- IMF Raises Global Forecast
The emergence of protectionist forces could undermine a modest brightening of the global growth outlook and is putting severe strain on the post-World War II economic order, the International Monetary Fund said.
The IMF raised its forecast for global growth to 3.5 percent this year, up 0.1 percentage point from January, the Washington-based fund said in the latest update to its World Economic Outlook. Expansion will pick up to 3.6 percent in 2018, unchanged from the projection three months ago. The upgrade offers a glimmer of optimism following a trend in recent years of the fund downgrading its growth forecasts.
The pickup is being fueled by “buoyant” financial markets and a long-awaited cyclical recovery in manufacturing and trade, the IMF said. Still, global growth remains subdued compared with past decades, and the risk of “trade warfare” is still hanging over the world economy, IMF chief economist Maurice Obstfeld warned.
“The global economy seems to be gaining momentum — we could be at a turning point,” Obstfeld said in a foreword to the outlook. However, “the post-World War II system of international economic relations is under severe strain despite the aggregate benefits it has delivered — and precisely because growth and the resulting economic adjustments have too often entailed unequal rewards,” he added.
The sunnier outlook will hearten finance ministers and central bankers from the IMF’s 189 member countries as they meet this week in Washington for the fund’s annual spring meetings. In an interview last week with Bloomberg Television, Christine Lagarde said “we see spring in the air of the global economy.”
It will be the first spring meetings in Washington since the inauguration of U.S. President Donald Trump, who has promised to take an “America First” approach to foreign policy. After Trump declined last week to follow through on his campaign promise to brand China a currency manipulator, policy makers will be watching closely to see if his administration is backing down from its most hawkish trade threats, or merely picking its battles.
The IMF left its U.S. forecast unchanged for this year and next, at 2.3 percent and 2.5 percent respectively, after raising its projections in January on Trump’s plan to cut taxes and boost infrastructure spending.
The fund sees the U.K. economy expanding by 2 percent this year, up from a projection of 1.5 percent seen in January, before slowing to 1.5 percent in 2018. The British economy has performed stronger-than-expected since the 2016 Brexit referendum, indicating “a more gradual materialization than previously anticipated of the negative effects” from the decision.
The IMF bumped up its estimate for Japanese growth to 1.2 percent this year, an increase of 0.4 percentage point from three months ago. Japan’s growth is being driven by a jump in net exports that’s expected to continue in 2017, the IMF said.
In the euro area, a mild boost from fiscal policy, easy financial conditions and a weaker currency are boosting growth, which is expected at 1.7 percent in 2017, up 0.1 percentage point from January, according to the fund.
The IMF also raised its growth forecasts for China to 6.6 percent this year and 6.2 percent in 2018.
The fund left unchanged its overall projections for growth in emerging markets and developing economies. Conditions for resource exporters are gradually expected to improve, supported by recovering prices for oil and other commodities, the IMF said.
Nevertheless, the fund downgraded its outlook for the Middle East and sub-Saharan Africa, two regions heavily dependent on natural resources.
The IMF was conceived during World War II to oversee the global monetary system and promote open markets after countries resolved to avoid the beggar-thy-neighbor policies that followed the Great Depression.
But Trump and other nationalist politicians have expressed doubt about the existing system and multilateral institutions such as the IMF. National Front leader Marine Le Pen, who wants to pull France out of the euro, is polling strongly ahead of this month’s presidential election, though she’s an underdog to win a runoff vote next month.
“A distinct set of threats comes from the growth in advanced economies of domestic political movements skeptical of international economic integration — no matter if integration is promoted through multilateral rules-based systems for the governance of trade, more ambitious regional arrangements such as the euro area and European Union, or globally agreed standards for financial regulation,” Obstfeld said in prepared remarks to be delivered Tuesday in Washington.
Communities in Delta State Shut OML30 Operates by Heritage Energy Operational Services Ltd
The OML30 operated by Heritage Energy Operational Services Limited in Delta State has been shut down by the host communities for failing to meet its obligations to the 112 host communities.
The host communities, led by its Management Committee/President Generals, had accused the company of gross indifference and failure in its obligations to the host communities despite several meetings and calls to ensure a peaceful resolution.
The station with a production capacity of 80,000 barrels per day and eight flow stations operates within the Ughelli area of Delta State.
The host communities specifically accused HEOSL of failure to pay the GMOU fund for the last two years despite mediation by the Delta State Government on May 18, 2020.
Also, the host communities accused HEOSL of ‘total stoppage of scholarship award and payment to host communities since 2016’.
The Chairman, Dr Harrison Oboghor and Secretary, Mr Ibuje Joseph that led the OML30 host communities explained to journalists on Monday that the host communities had resolved not to backpedal until all their demands were met.
Crude Oil Recovers from 4 Percent Decline as Joe Biden Wins
Oil Prices Recover from 4 Percent Decline as Joe Biden Wins
Crude oil prices rose with other financial markets on Monday following a 4 percent decline on Friday.
This was after Joe Biden, the former Vice-President and now the President-elect won the race to the White House.
Global benchmark oil, Brent crude oil, gained $1.06 or 2.7 percent to $40.51 per barrel on Monday while the U.S West Texas Intermediate crude oil gained $1.07 or 2.9 percent to $38.21 per barrel.
On Friday, Brent crude oil declined by 4 percent as global uncertainty surged amid unclear US election and a series of negative comments from President Trump. However, on Saturday when it became clear that Joe Biden has won, global financial markets rebounded in anticipation of additional stimulus given Biden’s position on economic growth and recovery.
“Trading this morning has a risk-on flavor, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate,” Michael McCarthy, chief market strategist at CMC Markets in Sydney.
“The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”
The president-elect and his team are now working on mitigating the risk of COVID-19, grow the world’s largest economy by protecting small businesses and the middle class that is the backbone of the American economy.
“There will be some repercussions further down the road,” said OCBC’s economist Howie Lee, raising the possibility of lockdowns in the United States under Biden.
“Either you’re crimping energy demand or consumption behavior.”
Nigeria, Other OPEC Members Oil Revenue to Hit 18 Year Low in 2020
Revenue of OPEC Members to Drop to 18 Year Low in 2020
The United States Energy Information Administration (EIA) has predicted that the oil revenue of members of the Organisation of the Petroleum Exporting Countries (OPEC) will decline to 18-year low in 2020.
EIA said their combined oil export revenue will plunge to its lowest level since 2002. It proceeded to put a value to the projection by saying members of the oil cartel would earn around $323 billion in net oil export in 2020.
“If realised, this forecast revenue would be the lowest in 18 years. Lower crude oil prices and lower export volumes drive this expected decrease in export revenues,” it said.
The oil expert based its projection on weak global oil demand and low oil prices because of COVID-19.
It said this coupled with production cuts by OPEC members in recent months will impact net revenue of the cartel in 2020.
It said, “OPEC earned an estimated $595bn in net oil export revenues in 2019, less than half of the estimated record high of $1.2tn, which was earned in 2012.
“Continued declines in revenue in 2020 could be detrimental to member countries’ fiscal budgets, which rely heavily on revenues from oil sales to import goods, fund social programmes, and support public services.”
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