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Malaysian Prime Minister Mahathir Mohamad arrived Thursday in Pakistan on an official three-day visit, where his high-powered delegation is expected to finalize investment deals worth nearly $900 million, officials said. 

 

The Malaysian leader will also be the chief guest at the Pakistan Day military parade Saturday, the Foreign Ministry announced. 

 

Pakistani Prime Minister Imran Khan’s adviser on commerce told reporters that business leaders accompanying Mahathir would sign three memorandums of understanding on Friday covering up to $900 million worth of investments in information technology and telecom sectors.  

The adviser, Razak Dawood, said the deals with Malaysia would also provide Pakistan a new opening toward membership in the Association of South East Asian Nations. He said Malaysian businessmen had also indicated they would like to invest in other sectors, including energy and textiles, to help Pakistan improve its exports. 

 

Officials said that Malaysia’s Proton carmaker signed an agreement late last year with a Pakistani partner to set up an assembly plant in the southern city of Karachi that would be its first facility in South Asia. Khan and his Malaysian counterpart are expected to officiate at a symbolic groundbreaking of the Proton plant Friday.

Looking for investors

Since taking office last August, Khan has approached nations that have warm relations with Pakistan, including China, Saudi Arabia, the United Arab Emirates, Qatar and Malaysia, to bring investment and financial deposits to help reduce a widening current account deficit and shore up foreign reserves.  

Riyadh and Abu Dhabi have deposited or are in the process of depositing $6 billion in loans in recent months. The two countries have also agreed to allow Islamabad to import oil on deferred payments. China is expected to deposit more than $2 billion in the next few days. 

 

Beijing has invested more than $19 billion over the past six years in energy and infrastructure projects under what is known as the China-Pakistan Economic Corridor, as part of its global Belt and Road Initiative. 

 

Last month, Saudi Crown Prince Mohammad bin Salman visited Islamabad and signed investment agreements worth $20 billion, including a $10 billion refinery and petrochemicals complex in the southwestern port city of Gwadar. 

 

Pakistani officials say they are also close to securing a deal with the International Monetary Fund for a bailout package reportedly of up to $12 billion.


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The number of Americans filing applications for unemployment benefits fell more than expected last week, pointing to still strong labor market conditions, though the pace of job growth has slowed after last year’s robust gains.

Other data on Thursday showed a measure of factory activity in the mid-Atlantic region rebounding sharply this month after falling into negative territory in February for the first time in more than 2-1/2 years. But manufacturers’ perceptions about the outlook were the least favorable in three years and their expectations for capital spending were also less upbeat.

These findings support the view that the manufacturing sector is slowing in line with softening economic growth.

The Federal Reserve held interest rates steady on Wednesday and its policymakers abandoned projections for further rate increases this year, noting that “growth of economic activity has slowed from its solid rate in the fourth quarter.”

“The U.S. economy has clearly slowed and will cause job growth to moderate, which isn’t alarming as long as it is orderly,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 221,000 for the week ended March 16, the Labor Department said on Thursday. Economists polled by Reuters had forecast claims falling to 225,000 in the latest week. Claims have been drifting in the middle of their 200,000-253,000 range this year.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 1,000 to 225,000 last week.

The claims data covered the survey week for the nonfarm payrolls portion of March’s employment. The four-week average of claims fell 11,000 between the February and March survey periods, suggesting a pickup in job growth after hiring almost stalled last month.

Nonfarm payrolls increased by only 20,000 jobs in February, the fewest since September 2017. The slowdown followed big gains in December and January. Average job growth has moderated to about 165,500 per month from 223,250 per month in 2018.

Despite the slowdown in employment growth, the labor market remains solid. The unemployment rate is at 3.8 percent and annual wage growth in February was the strongest since 2009.

The step-down in hiring reflects a shortage of workers and softening economic growth as the stimulus from a $1.5 trillion tax cut package fades. A trade war between the United States and China, slowing global growth and uncertainty over Britain’s exit from the European Union are also hurting domestic activity.

Ebbing momentum

The slow growth theme was also underscored by another report on Thursday from the Conference Board showing its leading economic index, which measures future U.S. economic activity, rose in February for the first time in five months.

February’s 0.2 percent increase in the leading indicator followed an unchanged reading in January.

The leading indicator’s growth rate has slowed in the past six months, which the Conference Board said suggested “that while the economy will continue to expand in the near-term, its pace of growth could decelerate by year end.”

Gross domestic product estimates for the first quarter are as low as a 0.4 percent annualized rate. The economy grew at a 2.6 percent pace in the fourth quarter.

The dollar firmed against a basket of currencies while stocks on Wall Street rose. U.S. Treasury prices were generally higher.

In a third report on Thursday, the Philadelphia Fed said its business conditions index jumped to 13.7 in March from -4.1 in February, which was the first negative reading since May 2016.

But the survey’s measure of new orders received by factories in the region, which covers eastern Pennsylvania, southern New Jersey and Delaware, rebounded moderately from negative territory in February and unsold goods piled up.

In addition, the survey’s six-month business conditions index dropped to a reading of 21.8 this month, the lowest since February 2016, from 31.3 in February. Its six-month capital expenditures index fell to a reading of 19.5 in March from 31.7 in the prior month. The index dropped below 20 for the first time since 2016.

“The details within the report were much more of a mixed bag, and more downbeat than one might think given the solid improvement in the headline reading,” said Daniel Silver, an economist at JPMorgan in New York.

These readings are in line with other surveys showing signs of slowing national factory activity. A report from the New York Fed last week showed a gauge of factory activity in New York state dropped to a two-year low in March.

The Philadelphia Fed survey also showed more factories experiencing difficulty finding workers, which could weigh on production in the future. Nearly 74 percent of the firms reported labor shortages, up from 63.8 percent last year.

Just over half of the companies also reported they had positions that have remained vacant for more than 90 days. That compared to 47.8 percent in 2018.


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China says a high-ranking U.S. delegation will travel to Beijing next week to resume negotiations aimed at resolving the ongoing trade war between the world’s two leading economies.

Commerce Ministry spokesman Gao Feng announced Thursday that U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will visit the Chinese capital next Thursday and Friday, March 28 & 29, followed by a trip to Washington in early April by Chinese Vice Premier Liu He.

The trade war between the United States and China began last year when President Donald Trump imposed punitive tariffs on $250 billion worth of Chinese imports to compel Beijing to change its trading practices.

China has retaliated with its own tariff increases on $110 billion of U.S. exports. The Trump administration is also pushing China to end its practice of forcing U.S. companies to transfer their technology advances to Chinese firms.

Trump had initially imposed a deadline of March 2 for both sides to reach a deal before imposing a hike in tariffs from 10 to 25 percent, but delayed the increase late last month citing “substantial progress” in the negotiations. But Chinese President Xi Jinping has reportedly cancelled tentative plans to visit Trump’s Mar-a-Lago estate in Florida next month to sign a final deal, a sign that the talks have stalled.

Trump issued a warning Wednesday that U.S. tariffs could remain in place for a “substantial period” to ensure that Beijing lives up to any agreement.

 


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The Federal Reserve left its key interest rate unchanged Wednesday and projected no rate hikes in 2019, dramatically underscoring its plan to be “patient” about any further increases.

The Fed said it was keeping its benchmark rate — which can influence everything from mortgages to credit cards to home equity lines of credit — in a range of 2.25 percent to 2.5 percent. It also announced that it will stop shrinking its bond portfolio in September, a step that should help hold down long-term rates. It will begin slowing the runoff from its bond portfolio in May.

Combined, the moves signal no major increases in borrowing rates for consumers and businesses. And together with the Fed’s dimmer forecast for economic growth this year — 2.1 percent, down from a previous projection of 2.3 percent — the statement it issued Wednesday after its latest policy meeting suggests that it’s grown more concerned about the economy.

With the prospect of no rate hikes ahead anytime soon, the stock market reversed losses it had suffered before the Fed issued its statement and was up modestly soon after.

The Fed’s decision was approved on an 11-0 vote.

Economic activity slows

Some Fed watchers say they think the next rate move could be a cut later this year if the economy slows as much as some fear it might.

In signaling no rate increases at all this year, the Fed’s policymakers reduced their forecast from two that were previously predicted in December. They now project one rate hike in 2020 and none in 2021. The Fed had raised rates four times last year and a total of nine times since December 2015.

The Fed’s pause in credit tightening is a response, in part, to slowdowns in the U.S. and global economies. It says that while the job market remains strong, “growth of economic activity has slowed from its solid rate in the fourth quarter.”

The Fed laid out a plan for stemming the reduction of its balance sheet: In May, it will slow its monthly reductions in Treasurys from $30 billion to $15 billion and end the runoff altogether in September. Starting in October, the Fed will shift its runoff of mortgage bonds into Treasurys so its overall balance sheet won’t drop further.

Change in direction

The central bank’s new embrace of patience and flexibility reflects its calming response since the start of the year to slow growth at home and abroad, a nervous stock market and persistently mild inflation. The Fed executed an abrupt pivot when it met in January by signaling that it no longer expected to raise rates anytime soon. 

The shift toward a more hands-off Fed and away from a policy of steadily tightening credit has encouraged the view that the central bank is done raising rates for now and might even act this year to support rather than restrain the economy. Though the U.S. economy is on firm footing, it faces risks from slowing growth and trade conflicts. 

All of which suggests that the Fed may recognize that it went too far after it met in December. At that meeting, the Fed approved a fourth rate hike for 2018 and projected two additional rate increases in 2019. Chairman Jerome Powell also said he thought the balance sheet reduction would be on “automatic pilot.” 

That message spooked investors, who worried about the prospect of steadily higher borrowing rates for consumers and businesses and perhaps a further economic slowdown. The stock market had begun falling in early October and then accelerated after the Fed’s December meeting.

Trump weighs in

President Donald Trump, injecting himself not for the first time into the Fed’s ostensibly independent deliberations, made clear he wasn’t happy, calling the December rate hike wrong-headed. Reports emerged that Trump was even contemplating trying to fire Powell, who had been his hand-picked choice to lead the Fed. 

But after the December turmoil, the Fed in January began sending a more comforting message. At an economic conference soon after New Year’s, Powell stressed that the Fed would be “flexible” and “patient” in raising rates — a word he and other policymakers have invoked repeatedly since — and “wouldn’t hesitate” to change course if necessary. 

Powell, appearing last week on CBS’s “60 Minutes,” denied that pressure from Trump had influenced the Fed’s policy shift. Private economists generally agree that a slowing economy and a sinking stock market, which eased Fed worries about any possible stock bubble, were more decisive factors. 

Stocks have rallied

After sharply falling in December, stocks have rallied and recouped most of their late-year losses in trading since the start of 2019, a rebound credited larger to the Fed’s easier monetary stance. 

Some analysts say they think the Fed won’t raise rates at all this year if the outlook becomes as dim as they are forecasting. 

That view is supported by the CME Group, which tracks trading in futures contracts on the Fed’s benchmark rate. It says traders now put the probability of any Fed rate hike this year at just 1 percent and project a roughly one-in-four chance that the Fed will actually cut rates by year’s end to help prevent a slowing economy from toppling into a recession.

 

 


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U.S. tariffs on China are likely to remain in place for a while, even if a trade deal is reached, President Donald Trump told reporters Wednesday. 

 

“The deal is coming along nicely,” the president said about the trade talks with Beijing, noting U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin would be heading to China within days to continue discussions.  

  

“We’re taking in billions and billions of dollars right now in tariff money, and for a period of time that will stay,” Trump said.

The president’s remarks indicated that Washington’s tariffs could stay in place until U.S. officials are convinced the Chinese are adhering to the terms of the agreement. 

 

“They’ve had a lot of problems living by certain deals,” the president noted on the White House South Lawn just before boarding the Marine One helicopter.   

China might accept a deal in which most of the U.S. tariffs are rolled back, according to Brookings Institution senior fellow David Dollar, but he said he expected President Xi Jinping would not accept any pact in which no tariffs were lifted. 

 

“It’s very hard for the Chinese president to agree to a deal that’s so clearly asymmetric. Chinese people are so active on the internet and social media, and President Xi will hear about it from the people if he makes a deal that looks bad for China,” Dollar told VOA.  

  

Tit-for-tat tariffs imposed last year ignited fears of a trade war between the United States and China, the world’s two largest economies, which annually trade more than a half-trillion dollars’ worth of goods.  

 

The value of Chinese products sold in the United States far outweighs the value of those sent to China, and that deficit alone represents about 80 percent of America’s overall trade gap in goods. 

A pillar of the Trump presidency has been reducing that huge gap by negotiating bilateral trade deals and rebuilding the U.S. manufacturing base.

Trump traveled Wednesday to an area in Ohio where General Motors is set to shutter a car assembly plant, affecting about 1,500 jobs and undercutting the president’s manufacturing revival message.  

 

“What’s going on with General Motors?” Trump asked during a speech. “Get that plant open or sell it to somebody and they’ll open it. Everybody wants it.”  

 

“Intervening to try to keep one factory open isn’t going to do much for the economy” at a time when manufacturing is declining as a share of the overall job market, said Dollar, of the Brookings Institution. “It’s a bad precedent for politicians to intervene like that.”  

 

A resident scholar at the American Enterprise Institute, Claude Barfield, agrees presidents should not intervene in individual corporate decisions.  

 

“The president is woefully ignorant about trade and this part of the economy. He thinks it does help. I don’t think it does at all help,” Barfield, a former consultant to the office of the U.S. trade representative, told VOA.  

The closure of the GM plant in Lordstown, according to a Cleveland State University study, will result in a total loss of 7,700 jobs in the region, including supply chain and consumer services employment tied to the auto plant, cutting 10 percent of the gross regional product in the greater Youngstown area. 

 

Trump, in his remarks on Wednesday, placed some of the blame on the United Auto Workers, the union representing the GM workers.  

 

“Your union leaders aren’t on our side,” Trump declared. “They could have kept General Motors” operating the Lordstown plant.  

Trump spoke at a facility in Lima that makes the M1 Abrams tank for the U.S. Army, about 300 kilometers from the idled auto factory.  

 

“You better love me. I kept this place open,” Trump told workers at the General Dynamics facility, which was nearly closed six years ago after Army officials told Congress they did not need the additional tanks.  

Ohio, which Trump won in the 2016 election by 8 percentage points, again will be a key battleground state in next year’s presidential election. 

 

Polls in the Buckeye State, where the president relies on a strong base of working-class voters, show his approval rating slipping. 

 

Trade and tariffs are “not even the core issue about retaining the manufacturing jobs in this region,” University of Akron associate professor Mahesh Srinivasan, who is director of the school’s Institute of Global Business, told VOA. 

 

Srinivasan said the focus by the Trump administration should not be so much on trade agreements as on “the inevitable march of automation and technology that has displaced workers from traditional jobs. The need of the hour is doubling down with even more emphasis on worker training and education to prepare the workforce for tomorrow’s jobs.”  

 

Tariffs on imported automobiles — as are being contemplated by the White House — “would be counterproductive, like we have seen with steel tariffs,” said Srinivasan, who was part of former President Barack Obama’s Advanced Manufacturing Partnership task force. “It could attract retaliatory tariffs that will negatively impact numerous automobile manufacturers in Ohio and other Midwestern states, which today are supplying to automobile manufacturers globally.”  

  

Some trade analysts agree that Trump’s metals tariffs on Canada and Mexico have hurt American manufacturing, including making U.S. auto plants less competitive.  

 

Patsy Widakuswara and Elizabeth Cherneff contributed to this report. 


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German automaker BMW said Wednesday that profits in 2019 would be “well below” last year’s and that it planned to cut 12 billion euros ($13.6 billion) in costs by the end of 2022 to offset spending on new technology.

The company said profits would be eroded by higher raw materials prices, the costs of compliance with tougher emissions requirements and unfavorable shifts in currency exchange rates.

The Munich-based automaker also faces increased uncertainty due to international trade conflicts that could lead to higher tariffs.

The company forecast a profit margin of 6 to 8 percent for its automotive business, short of the long-term strategic target of 8 to 10 percent, which it said still “remains the ambition” for the company given “a stable business environment.”

BMW said it had no plans for layoffs even as it outlined cost saving measures that include dropping half of its engine variants as it seeks to reduce product complexity. The BMW, MINI and Rolls-Royce brands are to get a single sales division.

Chief Financial Officer Nicolas Peter said that given the headwinds to earnings, “we began to introduce countermeasures at an early stage and have taken a number of far-reaching decisions.”

The company said the measures were needed “to offset the ongoing high level of upfront expenditure required to embrace the mobility of the future.”

BMW shares were down 4.9 percent to 72.02 euros in Frankfurt.

Automakers around the world have faced heavy up-front costs for new technologies expected to change how people get from one place to another in the next decade. Those include electric cars and renting cars through smartphone apps. Yet the returns from such investments remain uncertain and auto companies face competition from tech firms such as Uber and Waymo.

BMW made 7.2 billion euros ($8.2 billion) in net profit last year, down 17 percent from 2017, when it booked a gain of $1 billion from U.S. tax changes. The company faced headwinds from increased tariffs on vehicles exported to China from the United States. It also suffered from turmoil on the German auto market when companies faced bottlenecks getting cars certified for new emissions rules.

BMW faces uncertainty from U.S.-China trade tensions that could result in new tariffs if talks do not result in an agreement. U.S. President Donald Trump has also threatened to impose auto import tariffs that would hit EU automakers, but has held off for now. BMW could also suffer disruption if Britain leaves the European Union without a negotiated departure agreement to address trade issues.


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Mexican President Andres Manuel Lopez Obrador says talks with White House senior adviser Jared Kushner have led to advances toward an agreement that would have the U.S. government guarantee some $10 billion in development investments for Mexico and Central America.

Lopez Obrador said Wednesday that the investments would aim to reduce immigration from Mexico and Central America by providing more opportunities in those countries. Roughly half of the sum would go to Mexico while the remainder would be divided among Honduras, Guatemala and El Salvador.

 

Lopez Obrador and President Donald Trump’s son-in-law dined Tuesday in the Mexico City home of Bernardo Gomez, co-executive president of Grupo Televisa.

 

The Mexican leader says they also discussed the pending ratification of the new trade agreement dubbed the U.S.-Mexico-Canada Agreement.


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Starbucks says it plans to test both recyclable and compostable cups over the next year.

 

Customers in New York, San Francisco, Seattle, London and Vancouver, British Colombia, will help test the cups, which use fiber, paper and other materials in place of plastic liners.

 

Seattle-based Starbucks was expected to announcement the test program Wednesday at its annual shareholders meeting.

The company also said it plans to redesign its stores as it adapts to increasing mobile pick-up and delivery orders.

 

Changes will vary by location. For example, in a neighborhood with three Starbucks cafes, one might be changed to an express format while another offers delivery.

 

Starbucks’ U.S. mobile orders more than doubled between 2016 and 2018, to 12 percent of orders. But there have been complaints about congestion in stores.


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General Motors said on Tuesday it would invest $2.7 billion in two Brazilian factories over the next five years, sparing them from a shakeup of the automaker’s operations, a decision hailed by the governor of Brazil’s largest state.

Sao Paolo state Governor Joao Doria told a joint news conference with GM executives that the plants in Sao Caetano do Sul and Sao Jose dos Campos had been slated for closure last December, and said he convinced GM to reverse the decision, saving jobs.

Last November, GM said it would slash thousands of jobs around the world and would close two unspecified plants outside of North America by the end of 2019.

The company declined to say whether its restructuring plans had referred to the two Brazilian factories, and declined to comment on whether the two plants had been slated for closure as Doria claimed.

Sitting next to Doria at the news conference, GM’s CEO for South America, Carlos Zarlenga, also did not directly address Doria’s recounting of the negotiations with GM.

Doria, a former businessman and reality TV show host, took office in January and became a vocal advocate for the state’s auto industry. Earlier this year, he said he would find a buyer for a Ford Motor Co. plant that is slated to close, after the U.S. automaker said it had tried and failed to find one.

At Tuesday’s news conference, Doria said GM told him in a call days before his inauguration that it planned to close the plants.

“I thought it was going to be good news,” Doria said. “But to my surprise I was told that the next day GM CEO Mary Barra would announce the closing of two factories in Sao Paulo. I fell off my chair.”

He said he dispatched his future state finance minister to fix the situation and landed a meeting in Miami with GM executives. He said 65,000 workers employed directly and indirectly by GM would have lost their jobs without his intervention.

Earlier this month, Doria announced an incentive plan granting automakers a 25 percent reduction in value added taxes if they created at least 400 jobs and invested at least 1 billion reais. At the news conference, GM announced it was creating 400 new jobs.

Zarlenga said the future of its Sao Paulo factories had presented GM “a really serious problem,” but did not confirm that the automaker had considered closing them down.

GM, the sales leader in Brazil, South America’s largest market, had warned local employees it was dealing with heavy losses and “sacrifices” would be necessary.

As announced, the plan pales in comparison to GM’s most recent investment plan in Brazil in 2014, which totaled $4 billion. However, the announcement does not include potential future investments in the automaker’s plants elsewhere in the country.


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Saudi Arabia said on Tuesday it would spend 86 billion riyals ($23 billion) to boost the quality of life in the capital Riyadh, increasing green space and recreational areas and installing 1,000 works of art across the city.

The four projects unveiled are part of efforts to open up Saudis’ cloistered lifestyles, encourage physical activity and make life more fun in the conservative kingdom, alongside reforms to diversify the economy away from oil.

They are the latest in a series of planned development investments that King Salman has launched at the side of his son, Crown Prince Mohammed bin Salman, after a global outcry over the killing of Saudi journalist Jamal Khashoggi last October tarnished the crown prince’s image.

Park, cycling track planned

State media showed the pair touring a diorama of the plans, which include a park four times the size of Central Park and 135 kilometers (84 miles) of cycling track. The king also ordered that one of the capital’s main roads be renamed after his son.

The murder of Washington Post columnist Khashoggi in the Saudi consulate in Istanbul sparked international criticism of the crown prince, who had won Western plaudits for easing social strictures. The CIA and some Western countries suspect him of ordering the killing, which Saudi authorities vehemently deny.

The kingdom, and the crown prince, have also been criticized for a crackdown on dissent, including putting 10 prominent women’s rights activists on trial last week.

King stands by son

While some critics abroad have called for the crown prince’s removal, the king has stood by his favorite son and heir apparent as Riyadh tries to move on from the murder and refocus attention on reform plans that require huge foreign investment.

Work on the four new projects will start in the second half of the year and come on line gradually between 2023 and 2030. They will create 70,000 jobs and offer investment opportunities worth 50 billion riyals to local and foreign investors, state news agency SPA said.

One initiative aims to increase six-fold the percentage of green areas in Riyadh, notorious for its multi-lane highways and concrete block buildings, by planting 7.5 million trees. Seven museums, an open art fair, pedestrian bridges and community gardens are also called for.

Life in capital more relaxed

Such features were unimaginable in Riyadh just a few years ago when religious police patrolled the streets enforcing strict social codes like gender segregation and bans on public music.

But life in the capital has become more relaxed in recent years after the crown prince clipped the wings of the religious police, ended a ban on cinemas and began organizing public concerts. He has won the support of many young Saudis.

Saudi citizens have no vote and falling oil income could affect their living standards in coming years. As a result, improving quality of life is seen as important for ensuring political stability.


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