OECD highlights low Saudi corporate debt, but risks for Turkey

OECD highlights low Saudi corporate debt, but risks for Turkey
The outlook for global economic growth is promising according to the OECD despite worries over trade and tariffs. (Getty)
Updated 31 May 2018

OECD highlights low Saudi corporate debt, but risks for Turkey

OECD highlights low Saudi corporate debt, but risks for Turkey
  • Rising interest rates and oil remain worries
  • OECD urges more investment in education

LONDON: Saudi non-banking corporates have one of the lowest borrowing levels among the G-20 countries, according to the OECD’s latest global economic outlook.

The report also showed that Turkey had the most foreign-denominated debt within the G-20, heaping pressure on President Recep Erdogan ahead of elections.

But the next two years looked promising for global GDP growth running at its long-term average of about 4 percent, while world trade levels had recovered since the financial crisis. Unemployment within OECD countries was expected to drop to its lowest since 1980, although measures should be undertaken “to bring more people into the workforce.”

The OECD said: “The global economy is experiencing stronger growth, driven by a rebound in trade, higher investment and buoyant job creation, and supported by very accommodative monetary policy and fiscal easing.”

However, it said there were significant risks posed by trade tensions, financial market vulnerabilities and rising oil prices. And more needed to be done to secure “a strong and resilient medium-term improvement in living standards.”

OECD Secretary-General Angel Gurria said: “The economic expansion is set to continue for the coming two years, and the short-term growth outlook is more favorable than it has been for many years.”

He added: “However, the current recovery is still being supported by very accommodative monetary policy, and increasingly by fiscal easing. This suggests that strong, self-sustaining growth has not yet been attained.”

Gurria said policymakers needed to put greater focus on structural policies to boost skills and to improve productivity to achieve “strong, sustainable and inclusive growth.”

The report highlighted a range of risks to the current expansion. Oil prices had risen significantly in the past year, and, if sustained, could add to inflation while softening real household income growth.

Also, the threat of trade restrictions had begun to adversely affect confidence, and, “if such measures were implemented, they would negatively influence investment and jobs.”

Rising interest rates could expose vulnerabilities created by elevated risk-taking in financial markets and high debt, especially in emerging market economies with high levels of foreign currency debt. Turkey was most exposed, according to OECD data.

The report also urged countries to boost investment in education and skills, as part of improvements in the use of tax and spending policies to raise living standards across the income distribution.

It recommended policies to boost job creation and business dynamism. That would need “improvements to digital and physical infrastructure, enhanced research and development co-operation between universities and industry, as well as reduced barriers to entry into professional services,” said the report.


Lebanese ministries told to wait to grant approval for subsidized imports

Lebanese ministries told to wait to grant approval for subsidized imports
A man counts U.S. dollar banknotes next to Lebanese pounds at a currency exchange shop in Beirut, Lebanon April 24, 2020. (REUTERS)
Updated 17 min 13 sec ago

Lebanese ministries told to wait to grant approval for subsidized imports

Lebanese ministries told to wait to grant approval for subsidized imports
  • Finance Ministry to reduce number of subsidized goods from 80 to 30, source tells Arab News
  • Stores report declining sales as food prices surge

BEIRUT: The Banque du Liban has informed the Economy Ministry and other concerned ministries of the need to wait to grant approval for subsidized imports.
The move by Lebanon’s central bank comes as the caretaker government has been unable to secure a social safety net by agreeing to issue ration cards for the poorest families.
Meanwhile, there are no solutions to the problems obstructing the formation of a government to rescue the country from its economic crisis.
Prices of food such as beef and chicken have risen steeply, shocking supermarket customers. Employees at these stores say sales have declined due to people’s inability to pay these higher prices.
A source in the Finance Ministry told Arab News that the state supports “about 80 commodities,” including “wheat, fuel and medicines,” and that the ministry is planning to reduce this number to 30.
Subsidies have been removed from medical devices and supplies. The Medical Equipment and Devices Importers Syndicate said: “This means that the prices of goods (in this sector) will significantly rise.”
Subsidies on over-the-counter drugs are likely to be permanently lifted, but there are no plans to remove subsidies on medicines for incurable diseases.
Monthly subsidies do not exceed $500 million, but the scarcity of financial resources and the government’s inability to undertake reforms has made covering this cost difficult.


Dubai hub private jet traffic quadruples as Gulf high fliers return to travel

Dubai hub private jet traffic quadruples as Gulf high fliers return to travel
Updated 08 May 2021

Dubai hub private jet traffic quadruples as Gulf high fliers return to travel

Dubai hub private jet traffic quadruples as Gulf high fliers return to travel
  • After years in the doldrums, the private jet sector is rebounding strongly as Gulf operators report rising bookings and plane makers unveil new aircraft

DUBAI: Private jet traffic at one Dubai airport more than quadrupled in the first quarter as the sector rebounds strongly amid reduced commercial airline capacity.
The Mohammed bin Rashid Aerospace Hub in Dubai South recorded a 336 percent increase in private jet traffic in the first three months of this year, totaling 4,904 charters, it said on Saturday.
"We look forward to sustaining the momentum of aircraft movements as Dubai gears up to welcoming the world to Expo 2020 in October," said Tahnoon Saif, CEO of Mohammed Bin Rashid Aerospace Hub.

After years in the doldrums, the private jet sector is rebounding strongly as Gulf operators report rising bookings and plane makers unveil new aircraft such as Dassault's $75 million 10X that has been dubbed "the flying penthouse."

The Falcon 10X will be the company’s most powerful model when it goes into service in late 2025, with a range of 13,890 kilometers, and compete with high-end models offered by Canada's Bombardier and General Dynamics unit Gulfstream. It will come equipped with Rolls-Royce Pearl engines designed to run entirely on sustainable aviation fuel.

Regional carriers including Qatar Airways are also promoting their private jet charter units as scheduled air travel remains under pressure because of pandemic-related flying restrictions.

Charter jet movements at the Dubai hub’s VIP Terminal come from its four operators Jetex Executive Aviation, Jet Aviation, DC Aviation, and ExecuJet Middle East.
US-based firm General Dynamics said last week it recorded a surge in demand for private jets, in part due to increasing hopes of economic recovery following mass COVID-19 vaccination drives.
The company’s business jet deliveries increased to 28 units from 23 a year earlier, as travel restrictions gradually ease.
India has also become a lucrative market for private jet charter companies as wealthy expatriates seek to escape the deadly spike in COVID-19 infections in the country.
New Delhi-based JetSetGo has seen rising demand among the country's rich.
The company’s bookings jumped 900 percent in recent weeks, CNBC reported


Egypt’s economy to rebound from 2022, S&P Ratings says

Egypt’s economy to rebound from 2022, S&P Ratings says
Updated 08 May 2021

Egypt’s economy to rebound from 2022, S&P Ratings says

Egypt’s economy to rebound from 2022, S&P Ratings says
  • Real GDP growth will average 5.3 percent between 2022 and 2024

DUBAI: Egypt’s gross domestic product (GDP) growth will begin to rebound from 2022 onward on its foreign reserve buffers and debt market access, ratings agency S&P Global said, as it affirmed the country’s credit rating at “B/B” with a stable outlook.
Real GDP growth will average 5.3 percent between 2022 and 2024, S&P forecasts, due to higher public and private investment.
That compares to an expected 2.5 percent growth in 2021, where the impact of the pandemic was felt in full force, affecting major sectors such as tourism, manufacturing, and construction.
Still, S&P’s rating of the North African country is constrained by its wide fiscal deficit, large public debt and low-income levels.
But ongoing fiscal and economic reforms present strong medium-term growth prospects for Egypt, the new report said, and recovering growth and lower domestic interest rates will put the debt ratio back on a downward path.
“We expect Egypt’s foreign exchange reserves and access to domestic and external debt markets will allow it to cover higher external financing needs and upcoming maturities,” the report added.
Remittance inflow into the country will remain at high levels, and higher oil prices this year will have a balanced impact on its hydrocarbon exports and imports.
Egypt’s main sources of foreign exchange will remain under pressure, the report warned, as tourism and Suel Canal receipts still struggle amid the pandemic.


US job growth far below expectations

US job growth far below expectations
The unemployment rate rose to 6.1% in April from 6% in March. (Reuters)
Updated 08 May 2021

US job growth far below expectations

US job growth far below expectations
  • Nonfarm payrolls increased by only 266,000 jobs last month after rising by 770,000 in March, says Labor Department

WASHINGTON: US employers hired far fewer workers than expected in April, likely frustrated by labor shortages, leaving them scrambling to met booming demand as the economy reopens amid rapidly improving public health and massive financial help from the government.

Nonfarm payrolls increased by only 266,000 jobs last month after rising by 770,000 in March, the Labor Department said in its closely watched employment report on Friday.
Economists polled by Reuters had forecast payrolls advancing by 978,000 jobs.
The jobs report, the first since the White House’s $1.9 trillion COVID-19 pandemic rescue package was approved in March, will probably do little to change expectations that the economy entered the second quarter with strong momentum and was on track for its best performance this year in almost four decades.
Twelve months ago, the economy purged a record 20.679 million jobs as it reeled from mandatory closures of nonessential businesses to slow the first wave of COVID-19 infections. New claims for unemployment benefits have dropped below 500,000 for the first-time since the pandemic started.
Americans over the age of 16 are now eligible to receive the COVID-19 vaccine, leading states like New York, New Jersey and Connecticut to lift most of their coronavirus capacity restrictions on businesses.
But the resulting burst in demand, which contributed to the economy’s 6.4 percent annualized growth pace in the first quarter, the second-fastest since the third quarter of 2003, has triggered shortages of labor and raw materials.

SPEEDREAD

● The jobs report will probably do little to change expectations that the economy entered the second quarter with strong momentum and was on track for its best performance this year in almost four decades.

● Twelve months ago, the economy purged a record 20.679 million jobs as it reeled from mandatory closures of nonessential businesses to slow the first wave of COVID-19 infections.

● From manufacturing to restaurants, employers are scrambling for workers. A range of factors, including parents still at home caring for children, coronavirus-related retirements and generous unemployment checks, are blamed for the labor shortages.

From manufacturing to restaurants, employers are scrambling for workers. A range of factors, including parents still at home caring for children, coronavirus-related retirements and generous unemployment checks, are blamed for the labor shortages. The moderate pace of hiring could last at least until September when the enhanced unemployment benefits run out.
The labor market remains supported by very accommodative fiscal and monetary policy. President Joe Biden plans to spend another $4 trillion on education and childcare, middle- and low-income families, infrastructure and jobs. The Federal Reserve has signaled it intends to leave its benchmark interest rate near zero and continue to pump money into the economy through bond purchases for a while.
The unemployment rate rose to 6.1 percent in April from 6.0 percent in March. The jobless rate has been understated by people misclassifying themselves as being “employed but absent from work.” Millions of Americans remain out of work and many have permanently lost jobs because of the pandemic.


British Airways owner IAG expects travel recovery from July

British Airways owner IAG expects travel recovery from July
IAG’s first quarter operating loss before exceptional items of €1.14 billion was slightly better than the €1.17 billion loss forecast by analysts. (AFP/File)
Updated 08 May 2021

British Airways owner IAG expects travel recovery from July

British Airways owner IAG expects travel recovery from July
  • IAG’s first quarter operating loss before exceptional items of €1.14 billion was slightly better than the €1.17 billion loss forecast by analysts

LONDON: British Airways owner IAG is confident travel will recover from July onwards after forecasting only a minimal increase in its capacity to 25 percent for the April to June quarter.
IAG, which also owns Iberia and Vueling in Spain and Aer Lingus in Ireland, declined to forecast how much it would fly from July but said the recovery would be properly underway by then after more than a year of pandemic restrictions.
“We consider in the second half that we are going to be flying and we are prepared for that,” IAG Chief Executive Luis Gallego told reporters on Friday after the company posted a loss of €1.14 billion ($1.4 billion) in the first quarter.
Before July, however, Gallego said government action was needed on some issues, such as opening travel corridors between countries with high vaccination rates, including the United Kingdom and the US.
The rise to 25 percent of pre-pandemic capacity puts IAG’s plans behind those of rival airlines, and is only a marginal increase from the 19.6 percent it flew in the first three months of 2021.
Britain, which along with Spain is one of IAG’s main markets, is set to publish later on Friday its “green list” of low risk places where people can travel without needing to quarantine on their return.
Gallego said IAG was expecting only a small list of countries initially with more being added from June onwards.

FASTFACTS

● IAG, British Airways’ owner declined to forecast how much it would fly from July but said the recovery would be properly underway by then after more than a year of pandemic restrictions.

● The rise to 25 percent of pre-pandemic capacity puts IAG’s plans behind those of rival airlines, and is only a marginal increase from the 19.6 percent it flew in the first three months of 2021.

“Part of the reason we’re not giving guidance (for third quarter capacity) is simply because we don’t know what’s on the green list yet,” Chief Financial Officer Steve Gunning said.
Air France-KLM expects to operate 50 percent of its pre-pandemic flight capacity in the second quarter, picking up to 55 percent to 65 percent in July-September. Lufthansa expects to fly at about 40 percent of its pre-pandemic capacity for 2021 as a whole.
IAG’s first quarter operating loss before exceptional items of €1.14 billion was slightly better than the €1.17 billion loss forecast by analysts.
Shares in the company, which have risen 30 percent since the beginning of the year, traded up 0.7 percent.
“The company delivered a solid set of results and is pointing to the start of the recovery into the summer,” Goodbody analyst Mark Simpson said.
Given the ongoing uncertainty over COVID-19, IAG said it could not provide a profit outlook for 2021.