Gulf economies seen rebounding this year but some forecasts scaled back

Gulf economies seen rebounding this year but some forecasts scaled back
People walk outside The Dubai Mall in the UAE, where the median growth forecasts were raised in a poll. (Reuters)
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Updated 22 April 2021

Gulf economies seen rebounding this year but some forecasts scaled back

Gulf economies seen rebounding this year but some forecasts scaled back
  • Half seen expanding less than previously forecast
  • Bahrain forecast is raised, expected to lead growth

DUBAI: The economies of the six-member Gulf Cooperation Council are expected to return to growth this year, a quarterly Reuters survey showed on Thursday, but half are seen expanding less than previously forecast.
Economists in the April 8-20 poll forecast a marked improvement in economic fortunes across the oil-rich region after it was hammered by the COVID-19 pandemic.
But while median forecasts for 2021 growth were raised for Bahrain and to a lesser extent the United Arab Emirates, they were scaled back for Saudi Arabia, Kuwait and Oman while the outlook for Qatar was unchanged.
The economists expect Saudi Arabia’s economy, the Middle East’s largest, to grow 2.4 percent this year, less than the 2.8 percent forecast in a similar poll three months ago. Economic growth in 2022 and 2023 was seen at 3.3 percent and 3.0 percent respectively, versus 3.2 percent and 3.1 percent in the previous poll.
The Kingdom is in the midst of an ambitious economic development plan dubbed Vision 2030 to wean the economy off oil, create jobs and boost investment.
“While some progress has been made in implementing the needed reforms, bureaucracy, lack of transparency, and inefficiency remain major impediments to achieving sustained rapid private sector growth,” the Institute of International Finance (IIF) said in a report.
The UAE’s economy was seen growing by 2.3 percent this year, up slightly from the 2.2 percent expected three months ago. Growth was forecast at 3.6 percent in 2022 and 3.3 percent in 2023, up from 3.5 percent and 3 percent projected in January.
“The UAE can afford a modestly expansionary fiscal stance in 2021 given its spare capacity and the recovery in oil prices,” the IIF said.
“Higher oil prices combined with the economic recovery will support the banking sector by improving the liquidity situation and demand for private sector credit.”
The forecast for Qatar’s 2021 economic growth was unchanged from the previous poll at 2.8 percent, but edged up to 3.6 percent for next year from 3.5 percent. The 3.1 percent growth forecast for 2023 was up a full percentage point from the previous survey with a boost expected from its hosting of the FIFA World Cup in late 2022.
The economists revised down their expectations for Kuwait this year to 1.8 percent growth from 2.2 percent previously as it faces a possible liquidity crunch. However, the 3.5 percent growth seen next year is comfortably above the January forecast of 2.7 percent, with 2023 expectations at 2.9 percent versus 3.0 percent.
Oman’s economy was expected to grow at 1.9 percent this year, 3.2 percent next year and 2.4 percent in 2023, compared to 2.1 percent, 2.7 percent and 2.5 percent in the previous poll.
Bahrain’s economy was seen growing the most this year, at 2.9 percent compared with 2.5 percent in the last poll, with the pace expected to be maintained next year, in line with the previous forecast. Economic growth in 2023 was forecast at 2.7 percent, up from 2 percent previously.

(For other stories from the Reuters global economic poll: )
(Polling by Md Manzer Hussain; Writing by Yousef Saba; Editing by Kirsten Donovan)


Tesla’s Musk halts use of bitcoin for car purchases

Tesla’s Musk halts use of bitcoin for car purchases
Updated 1 min 35 sec ago

Tesla’s Musk halts use of bitcoin for car purchases

Tesla’s Musk halts use of bitcoin for car purchases
  • Tesla will retain bitcoin holdings
  • Musk reiterates faith in crypto

LONDON: Tesla Inc. will no longer accept bitcoin for car purchases, Chief Executive Elon Musk said, citing long-brewing environmental concerns for a swift reversal in the company’s position on the cryptocurrency.
Bitcoin fell more than 10 percent after Musk tweeted his decision to suspend its use, less than two months after Tesla began accepting the world’s biggest digital currency for payment. Other cryptocurrencies, including ethereum, also fell before regaining some ground in Asia trade.
The use of bitcoin to buy Tesla’s electric vehicles had highlighted a dichotomy between Musk’s reputation as an environmentalist and the use of his popularity and stature as one of the world’s richest people to back cryptocurrencies.
Some Tesla investors, along with environmentalists, have been increasingly critical about the way bitcoin is “mined” using vast amounts of electricity generated with fossil fuels.
Musk said on Wednesday he backed that concern, especially the use of “coal, which has the worst emissions of any fuel.”
“Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment,” he tweeted. Tesla shares fell 1.25 percent after hours.
Tesla revealed in February it had bought $1.5 billion of bitcoin, before accepting it as payment for cars in March, driving a roughly 20 percent surge in the cryptocurrency.
Tesla would retain its bitcoin holdings with the plan to use the cryptocurrency as soon as mining transitions to more sustainable energy sources, Musk said.
Bitcoin is created when high-powered computers compete against other machines to solve complex mathematical puzzles, an energy-intensive process that currently often relies on electricity generated with fossil fuels, particularly coal.
At current rates, such bitcoin “mining” devours about the same amount of energy annually as the Netherlands did in 2019, the latest available data from the University of Cambridge and the International Energy Agency shows.
Analysts said Musk’s about-face was inevitable.
“The environmental impact from mining bitcoins was one of the biggest risks for the entire crypto market,” said Edward Moya, a senior market analyst at currency trading firm OANDA.
Meltem Demirors, chief strategy officer at digital asset manager CoinShares Group, said Tesla was unlikely to have sold many, if any, cars using bitcoin and the backflip generated positive publicity while simplifying payment processes.
“Elon was getting a lot of questions and criticisms and this statement allows him to appease critics while still keeping bitcoin on his balance sheet,” Demirors said.
Mark Humphery-Jenner, an associate professor of finance at the University of New South Wales, said he was more concerned about Tesla management’s “very hasty and precipitous” decision-making.
Musk did not say in his Twitter comments whether any vehicles had been purchased with bitcoin and Tesla did not immediately respond to a request for comment.
Some bitcoin proponents note that the existing financial system — with its millions of employees and computers in air-conditioned offices — uses large amounts of energy too.
Musk reiterated he remained a strong believer in cryptocurrencies.
“We are also looking at other cryptocurrencies that use <1 percent of bitcoin’s energy/transaction,” he tweeted on Wednesday.
Just a day earlier, Musk had polled Twitter users on whether Tesla should accept dogecoin, a currency he has helped turn from a joke into a valuable commodity.
He announced on Sunday that his commercial rocket company SpaceX will accept dogecoin as payment to launch a lunar mission next year — just hours after he sent the cryptocurrency spiraling downward when he called it a “a hustle” during a guest-host spot on the “Saturday Night Live” comedy sketch TV show.
The dominance of Chinese bitcoin miners and lack of motivation to swap cheap fossil fuels for more expensive renewables could mean there are few quick fixes to the cryptocurrency’s emissions problem.
Chinese miners account for about 70 percent of bitcoin production, data from the University of Cambridge’s Center for Alternative Finance shows. They tend to use renewable energy — mostly hydropower — during the rainy summer months, but fossil fuels — primarily coal — for the rest of the year.
Officials in Beijing are conducting a check on data centers involved in cryptocurrency mining to better understand their impact on energy consumption, sources told Reuters last month.
In theory, blockchain analysis firms say, it is possible to track the source of bitcoin, raising the possibility that a premium could be charged for green bitcoin.


Oil pulls back from 8-week high as coronavirus cases surge in India

Oil pulls back from 8-week high as coronavirus cases surge in India
Updated 15 min 25 sec ago

Oil pulls back from 8-week high as coronavirus cases surge in India

Oil pulls back from 8-week high as coronavirus cases surge in India
  • Brent crude and WTI both fell 1 percent on Thursday
  • Oil demand is already outstripping supply, IEA said yesterday

TOKYO: Oil prices fell on Thursday, pulling back from an eight-week high as concerns about the coronavirus crisis in India, the world’s third-biggest importer of crude, tempered a rally driven by IEA and OPEC predictions that demand is coming back strongly.
Brent crude was down 66 cents, or 1 percent, at $68.66 a barrel by 4:44 a.m. GMT, after gaining 1 percent on Wednesday. West Texas Intermediate (WTI) was down 67 cents, or 1 percent, to $65.41 a barrel, having risen 1.2 percent in the previous session.
“The path for crude prices appears to be higher but until the situation improves in India, WTI will probably struggle to break above the early March high,” Edward Moya, senior market analyst at OANDA, said in a note.
Oil demand is already outstripping supply and the shortfall is expected to grow further even if Iran boosts exports, the International Energy Agency (IEA) said in its monthly report on Wednesday.
A day earlier, the Organization of the Petroleum Exporting Countries (OPEC) stuck to its forecast for a strong return of world oil demand in 2021, with growth in China and the United States canceling out the impact of the coronavirus crisis in India.
But global concern is rising over the situation in India, the world’s second-most populous country, where a variant of the coronavirus is rampaging through the countryside in the deadliest 24 hours since the pandemic began.
Medical professionals are still unable to say for sure when new infections will plateau and other countries are alarmed over the transmissibility of the variant that is now spreading worldwide.
Meanwhile, fuel shortages are getting worse in the southeastern United States six days since the shutdown of the Colonial Pipeline, the largest fuel pipeline network in the world’s biggest oil consumer.
Colonial, which pipes more than 2.5 million barrels per day, said it is hoping to get a large portion of the network operating by the end of the week.
“While the disruption is meaningful for local retail markets, its impact is still likely to be transient as there is no physical damage to the pipeline,” Goldman Sachs analysts wrote in a new report.


GCC chemical projects worth $71bn amid pandemic recovery

GCC chemical projects worth $71bn amid pandemic recovery
Updated 32 min 27 sec ago

GCC chemical projects worth $71bn amid pandemic recovery

GCC chemical projects worth $71bn amid pandemic recovery
  • The projects will become operational between 2020 and 2024
  • Regional chemical production increased 1.5 percent in 2020

RIYADH: Gulf petrochemical projects worth $71 billion are expected to become operational between 2020 and 2024, Al Eqtisadiah reported, citing the Gulf Petrochemicals and Chemicals Association (GPCA).
Regional chemical production expanded 1.5 percent last year compared to a global decrease of 2.6 percent, it said.
Increased demand for raw materials used in medical equipment helped the industry navigate through the pandemic.
This enabled companies to maintain stable operating rates of 93 percent, as commercial activity started to recover in the third quarter of the year.
Still, the regional industry has posted a two-year decline in revenues, said GPCA secretary general Abdulwahab Al-Sadoun.
He said the challenges facing the sector have been exacerbated by supply chain disruptions related to the closure of ports in China and increases in freight rates up to three times the market price before the epidemic, he explained.
This increase has eroded the profits of GCC producers who were already operating on thin margins, he said.


How the pandemic helped 3D printing become mainstream

How the pandemic helped 3D printing become mainstream
Updated 31 min 44 sec ago

How the pandemic helped 3D printing become mainstream

How the pandemic helped 3D printing become mainstream
  • Demand in the Kingdom is coming from critical sectors, such as oil, gas, defense, and utilities

JEDDAH: The global uncertainty created by the coronavirus disease (COVID-19) pandemic was a challenging time for many industries. However, for some, such as Zoom or Amazon, it was a blessing in disguise and a catalyst for accelerated growth.

The 3D printing sector also saw a rapid surge in demand.

Dubai-headquartered Immensa Technology Labs reported that its business grew by nearly 400 percent in 2020, as global supply chains were disrupted, and operators scrambled to find an alternative.

“The pandemic was probably one of the biggest propellers for this technology, the year of COVID-19 is the year that 3D printing grew up and became mainstream,” CEO and founder of Immensa, Fahmi Al-Shawwa, told Arab News.

“3D printing saved the day,” he said, adding: “Whether it was in the medical sector, where we started producing components for hospitals to utilize, or things as big as old refineries, where there had been components that failed, and they could not resource the spare parts, we produced them.”

As one of the biggest markets in the region, Saudi Arabia was an obvious target for expansion. In April, Immensa was the first company in the Kingdom to be awarded an additive manufacturing — or 3D printing — license by the Saudi Ministry of Investment.

Immensa launched into the Saudi market in November through its acquisition of two Saudi 3D printing startups, Shakl3D and LayLabs. Shakl3D was established in 2016 and LayLabs two years later. By combining with Immensa, the larger entity is aiming to scale globally and target opportunities in Europe and North America.

“By acquiring their existing setups and investing in what they have started, we can expedite the development of the industrial 3D-printing sector in the Kingdom and provide both teams with the international platform of Immensa,” Al-Shawwa said.

HIGHLIGHTS

● In April, Immensa was the first company in the Kingdom to be awarded an additive manufacturing — or 3D printing — license by the Saudi Ministry of Investment.

● Immensa launched into the Saudi market in November through its acquisition of two Saudi 3D printing startups, Shakl3D and LayLabs.

● The company has also acquired a 10,000 square foot industrial facility in Dammam and is planning to establish a network of other 3D printing hubs across Saudi Arabia.

The company has also acquired a 10,000 square foot industrial facility in Dammam and is planning to establish a network of other 3D printing hubs across Saudi Arabia.

3D printing is a production method in which materials such as plastic or metal are stacked in layers to create products. It is also known in the industry as additive manufacturing or rapid prototyping.

Immensa is focused on industrial 3D printing, making mechanical and functional parts for the oil and gas, utilities, power, and water treatment sectors. Al-Shawwa is planning to expand the company’s reach to other sectors and industries.

“We already have our plastics and polymer machinery up and running,” he said, adding that its “metal facility will be operating in the coming weeks.”

As part of its overall strategy, the CEO said he is planning a big investment drive in the Kingdom. “Over the next three years, I think we will be investing significantly.”

According to Statista, the global 3D printing market was valued at around $13 billion in 2020 and is forecast to grow at a rate of 26 percent per annum between 2022 and 2024.

At the same time, in its latest report issued late last year, research firm UnivDatos Market Insights said the 3D printing industry in the Middle East and North Africa was valued at $521.4 million in 2018, which is expected to rise to $1.374 billion by 2025.

“Globally, the adoption of 3D printing is growing at around 30 percent per year. I think what we are going to see in Saudi Arabia is it growing by more than four times that, of 150 to 200 percent per year,” Al-Shawwa said.

Demand in the Kingdom is coming from critical sectors, such as oil, gas, defense, and utilities. These sectors pave the way for other sectors, as other industries are slowly adopting the technology in areas like tooling and injection molding, he explained.

The company boasts eight full-time engineers in Saudi Arabia, with plans to increase that to over 20 this year. Al-Shawwa said one of the reasons for their focus on Saudi Arabia was the availability of local engineers.

“The pool of talent in Saudi Arabia is phenomenal,” Al-Shawwa said.

“One of the reasons why we are shifting to Saudi because we don’t have to rely on expat talents. You can actually rely on local talent.”

Al-Shawwa envisions Immensa eventually becoming a Saudi-American company in the next five years. Its primary base will be in the Kingdom, servicing the rest of the Gulf, which has been the company’s main focus market for the last two years. However, it has recently expanded to the US, which will focus on clients in Asia and northern Europe.


Oil industry spending cuts hammer services firm CGG

Oil industry spending cuts hammer services firm CGG
Updated 13 May 2021

Oil industry spending cuts hammer services firm CGG

Oil industry spending cuts hammer services firm CGG
  • A recent pick up in oil prices helped Europe’s major energy companies to post big increases in first quarter earnings

GDANSK: French oil services group CGG posted a 71 percent plunge in first quarter core profit on Wednesday, reflecting a year of drastic spending cuts by the oil industry in the pandemic and sending its shares sharply lower.

In a call with analysts, CEO Sophie Zurquiyah said the quarter had been slow as expected, but predicted more spending in the second half of 2021, noting a resumption of commercial business and contract awards in March and higher oil prices.

“I believe we will see the need for our clients to increase their activity to not only catch up on the work postponed from 2020, but also to compensate for the depletion of their existing reservoirs,” she told analysts in a call.

Zurquiyah confirmed the firm’s 2021 targets.

A recent pick up in oil prices helped Europe’s major energy companies to post big increases in first quarter earnings.

That could bode well for CGG, which cut jobs and sold out of businesses last year as companies such as BP, Total, and Equinor slashed spending.

The Organization of the Petroleum Exporting Countries (OPEC) on Tuesday stuck to its prediction of a strong recovery in world oil demand in 2021, as growth in China and the US counters the coronavirus crisis in India.

OPEC and its allies, known as OPEC+, agreed in April to gradually ease oil output cuts.

CGG posted a first quarter core profit of $36 million, while its multi-client business — which offers seismic data and geological studies — had just one active project in offshore Brazil. Its stock was down over 9 percent at 0725 GMT, the worst performer on France’s SBF 120 index.