What prospects for a balanced economic cooperation ?
A meeting of the Algerian and Russian intergovernmental commission was held in Algiers on September 18 to 20. An Algero-Russian Joint Commission whilst meeting political convergences and acknowledging Russia’s as well as Algeria’s efforts to stabilize the price of oil, a call was launched for a widening of cooperation based on a closer and win-win sharing partnership.
The concerned sectors are particular areas of professional training, scientific and technical research, industry, transport, civil nuclear and of renewable energy.
At the International Fair of Algiers last May, in which Russia was the guest of honour, its delegation reported that three Russian companies were ready to invest in Algeria through a long term partnership in areas such as green energy, industrial and household waste treatment and management of water resources.
Concerning cooperation in renewable energy, the Russian Minister highlighted the interest of his country in the vast renewable energy programme launched by Algeria to develop a capacity of 4,500 megawatts by year 2030.
Three companies, Uralvagonzavod, PAO NPK. and ZAO Transmachholding are interested in projects with Algerian partners with the objective of the development of assembly of rolling plants, the creation of centres of services in the rail sector and the production of agricultural combine machines.
In addition, the Russian company KAMAZ PAO, the largest producer of trucks in Russia, is ready to make proposals for partnership in the field of industrial vehicles production assembly plants.
What about exchanges between Russia and Algeria, two competing economies in the field of oil and gas?
The laws of economics being immune to political slogans, these two countries are currently facing budgetary tensions characterized by a significant decline in their foreign exchange reserves and the devaluation of their respective currencies; although not wanting to be utopian as through not comparing comparable for Russia is nevertheless a great economic and military power.
Trade between Algeria and Russia, apart from military equipment and armaments, that was $ 175 million in 2002, reached $ 530 million in 2014. The balance was clearly not in favour of Algeria, especially when one realizes that $ 523 million of the $ 530 million represent products imported by Algeria with Russian suppliers. The remaining seven million Dollars, represents the small value of Algerian exports, including three million Dollars in food products destined for Russia.
We therefore are witnessing a timid progression since the volume of the two-way trade off any military equipment reached $ 885 million in 2015.
For 2016, according to official statistics cited by Algeria Press Service, we have a 65.3% increase, about $ 2 billion, of which 1.4 billion Dollars were military equipment. To rebalance trade in fields of industry with the Department of National Defense as I pointed out in an interview (1) with a private television on September 20, 2017 is in need to be looked at and can thereby be developed.
There remains only $ 600 million outside of military equipment so it is down from 2015.
Thus Russian military imports are important, the Russians for their commercial balance would need perhaps to look into contributing towards a military industry in the context of import substitution in Algeria.
Exchanges between Russia and Algeria are not that substantial if compared to imports / exports of each Russia and Algeria. All commercial transactions between Algeria and Russia which, according to the Bank of Algeria, should be carried out in Rubble, would perhaps energize more exchange work?
But what would the public and private Algerian companies provide in return to Russia above all knowing that Algeria whose revenues are 97 / 98% directly and / or indirectly drawn from exports (50% off hydrocarbons from the derivatives of hydrocarbons), is currently going through budgetary tensions.
In short, the trade imbalance is obviously to the disadvantage of Algeria, but because of Russia’s own financial difficulties, substantial money inflows should not be expected in Algeria. It would instead be of a contribution in terms of technology transfer and managerial streaming that should be planned and put high on any future bilateral cooperation.
At the start of this week, we would like to republish this essay of Naseem Javed, a corporate philosopher, world-class speaker, author and Chairman of Mentorian Worldwide; a think tank on Image Supremacy of Innovative Excellence & amp; Entrepreneurial Leadership. It is all about Entrepreneurialism in this day and age and how it will yet again be re-modelling the world economy. In these times where at the outset of the so-called Fourth Industrial Revolution, everything around us that we have this far taken for granted seem to undergo change at a whirlwind speed, Globalisation has for its own benefit got the various parts of the world closer to one another than ever before in terms of exchange and accessibility to exchange. In effect and in view of that, we could safely endorse the notion of Naseem’s proposed Technocalamity helping to quadruple Trade or goods and services exchange is increasingly evident everywhere one looks, especially in relation to those hot spots of the MENA region.
It was published first in AMEinfo of April 9th, 2017.
This is when nouveau entrepreneurialism becomes intertwined with technoclamity. It is driven by alpha dreamers and creates a peaceful and very powerful collaborative Synthesis with the unique ability to dance together in perfect time.
Nations that are smart enough to understand real innovative excellence and can deploy massive grassroots programs as national agendas and support their entrepreneurial base will participate in such global races. The rest will see the spectators cheering others to success.
National leaderships around the globe are calling out clear and loud for top-level mandates on creating successful exportability and innovative excellence necessary to ensure their own country’s image supremacy of economical performance and global respectability.
Nations are focusing on the opening up of fair trade with many dozens of countries – an expothon strategy; a powerful modulation of local national entrepreneurialism with unlimited global markets in a systematic and long-term deployment a hot topic. Smart nations are smart enough to know the difference.
Make the world great again.
Collaborative Synthesis is a new global age phenomenon that concentrates on re-thinking and re-looking at the world, all over again, like never before, village by village, city by city; it requires that we re-explore the landscape of richness with new minds, visions of 2020, new sets of eyes and with raw, wild entrepreneurial imagination.
Collaborative Synthesis is a highly integrated, technology based real time superior performance and collaborative progressions deployed simultaneously in dozens of countries with fascinating ease. It’s global age rapid deployment of innovative excellence with new execution styles coming together to create a massive impact. This is new thinking re-trained, new visions re-engineered and new business models re-calibrated. It’s a new blend of massive economical development that is synthesised at a new mix cycle rate, boldly declaring old economical thinking and business models ineffective.
This is neither the fourth nor the fifth industrial revolution; it’s a brand new renaissance of new global thinking.
Very soon, 20 billion smart devices in the hands of a few billion alpha dreamers will start dancing in synchronisation at the same beat. This will be a real living tsunami of Technocalamity; it will be like being inside a big screen sci-fi film via goggles in your own private space with your choice and time.
The earth will vibrate with grassroots prosperity. Such a world will use primal needs of mankind as a principal guide and overtake destructive maneuvering of self-interest-agendas. Alpha dreamers are like the new global age pioneers of today, liberating old thought leaderships of yesterdays.
The world is so big, so colourful and so wide open to massive collaboration; it has been the last century’s dogmatic destruction, blindfolded by fake news, bad economical models and for-hire incompetent leaderships.
New separation and new divides:
The new prosperity demands a brand new space to house such new thinking and new styles of business structures. A complete separation from the old systems and thinking must take place. The start of the e-commerce revolution flourished with a brand new set of rules, new procedures, complete new looks and new types of staff on brand new floors, with special thinking and skills. The E-commerce revolution was never an extension of the previous industrial revolution. It was a brand new umbrella, far superior in thinking and execution. Without brand new separate facilities, new styles of teams and new protocols, e-commerce would have collapsed on greasy factory floors and would have been misfiled in old secretarial pools. The old management like viruses was separated, old contagious mentalities were blocked and restricted, only newly trained and qualified IT specialist had round the clock access to the air-conditioned humming rooms working as new pulsating hearts of the innovative organisations. This was prevalent across the corporate world and very recent in the main frame computer era.
Unless frequent flyers are pulled out of the cockpits and replaced by real professional pilots we cannot land safely. The grassroots prosperity failures of past era can no longer be solved by the same system and leadership that created it. A brand new page and new teams in new locations are mandatory.
Today’s deniers are now the new enemy of growth, fake media now the new enemy of the nation, and the incompetency the new burden to new transformation. Identify, isolate, transform and move forward.
Collaborative Synthesis has arrived in full swing. Feel the rhythm, learn the new dance, enjoy the beat and musicology of new free technologies and the let the spectators watch.
The new challenges of 2020
Beneficiaries: The silent majority, seeking practical and fundamentalist view for deployment of local prosperity issues, anywhere across the globe will benefit. Entrepreneurs believing in “extreme value creation” while rejecting “value manipulations” and alpha dreamers embracing this new global age and Technocalamity will have great success.
Enemies: The establishment which is determined NOT to change is the adversary. Populace brainwashed on fake media and bureaucracy dependent job seekers are the opponents. Ignoramus of the new global age world will try to beat the path down for those pushing on the way up
Adjustments: Arrange a bold and open debate, create a small but high-profile forum, and debate, engage and fight out in open; spin hard so it finally curdles into something solid. It’s not important who is right or wrong; what is important is the real truth. We must continually seek to find why the truth is so hidden, and why solutions are so prohibited. It will not be an easy process. Courage and stamina will be mandatory. Unlimited prosperity will emerge.
Discover and define economical nationalism. Make your own country great by first adopting a positive and logical approach to national prosperity. Discover how to work successfully with one country and later multiply such skills to expand to 200 countries. Fair trading is wide open all over the world. Boycotts and closed trade are the destructive thinking, caused by globalisation based on serving only selected groups. Mankind wants to depend on its natural survival strategy and has now figured out that enough is enough and the time for big change has already arrived.
Sustainability in Development in the World of Today has become a concern for one and all for some time. The UN in its “Gathering a body of global agreements” has written the following definition of Sustainable Development.It is a development that meets the needs of the present without compromising the ability of future generations to meet their own needs. Within this definition two key concepts come to light:
the concept of ‘needs’, in particular the essential needs of the world’s poor, to which overriding priority should be given; and
the idea of limitations imposed by the state of technology and social organization on the environment’s ability to meet present and future needs.
The aim is an economic and social development that must be defined in terms of sustainability in all countries with all required variations depending on the specifics of each country, etc.
Also, development should involve a progressive transformation of economy and society through concern for social equity between generations that must logically be extended to equity within each generation.
In our view, all the above is fine but we feel there is still some gaps between these precepts drawn at international level and the down to earth practicalities of everyday life in the discrete sets of different countries.
There has been an agreement in Paris in December 2015 followed by its signing off in Marrakesh the following year but up until now, we have yet to see any follow up. There is even talk of this agreement going to the sideways with new world leaders washing their hands off it.
In the meantime, the World Economic Forum as always at the forefront of these concerns, produced the following article written by Andrea Willige, Formative Content and published on Monday 20 March 2017. Here it is repreduced with thanks to the WEF and compliments to the author.
The SDG Index measures 149 countries, comparing their current progress with a baseline measurement taken in 2015.
Here are the top performers this year:
Image: SDG Index and Dashboards
Across all 17 goals, Sweden tops the list of countries surveyed. It is, on average, 84.5% of the way to achieving the targets envisaged for 2030.
Following closely were Scandinavian neighbours, Denmark and Norway, with Finland in fourth place. Western European countries, plus Iceland (ninth), took the remainder of the top 10 slots and four of the top 20.
Also in the top 20 were Canada (13th), the Czech Republic (15th) and Slovenia (17th). Asia-Pacific’s top performers Japan, Singapore and Australia rounded off the list at 18th, 19th and 20th, respectively.
Don’t rest on your laurels
The SDG Index underlines that despite achieving high percentages, all countries still have their work cut out to close the remaining gap.
Image: SDG Index and Dashboards
The report stresses that many high-income countries perform well in areas such as economic development but still fall short of achieving a good all-round SDG performance. This is because they face significant challenges in specific areas such as climate-change mitigation, income inequality, gender equality and education.
The top three, for example – Sweden, Denmark and Norway – will need to focus particularly on evolving their energy systems from high-carbon to low-carbon sources to fulfill the environmental sustainability goals.
Countries where the report suggests support and solidarity is needed most:
Image: SDG Index and Dashboards
Not unexpectedly, some of the world’s poorest countries are near the bottom of the ranking. The SDGs are, after all, a demanding bunch: including a call to end extreme poverty and hunger, universal access to healthcare, education, safe water and sanitation, modern energy services, and decent work. These areas continue to be an uphill struggle for many nations.
“We know that some countries may be puzzled by their scores and that some will be unhappy with their place in the global rankings,” say Aart de Geus and Jeffrey D Sachs in the preface to the report. But if there are any mistakes or gaps in the data, they add, the beauty of an online report is that they can be corrected as quickly possible.
For those countries that aren’t yet showing results, such as the Central African Republic in the chart below, assistance may be necessary. It could come through international mechanisms such as foreign direct investment, technology sharing and global tax reform (so poor countries can fight tax evasion by international investors).
SDG Dashboards for Sweden and Central African Republic
The United Arab Emirates (UAE) has a GDP of about $350 billion and a high GDP per capita, but it is a commodity-based economy, with hydrocarbons accounting for 40% of total exports and 38% of its GDP. In its drive towards diversifying its economy and reduce its dependence on oil revenues, the UAE programmed for tourism, financial and construction sectors to receive most of its investments. Meanwhile, manufacturing activity accounted for 42% of output growth, transport and communication for 23%, wholesale and retail trade for 16.5% and catering and hospitality for 15.5% whilst construction and agriculture contracted these last 2 years. All of these activities are manned by active populations which according to all governments agencies and local media are made of more than 85% of expatriate population with 71% mostly Indian. The UAE and India to enjoy stronger trade and cultural ties further have to come together in a range of agreements .
Arabian Business.com came up on Monday, 13 March 2017 with this article by Hamad Buamim, thus providing an idea as it were from the inside to show where the UAE’s heart lies hence the subject of the proposed article on tying ever more closer relationships with India. Like all countries of the GCC, the UAE has some difficulty in accepting to apply some sort of minimal fair ‘Equal Opportunity’ treatment to all their residents, if only to sedenterise them better. It must however be said on this chapter, the UAE have prominently shown the way, by being at the forefront of the other members of the GCCs.
[ . . . ] The UAE and India have enjoyed strong trade and cultural ties that date back more than a century. This unique relationship has strengthened in recent decades amid an increase in bilateral trade and investment. Non-oil trade between India and Dubai has accounted for the largest volume of trade, amounting to $19bn in the first nine months of 2016, and solidifying India’s position as the emirate’s second-largest trading partner.
The Indian business community in the UAE has contributed significantly to bilateral relations and trade. In fact, 29 percent of all new companies that registered with Dubai Chamber last year were Indian, bringing the total number of Indian members to over 36,000. At the same time, India remains one of the top export markets for Dubai Chamber members, with exports and re-exports to the country growing steadily in recent years to reach $1.7bn by the end of 2016.
Yet, we see huge potential within India’s fast-growing economy that has yet to be explored. The two countries share many synergies, especially within the areas of agriculture, pharmaceuticals, manufacturing and metals.
The world’s fifth-largest economy has renewed its focus on foreign trade, while it has also outpaced China in exports of locally made retail and lifestyle products. At the same time, it has stepped up efforts to strengthen its economic cooperation with the UAE in the areas of agriculture, food security, energy, defence, technology and healthcare.
India has put forth a clear roadmap to fuel future economic growth that places a major emphasis on expanding its infrastructure and boosting foreign direct investment. The country is building several cluster cities and recently opened its first international finance services centre in Ahmedabad. New policies are also focussed on turning India into a manufacturing hub for pharmaceutical and medical products under the “Make In India” initiative.
There are also exciting new technologies that India is embracing, such as blockchain, which has now been successfully tested by the country’s central bank. Smart city concepts are also gaining momentum and the adoption of innovative solutions stands to make the country a major hotspot for smart city developments.
As a country that has excelled in rapidly expanding its infrastructure and economy, I believe that the UAE can offer the right level of expertise and investment needed to meet growing demand within India and help turn the country’s ambitions into a reality. [ . . . ]
As put by Bloomberg in an article by Jeanna Smialek dated April 10, 2015 where she said: ” Get ready for a new economic order by 2030 / 2050. In the world 15 years from now, the U.S. will be far less dominant, several emerging markets will catapult into prominence, and some of the largest European economies will be slipping behind.”
A new economic order by 2030 / 2050 ?
Last week an article on the same subject and written by Lianna Brinded, Markets Editor, Business Insider and published in collaboration with Business Insider on Thursday 9 February 2017 by the WEF goes like below.
A prediction: the world’s most powerful economies in 2030
PricewaterhouseCoopers (PwC), one of the world’s largest professional-services firms, just released its predictions for the most powerful economies in the world by 2030.
The report, titled “The long view: how will the global economic order change by 2050?” ranked 32 countries by their projected global gross domestic product by purchasing power parity (PPP).
PPP is used by macroeconomists to determine the economic productivity and standards of living among countries across a certain time period.
While PwC’s findings show some of the same countries right near the top of the list in 13 years, they also have numerous economies slipping or rising massively by 2030 [ . . . ]
The PwC Report Key findings
This report sets out our latest long-term global growth projections to 2050 for 32 of the largest economies in the world, accounting for around 85% of world GDP.
Key results of our analysis (as summarised also in the accompanying video) include:
The world economy could more than double in size by 2050, far outstripping population growth, due to continued technology-driven productivity improvements
Emerging markets (E7) could grow around twice as fast as advanced economies (G7) on average
As a result, six of the seven largest economies in the world are projected to be emerging economies in 2050 led by China (1st), India (2nd) and Indonesia (4th)
The US could be down to third place in the global GDP rankings while the EU27’s share of world GDP could fall below 10% by 2050
UK could be down to 10th place by 2050, France out of the top 10 and Italy out of the top 20 as they are overtaken by faster growing emerging economies like Mexico, Turkey and Vietnam respectively
But emerging economies need to enhance their institutions and their infrastructure significantly if they are to realise their long-term growth potential.
As per reliable sources, declining solar equipment prices, and a slowdown in major markets such as China led to an 18% dropping in 2016 to a Global Clean Energy Investments at $287.5 billion. Although a smaller market than the United States, China or Japan, the Indian solar energy sector is in the middle of unprecedented growth, fed by rapidly declining tariffs, improved technology and a global oversupply of photovoltaic panels and other material, made mainly in China per Soumya Sarkar in her India’s solar dream rests on Chinese imports on 17 August 2016.
India is nevertheless expanding as the fastest among those major nations. With over 300 million houses in India, over 300 days of sunshine, and an ambitious target of 40 GW of rooftop solar by 2020, there should have been a solar revolution in Indian homes. Yet, the situation on the ground is quite different as reported by Juhi Chaudhary , author of our proposed article, reproduced here below.
The above trends would of course be relevant to the MENA region due if only to all Non-Residents Indians (NRIs) flow of remittances from the GCC countries somehow helping in the process described in this article.
Solar panels installed on Indira Paryavaran Bhawan in New Delhi. (Image by Central Public Works Department, Government of India)
India’s capital has a new target to generate a gigawatt of solar power by 2020 and 2 GW by 2025 through rooftop installations, with the government announcing a slew of incentives.
Delhi may be the next big solar city, if the government of India’s National Capital Territory has its latest wish fulfilled. It has set a target of generating 1 GW of solar power a day through rooftop installations by 2020 and 2 GW by 2025. That’s far higher than targets set by states many times the size of Delhi.
“Making Delhi a solar city is on our 70-point agenda,” says Arvind Kejriwal, Delhi’s Chief Minister. “This policy which is very progressive will help in providing clean and green energy. Rooftop solar systems offer sustainable energy, environmental benefits, low gestation period and minimum transmission and distribution losses.”
Delhi has a peak power demand of 6.5 GW a day. Quite often, this cannot be met, and people face power cuts in temperatures that cross 40 degrees Celsius. There is enough power in the national grid, but transmission and distribution (T&D) lines are too antiquated to meet peak demand.
Decentralised power generation through rooftop solar installations would take care of T&D problems, and bring down Delhi’s huge carbon footprint.
To turn this dream into reality, the government has proposed tax breaks; 30% subsidy on capital investment; making it mandatory for government and commercial buildings to deploy rooftop solar panels; and for distribution companies to meet at least 75% of their solar renewable purchase obligation (RPO) within Delhi.
Individual households can put up their own rooftop panels. They will get an incentive depending on the amount of power they generate. Those who do not want to make the investment can get a firm to install the solar panels free of cost, and then buy the power from the firm.
New electricity meters have to be installed for the scheme to work, meters that turn one way when the utility is selling power to you, and the other way when you are generation excess power and selling it to the utility. The cost and relative scarcity of these ‘net’ meters has been a big obstacle in the rollout of solar power generation at the household level.
In its new policy, the government has tried to solve this by grouping multiple homes, factories or offices under one ‘net’ meter. This should be of greatest help to large consumers with multiple buildings and electricity connections. It may also help avoid arguments about who owns the terrace in a shared building. The efficacy of this group net metering scheme will be keenly watched.
On top of being able to sell power back to the utility, for the next three years there is an incentive of Rs 2 (3 US cents) per additional unit generated. Aruna Kumarankandath of the Renewable Energy Programme in the New Delhi-based think tank Centre for Science and Environment (CSE) says, “This is a step in the right direction. So far 18 states have drafted solar policy and Delhi has the best additional generation based incentive to boost rooftop solar.”
Chandra Bhushan, Deputy Director General of CSE, however warns, “The kind of money they have allocated for subsidies will take care of only 100 MW.” That is 10% of the 2020 target.
One big problem is that residents do not want to block up terrace space with solar panels. Terraces have clotheslines and water tanks; they are places where people exercise in the morning and party in the evening.
Now the government has amended the building by-laws so that you can erect a frame on your terrace and then put the panels on the frame, without the tax inspector coming and telling you that your house is higher so you have to pay more property tax.
Plus, you do not even need approval from the municipal corporation to put solar panels on your terrace.
Though the government is silent on this, it still makes sense to check if your building can take the extra weight.
Other challenges remain. A solar panel generating one kilowatt per hour costs Rs 1 lakh (USD 1,500) and takes up around 100 sq. feet. To make money in the long run, one ideally needs to generate in megawatts, but most do not have the space, even if specialised firms take care of the investment. Still, every little will help reduce electricity bills, not to talk of the environment.
Ashutosh Dixit, CEO of URJA – the apex body of around 2,500 resident welfare associations (RWA) in Delhi – welcomes the move. Five RWAs have already installed rooftop solar panels in their offices, he says. But he is worried about solar panels adding to the weight on the building. “The safety issue also needs to be looked into as Delhi gets lots of storms and these panels can easily fly off and injure someone.”
Pujarini Sen, campaigner in environmental NGO Greenpeace, calls the move “a trailblazing step towards fulfilling India’s global climate commitments, Prime Minister Narendra Modi’s ambitious national solar targets, and overall sustainable development. If the entire country moves in this direction, then the long overdue energy revolution in India will be achieved soon.”
As a first step, it will help if the average resident knows where to go and buy a solar panel.
Devexposted this article written by Michael Igoe@AlterIgoeon its online site on December 22nd, 2016. We are happy to republish excerpts of the Global Development’s Winners 2016 only and would definitely encourage all to visit and read the whole article by clicking the title below.
2016 has been a tumultuous year. Man-made crises, natural disasters, rising temperatures, and political hostility tested the global development community’s commitment and creativity to forge new solutions for a world in transition. On social media, 2016 has acquired a plethora of memes declaring it the worst year ever, and indeed, at times it has been trying.
But while it is true that real people have suffered and important causes have seen setbacks, the challenges have also reaffirmed the aid community’s commitment to keep moving forward. The tumult imparted costs and uncertainty — but it also provoked leadership and resolve to ensure that decades of progress in combating poverty and disease aren’t lost to the winds of change.
The Syrian conflict continues to produce images and accounts of humanity at its worst. Yet it has also drawn the sharp edge of heroism — health workers who continue to administer care despite the knowledge that the hospitals where they work have been painted with targets; teachers who fight to keep classrooms open amid the bombing.
The global development community will grapple with a new and evolving geopolitical landscape in 2017, but the new year is also a time to take stock. Here are a few of the actors, ideas, and priorities that emerged from 2016 as winners — or losers.
Global development’s 2016 winners:
While national and international institutions around the world struggled to keep pace with change, the world’s cities and their leaders took more steps to solidify their status as centers of action for sustainable development. The first Habitat summit in 20 years — Habitat III — brought urban leaders to Quito, Ecuador in October to launch a New Urban Agenda, which endorses an “urban paradigm shift” that “readdresses the way governments plan, finance, develop, govern and manage cities.”
Mayors and local leaders proved critical to sustaining climate momentum at COP22 in Marrakech, after Donald Trump’s surprise presidential victory cast doubts over U.S. national climate policy. “Cities, businesses and citizens will continue reducing emissions, because they have concluded … that doing so is in their own self-interest,” said U.N. Secretary-General’s Special Envoy for Cities and Climate Change and former New York City Mayor Michael Bloomberg.
In 2017 Devex will convene a global conversation about the future of smart cities for global development. Stay tuned.
The cost of solar panels has fallen 80 percent since 2010, according to the International Energy Agency. Solar energy has gotten increasingly cheaper and is now the lowest-priced option for new electricity production in many developing countries.
The last few years witnessed a turning point, with more new energy production happening in renewables than in fossil fuels. New payment and distribution models — such as pay as you go solar panels — have emerged to help enable access to renewable power at the bottom of the pyramid. These trends have led to some bold and hopeful predictions.
The Indian government, for example, said it will exceed its — already very ambitious — Paris climate agreement target for renewable energy by half, generating 57 percent of its electricity from renewables by 2027.
At COP22, the Climate Vulnerable Forum — a group of 48 countries expected to experience the harshest impacts of climate change — adopted a vision to meet 100 percent domestic renewable energy production by 2050.
National development finance institutions.
Development finance institutions receivedtop billing in the new 2030 Agenda for Sustainable Development, which called on donors to leverage aid resources into private sector investment in order to reach the precipitous $2.5 trillion target. Donors across Europe areresponding enthusiastically. Finland, Spain, Belgium, Switzerland and France are recapitalizing their DFIs, many increasing budgets by more than 100 percent. The United Kingdom’s investment arm, the CDC, is on track to quadruple its ceiling for investment early next year to $8 billion.
Cyclone Winston, Hurricane Matthew and the Aceh earthquake were just some of the natural disasters that devastated some of the poorest economies in 2016. According to theWorld Disasters Report, released by theRed Cross in October, climate change will increase the numbers of natural disasters worldwide, with the Asia-Pacific region suffering the greatest impacts in terms of cost and lives lost. But this year also saw strong funding and increased programmatic focus on building communities that will be better equipped to prepare and respond to future natural disasters.
TheAsian Development Bank, for example, told Devex about its increased funding to tackle climate-related impacts in the Asia-Pacific: funding for more resilient infrastructure, climate-smart agriculture, innovative technologies, preparedness for weather-related disasters and mitigation programs will be key investments in the coming years.
AMEinfo came up with this formidable vision of next year titled 16 events that will shape 2017; we could not help but reproduce it here all for the benefit of our readers. All comments are welcome but we would advise to address direct to AMEinfo with nevertheless a copy to MENA-Forum.
AMEinfo, is a well known and reliable middle east online medium of information.
Historically as per Wikipedia, AMEinfo.com was initially Arabian Modern Equipment Est., incorporated in Abu Dhabi, in February 1993 by Saif Al-Suwaidi and Klaus Lovgreen. The first version of the AME Info CD-ROM database of 125,000 companies was developed and compiled late 1996 and sold some 10,000 copies.
The listing of the events as proposed by AMEinfo summed up thus.
Many events of 2016 will have repercussions spilling over into 2017
Positive impacts include Saudi Vision 2030, OPEC deal
The fallout of Trump’s presidency, JASTA law, Italy referendum, etc. remain to be seen
The year 2016 was eventful, to say the least, with the world shaken by several momentous events whose repercussions will spill over into 2017.
Here are 16 events of 2016 that will most probably shape the coming year:
Saudi Vision 2030
This vision, announced in April, is one of the top economic highlights of 2016. Its repercussions are yet to be experienced throughout 2017 and beyond. Some of the biggest follow ups to this event are the Saudi Aramco IPO, expected to take place in 2018, privatising Football Clubs in the kingdom and its green card plan.
Trump as president of the United States
President-elect Donald Trump filling posts for his administration, getting ready to officially take office in January. This is when his foreign policy is expected to take its final shape and impact the whole world, starting with countries of the Americas, passing through Europe and the Middle East and reaching Asia.
The United Kingdom voted to exit the European Union last June through a national referendum. Since then, the country underwent several months of economic chaos that it tried to keep under control, especially because it had not yet left the European Union. The chaos is expected to continue until the announcement of an exit plan, expected in March 2017.
The Justice Against Sponsors of Terrorism Act is a law passed by the United States Congress, allowing survivors and relatives of victims of terrorist attacks to pursue cases against foreign governments in the US federal court. The bill raised tensions with Saudi Arabia – when the bill was introduced, Saudi Arabia threatened to sell up to $750 billion in United States Treasury securities and other US assets if the bill is passed. Saudi Arabia is still lobbying the US over the law.
Egypt’s floating of the pound
Egypt’s central bank floated the pound currency in November, devaluing by 32.3 percent to an initial guidance level of EGP 13 to the dollar and hiking interest rates by three per cent to rebalance currency markets following weeks of turbulence. According to many observers, Egypt’s floating of its currency comes in a bid to attract more investors to the country.
China’s AIIB development bank
China launched the Asian Infrastructure Investment Bank (AIIB), a new international development bank, seen as a rival to the current, US-led World Bank. Countries such as Australia, Britain, Germany, Italy, the Philippines and South Korea agreed to join the AIIB, recognising China’s growing economic strength.
Last August, Google announced creating a new public holding company, Alphabet. Alphabet become the mother of a collection of companies, including Google, which includes the search engine, YouTube and other apps; Google X, the Alphabet arm working on big breakthroughs in the industry; Google Capital, the investment arm; as well as Fiber, Calcio, Nest and Google Ventures.
Panama papers leak
Roughly 11.5 million documents were leaked in April, detailing financial and attorney-client information for hundreds of thousands of offshore entities. The documents contained personal financial information about famous, wealthy individuals and public officials.
The documents were created by a law firm in Panama, with some dating back to the 1970s.
Iran nuclear deal: lifting of sanctions
Although the framework of this agreement was announced in 2015, economic sanctions started to lift only in January 2016. The year saw the beginning of Iran’s return to international markets and more is expected for 2017 as the country has not yet made a full comeback.
Samsung Galaxy Note 7
Samsung Galaxy Note 7 phones, released this year, started to heat up and explode, causing some injuries in different markets around the world and killing the model altogether. This created massive chaos for the South-Korean manufacturer, which withdrew all units from the markets and started a gruelling investigation into the rootcause of the issue.
King Salman bin Abdel Aziz Bridge
Last April, Saudi Arabia and Egypt agreed to build a bridge over the Red Sea, linking the two countries together. This was seen as a historic move highlighting the excellent relationship between the allies. The bridge would be called “King Salman bin Abdel Aziz Bridge”.
Members of the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC members as well, reached their first deal since 2001, to curb levels of oil output to ease a global glut after oversupply pressured prices for more than two years. Long-term market reactions to the deal are yet to be felt and will probably be seen throughout 2017.
The new augmented reality game, developed by Niantic, quickly became a global phenomenon and was one of the most profitable apps of 2016, with more than 500 million downloads worldwide.
Italy’s government, led by then-Prime Minister Matteo Renzi, held a nation-wide referendum proposing reforms and amendments to the country’s constitution. The referendum failed, leading to the resignation of Renzi, tipping the country into potential political turmoil and the rise of the populist, right-wing movement in the country.
Renzi’s resignation and the country’s instability also brought up concerns over a looming banking crisis in Italy, the third-largest national economy in the euro zone.
The US Federal Reserve raised interest rates, signalling a faster pace of increases in 2017, with central banks adapting to the incoming of a Donald Trump administration, which has promised to cut tax. The year 2017 will probably see the repercussion of that decision.
A coup d’état was attempted in Turkey in July against state organisations including the government of President Recep Tayyip Erdogan. The failed coup was carried out by a faction of Turkey’s armed forces, who attempted to seize control of several areas in the capital of Ankara, Istanbul and elsewhere.
The coup, and other terrorist attacks, disturbed Turkey’s peace and stability and harmed its tourism industry, among others.
The World Bank is expected this week to approve its New “Environmental and Social Framework”. Many groups are alleging this would weaken human rights protections and / or even endanger the very communities these new rules were intended to protect. Apparently, a series of contradictions that allegedly strengthens the oversight authority of those local governments that are pushing large development projects despite opposition of their own poor and indigenous communities is at the root of the objections to these new rules.
Would the MENA region, which having directly or indirectly benefitted from decades of positive cashflows be also in the whirlwind of debates generated by such rules?
Meanwhile, CommonDreams.org published this article on the new World Bank rule book titled
“Environmental and Social Framework” that shifts responsibility for enforcement of World Bank regulations on human rights and environmental protections to the borrowing nations themselves — leading observers to wonder if the bank is attempting to absolve itself of responsibility for the negative impacts of the projects it funds.
Essentially, the new rules will allow “borrowers, regardless of their track record of corruption or human rights violations, to bulldoze their way through projects without community consent, participation, or oversight,” teleSUR argues.
“Thus, a borrowing country like Uganda, with a long history of LGBTQ human rights abuses,” the Human Rights Campaign notes, “would be responsible for ensuring that LGBTQ people are not harmed by a bank project.”
Moreover, Human Rights Watch reported that “sources inside the World Bank told Human Rights Watch that World Bank management opposed language that would require the bank itself to respect human rights throughout its operations.”
“The bank has effectively dismantled thirty years of environmental and social protections for the world’s most impoverished and vulnerable peoples,” said Stephanie Fried of the Ulu Foundation, a U.S.-based environmental organization, to the International Consortium of Investigative Journalists (ICIJ).
In a press statement, a group of international human rights organizations sounded the alarm about the new rules:
“At a time when the bank intends to finance more high-risk projects in high-risk contexts, the safeguards should provide heightened protection and vigilance. Instead, the bank has proposed increasing ‘flexibility’ and relaxed requirements,” the groups warn.
They welcome the addition of some new provisions on labor and non-discrimination, but say these gains have been “undermined by the replacement of clear time-bound requirements with vague language, loopholes, flexible principles and reliance upon ‘borrower systems’ instead of bank safeguards to determine what social and environmental standards a project must meet.”
Would Venezuela be ‘lesson-learned’ for Algeria? Each country, excessively dependent on the volatile fluctuations in the price of oil, Venezuela’s like Algeria’s economy have each been quite affected by the global economic crisis, resulting from the recent oil price slump.
The semi-bankruptcy of Venezuela’s economy: are there any lessons for Algeria?
This is the paradox of a typical annuitant who has not in its recent past benefitted from the financial windfall of oil price highs to establish a competitive based productive economy.
Venezuela is a rich country but with a poor population; the country being in 2016 literally on the verge of bankruptcy. Algeria for want not to renew this unfortunate experience should avoid euphoric speeches and meditate the Venezuelan lesson.
1 – Some socio-economic indicators
With an area of 912,050 km² with about 40 indigenous languages (wayuu, piaroa, Pemón, guahibo, etc.), Venezuela is part of the WTO, World Bank, ECLAC (Economic Commission for Latin America) of ALADI (Association Latin American integration) and the CACM (Central America common market).
It is partner of MERCOSUR, but has retired from the Andean Community, which includes several countries of the southern Latin America’s cone, in 2006. Venezuela has a population of 31.5 million in 2016 of which 93.4% are urban and 6.6% rural citizens with a density of 28.5 people per km², life expectancy is generally over 72 years, and a literacy rate of 95.5%. In Human Development world ranking, the country had 0.762 note in 2015 and was 71st on 187 countries.
With the oil price dropping almost 2 years ago, the Gross Domestic Product (GDP) in current US$ billion was 298.38 in 2012, 218.43 in 2013, 206.25 in 2014, 131.86 in 2015 and forecast to be 133.53 billion in 2016 with a decrease in volume of 3.9% in 2014 and 8% in 2015. The main sectors of activity taken in the GDP are: agriculture: 3.8%, industrial sector: 45.8% with total prevalence of hydrocarbons (96% of exports) and the services sector: 50.4%. Exports of non-oil products are marginal (4 to 5% of the total) and constantly declining in value and in volume due to the growing difficulties encountered by the national productive systems. These are dominated by the chemical and mineral products (60% of the total in 2014).
The official unemployment rate has thus evolved according to the World Economic Outlook Database: 7.8% in 2012, 7.5% in 2013, 8.8% in 2014, 14.0% in 2015 and 2016 is forecast give 18.1%, but in reality much more with a predominance of jobs-annuities. According to the same institution, the inflation rate was 21.1% in 2012, 40.6% in 2013, 62.2% in 2014, 159.1% by 2015 and more than 180% in 2016; some forecast 200% by end of December 2016, possibly one of the highest in the world. This inflationary spiral that lead to shortages of products is causing a deterioration in the purchasing power of the most vulnerable and the dumbing down of the middle classes that constitute the basis and support of the power in charge.
The balance of common transactions had lately a significant deterioration, $11.02 billion in 2012, $5.33 in 2013, $10.89 in 2014, a negative balance of $3.98 billion in 2015 and still a negative balance in 2016, despite restrictions of $1.9 billion. The total public debt (internal and external sovereign + PDVSA) would amount to 80% of GDP by end of 2015 compared to 56% in 2014. Despite the acute financial crisis, Venezuela scrupulously paid at maturity of its external debt in the first four months of 2016 (approximately $3.5 billion) and continues to assert that it will not default. Correlated to the hydrocarbons related semi-annuity with the collapse of foreign exchange reserves, and according to François Faure of Le Figaro, Economist for BNP Paribas in May 2015, the total amount of foreign exchange of the Venezuelan reserves were $22 billion including $7.4 billion in cash and the rest mainly in gold.
According to the Trading Economics, the amount of foreign exchange reserves was $12.7 billion in April 2016. The currency; $1 = 10 Bolivars at the official rate and more than 1,100 Bolivars at the parallel market rate.
Its customers mainly the United States (40%), China (20%) and India (10%), Singapore (5%), Cuba (5%) and its suppliers are the United States (25%); China (16%), Union European (14%), Brazil (9%) and Colombia (5%).
2 – Venezuela, failing rentier economy
The country would have reserves of upto 300 billion oil barrels; one of the largest in the world. But the specification of its oil is of the heavy type, that is expensive to extract and according to some experts, it would be no more interesting to extract it below $100 a barrel. Furthermore, its main market in the past, being the United States of America, whom became lately self-sufficient with their shale gas revolution have drastically reduced their imports. In addition, with the loss of its managers, the lack of investment at the level of the main Venezuelan society between 2013 and 2015, oil production increased from 3.5 million barrels’ day to 2.5 million barrels with a very strong domestic consumption, oil prices being subsidized.
Claiming to be victim of an economic war, the president of Venezuela Nicolas Maduro, given the scale of the economic crisis, has decided to operate a tightening of budgetary policy, decreed in January 2016 “economic emergency” for a renewable term of 2 months, to increase the price of petrol (litre of super gasoline costs now 6 Bolivars against 0.097 Bolivars), a first for nearly 20 years (even if the price remains particularly low). He also allowed a devaluation of 58% and whose objective would be to revive local production, but actually to try to fill the budget deficit at the price of imported inflation. Indeed, according to a recent study by BNP Paribas, the Government has set up a system of rationing. Every citizen should not buy more than its share, and should not go more than once a week in public stores. The Central Bank coordinates provision of Dollars, in large part, by oil rents by applying several Exchange rate, the lower being the products of basic necessities.
The Government of Nicolas Maduro accuses all speculators, private companies and opposition of helping inflation prices and to suffocate economically and thereby destabilize the country. Tackling structural reforms, with short-term actions, he decreed the temporary occupation of large plants and expropriations, short-term solutions that amplify tensions.
Economic laws being however impervious to political slogans, economic activity in Venezuela should further contract in 2016 and in the event of a barrel less than $50 to $60 (operating on the basis of a greater than $120 price of a barrel according to the IMF), are expected to multiply in 2017. Also, the slowdown in private investment should continue despite the probable phase-out of restrictions to imports and currency.
Distrust of local and foreign investors face the uncertainty of the legal framework should further promote capital outflows from the country. Inflation should stay high, driven by the rapid expansion of the money supply and the strong depreciation of the Bolivar against the US Dollar. Thus, according to the International Association of Transport Association https://www.iata.org (IATA), the country not having enough foreign hard currency to pay all its creditors, many companies have not been paid, starting with the airlines to whom the amount would be of approximately of $3.6 billion.
All the above denotes of both political and economic climate deterioration as demonstrated for Economic Freedoms, by Venezuela ranking in 2015 at the second last place, 175th out of 176 countries and was level within the south American continent 28 out of 29 and for Business Climate in the last rows with a score of 3.93 out of 10. Thus, Venezuela does not seem to have got, according to ECLAC http://www.cepal.org/en/datos-y-estadisticas , only 0.2% of the total of net FDI for the region ($230 million from a total of more than $153 billion) and ranks regionally seventeenth within the receptors of FDI overtaking only El Salvador and Paraguay. With an amount of $30 billion in 2014 (compared to 33 in 2013) according to UNCTAD, Venezuela’s FDI is seventh in the region, behind Colombia’s or Argentina’s. According to the Central Bank however, the FDI inflows to Venezuela reached $320 billion in 2014 (a drop of 88% from 2013).
3 – Venezuela has the potential for come out of its crisis
The Venezuelan economic model, based on a redistribution of the oil revenues, was based on two assumptions: domestic consumption and strong public expenditure. Growth, fuelled by high oil prices, has been until 2012, one of the best growth of Latin America, but artificial growth lead by public expenditure. Since that date, the worsening of the macroeconomic imbalances and the fall in the price of oil (oil exports representing over 96% of resources in currency of the country and more than 60% of the taxation) have completely reversed this trend. Yet Venezuela has vast water resources, as well as significant agricultural potential. The main agricultural products of the country are corn, soybeans, sugar cane, rice, cotton, bananas, vegetables, coffee, beef and pork meat, milk, eggs and fish. As highlighted earlier, with the first world oil reserves, before Saudi Arabia, though of heavy oil specification, the fourth world reserve of natural gas, Venezuela is the 5th economic power of Latin America behind Brazil, Mexico, Argentina and Colombia. A founding member of OPEC, it is the 12th largest producer of petroleum and the tenth largest exporter of crude. But with foreign exchange reserves leaning towards nil and a debt increasingly heavy, the Government sees a steady reduction of any room for manoeuvre and as a response threatened of defaulting in its payment of external debt. Very likely event for Venezuela if the price happens to be lower than $70. Venezuela narrowly avoided default in 2015, thanks to loans granted by China and managed to meet the deadline of February 2016 ($1.5 billion. Two other and most important deadlines are coming up shortly, those October and November 2016 whereas Venezuela might be facing difficulty in meeting its commitment.
Yet despite all the above, salary increases, purchasing power being going down, poverty increasing and health system is deteriorating, unemployment rate exploding and the country also facing a certain rise in insecurity for it has within Latin America the highest homicide rate, the country is felt to nevertheless possess plenty to speak of in terms of potentialities. .
In summary, specifying that in the practice of business and politics there are no feelings, having regard to the strategic interests of Beijing in the country, China will come – will it help Venezuela?
Let’s not dream of utopia, any solution must be in essence internal, residing in a clear political will to Venezuelan power to deepen the comprehensive reform. In addition to oil reserves, the country having mineral and agricultural considerable resources. The country has an active civil society and above all a very good standard socio-educational system, good quality tourism and quite a resourceful human foundation for development, however perhaps an advantage in today’s underutilized by the current Government.
Subject to far-reaching structural reforms and an appropriate vision far from sterile populism that has led the country this far, reforms will necessarily move segments of power based on the semi-annuity related hydrocarbons, Venezuela has the potential to become an emerging country.
As for Algeria, it is a matter of not to renew the Venezuelan unfortunate experience of semi-bankruptcy economics. Leadership must avoid euphoric speeches but rather meditate the Venezuela’s ‘lesson-learned’.
All countries economic growth has perhaps never been so generally spread and assessment of the World Economy Growth Risks in 2016 virtually unprecedented.
The US has experienced some moderate growth averaging 1% and the Eurozone’s monetary easing has boosted some sort of relative recovery. Meanwhile, in most emerging economies, things were not better. To the contrary for some of the five so called BRICS countries, Brazil and Russia are in recession, South Africa is just about growing and China going through some thin patch. India is apparently the only one that is doing not so badly after all.
The IMF and many other financial institutions have recently lowered their forecasts for the world economy growth. These together with the World Bank and think-tanks throughout the world produced studies and reports that are avidly read by all concerned. Here is one of Credit Suisse that seems to cover all main issues;
The global economy struggled through a difficult year in 2015, leaving a range of challenges for policymakers hoping to avoid a third leg of the financial crisis, panellists at the Credit Suisse 2016 Asian Investment Conference (AIC) said.
The Federal Reserve’s moderation in monetary tightening is crucial to sustaining fragile global economic growth in 2016, while structural reforms in China, India, and other countries are essential if struggling emerging economies are to regain their footing over the next several years.
“It’s (2016) going to be a period of very uneven and hesitant growth,” said Eswar Prasad, Senior Professor of Trade Policy at Cornell University and Senior Fellow at the Brookings Institution. U.S. growth looks reliable, along with the U.K., India and a handful of others. “But by and large, a very morose and gloomy picture across the rest of the world,” Prasad added.
The U.S. economy is improving, but not enough to withstand monetary tightening beyond the Federal Reserve’s quarter-point rate hike last December, according to Gene Sperling, a former director of the U.S. National Economic Council and a former economic aid to Presidents Clinton and Obama.
Fortunately, the Fed under Chair Janet Yellen appears to have put the brakes on interest rate hikes in the near term. Tightening now could damage the U.S. economy, not to mention the global economy. On the other hand, accommodative monetary policy creates little risk, even if it enables inflation to rise above the Fed’s 2 percent long-term target, Sperling said.
Sperling cited the absence of U.S. wage growth and a struggling middle class, even as the labor market has improved. “It’s OK if you overshoot (on inflation) for a little while,” he added.
China could potentially disrupt global economic stability this year, with more than half of AIC attendees naming China’s growth and currency as a major risk. China needs to continue to reform its economy, shuttering “zombie” firms and reducing overcapacity in manufacturing and heavy industry, to sustain GDP growth at its projected 2016 rate of 6.5 percent.
“I think China needs to do more in terms of structural reform in order to solve the medium-term growth question,” said Huang Yiping, Professor of Economics at Peking University, and an advisor to the Monetary Policy Committee for the People’s Bank of China.
Huang added that China is not alone in the need for reform. Most countries around the world have relied heavily on fiscal and monetary stimulus, leaving them vulnerable to ongoing trends toward global free capital flows and flexible exchange rates.
“The problem is, in my view, many emerging market economies are either unable to, or unwilling to, withstand volatile capital flows,” Huang said.
The OPEC and non-OPEC countries in Doha are meeting over the weekend of 17 April 2016, to discuss stabilising prices through possible production freezes. It is however felt that it may have little impact on the current market conjecture. No dramatic rise in the price of oil is foreseen mainly because of the current geo-strategic tensions and uncertainties in the world economy. Euphoric analyses should be avoided although the price of oil course despite the geo-strategic tensions particularly those between Iran and Saudi Arabia coupled with uncertainties of the world economy, have had recently some slight facelift, ending this 14th April morning, for the American WIT at $41.59 a barrel and for the Brent at $43.89 with $1,1383 / Euro. This is in no way a spectacular comeback, given that it is a freeze and not a decrease in production that is planned with a surplus of some 2.52 million barrels per day in the first quarter of 2016. But what of the great absentee, i.e. the United States of America which is one of the largest producer and soon one of the world’s largest exporter, and the specific cases of Iran which warned that it intends to first and foremost reach a production of 4 million barrels a day prior to considering a freeze on its production. Iraq and Libya who also are in desperate need of funds so as to rebuild their wrecked economies. Then, what of the world’s largest producer that is Saudi Arabia? To study the evolution of prices in the energy sector, we should be sticking to the fundamentals or to basics in addition to geo-strategic issues, the price of oil having undergone changes that one report of 13 April 2016 as being ephemeral. The IMF has since then revised downward the growth prospects of the world economy from 3.1 to 3.2% for 2016 against a forecast of 3.4% and 3.5% in 2017.
1 – In a speech to the Who’s Who of global finance meeting in Washington for the traditional spring of the Fund and the World Bank meetings, M. Obstfeld, former economic advisor to US president Barack Obama, did not hide his concern, stressing with force that “our forecasts are less optimistic. Despite the accommodative monetary policies ((almost zero interest rate) of both the FED and the ECB, the request, whether it’s for consumption or investment, is at half-mast). The various scandals revealed at the global level by the “Panama papers” regarding tax havens with others to be be unveiled shortly involve the improvement of the functioning of the international monetary system, the financial stability of the markets, and especially the morality of international relations by a greater international cooperation that also affects the fight against the omnipresent global threat of terrorism. Brazil plunged into a serious political-financial crisis, and Russia, should know recession in 2016/2017 with a GDP declining in 2016 respectively by 3.8% and 1.8%. China would have a growth of 6.5% with the risk of creating new financial turbulence. The IMF forecasts weak growth for all advanced economies: its estimates for the United States and the Euro zone are even less than previously planned (−0.2 point), with a growth of 2.4 and 1.5%, respectively and even Japan should know recession in 2017. In general, according to the IMF, weak manufacturing activity and trade cannot be explained only by the development of China but also by the ‘moderate’ nature of demand and investment in general.
“Financial tensions in many oil-exporting countries reduce the capacity of these countries to mitigate the shock, resulting in a significant decline in their domestic demand.” Investment in the extraction of oil and gas having declined, “which amputates also global demand”, the perspectives do not encourage optimism. “The risks are rather bearish”, according to the IMF listing them in this order: a net slowdown in China, a stronger appreciation of the greenback and a tightening of conditions of finance at the global level and, a thrust of global risk aversion and an escalation of geopolitical tensions. These uncertainties, quoting the IMF could “derail global growth if these important pitfalls are not well managed.
The impact on the Algerian economy which being totally externalized and dependent on the evolution of the global economy through its semi “annuity” of hydrocarbons that represent directlyand indirectly 98% of its foreign exchange earnings and with imports represent 70% of the needs of households and public and private companies with an integration rate not exceeding 15%. Despite all those disconnected speeches from reality, exports of its private sector, of whom more than 97% are not very innovative, often indebted to banks, SMB’s struggle to reach 1%. As from the IMF downwards revision of its forecast of growth of the world economy, it is feared a global financial bubble between 2017 and 2018, would result in a slowdown in the demand for oil with depressed oil prices.
The IMF report notes that for 2017 Gross Domestic Product (GDP) growth would be 2.9% in 2017 against 3.4% for 2016. The IMF forecasts a deficit of the Treasury for Algeria of 17.1% at the end 2016 compared to 15.7% in 2015 prior to stabilizing at 16.2% in 2017. As it provides a ‘degradation’ of the labour market, where unemployment rate will tend to go the opposite way to 12.1% in 2017 against 11, 3% in 2016. The rate of inflation calculated by the IMF is somehow biased by including subsidised products (bread, milk, fuel, water, electricity etc.) otherwise the national rate would be higher than 5% praising the problem of profitability of the current national loan whose rate is 5% in the medium term. Also, for Algeria to face these uncertainties about its future, it has to have a strategy of adaptation simply because of its lack of influence on oil prices (the price of gas is indexed to that of oil) and thus the decline in revenue of the country’s main source of finance SONATRACH.
2 – For the next meeting of the OPEC/non-OPEC countries, the euphoric analyses should be avoided and not be expected according to the IEA to a spectacular comeback, the price of crude oil being basically a balance determined by an agreement between the USA, not affected by this meeting and Saudi Arabia and to a lesser extent by the position of two other major producers Iran and Iraq who intend to increase their production. The oil price having certainly had a slight rise recently helped the Algerian Dinar to skid down to 122.275 to €1 and 107.700 to $1, the country is advised to stick to the fundamental nine principles below.
First, the essential reason for the fall in the price of oil from June 2014 was due the weakness of growth in the world economy as highlighted above.
Secondly, on the supply-side, we are witnessing increased faster than expected from the USA non-conventional oil production upsetting the world energetic map. These will soon start to export in 2017 to Europe competing strongly against the weakest Algeria and incidentally Russia.
Thirdly, the rivalries within OPEC with some not meeting their quotas, although this organization represents only 35 / 40% of world production, 60 / 65% being non-OPEC, as well as that of Iran-Saudi Arabia (more than 35% of the OPEC production), who do not want to lose their market share.
4, the strategic expansionist Gazprom, of Russia which has always so far benefited from the drop in quotas of OPEC to increase its market share, has great need for financing; tensions in Ukraine have in no way affected its exports in Europe where its market share was 30% between 2013/2015 compared 8 / 9% for Algeria.
5, the return to the market of Libya’s 800,000 barrels per day could go to 2/3 million barrels. in the near future. Iraq with 3.7 million barrels a day (at a production cost of less than 20% compared to its competitors) that can go to more than 5 million per day is in need of funding and intends to penetrate the Asian market. Iran, has reserves of 160 billion barrels of oil and could easily export between 4/5 million barrels day. It has the second reserve of traditional gas with more than 34,000 billion cubic meters, not to mention that it will then have access to some of its sanctions related $100 billion blocked in foreign banks, which could increase its exports and attract foreign investment.
6, USA/Europe that represent more than 40% of world GDP for a population of less than a billion inhabitants pushing towards energy efficiency with a forecast of 30% reduction in 2030, confirming the future is made of hydrogen and renewable energy. Also, prospects by 2017/2020 have the strategic goal of strengthening energy efficiency as per a controlled energy transition process, as per the important resolutions agreed at the meeting of the COP21 in Paris on global warming particularly in the building and transport sectors.
7, the trends are a new division and international specialization with the concentration of manufacturing industry, strong consumer of energy in Asia which will absorb 65% of consumption worldwide by 2030, mainly from India and China. Customer relations – providers will be to their benefit to have comparative advantages and will push to lower prices.
8, occupation by terro€rists of oil and gas fields and flows on the black market in Iraq for a barrel between $30/40
9, the evolution of the exchange rate of the Dollar and the Euro, any increase in the Dollar, with the recent decision by the FED to raise the interest rate affects the oil price down, well that exists no linear correlation.
In summary, the GCC countries recorded in 2015 a total deficit of $160 billion (€140 billion) against an overall surplus of 220 billion (€193 billion) in 2012. Member of the Council of cooperation of the Gulf (GCC) countries should borrow between 250 and €342 billion by 2020 to finance their budget deficits resulting from the fall in the price of oil according to the report of the Kuwait Financial Centre (Markaz) of March 2016. Saudi Arabia, Bahrain, the United Arab Emirates, Qatar, Oman and Kuwait, which depend on oil revenue, could accumulate a deficit of $318 billion dollars (€279 billion) for the only years 2015 and 2016. With the exception of Bahrain and Oman, the other members of the GCC have huge reserves and low debt that enable them to easily mobilize loans on their domestic market and abroad. And the countries the hardest hit are, respectively, Nigeria (drop drastically change reserves $ 28 billion by 2015 with an inflation rate of 10%), Venezuela (in semi – bankruptcy with 180,5% inflation rate in 2015 and less than $ 15 billion of reserves), Russia the Ruble has lost more than half its value (65.94 a Dollar and over $40/50) foreign exchange reserves could be depleted by 2020) and Algeria with an accelerated drift of its Algerian Dinar to 122.275 a euro and DA107.700 to one dollar on April 15, 2016, of which foreign exchange reserves decreased from $192 billion in 2014 to 143 billion to 01 January 2016.
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