Saudi consumers splashing the cash once more, says Mastercard boss

J.K. Khalil, the general manager of Mastercard in Saudi Arabia and Bahrain, said that there has been an appreciable pickup in consumer spending in the first quarter of 2019. (Supplied)
Updated 25 April 2019

Saudi consumers splashing the cash once more, says Mastercard boss

  • J.K. Khalil: We have seen an overall relaxation in the economy. It’s not yet back to previous levels, but there has been a positive trend reversal
  • J.K. Khalil: We are seeing an increase not just in the physical retail space, but also online. Consumers see increasingly that cards can be used online and offline

RIYADH: Saudi Arabian consumers are increasingly spending cash — and using their credit cards online — after a period of relative parsimony, the head of one of the biggest providers of consumer payment systems told Arab News.

J.K. Khalil, the general manager of Mastercard in Saudi Arabia and Bahrain, said that there has been an appreciable pickup in consumer spending in the first quarter of 2019, in contrast to the slump that followed the introduction of value-added tax last year.

Speaking on the sidelines of the Financial Sector Conference in Riyadh, Khalil said: “There are positive signals that last year’s situation is being reversed. We have seen an overall relaxation in the economy. It’s not yet back to previous levels, but there has been a positive trend reversal.”

Khalil described the upturn as a “positive single-digit increase.”

The Mastercard regional boss said that the trend would continue. “We are expecting the second quarter to be better than the first, and we are confident that will happen,” he said.

A lot of the upturn has been in the form of online transactions, he said. “We are seeing an increase not just in the physical retail space, but also online. Consumers see increasingly that cards can be used online and offline,” Khalil added.

Some 30 million debit cards are now used for e-commerce transactions in the Kingdom, Khalil said.

Mastercard’s optimistic view was echoed by several participants at the Financial Sector Conference. Finance Minister Mohammed Al-Jadaan opened the first day of the event with the surprise announcement that the Kingdom’s budget had recorded its first quarterly surplus in five years.

Mohammed Al-Tuwaijri, the minister for economy and planning, said on Thursday that unemployment was down in the Kingdom, even though there were a large number of new entrants to the jobs market.

Elsewhere at the event, which closed on Thursday, there were expressions that the Kingdom had “turned the corner” from the downturn that hit after the collapse in oil prices in 2014. One operator of a major retail chain, who asked not to be identified, said that footfall in the capital’s malls was ahead of last year, and the trend was expected to continue this year.


Powell: No clear hint on rates but says Fed will aid economy

Updated 23 August 2019

Powell: No clear hint on rates but says Fed will aid economy

  • The outlook for the US economy, Powell said, remains favorable but continues to face risks
  • Trump, who has relentlessly attacked Powell and the Fed over its rate policies, kept up his verbal assaults on Twitter

WASHINGTON: Federal Reserve Chairman Jerome Powell sent no clear signal Friday that the Fed will further cut interest rates this year but said it would “act as appropriate” to sustain the expansion — phrasing that analysts see as suggesting rate cuts.
Powell said President Donald Trump’s trade wars have complicated the Fed’s ability to set interest rates and have contributed to a global economic slowdown.
Speaking to a gathering of central bankers in Jackson Hole, Wyoming, Powell didn’t give financial markets explicit guidance on whether or how many rate cuts might be coming the rest of the year. The Fed cut rates last month for the first time in a decade, and financial markets have baked in the likelihood of more rate cuts this year.
The outlook for the US economy, Powell said, remains favorable but continues to face risks. He pointed to increasing evidence of a global economic slowdown and suggested that uncertainty from Trump’s trade wars has contributed to it.
Reacting to the speech Friday, Trump, who has relentlessly attacked Powell and the Fed over its rate policies, kept up his verbal assaults on Twitter:
“As usual, the Fed did NOTHING!” Trump tweeted. “It is incredible that they can ‘speak’without knowing or asking what I am doing, which will be announced shortly. We have a very strong dollar and a very weak Fed. I will work “brilliantly” with both, and the US will do great.”
Trump added:
“My only question is, who is our bigger enemy, Jay Powel (sic) or Chairman Xi?“
Powell’s speech comes against the backdrop of a vulnerable economy, with the financial world seeking clarity on whether last month’s rate decision likely marked the start of a period of easier credit.
The confusion only heightened in the days leading to the Jackson Hole conference, at which Powell gave the keynote address. Minutes of the Fed’s July meeting released Wednesday showed that although officials voted 8-2 to cut their benchmark rate by a quarter-point, there was a wider divergence of opinion on the committee than the two dissenting votes against the rate cut had indicated.
The minutes showed that two Fed officials favored a more aggressive half-point rate cut, while some others adopted the polar opposite view: They felt the Fed shouldn’t cut rates at all.
The minutes depicted the rate cut as a “mid-cycle adjustment,” the phrase Powell had used at his news conference after the rate cut. That wording upset traders who interpreted the remark as suggesting that the Fed might not be preparing for a series of rate cuts to support an economy that’s struggling with a global slowdown and escalating uncertainty from President Donald Trump’s trade war with China.
There was even a difference of opinion among the Fed members who favored a rate cut, the minutes showed, with some concerned most about subpar inflation and others worried more about the threats to economic growth.
Comments Thursday from Fed officials gathering in Jackson Hole reflected the committee’s sharp divisions, including some reluctance to cut rates at least until the economic picture changes.
“I think we should stay here for a while and see how things play out,” said Patrick Harker, the president of the Fed’s Philadelphia regional bank.
Esther George, president of the Fed’s Kansas City regional bank and one of the dissenting votes in July, said, “While I see downside risk, I wasn’t ready to act on that relative to the performance of the economy.”
George said she saw some areas of strength, including very low unemployment and inflation now closer to the Fed’s target level. She said her decision on a possible future rate cut would depend on forthcoming data releases.
Robert Kaplan, president of the Fed’s Dallas branch indicated that he might be prepared to support further rate cuts.
If “we are seeing some weakness in manufacturing and global growth, then it may be good to take some action,” Kaplan said.
George was interviewed on Fox Business Network; Harker and Kaplan spoke on CNBC.
The CME Group, which tracks investor bets on central bank policy, is projecting the likelihood that the Fed will cut rates at least twice more before year’s end.
Adding to the pressures on the Fed, Trump has kept up his attacks on the central bank and on Powell personally, arguing that Fed officials have kept rates too high and should be cutting them aggressively.
Trump has argued that a full percentage-point rate reduction in coming months would be appropriate — a suggestion that most economists consider extravagantly excessive as well as an improper intrusion on the Fed’s political independence.
The president contends that lower rates in other countries have caused the dollar to rise in value and thereby hurt US export sales.
“Our Federal Reserve does not allow us to do what we must do,” Trump tweeted Thursday. “They put us at a disadvantage against our competition.”
Earlier in the week, he had told reporters, “If the Fed would do its job, you would see a burst of growth like you have never seen before.”
Powell has insisted that the White House criticism has had no effect on the Fed’s deliberations over interest rate policy.