Saudi economy returns to growth on back of oil price rises

View of the production facility at Saudi Aramco’s Shaybah oilfield in the Empty Quarter, Saudi Arabia May 22, 2018. (Reuters)
Updated 05 June 2018
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Saudi economy returns to growth on back of oil price rises

  • The world’s top crude exporter has seen a key boost in its revenues after the recovery in oil prices
  • Oil prices surged to around $80 a barrel last month from under $30 a barrel in early 2016

DUBAI: The Saudi economy pulled out of recession in the first quarter of 2018 thanks to oil price rises, a think-tank said Tuesday.
Capital Economics said the oil-dependent Saudi economy grew by 1.5 percent in the first quarter, after having contracted by 0.7 percent in 2017.
“The oil sector was the main driver of the recovery,” the London-based group said.
Oil prices surged to around $80 a barrel last month from under $30 a barrel in early 2016 after OPEC and non-OPEC producers struck a deal to cut output.
As a result of the crash in prices, the economy dipped into negative territory last year for the first time since 2009, a year after the global financial crisis.
The OPEC kingpin has posted a budget deficit in the past four years, and it has borrowed from domestic and international markets and hiked fuel and power prices to finance the shortfall.
It also introduced a five-percent value-added tax from the start of 2018.
The world’s top crude exporter has seen a key boost in its revenues after the recovery in oil prices.
Riyadh-based Jadwa Investment said Monday that Saudi fiscal reserves rose by $13.2 billion in April, marking its largest monthly increase since October 2013.
The reserves stood at $506.6 billion in April, down from $732 billion at the end of 2014.
Since 2014, Saudi budget deficits have totalled $260 billion and the government is projecting a 2018 shortfall of $52 billion.


Daimler, BMW to invest $1.13 billion in venture to rival Uber

Updated 4 min 34 sec ago
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Daimler, BMW to invest $1.13 billion in venture to rival Uber

  • Carmakers Shifting beyond manufacturing and car sales toward pay-per-minute or pay-per-mile systems
  • Carmakers face marginalization by cash-rich technology firms unless they develop services based on vehicle usage
BERLIN: German carmakers Daimler and BMW unveiled a joint ride-hailing, parking and electric car charging business on Friday to compete with mobility services provided by Uber and other tech firms.
The luxury car firms said they would invest more than €1 billion ($1.13 billion) to expand the joint venture, shifting beyond manufacturing and car sales toward pay-per-minute or pay-per-mile systems.
Consultancy PwC has said carmakers face marginalization by cash-rich technology firms unless they develop services based on vehicle usage.
Established ride-hailing firms have been expanding. China’s Didi Chuxing aims to build its business in Latin America and Uber is gaining a stranglehold on its US market.
“Further cooperation with other providers, including stakes in startups and established players, are also a possible option,” Daimler’s Chief Executive Dieter Zetsche said.
Daimler’s Car2Go car-sharing brand will be combined with BMW’s DriveNow, ParkNow and ChargeNow businesses, with both carmakers holding 50 percent stake in the venture.
The venture has five strands: REACH NOW, a smartphone-based route management and booking service, CHARGE NOW for electric car charging, FREE NOW for taxi ride-hailing, PARK NOW for parking services and SHARE NOW for car-sharing.
“These five services will merge ever more closely to form a single mobility service portfolio with an all-electric, self-driving fleet of vehicles that charge and park autonomously,” said BMW Chief Executive Harald Krueger.
BMW and Daimler are working to develop autonomous cars, vehicles which could enable them to up-end the market for taxi and ride-hailing services.