German economy at risk of downturn as growth slows

German economy at risk of downturn as growth slows
Updated 18 December 2014

German economy at risk of downturn as growth slows

German economy at risk of downturn as growth slows

FRANKFURT: German private-sector growth slowed to the weakest in 18 months in December, increasing the risk that a soft phase will turn into a more pronounced economic downturn.
Markit Economics said a Purchasing Managers Index for manufacturing and services fell to 51.4 this month from 51.7 in November. Economists forecast an increase to 52.3. A factory gauge rose to 51.2 from 49.5, crossing the 50 mark that divides expansion from contraction, while a measure for services fell to 51.4 from 52.1.
While German data showed this month that the economy, Europe's largest, had a modest start into the last quarter of the year, the Bundesbank has pointed to signs that growth could strengthen. As the rest of the euro area struggles to expand and inflation hovers close to zero, the European Central Bank has held out the prospect of expanding its range of asset-purchases next year.
The German "data are consistent with only marginal gross- domestic-product growth in the fourth quarter at best," said Oliver Kolodseike, an economist at London-based Markit. "The possibility of a renewed downturn at the start of next year is clearly becoming more and more likely, especially if the survey data continue to disappoint."
The German economy narrowly escaped recession in the third quarter, recording growth of 0.1 percent after shrinking by the same extent in the April-June period. Economists predict growth of 0.2 percent in the final three months of the year.
Companies signaled a second consecutive monthly decline in new business in December, citing a lack of investment and increased competition, according to Tuesday's report.
In France, the manufacturing PMI unexpectedly declined to 47.9 from 48.4. Economists predicted an increase to 48.6. A gauge for services and manufacturing activity in the 18-nation euro area is seen increasing to 51.5 this month from 51.1, according to a separate survey.
A second round of targeted long-term loans to banks by the ECB last week came in at the low end of analysts' forecasts, in a sign that financial institutions see few ways of using cheap central-bank money in the weak economy. ECB President Mario Draghi said on Dec. 4 that "all assets but gold" are under consideration for purchase as the central bank seeks to step up aid to the economy.
The Bundesbank said Monday that some support for German consumers will come from lower oil prices, a development Weidmann has likened to a "mini stimulus package."
Meanwhile, investor sentiment in Germany rose sharply again in December driven by a weak euro and plunging oil prices, a survey found on Tuesday, underlining a sunnier outlook for Europe's top economy.
The widely watched investor confidence index calculated by the ZEW economic institute jumped by 23.4 points in December, after increasing for the first time this year in November, ZEW said in a statement.
It said there was abundant evidence that faith in Germany among financial market experts was being restored.
"This renewed confidence remains linked to the auspicious economic conditions including the weak euro and the low price of oil," ZEW President Clemens Fuest said in a statement.
"This positive trend could be seen in the recent data for German exports. But it should be noted that the current economic optimism is fostered by factors that can change quickly."
For its survey, ZEW questions analysts and institutional investors about their current assessment of the economic situation in Germany, as well as their expectations for the coming months.
The sub-index measuring financial market players' view of the current economic situation in Germany also rose, by 6.7 points.
In November the ZEW headline indicator had bounced back for the first time in 2014, adding to signs that the German economy is stabilizing and providing a boost for the euro zone as a whole.
After hitting a 22-month low in October, the index jumped to 11.5 points from minus 3.6 points the previous month.
Last week Germany reported that its trade surplus had grown slightly in October, with imports showing a sharper decline than exports due in part to the weaker euro.
A frequent criticism of the ZEW index is that it can be volatile and is therefore not particularly reliable.
As a result, analysts were cautious about reading too much into the December data.
"December's sharp rise in German ZEW investor sentiment is an encouraging sign that confidence has so far not been hit by renewed problems in Greece, but the improvement is at odds with the weakness of the more reliable PMI" or purchasing managers' index, said Jennifer McKeown, senior European economist at Capital Economics in London.
The German PMI had declined in December, McKeown noted, and said that she maintained her view "that the Germany recovery will be steady rather than spectacular and that additional policy support is still required in Germany and the euro zone as a whole" to boost growth.
Christian Schulz of Berenberg Bank said "the evidence that Germany's economy is about to reaccelerate after a rough patch is mounting" but warned there may be "new wobbles ahead".
"The market rout triggered by political risks in Greece as well as the economic fallout of sanctions and the sharply lower oil price for Russia are bound to leave traces in German investor confidence in the coming months, if sustained," he said.
Carsten Brzeski, chief economist at ING-Diba bank in Frankfurt, said the ZEW index, with the headline number showing its strongest monthly increase since January 2013, and the weaker PMI sent "mixed signals".
"The economy should benefit from a very special stimulus package: The weaker euro and the sharp drop in energy prices," he said.
"To some extent, however, this very special stimulus package could also be the poisoned apple as it could delay necessary structural reforms."


Rising consumer appetite for digital payments in Saudi Arabia

Rising consumer appetite for digital payments in Saudi Arabia
Updated 12 May 2021

Rising consumer appetite for digital payments in Saudi Arabia

Rising consumer appetite for digital payments in Saudi Arabia
  • The survey found that 94 percent of respondents are comfortable with digital payment systems such as biometrics, digital wallets and QR codes

RIYADH: Statistics released this week have highlighted the massive surge in the uptake of digital payments in the Kingdom, especially in light of pandemic restrictions on shopping and travel.

According to monthly data issued by the Saudi Central Bank, there were 25.84 million online sales transactions through the Mada system in March. The total value of sales during the month was SR 5.31 billion ($1.4 billion), a year-on-year increase of 196 percent.

The Small and Medium Enterprises General Authority (Monshaat) also reported that the e-commerce sector received an investment of around SR 250 million during the first quarter of 2021, according to an article by the Al-Eqtisadiah newspaper.

With shoppers having few alternatives when it comes to getting basic necessities, it is no surprise that the first-ever Mastercard New Payments Index for the Kingdom found widespread acceptance of digital payments among Saudi consumers.

The survey found that 94 percent of respondents are comfortable with digital payment systems such as biometrics, digital wallets and QR codes.

A year into the pandemic, research from Mastercard showed that the adoption of new payment technologies is rising and consumer appetite for it growing fast.

According to the index, 68 percent of respondents tried a new payment method they would not have tried under normal circumstances.

In addition, 92 percent of Saudi consumers said they have access to more ways to pay compared to this time last year.

Three-quarters of respondents said digital payment methods help them save money, while the same amount also said they are more loyal to retailers who offer multiple payment options. Sixty-nine percent of Saudi consumers said using biometrics to verify purchases made them feel safer.

“More than ever, consumers in Saudi Arabia are adapting and embracing payment innovations. Businesses, both big and small, must respond to this evolving trend. We are closely working with our partners and retailers to deliver secure and diverse payment technologies for the omnichannel generation,” J.K Khalil, country manager, Saudi Arabia, Bahrain and the Levant at Mastercard, said in a press statement.


Latest reforms will boost KSA real estate, says analyst

Latest reforms will boost KSA real estate, says analyst
Updated 12 May 2021

Latest reforms will boost KSA real estate, says analyst

Latest reforms will boost KSA real estate, says analyst
  • The support for the housing sector will help the government achieve one of its core Vision 2030 goals to reach 70 percent homeownership by the end of the decade

RIYADH: The Saudi government’s recent announcements in the real estate sector, including providing more than 53,000 new homes in Riyadh and relaxing the ban on ownership by non-Saudis in Makkah and Madinah, will help to overhaul the sector and reach the Kingdom’s Vision 2030 home ownerships goals, according to an industry figure.

“The announcement of the allocation of 20 million square meters of land in the northern Riyadh suburb of Al-Jawan, effectively trebling the size of this neighborhood, to housing developments will certainly aid the government’s home ownership targets,” Faisal Durrani, head of Middle East research at real estate consultancy firm Knight Frank, told Arab News.

He added that the announcement by Crown Prince Mohammed bin Salman “follows the December announcement by Roshn to develop 30,000 residential units in Riyadh — 4,000 in the first phase — as part of a national program to deliver 1 million new homes by 2030.”

The move is also in line with the city’s aim to become one of the 10 largest economic cities in the world and to increase its population from 15 to 20 million by 2030.

The support for the housing sector will also help the government achieve one of its core Vision 2030 goals to reach 70 percent homeownership by the end of the decade, up from 47 percent four years ago and around 60 percent at present.

The decision late last week to allow companies listed on the Saudi Stock Exchange to own properties in Makkah and Madinah was also seen as a major move by the government to encourage foreign investment and to permit non-Saudi investor ownership in the prime markets.

“Opening ownership in Makkah and Madinah to international companies is a clear indication of the direction of travel of the Saudi economy and is perfectly aligned with Vision 2030,” Durrani said, adding: “The landmark change is likely to pave the way for a boost in demand for commercial real estate over the medium to long-term, as businesses are drawn to the emerging economic opportunities.”

Such moves by the government are likely to be a catalyst for a post-pandemic rebound in the Kingdom’s real estate sector, which are already up 25 percent year-on-year (Y-o-Y) in Riyadh during the first quarter of this year, and 34 percent Y-o-Y in Jeddah and 11 percent Y-o-Y in the Dammam Metropolitan Area.


Airbus tells suppliers to plan for 18% output hike in 2022

Airbus tells suppliers to plan for 18% output hike in 2022
Updated 12 May 2021

Airbus tells suppliers to plan for 18% output hike in 2022

Airbus tells suppliers to plan for 18% output hike in 2022
  • The tentative new goal would lift output of the workhorse domestic and medium-haul jet

PARIS: Europe’s Airbus is asking suppliers to get ready for a further 18 percent increase in A320-family jet output during 2022, on top of existing targets for this year, as airlines ready for a partial return to normal travel, industry sources said.

The tentative new goal would lift output of the workhorse domestic and medium-haul jet, which competes with Boeing’s partially grounded 737 MAX, to 53 a month, they told Reuters.

The number being floated for end-2022 remains informal and Airbus has only committed so far to raising output in two steps to 45 a month by end-2021 from 40 now.

But it is the first concrete indication of the shape of recovery Airbus hopes to achieve for its main single-aisle jets next year as it restores coffers depleted by the pandemic.

“We do not comment on speculation regarding the longer-term trajectory,” a company spokesman said.

“We see the market recovering to pre-COVID levels in the 2023-2025 time frame, with single-aisle recovering first,” he said, adding, “uncertainties remain.”

Airbus, which had been enjoying record jet demand before the virus triggered widespread travel bans, cut output of its best-selling model by a third to 40 a month around a year ago.

In January, it announced plans to increase output to 43 a month in the third quarter and 45 a month in the fourth.

CEO Guillaume Faury said last month Airbus aimed for a “steep ramp-up” in 2022 and 2023, without elaborating.

Some suppliers have warned of bumps ahead in restoring pre-pandemic production as smaller parts makers struggle with cash shortages. Airbus must also address industrial snags that held up dozens of deliveries even before COVID-19, they say.

Output of larger wide-bodied jets remains depressed by travel restrictions and is not expected to recover soon.


Lebanese drivers queue for hours as fuel crisis worsens

Lebanese drivers queue for hours as fuel crisis worsens
Updated 11 May 2021

Lebanese drivers queue for hours as fuel crisis worsens

Lebanese drivers queue for hours as fuel crisis worsens
  • Some stations rationed the amount of fuel sold to customers, mostly taxi drivers

BEIRUT: Motorists queued for hours at gas stations across Lebanon on Tuesday as fears of an imminent end to the country’s subsidy on fuel increased demand for a commodity already in short supply.

Payment delays are also keeping urgent oil stocks on offshore tankers, meaning that many gas stations are facing critical supply shortages.

Queues extended into streets as drivers waited to fill their cars. Some stations rationed the amount of fuel sold to customers, mostly taxi drivers. Other stores closed down entirely.

However, Fadi Abu Shakra, representative of the union for fuel distributors and gas stations in Lebanon, said that the confusion and fear surrounding gas supply was “unjustified.”

He denied news reports that oil companies have notified distributors of an end to fuel subsidies.

Georges Brax, a member of the gas station owners’ syndicate, said: “The fact is, some stations have been running on very low fuel stocks due to the rationing of credits, which has forced some of them to close.”

He added that more stations will open their doors as soon as importing companies begin distribution, warning that the problem is not with importing companies or station owners, but with the Central Bank of Lebanon.

“It is necessary to speed up the opening of credits for ships that have reached regional waters, which have prior approval so that they can unload their cargo, thus easing market tension,” he said.

Brax added: “We have to get used to this reality, because for weeks we have been facing the same problem and the fuel has not been cut off.”

However, he added that, given the complexity of the issue, “in the short term, subsidies will not be lifted.”

But the panic of the Lebanese seems justified as subsidies on food and over-the-counter medicines are being gradually lifted.

Caretaker Finance Minister Ghazi Wazni has warned that Lebanon will “run out of money” to afford basic imports by the end of May if its remaining foreign currency reserves are not rationed.

According to Wazni, delays in launching the plan are costing the government about $500 million per month.

Bechara Asmar, head of the General Confederation of Lebanese Workers, said that there is “chaos in the markets and in all sectors,” and that “citizens are standing in queues in front of bakeries, fuel stations, supermarkets, shops and pharmacies to secure their daily needs.”

He added: “There is no plan yet to protect low-income people who can no longer afford their basic needs. Who is responsible? Is the Bank of Lebanon solely responsible? Or is it collusion between some merchants, importers, mafias, money whales and officials?”

Some of Lebanon’s fuel supply is also being smuggled to Syria.

An investigation by North Lebanon First Investigative Judge Samaranda Nassar revealed that “smuggling of fuel from the north into Syria in large commercial quantities through several smuggling lines has been going on for about two weeks.

“The new line passes through the town of Baino toward old Akkar, Al-Qamou’a, Hermel and then into Syria,” a report said.

Nassar issued 15 arrest warrants in absentia in six cases relating to fuel smuggling.

A gas station in the border area of Al-Arida was also closed after it was established that the owners “had filled tanks with fuel to be smuggled into Syria.”


Lebanon must fix debts, end prosecutor action or face power cut, says Turkish firm

Lebanon must fix debts, end prosecutor action or face power cut, says Turkish firm
Updated 11 May 2021

Lebanon must fix debts, end prosecutor action or face power cut, says Turkish firm

Lebanon must fix debts, end prosecutor action or face power cut, says Turkish firm
  • Turkey’s Karadeniz supplies electricity to Lebanon from power barges

ISTANBUL: Turkey’s Karadeniz, which supplies electricity to Lebanon from power barges, told Beirut to halt action by the Lebanese prosecutor to seize its vessels and said it must draw up a plan to settle arrears to avoid a cut in supplies, a spokesperson said.
The spokesperson for Karpowership, a unit of Karadeniz that operates floating power plants, was speaking on Tuesday after Lebanon’s Finance Ministry cited a lawmaker saying the country had been threatened with a cut to its supplies.
A Lebanese prosecutor issued a decision last week to seize the barges and fine the firm after TV channel Al-Jadeed reported corruption allegations tied to the power contract. The firm denies the charges and says it has not been paid for 18 months.