UK wage growth dips but interest rate increase seen on track

The Office for National Statistics said Tuesday that average weekly earnings during the period were 2.7 percent higher than the year before. (AFP)
Updated 17 July 2018
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UK wage growth dips but interest rate increase seen on track

LONDON: Official figures show that wage growth in the UK moderated in the three months to May, a development that’s unlikely to change expectations that the Bank of England will raise interest rates next month.
The Office for National Statistics said Tuesday that average weekly earnings during the period were 2.7 percent higher than the year before. Though down on the previous 2.8 percent, wages are still higher than headline inflation, which in the year to May was 2.4 percent.
That means that household incomes continue to grow following a long squeeze when inflation outstripped earnings.
The Bank of England is widely expected to raise its benchmark interest rate on Aug. 2 to 0.75 percent partly because of the improvement in living standards.


Moody’s raises GDP growth forecasts for Saudi Arabian economy

Updated 11 min 21 sec ago
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Moody’s raises GDP growth forecasts for Saudi Arabian economy

LONDON: Moody’s has raised Saudi Arabia’s GDP growth forecast for 2018 to 2.5 percent from 1.3 percent as it maintains a “stable outlook” for the Saudi economy.
The ratings agency also increased its 2019 GDP forecast to 2.7 percent, well above the 1.5 percent previously predicted, the Kingdom’s Ministry of Finance said.
Moody’s numbers exceed the forecasts of the Saudi Arabian government for the 2019 budget announced in September.
The Moody’s report released on Wednesday maintained the Kingdom’s A1 rating.
The agency expects higher oil production to boost the economy, but also said developments in the non-oil sector will contribute to stronger GDP growth in the medium and long-term.
Moody’s said the Saudi government deficit for the 2018 and 2019 will hover between 3.5 percent and 3.6 percent, a far cry from its previous expectations of 5.8 percent and 5.2 percent.
Moody’s commended Saudi Arabia’s reasonable control of expenditure, even in the face of higher oil revenues.
“In addition to the moderate funding requirements, the government is able to access ample sources of liquidity, from both domestic or international capital markets and financial reserves. It is unlikely to face problems in financing the fiscal deficit,” the report said.
Last week, the IMF lifted its projections for economic growth in Saudi Arabia saying the Kingdom’s economy is expected to grow by 2.2 percent in 2018 and 2.4 percent next year, raising previous projections by 0.5 percent.