repercussions for jobs, growth and stability around the world,” he added.
Trade growth in 2018 was weighed down by several factors, including new tariffs and retaliatory measures affecting widely-traded goods, weaker global economic growth, volatility in financial markets and tighter monetary conditions in developed countries, among others. Consensus estimates have world GDP growth slowing from 2.9 per cent in 2018 to 2.6 per cent in both 2019 and 2020.
The preliminary estimate of 3.0 per cent for world trade growth in 2018 is below the WTO’s most recent forecast of 3.9 per cent issued last September. The shortfall is mostly explained by a worse-than-expected result in the fourth quarter, when world trade as measured by the average of exports and imports declined by 0.3 per cent. Until then, third quarter trade had been up 3.8 per cent, in line with WTO projections.
Trade expansion in the current year is most likely to fall within a range from 1.3 per cent to 4.0 per cent. It should be noted that trade growth could be below this range if trade tensions continue to build, or above it if they start to ease.
Nominal trade values also rose in 2018 due to a combination of volume and price changes. World merchandise exports totalled $19.48 trillion, up 10 per cent from the previous year. The rise was driven partly by higher oil prices, which increased by roughly 20 per cent between 2017 and 2018. – TradeArabia News Service
Ups and downs in the global economy, and / or the economy of the large countries blocks or the small ones, there seems always to have trade businesses that are vulnerable to any adverse winds. Would the Brexit vote and a new man in the White House have any bearing on the business of trading? With all the books and discrete writings since Neanderthal times, on trade, fair or not and those many varieties in between, we have still got things to discuss such as in the proposed article written by Arancha González Laya, Executive Director, International Trade Center and published by the WEF on Thursday 9 February 2017.
What about what is happening in the MENA’s GCC countries with Christine Lagarde of the IMF visiting Dubai who said yesterday that Algeria was “a good example” in budgetary management. Thoughts ?
The outlook for global trade cooperation is darkening. Amid the sluggish recovery from the global financial crisis of 2008-09, trade and globalization have in many advanced economies become lightning rods for public anxiety over diminished economic prospects, rapid technological change, immigration and more broadly discomfort with the pace of social change.
In these countries, the social licence on which open markets rest has become fragile. The result: sustained pressure on the international economic system that has underpinned seven decades of peace and unprecedented prosperity. We today run the risk of shifting from a rules-based trading system to one based on deals and power politics.
Some of the anti-trade sentiment is the result of rising wealth inequality and stagnating real wages. Policy and business elites did not speak frankly about the unequal distribution of benefits from trade, and failed to adequately accompany market-opening with good domestic policies to equip displaced workers to upskill, adjust and share in the new opportunities being created. Yet technological change is responsible for far more of the job losses than imports of goods and services: trade has simply become a more identifiable scapegoat.
However unpopular trade may be in some quarters, the fact is that trade does improve productivity and growth in aggregate. If governments start to go it alone on trade, it will become harder, not easier, to generate the jobs and rising incomes that angry electorates want. Inward-looking unilateral trade policies invite retaliation. The open global economy has enabled the largest-ever reduction of extreme poverty. Closing markets would close off prospects for poor countries to trade their way out of poverty. And the singular lesson of the 1930s is that zero-sum approaches to economic relations lead to trade wars, economic stagnation and, ultimately, conflict.
A World Economic Forum council focusing on the future of international trade has identified three potential scenarios for how the upcoming years might unfold. Borrowing from Sergio Leone, we call them “the good, the bad and the ugly”. The risks are firmly on the downside, but it is not too late for governments, businesses and civil society to work together to arrest the slide: to choose reason over friction, cooperation over conflict, and multilateralism over unilateralism. Responsive and responsible trade and investment policies are possible, but it will take hard work at home and in the global arena.
The insanity of Black Friday is upon us, but don’t succumb to the madness at the malls tweeted many observers – and it’s only one day, I for one would not mind adding. Newsweek Europe published this article about the introduction of the notion of Black Friday into the Middle East or rather into the countries of the Gulf part of the region. The other regions are either undergoing traumatic upheavals of civil wars and / or internal political unrest and have no serious propensity or disposition of mind to indulge into acquiring at an exceptional bargain a desired product. The varying levels of ICTs penetration into the countries of the Middle East play against all other countries other than those of the Gulf. And within these latter countries, the diverse populations can also be differentiated through their response to the afore-said notion of Black Friday.
Souq, the Amazon of the Middle East, aims to break its own records in third year of sales bonanza.
BY JACK MOORE ON 11/25/16 AT 10:12 AM
The dizzying array of discounts, department store frenzies and violent wrestling bouts over electronic goods that have come to define the American tradition of Black Friday have arrived in the Middle East—not in the shops, but online.
Souq, the largest e-commerce site in the Arab world launched a four-day online shopping bonanza known as ‘White Friday’ in 2014 and this year it began on Wednesday, seeing consumers from seven Arab countries vie for a bounty of luxury goods until Saturday. The site’s chief executive, Syrian entrepreneur Ronaldo Mouchawar, earned the company a billing as the ‘Amazon of the Middle East’ and prompted a host of other Middle Eastern retailers to follow suit.
White Friday takes an American tradition and turns it on its head. It seeks to resonate with the culture of the Middle East, where Thanksgiving is not celebrated, and Friday is a weekend day, reserved for the holy worship of millions of Muslims, both Sunni and Shia. While black can denote a sombre event (in the U.S., Black Friday actually refers to hoisting a business “back into the black”), the color white takes on a more positive meaning for Mouchawar and the team at Souq.
Mary Ghobrial, Chief Commercial Officer, SOUQ
Mary Ghobrial, chief commercial officer of Souq.com and Ronaldo Mouchawar, chief executive and co-founder of Souq.com, two of the faces behind the Middle East’s White Friday sale.
“We wanted to own an event that was not really tied to thanksgiving as much but more tied to our Friday, our White, which is kind of positive and happy,” says Mouchawar, speaking to Newsweek from his Dubai office by Skype. “We launched it in 2014 and it was a massive success. Last year, we did about 600,000 units, and hopefully this year we go over a million.”
The scenes of mayhem witnessed in the West upon the opening of Black Friday sales across thousands of stores will not be reflected in the Middle East, but the feverish hunt for bargains online will be, in what is predicted to be a record year for the sales event. The event has grown year on year, Souq’s co-founder says, and this year they have expanded to three new countries, Bahrain, Qatar and Oman, on top of Egypt, the United Arab Emirates, Saudi Arabia and Kuwait.
China as opposed to the United States driven by oil and the military industrial complex has developed special trade relationship based on the historically antique overland trade Silk Routes connecting China to Europe via the Middle East. The Silk Routes of the GCC are as put by Dr. Jean-François Seznec in his article published on 7 August 2016 by The CipherBrief.com proving to be fairly debatable in its meaning as well as in its ultimate goal. Here it is :
The Silk Routes of the GCC Versus China’s One Belt One Road . . .
Even before Chinese President Xi Jinping’s “One Belt, One Road” initiative, there has been a silk road in place between the Far East and the Gulf Cooperation Council (GCC) region for some time. Any visitor to Dubai will note the prominence of Chinese products in the markets. For the past 12 years, Chinese firms have operated a 150,000 square meter trading center, perhaps the largest outside China, called the Dragon Mart with 3,950 stands representing Chinese firms selling their wares, retail and wholesale, to visitors from all over the region.
Even more important is the role of Jebel Ali. The free trade zone of Jebel Ali [“JAFZA”] in Dubai is the third largest container port in the world. It receives containers from all over the world but principally re-export shipments from the Far East to the countries in the Gulf region and Africa. Dubai has built a fully streamlined zone with over 7,000 firms that maintain mammoth warehouses and/or factories feeding from the harbor. The containers come to the warehouses, are unloaded and their contents redistributed either by sea or in smaller packages by air cargo through the largest air cargo facility in the world, which is fully integrated into the free zone. Hence, large Chinese, Japanese, and Korean companies use Dubai as a distribution center for their products and spare parts for the whole region including Africa.
Dubai is increasingly focused on developing its trade, mainly the re-export trade, to Africa. Emirates Airlines and cargo air planes can take off from Jebel Ali to the continent more efficiently than from Asia. The giant 14,000 teu (Twenty Foot Equivalent) container ships – which cannot unload in Iran, other Gulf countries, or any African port –can be reloaded onto smaller ships at Jebel Ali in less than 24 hours. While Abu Dhabi only sells crude and LNG (liquefied natural gas) to the Far East, Dubai provides a full package of goods to Asia with an efficiency unmatched anywhere in the region, thus providing a real silk route between Asia and the region.
Of course, there is a great deal of trade based solely on the exchange of energy for goods. Indeed, when asked about a silk road between the GCC countries and Asia, one thinks primarily of oil and gas exports from the gulf region and imports of manufactured goods from Asia. The GCC countries export about 8.5 million b/d of oil and 54.4 million tons of LNG per year to the Far East. The Gulf countries also export large volumes of refined products: chemicals both basic and advanced; fertilizers; and metals, mainly aluminum to Asia.
The largest exchanges take place between Saudi Arabia and China, who imports over one million b/d of crude oil from the Kingdom, as well as chemicals and fertilizers. In turn, China sells about $20 billon of goods to the Saudis. Riyadh has also invested in a large refinery and petrochemical complex in Fujian, a 660,000 b/d refinery in South Korea, and a 445,000 b/d refinery in Japan. Saudi Arabia’s SABIC, the second largest chemical company in the world, has a large chemicals manufacturing Joint Venture (JV) and a research center in China. In return, China’s Sinopec has invested in Yasref, a 400,000 b/d refining JV with Saudi Aramco in Yanbu.
The GCC silk road is not merely between China and the Gulf countries. Perhaps the most successful trading countries in the region are:
Japan, which sells 25 billions of advanced equipment and cars and invests in factories in the GCC, while importing over 1.1 million b/d from Saudi Arabia, 700,000 b/d from the UAE and 12 million tons of LNG p.a. from Qatar, most of its aluminum from the UAE
South Korea, which not only sells equipment and runs highly reputed large contracting firms in the region, but also provide advanced technology in direct competition with the U.S. and the EU. It is now the country of choice for the engineering and construction of the main advanced chemical plants in the region, such as those built by SADARA, the joint venture between Dow Chemical and Saudi Aramco.
With the price of oil dropping, 2 years ago, restrictive budgeting generally was expected to end up with large numbers of professional expats exiting Qatar in a hurry. The ensuing despair of knowing that oil price course would most probably not budge up is biting into many businesses in Qatar, company CEOs have told Reuters.
Qatar’s population recently blown to around 2.5 million people, with mostly Asian workers, is going through traumatic layoffs starting with the cream of salaried professionals. Companies have been laying off thousands of well-paid expatriates of mainly non-technical background; the World Cup 2022 helping to maintain as it were, the momentum of construction pace steady.
A down to earth article written by Tom Finn and published by Reuters on July 18, 2016 is well worth reading if only by intellectual curiosity.
How an “Exodus of professional workers is reshaping Qatar” . . .
Five years ago Samer Habib left the United Arab Emirates and moved to Qatar where he opened a restaurant that turned a profit serving Lebanese salads and sandwiches to expats.
In June, the business folded.
The European lawyers and Indian clerks who for years frequented Habib’s restaurant have been leaving the country in recent months, he said, many laid off in sweeping cuts to public and private companies hastened by a fall in energy prices.
“Customers keep coming to me and saying: ‘Samer, this is my last sandwich’,” he said. “They say it’s been a tough year.” Like other Gulf states heavily dependent on energy sales, Qatar – the world’s top liquefied natural gas exporter – has sought to cushion the impact of lower oil prices on its finances by raising utility bills and slashing spending.
Many of the foreign workers who make up the bulk of the 2.5 million-strong population have been affected. Companies in Qatar that rely on government contracts are feeling the pinch and are freezing salaries and terminating contracts of expatriate engineers, lawyers and consultants from countries including Britain, France, the United States and India.
This trend risks increasingly polarising the country between wealthy Qataris at the top and Asian blue-collar workers at the bottom. Businesses that rely on the custom of professional foreign workers with their tax-free salaries and disposable income, including restaurants like Habib’s, private schools, car dealerships and shopping malls, could struggle to survive.
In 2015 state-run Qatar Petroleum let more than 1,000 foreign workers go as part of restructuring, according to the energy minister. Al-Jazeera, the pan-Arab satellite news network owned by Qatar, closed its American channel in April and has laid off 500 staff, most of them in Doha. Vodafone’s Qatar subsidiary said in May it would cut about 10 percent of its workforce.
It is unclear exactly how many of Qatar’s 1.6 million foreign workers are departing, and the country’s population is still growing due to an influx of Asian workers building highways and stadiums for the 2022 soccer World Cup. But industry sources, including three company CEOs, told Reuters that job cuts were widespread and tens of thousands of white-collar workers had been laid off in the last two years.
A Facebook group set up in March for departing expatriates in Qatar selling cars and second-hand furniture has over 50,000 members and is updated hourly. The small country is astonishingly wealthy – one of the richest in the world per capita – but faces a $12.8 billion budget deficit this year, its first in over a decade. The government in December halved its forecasts for economic growth and last month said it expects to run a deficit for at least three years as low natural gas and oil prices strain revenues.
The layoffs could further weigh on the economy. Hotels, malls and private schools – projects conceived when oil prices were high and Qatar’s winning of the 2022 World Cup was driving infrastructure and population growth – now compete for the custom of a dwindling middle class of professionals.
Mohammed al-Emadi, a real estate tycoon who has developed a $1 billion luxury shopping centre in Doha that will open in September, said the mall’s cafés and fashion boutiques will have no trouble drawing customers. But he concedes were it not for the project’s eye-catching design – a marble structure modelled on a 19th century Italian galleria with shops tailored to super-rich Qataris, whose jobs have survived the austerity – his business might be in trouble.
“Ten to 12 malls are currently being built in Qatar and soon they will open,” Emadi said, adding that some mall owners were having to drop rent prices to attract tenants. “This is not a good sign. In the current economy … the market can’t handle any more malls.”
Two other malls are set to open later this year – the Doha Festival City and the Mall of Qatar, a building equivalent in size to 50 football pitches with over 500 stores. Both projects have delayed their opening dates. Hotel owners, too, have concerns about an oversupply with government spending cuts affecting business tourism and leading to a 19 percent decline in hotel room prices in dollar terms this year, according to Ernst and Young.
Qatari politicians dismiss as scaremongering the notion of a capital flight. They say new facilities, including Doha’s Hamad International Airport, US university campuses, and world-class swimming pools and stadiums, will continue to lure residents and visitors to the country, regardless of oil prices.
BUILDING WILL DRIVE DEMAND
We are thinking long term, beyond 2022 (World Cup), and looking at areas of growth like regional tourism from the Gulf. Of course there is still room for malls and hotels … these things are encouraging people to visit and work here,” said a Qatari government official.
Some businesses, though, spy an opportunity in the exodus of workers. Second-hand car dealers in Doha run a lucrative trade buying used sports cars from foreigners departing in a hurry, which are then shipped and sold in Asian markets. Bentleys, Porsche GTs, SL63 Mercedes … pretty much every day we see one brought in,” said a Western businessman who has run a car dealership in the city for over a decade.