OPEC: Low oil prices hurting world economy

Updated 10 February 2016

OPEC: Low oil prices hurting world economy

LONDON: OPEC pointed to a larger oil supply surplus on the world market this year than previously thought as Saudi Arabia and other members pump more oil, helping to make up for losses in non-member producers hurt by the collapse in prices.
The monthly report from the Organization of the Petroleum Exporting Countries indicates supply will exceed demand by 720,000 barrels per day (bpd) in 2016, up from 530,000 bpd implied in the previous report.
A persistent surplus could weigh on prices, which have collapsed to a 12-year low of $27.10 a barrel last month from over $100 in mid-2014. OPEC’s 2014 strategy shift to defend market share and not prices helped deepen the decline.
OPEC also cut its forecast for world economic growth in 2016 to 3.2 percent from 3.4 percent and said low oil prices were hurting the economy, in contrast to previous price slides that were supportive of global growth.
“It seems that the overall negative effect from the sharp decline in oil prices since mid-2014 has outweighed benefits in the short-term,” OPEC said.
“There seems to be a ‘contagious’ effect taking place across many aspects of the global economy.”
OPEC cited factors including the financial strain on producers dependent on oil income, the inability of central banks to lower interest rates and impacts on sectors from manufacturing to agriculture.
The report added to signs that the price drop is hitting relatively expensive non-OPEC supply. Companies have delayed or canceled billions of dollars worth of projects, putting some future supply at risk.
OPEC now forecasts supply from non-member producers will decline by 700,000 bpd in 2016, led by the United States. Last month, OPEC predicted a drop of 660,000 bpd.
But OPEC produced 32.33 million bpd according to secondary sources, up 130,000 bpd from December, offsetting the forecast decline from outside the group.
Top OPEC exporter Saudi Arabia told OPEC it increased production to 10.23 million bpd from 10.14 million bpd in December. The secondary sources also reported higher output from major producers Iran and Iraq.
Supply from OPEC could rise further due to the lifting of sanctions on Iran. Tehran is aiming to increase output by 500,000 bpd, which would fill most of the hole left by non-OPEC members.
OPEC left its 2016 global oil demand growth forecast little changed, predicting demand would rise by 1.25 million bpd, marking a slowdown from 1.54 million bpd in 2015.


Egypt expects economic growth between 2.8 and 4% in 2021

Updated 32 min 56 sec ago

Egypt expects economic growth between 2.8 and 4% in 2021

  • Unemployment indicators also reflected the economy's development

CAIRO: Egyptian Finance Minister Mohamed Maait said the country was reaching positive growth rates, calling it a great achievement in light of the global conditions brought on by the coronavirus pandemic.

Maait said the estimated rate of economic growth in the fiscal year 2021-2022 would reach between 2.8 and 4 percent.

He said the percentage varied according to how each person perceived it sectorally, and that industries such as tourism and aviation were significantly affected by the spread of the disease.

“We have a priority to make room for the private sector’s participation in development projects,” the minister added.

He explained that there would be strengthened cooperation with the Transport Ministry in implementing its projects in partnership with the private sector.

Egypt had been hoping for growth between 6 and 6.5 percent before the coronavirus crisis broke out.

The country topped the emerging market economies in containing the rate of inflation during the current year, according to data from the Egyptian cabinet, despite the global repercussions of the health emergency.

The International Monetary Fund (IMF) said that Egypt achieved the largest annual decline in the inflation rate in emerging markets in 2020, compared to 2019, with a decline of 8.2 percentage points.

Among the effects of the economic reform plan were inflation rates falling to 5.7 percent during 2019-2020, compared to 13.9 percent in 2018-2019.

Unemployment indicators also reflected the economy's development. 

Recent data from the Egyptian Central Agency for Public Mobilization and Statistics showed the unemployment rate declining to 7.3 percent in the third quarter of this year, compared to 7.8 percent a year ago.

Egypt's monetary reserves rose to $39.22 billion by the end of last October, according to the country's central bank.

The IMF said the performance of the Egyptian economy exceeded expectations.