Global growth jitters rattle world markets

Updated 21 August 2015
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Global growth jitters rattle world markets

PARIS: Global growth jitters have shaken world financial markets with the powerful Chinese economic engine slowing down, the European economy sputtering and the US Federal Reserve unclear about the timing of rate hikes.
The equities sell-offs continued on Friday sending all the Asian markets into steep declines with European and US stocks following in their wake.
"It isn't so much that the world economy is worsening, but that the international context has not improved as hoped," Jean-Louis Mourier, economist at broker Aurel BGC, told AFP.
That global outlook has been dampened not only by China but also by the Russian and some South American economies.
"The recovery in the US and, to a lesser extent, the euro area and Japan will be offset by the ongoing slowdown in China, low or negative growth in Latin America and only a gradual Russian recovery from its recession this year," Marie Diron, senior vice president for credit policy at Moody's, said in a note.
The main concern however weighing on market sentiment is the extent and pace of the economic slowdown in China, which for the last 10 years has been a key driver of global growth.
"Uncertainties over China's slowdown have escalated," banking giant Citi Group said in a note, predicting that growth in the world's second-biggest economy "is likely to remain sluggish."
On Friday a new wave of jitters swept through markets over weak Chinese manufacturing data, with the preliminary reading of Caixin's Purchasing Managers' Index (PMI) at 47.1 this month — its worst result since March 2009 and significantly below analysts' forecasts.
The International Monetary Fund has forecast China's growth at 6.8 percent this year — compared with 7.4 percent in 2014 — but many analysts have doubts about official Chinese figures.
Nigel Green, CEO of financial consultancy deVere Group, expects the economic concerns to persist at least until the end of the year, when "we will have a clearer view as to the risk of a China economic 'hard landing'."
China's economic woes are also weighing on commodities, where prices have plummeted — hitting the emerging economies hard, especially in Latin America, which depend on exports of minerals.
Brazil, the world's seventh-largest economy, is sinking into recession amid rising inflation and unemployment, a falling currency and a political crisis born of a massive corruption scandal.
Meantime, Europe has yet to take over the lead in growth from slowing emerging economies.
"After an excess of optimism, this is something of a cold shower," said Mourier.
Growth in the euro zone eased slightly from 0.4 percent in the first quarter to 0.3 percent in the second, in large part due to unexpected slowing in France.
Germany improved its quarterly performance, albeit less impressively than anticipated, according to initial estimates published August 14 by Eurostat.
But if recovery hasn't come as quickly in the euro zone as many analysts might have expected, the long-term outlook for the 19-nation bloc remains somewhat encouraging.
Private sector growth in the euro area accelerated in August, according to Markit's closely-watched PMI published Friday, which came in at 54.1 points — up from 53.9 in July — driven mostly by Germany and despite France's stall.
That positive activity may have been aided by other factors.
"The euro is under-valued, and this will help boost the euro zone's recovery," said Green, who also foresees European economies benefiting from depressed oil prices that continued their slide Friday, nearing the key $40 threshold in Asia.
Another source of downward pressure on financial markets is the apparent confusion of analysts struggling to decipher US monetary policy plans.
In the minutes of the last meeting, policy makers at the US Federal Reserve did not provide expected clues into the timing of their decision to raise interest rates -- an absence of clarity that soured investor sentiment.


Libya’s National Oil against paying ‘ransom’ to reopen El Sharara field

Updated 14 December 2018
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Libya’s National Oil against paying ‘ransom’ to reopen El Sharara field

  • Ransom payment would set dangerous precedent
  • NOC declared force majeure on exports on Monday

BENGHAZI: Libya’s state-owned National Oil Corp. (NOC) said it was against paying a ransom to an armed group that has halted crude production at the country’s largest oilfield.
“Any attempt to pay a ransom to the armed militia which shut down El Sharara (oilfield) would set a dangerous precedent that would threaten the recovery of the Libyan economy,” NOC Chairman Mustafa Sanalla said in a statement on the company’s website.
NOC on Monday declared force majeure on exports from the 315,000-barrels-per-day oilfield after it was seized at the weekend by a local militia group.
The nearby El-Feel oilfield, which uses the same power supply as El Sharara, was still producing normally, a spokesman for NOC said, without giving an output figure. The field usually pumps around 70,000 bpd.
Since 2013 Libya has faced a wave of blockages of oilfields and export terminals by armed groups and civilians trying to press the country’s weak state into concessions.
Officials have tended to end such action by paying off protesters who demand to be added to the public payroll.
At El Sharara, in southern Libya, a mix of state-paid guards, civilians and tribesmen have occupied the field, camping there since Saturday, protesters and oil workers said. The protesters work in shifts, with some going home at night.
NOC has evacuated some staff by plane, engineers at the oilfield said. A number of sub-stations away from the main field have been vacated and equipment removed.
The occupiers are divided, with members of the Petroleum Facilities Guard (PFG) indicating they would end the blockade in return for a quick cash payment, oil workers say. The PFG has demanded more men be added to the public payroll.
The tribesmen have asked for long-term development funds, which might take time.
Libya is run by two competing, weak governments. Armed groups, tribesmen and normal Libyans tend to vent their anger about high inflation and a lack of infrastructure on the NOC, which they see as a cash cow booking billions of dollars in oil and gas revenues annually.