Category Archives: Economy

IMF Warns of Global Economic Slowdown

Economy, Emerging Markets, , ,

The International Monetary Fund is warning that the risk of a global financial crash is on the rise due to China’s economic slowdown and a concomitant decline in world trade. This double-headed decline has the effect of de-stabilizing emerging economies which are burdened with large debt.

The IMF, the Washington-based lender of last resort, explained that because of the large scale borrowing by emerging market countries with debts which are highly susceptible to increased interest rates, policymakers need to act fast to strengthen the financial system.

The cautionary statements come after a difficult summer of global market chaos caused by China’s currency devaluation, instituted to increase its export flow. That action set off a panic reaction in world-wide markets, which crashed. Investors suddenly understood the real meaning of China’s economic slowdown.

Earlier in the week the IMF lowered its prediction for global growth in 2015 down to 3.1 percent. That number is the smallest since the low point of the 2009 downturn.

World Bank Bracing for US Rise in Interest Rates

Economy, Emerging Markets, , ,

US interest rates, which have been hovering near zero for about 6 years, are expected to rise as the US economy continues its slow but steady recovery. The World Bank is closely watching what the US Federal Reserve will do, and when, and is expecting when that day finally does arrive, developing economies might be in for some hard times.

The hike in interest rates could come as early as this Thursday, when the Fed winds up a policy meeting. In a report issued by the World Bank they warn that such a rise could have a modest impact on developing countries, but also adds that there is a chance that the fall-out could be worse.

The World Bank has several reasons for their concern. They believe that a rise in interest rates could interfere with capital flows into developing countries, which can lead to stifling of economic growth, which could then lead to financial instability.

Despite their warning, they also site several reasons to be optimistic. First of all, any increase in interest rates will happen gradually, allowing developing economies to cope more easily with any changes. They also point out that any changes in rates will happen within the context of a strong, growing US economy, which usually bodes well for the global economy in general.

South America the New China?

Economy,

Not all business opportunities are found in Asia. An ever growing number of investors are looking south, betting on growing economies and other opportunities in countries such as Brazil, Chile, and Mexico.

In the insurance sector, Travelers increased its stake in J. Malucelli in 2012, and became the majority interest holder in the property casualty business of the joint venture three years later, in 2015.

Commenting in 2012 on the joint venture with J. Malucelli was Alan Schnitzer, Travelers’ Vice Chairman and head of Financial, Professional & International Insurance.

“The venture continues to be the market leader in the surety insurance business in Brazil, with a market share of approximately 30 percent. In addition, we are making good progress on our early efforts to expand beyond the surety business into the growing property and casualty market.”

The renewable energy market is also expanding into South America. The excellent wind and solar natural resources found in much of the continent makes this a tempting area for expansion. Recently Enel Green Power signed a 25-year contract for electric power with Empresa Nacional de Electricidad in Chile. The deal, which is estimated to be worth as much as $3.5 billion, will support the construction of a solar-power plant, wind farm, and a geothermal facility.

Potential for growth in the more traditional energy sector in Mexico has also been expanding, especially since Mexico’s President Enrique Peña Nieto pushed through a change in his country’s constitution in 2013. The constitutional amendment allowed private and foreign companies to explore for and produce oil and gas there for the first time in 80 years.

As of July 15, 2015, those first international investors finally began their venture into Mexican oil, whose reserves could be, according to the Financial Times, “as big as the proven reserves of Kuwait.” The FT estimates the oil potential in Mexico could be as large as 107.5 billion barrels, saying that “The country is viewed as one of the dwindling number of opportunities to add substantial reserves to portfolios after several years when the oil majors have struggled to make big discoveries.”

In the coming years, as growth opportunities continue to develop south of the border, South America can certainly become the new China.

Majid Jafar Supporting Others Through the GEI

Companies, Economy, , , ,

Crescent Petroleum with Majid Jafar is making a global impact, highlighted, amongst other things, by Majid’s election in 2013 as the deputy chairman of the Global Energy Initiative (GEI) which is a major international non-profit that helps to promote sustainable energy to fight energy poverty and to protect the environment.

Upon his appointment Majid Jafar commented:

“Like food, shelter, and medicine, access to affordable energy for all people must be viewed as an international objective that will require cooperation and coordination on a global scale to achieve in a sustainable manner that encourages development.”

Among their vast array of activities, the GEI is, this week, co-organizing 1 of the 3 strands of the  APO International Conference in Taiwan.

Called “How will green energy shape our future?” this segment of the conference is taking place on March 13th from 1:30-5:10. As GEI describes on its website: “Traditional energies had provided the backdrop for the last century’s industrial rapid growth. But, in view of the negative impact these energy sources have to our environment, we question: will they be able to sustain us for another century? How are we going to satisfy the increasing demand from our population and industrial growth? History has taught us that a diverse energy portfolio is better than a single energy source for a nation. However, are the other energy sources ready for the main stage? How can we nurture the growth of renewable energies? In this keynote, we hope to address this intractable topic through policy, technology and market place.”

Crescent Petroleum’s history ensures it is well placed to contribute to the GEI. It has been working in the sector since the 1970s, at a time when Saddam Hussein was both unofficially and then officially in power in the Iraqi government. Indeed, the company is the longest-established private gas and oil company in all of the Middle East, boasting experience as a global operator in countries like: Argentina, Canada, Egypt, Iraq, Montenegro, Pakistan, Tunisia, and the United Arab Emirates.

The Super Bowl as Economic Barometer

Economy, , ,
Super Bowl ads represent industry confidence
Super Bowl ads represent industry confidence

Over the years, as the Super Bowl has gained a wider audience, the iconic football match has become a showcase for clever advertising at top-dollar costs. For many fans the halftime show and the ad breaks have almost as much appeal as the game itself, adding to the value of ad placement.

Companies must assess whether spending several million dollars on a few seconds of airtime is money well spent. An examination of which industries are spending their hard earned profits on ads is a pretty good indication of the health of that industry.

This year’s Super Bowl is expected to bring in about $360 million from advertising, at about $4.5 million for half a minute, for the broadcaster of the event, NBC. Industries represented during the great game include car manufacturers, beer brewers, snack suppliers, and high-tech firms. The government of Ecuador made history by becoming the first foreign government to place an ad during the Super Bowl.

According to Kantar Media ad spending over the past three years has risen by double-digit percentages. This can be explained by the fact that there are now fewer chances for companies to reach mass audiences all in one shot, making such opportunities all the more value-laden.

As the expense of placing an ad in the Super Bowl is so dear, it can be inferred that those companies willing to take a chance on spending are doing well.  Based on that theory, it looks like car makers, although spending by far the most money on Super Bowl ads, have stepped back slightly from last year’s spending.