Saudi fourth-quarter GDP expands 3.59%, gets boost from oil sector

‘The oil sector led the recovery in the final quarter, reflecting stronger production’, said Monica Malik, chief economist at Abu Dhabi Commercial Bank. (AFP)
Updated 31 March 2019

Saudi fourth-quarter GDP expands 3.59%, gets boost from oil sector

  • ‘The oil sector led the recovery in the final quarter, reflecting stronger production’
  • The Saudi economy has suffered in recent years because of low oil prices and austerity measures

DUBAI: Saudi Arabia’s economy grew in the fourth quarter of last year at its fastest rate since early 2016 due to an expansion in the oil sector, while non-oil growth was sluggish, statistics agency data showed on Sunday.
Fourth-quarter gross domestic product grew by 3.59 percent from a year earlier. In the third quarter, annual growth was 2.5 percent.
“The oil sector led the recovery in the final quarter, reflecting stronger production, particularly at the beginning of the quarter,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.
The Saudi economy has suffered in recent years because of low oil prices and austerity measures aimed at reducing a huge budget deficit.
In 2017, the economy shrank for the first time since the global financial crisis almost a decade earlier.
“We expect the headline growth figure to moderate in 2019 as Saudi implements oil production cuts,” Malik said.
Saudi Arabia’s economy grew by 2.21 percent in 2018, government data showed in January, without breaking down fourth-quarter figures.
Last week, state-owned Saudi Aramco announced it had agreed to buy a majority stake in Saudi Basic Industries Corp. (SABIC) from the Saudi sovereign wealth fund, Public Investment Fund (PIF), for $69.1 billion.
The deal could boost economic growth as the sovereign fund gains more firepower to proceed with its plans to create jobs and diversify the largest Arab economy beyond oil exports.
Dubai-based Arqaam Capital said in a research note on Sunday the acquisition is expected to boost credit growth, “as corporate activity on increased award momentum continues to improve particularly toward the end of the year and potentially on loans from Aramco to fund the purchase of SABIC.”
Malik said economic growth in 2019 would be impacted by how the PIF implements investments.
“Our assumption is that the SABIC sale will boost PIF’s investments in the second half of the year,” she said.


Struggling WeWork mulls bailout deals with SoftBank, JP Morgan

Updated 14 October 2019

Struggling WeWork mulls bailout deals with SoftBank, JP Morgan

TOKYO: Under-pressure start-up WeWork is considering two huge bailout plans including a cash injection that could see Japanese investment titan SoftBank take control of the firm, according to reports.
The office-sharing giant had been on course for a massive initial public offering until last month when questions began to be asked over its governance and profit outlook.
The firm’s valuation plunged from $47 billion in January to less than $20 billion in September and the listing plans have been dropped, while co-founder Adam Neumann stepped down as chief executive.
With New York-based parent company We Co. not expected to push for the IPO this year, the cash-strapped firm is looking for a financial lifeline.
The Wall Street Journal, New York Times and Bloomberg News cited unnamed sources close to the talks as saying SoftBank — the US firm’s biggest shareholder — had drawn up a proposal that gives it full control of WeWork.
The move would dilute the voting power of Neumann, who remains as chairman of the company he started in 2010 and also currently maintains control a majority of voting shares.
They also reported that WeWork is looking at a deal with Wall Street giant JP Morgan to raise $5 billion in debt, with the Times saying directors of We would be meeting as soon as Monday afternoon to discuss that.
“WeWork has retained a major Wall Street financial institution to arrange financing,” the Journal reported a company spokesman as saying.
“Approximately 60 financing sources have signed confidentiality agreements and are meeting with the company’s management and its bankers over the course of this past week and this coming week.”
The New York-based startup that launched in 2010 has touted itself as revolutionizing commercial real estate by offering shared, flexible workspace arrangements, and has operations in 111 cities in 29 countries.
However, the company, which lost $1.9 billion last year, has faced skepticism over its ability to make money, especially if the global economy slows significantly.