1 Oil hurtles down after Opec meet (Terry Macalister & Graeme Wearden in The Guardian) Oil prices have crashed to a new four-year low, below $72 per barrel, after a major split inside Opec forced the cartel to hold production at current levels rather than make cuts to try to turn the market around.
The reduced cost of energy – prices are now down 37% since the summer – should be a boost to British consumers and the wider economy, but experts warned the North Sea oil industry is now facing a slump in investment and major job cuts. There are now predictions that the price of Brent blend could fall to as low as $60, which would be disastrous for countries with high producing costs and economies dependent on oil and gas, such as Russia and Iran.
Norway, an important oil and gas producer outside OPEC, saw its Krona currency hit a five year low against the dollar while Shell and BP saw their shares battered. Prior to a crunch meeting at its Vienna headquarters, OPEC was under huge pressure from some members to reduce output in a bid to counter the five month slide in Brent blend prices from $115. Prices have fallen due to increased US shale production and faltering demand as growth slows in China, Europe and emerging markets.
2 German jobless at record low (BBC) Germany’s unemployment rate has hit a record low, but slower inflation has raised concerns over deflation. The Federal Statistical Office revised October’s unemployment number from 6.7% to 6.6%, November’s figure was also 6.6%. Both figures were adjusted for seasonal variation. Meanwhile inflation fell to its lowest rate in nearly five years in November. Official figures showed inflation dropped to 0.5% in November from 0.7% in October.
The fall in the number of unemployed was larger than analysts’ expectations, down 14,000 to 2.872 million, the Federal Labour Office said. The figures are in marked contrast to many other economies in the eurozone. Economists have warned of a potential economic “stagnation trap” in the euro area. However, analysts said that record employment, rising wages and low interest rates are helping to prop up domestic demand in Germany.
Inflation remains weak in the eurozone and economists say the rate in Germany could fall further. Low German inflation may put pressure on the European Central Bank (ECB) to further stimulate the eurozone economy, Jennifer McKeown of Capital Economics said. The ECB has started buying covered bonds and asset-backed securities to try to revive the eurozone economy and keep deflation at bay.
3 South Asia’s boring club (Khaleej Times) Next year will be the 30th since the South Asian Association for Regional Cooperation was formed. Its career as an association has, since the mid-eighties, been neither distinguished nor even promising. The countries of the region, viewing the emerging tide of multi-lateralism elsewhere (especially in Latin America) and viewing the debris of the non-aligned movement, shuffled together to form SAARC.
The group has all the equipment — a secretariat, various centres that profess to tackle common subjects, a stable of professionals who advise bored officials, and so on — but has produced little. Some of the blame for such a desultory career must lie with the relations between Pakistan and India, which every other month swing between ‘hostile’ and ‘concerned’ but rarely tread any other territory.
Still, that ought not to have weighed so heavily on the other members of SAARC — Sri Lanka, Nepal, Afghanistan, Bangladesh, the Maldives and Bhutan. The accoutrements of SAARC should have served them just as well, but have simply not been used. This is the greyish and uninspiring background to the 18th SAARC summit this week in Kathmandu, Nepal.
The economic globalisation of the last decade especially has linked countries — within South Asia and outside — with bilateral agreements rather than through multi-lateral fora like SAARC. The poor showing has not deterred the countries from announcing yet another new SAARC centre which will merge four existing regional centres — the SAARC Disaster Management Centre (in India), the SAARC Coastal Zone Management Centre (in the Maldives), the SAARC Meteorological Research Centre (in Bangladesh) and the SAARC Forestry Centre (in Bhutan).
The suspicion, not unfounded, is that SAARC and its colourless apparatus exists to provide convenient sinecures for ex-diplomats from the eight countries and their colleagues. Of course, the “meetings on the sidelines”, over which some mild interest is mustered pertaining to SAARC, may lead to a front page headline or two, but on the balance, that occasional fillip is hardly worth the expense of maintaining the club.