Fed hikes interest rates; Russian inflation accelerates to highest rate since 2015 — Macro Snapshot 

Update Fed hikes interest rates; Russian inflation accelerates to highest rate since 2015 — Macro Snapshot 
The Federal Reserve raised interest rates by a quarter percentage point and signaled hikes at all six remaining meetings this year, launching a campaign to tackle the fastest inflation in four decades even as risks to economic growth mount. (Shutterstock)
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Updated 17 March 2022

Fed hikes interest rates; Russian inflation accelerates to highest rate since 2015 — Macro Snapshot 

Fed hikes interest rates; Russian inflation accelerates to highest rate since 2015 — Macro Snapshot 

RIYADH: Inflation is becoming a worry for all economies. The US took a step against it by raising the interest rates on Wednesday, while Russia sees inflation on the rise.

Fed hikes interest rates, signals aggressive battle against inflation

The Federal Reserve on Wednesday raised interest rates by a quarter of a percentage point and laid out an aggressive plan to push borrowing costs to restrictive levels by next year as concerns about high inflation and the war in Ukraine overtook the risks of the coronavirus pandemic.

The US central bank, in a surprise move, projected the equivalent of quarter-percentage-point rate increases at each of its six remaining policy meetings this year, which would push its benchmark overnight interest rate to a range between 1.75 percent to 2.00 percent by the end of 2022. It is projected to further rise to 2.80 percent by the end of next year, above the 2.40 percent level officials now feel would slow the economy.

Fed Chair Jerome Powell, speaking after the end of the latest two-day policy meeting, said the economy is strong and that officials will raise rates more aggressively at future meetings if needed to control inflation.

“The way we’re thinking about this is that every meeting is a live meeting,” Powell said in a news conference. “We’re going to be looking at evolving conditions, and if we do conclude that it would be appropriate to move more quickly to remove accommodation, then we’ll do so.”

An economic slowdown, however, may already be underway. Fed policymakers marked down their gross domestic product growth estimate for 2022 to 2.8 percent, from the 4 percent projected in December, as they began to discount the new risks facing the global economy.

Asian shares fall

Asian stock prices have surged for a second day after the Federal Reserve announced its first interest rate hike since 2008 and China promised support for its real estate and internet industries.

Hong Kong’s benchmark jumped more than 6 percent and Tokyo gained more than 3 percent. Shanghai, Seoul and Sydney advanced.

Wall Street’s benchmark S&P 500 index rose 2.2 percent after the Fed raised its short term lending rate by 0.25 percentage points.

The widely anticipated change was less than the 0.5 percentage point hike advocated by some officials.

Russia's Inflation

The impact of the Russia-Ukraine conflict can be felt all across the world amid fears of soaring oil prices and supply chain disruption. 

The annual inflation in Russia accelerated to 12.5 percent as of March 11, its highest since late 2015 and up from 10.42 percent a week earlier, the Economy Ministry said on Wednesday. 

Inflation accelerated sharply as the currency fell to an all-time low amid signs of increased demand for a wide range of goods, from food staples to cars, on expectations that their prices will rise further.

Weekly inflation slowed slightly to 2.09 percent in the week to March 11 from 2.22 percent a week earlier, which was the sharpest one-week increase in prices since the 1998 crisis, data from statistics service Rosstat showed.

The central bank, which targets annual inflation at 4 percent, raised its key rate to 20 percent in late February.

“Tight monetary conditions facilitate inflation slowdown but, in our view, they won’t save it from soaring above 20 percent this year,” Raiffeisen Bank analysts said.

French confidence weakened

French economic growth is holding up for now despite the energy price shock from the Ukraine crisis, but business and consumer confidence is falling fast, the INSEE official statistics agency said on Wednesday.
The euro zone’s second-biggest economy is on course to grow 0.3 percent this quarter, down from 0.7 percent in the fourth quarter but unchanged from a previous estimate last month, it said.
While limited so far, the economic impact of the Ukraine crisis could take a bigger toll going forward, especially through energy prices.
If energy prices remain at elevated levels seen at the start of March for the rest of the year, the French economy would lose around a percentage point of growth, the agency estimated.
It said early results coming in from its monthly business confidence survey showed a sharp deterioration, especially in the manufacturing, wholesale and retail sectors.
In the face of high energy prices, executives are expecting price pressures to get sharply worse — with the exception of the service sector.

German consumption

Soaring energy prices due to Russia’s war in Ukraine will dampen private consumption in Germany this year, the Economy Ministry said on Wednesday, although it is too early to quantify the impact on growth.
The ministry said in its monthly report that the impact of Russia’s invasion on economic output depended on the duration and intensity of the conflict which began on Feb. 24.

The economy contracted in the final quarter of last year and an investor sentiment index published on Tuesday fell sharply, pointing to a likely recession.

The ministry said accelerating inflation remained a major concern for the economy and that consumers and companies would probably have to grapple with higher energy bills given that Germany remains dependent on Russian gas and oil.

“Since the start of the military invasion there have been extreme increases in the price of energy and commodities,” it said. “Trade flows and supply chains are also strongly impacted.”

Gas and electricity bills for German householders entering into new contracts hit a record high this month and will filter down to the rest of the population, data showed on Wednesday. 

The government of Chancellor Olaf Scholz, which is led by his Social Democrats with the Greens and Lindner’s pro-business Free Democrats as junior partner, had already taken some measures to cushion the economic impact of the war and the resulting surge in energy prices.

A surcharge on electricity bills to fund renewable energy expansion will be dropped starting in July instead of next year and companies with business in Russia can apply for grants.


 

 

 

 


Third Jordan-Gulf Economic Forum begins in Amman

Third Jordan-Gulf Economic Forum begins in Amman
Updated 28 September 2022

Third Jordan-Gulf Economic Forum begins in Amman

Third Jordan-Gulf Economic Forum begins in Amman
  • Jordanian minister said value of trade between his country and Gulf Cooperation Council member states reached $6.6 billion in 2021

AMMAN: The third session of the Jordan-Gulf Cooperation Council Economic Forum began in Amman on Tuesday. It brings together officials and business representatives from Jordan and GCC member states to discuss opportunities for the expansion and development of economic relations, the Jordan News Agency reported.

The forum, which is taking place under the title New Horizons for Economic and Investment Cooperation, aims to advance the strategic objectives and interests of all participating nations, according to the Jordanian Ministry of Industry, Trade and Supply.

The delegates at the two-day event include businessmen, investors, the heads of trade federations and chambers of commerce, and representatives of Gulf and Jordanian government stakeholders, according to the ministry.

In his opening remarks, Youssef Shamali, the Jordanian minister of industry, trade and supply, said that the value of trade between his country and GCC member nations reached $6.6 billion in 2021. Jordanian exports to the GCC were worth $1.7 billion of that total, while Jordan’s imports accounted for $4.9 billion.

The minister added that Gulf nations are responsible for the most significant foreign investments in Jordan, and capital from the region has benefited the nation’s economy and created jobs for the Jordanian people.

He added that if Arab nations were to unite to form a powerful economic bloc, it would allow them to boost exports, increase production, create new job opportunities for young people, and achieve greater integration into the global economy.
 


Oil up $2 per barrel from multi-month low

Oil up $2 per barrel from multi-month low
Updated 27 September 2022

Oil up $2 per barrel from multi-month low

Oil up $2 per barrel from multi-month low

NEW YORK: Oil rose by $2 a barrel on Tuesday from a nine-month low a day earlier, supported by supply curbs in the US Gulf of Mexico ahead of Hurricane Ian and a slight softening in the US dollar.
Prices also drew support from analyst expectations of possible supply cuts from the Organization of the Petroleum Exporting Countries and allies, which meets to set policy on Oct. 5.
Brent crude was up $2.35, or 2.8 percent, to $86.41 a barrel at 10:52 a.m. EDT (1452 GMT). On Monday it fell as low as $83.65, the lowest since January. US West Texas Intermediate  crude was up $2.04, or 2.7 percent, at $78.74.
Crude soared after Russia invaded Ukraine in February, with Brent coming close to its all-time high of $147 in March. Recently, worries about recession, high interest rates and dollar strength have weighed.
“Oil is currently under the influence of financial forces,” said Tamas Varga of oil broker PVM. “In the meantime, relief rallies, like the one this morning caused by Hurricane Ian in the US Gulf, are viewed as temporary phenomena.”
The dollar edged back from a 20-year high, which also supported oil. A strong dollar makes crude more expensive for buyers using other currencies.
Supply cuts also lent support. BP and Chevron said on Monday they had shut production at offshore platforms in the Gulf of Mexico as Hurricane Ian approached.
The outages may only provide a momentary reprieve for oil prices, Jim Ritterbusch, of Ritterbusch and Associates, said in a note.
“Outages are apt to prove brief,” Ritterbusch said, adding that the Gulf of Mexico represents “only about 15 percent of total US production amid this shale age” so the effect “is apt to be minimal.”
The oil price drop has raised speculation that OPEC+ could intervene. Iraq’s oil minister on Monday said the group was monitoring prices and did not want a sharp increase or a collapse.


Moody’s assigns stable outlook to PIF-owned firm’s EMTN program

Moody’s assigns stable outlook to PIF-owned firm’s EMTN program
Updated 27 September 2022

Moody’s assigns stable outlook to PIF-owned firm’s EMTN program

Moody’s assigns stable outlook to PIF-owned firm’s EMTN program

RIYADH: Global rating agency Moody’s has assigned the Public Investment Fund-owned GACI First Investment Co.’s EMTN program  a (P) A1 rating.

The euro medium-term note program has been established under the special purpose company incorporated in the Cayman Islands.

The firm has been assigned a stable outlook in line with the stable outlook on existing ratings of PIF.

The rating decision reflects Moody’s view that note holders will effectively be exposed to PIF’s senior unsecured credit risk.

In February, Moody’s Investors Service assigned an A1 long-term issuer rating to the PIF. As one of the world’s largest sovereign wealth funds, PIF is one of the main vehicles to grow the Kingdom’s non-oil economy and reduce its reliance on the hydrocarbon sector.


UAE In-Focus — Hospitality market to expand by 25% by 2030; Dubai to announce hydrogen strategy soon

UAE In-Focus —  Hospitality market to expand by 25% by 2030; Dubai to announce hydrogen strategy soon
Updated 27 September 2022

UAE In-Focus — Hospitality market to expand by 25% by 2030; Dubai to announce hydrogen strategy soon

UAE In-Focus —  Hospitality market to expand by 25% by 2030; Dubai to announce hydrogen strategy soon

DUBAI: The UAE’s hospitality market is set to expand by 25 percent by 2030, with a further 48,000 rooms adding to the nation’s extensive 200,000 key portfolio, according to a study conducted by Knight Frank.

The global property consultancy said in its report that Dubai will account for the lion’s share of these new rooms, with 76 percent coming to the emirate, which already boasts more than 130,000 rooms.

“The emirate has cemented its status as a city with universal appeal, in large part to the world-leading government response to the pandemic and some of the world’s most visited and incredible attractions,” Faisal Durrani, partner and head of Middle East Research at Knight Frank said.

It is estimated that the hotel room supply will cost approximately 117.5 billion dirhams ($32 billion).

Dubai develops hydrogen strategy

Dubai will soon unveil its green hydrogen strategy, MEED reported quoting the managing director of the Dubai Electricity & Water Authority as saying.

Saeed Mohammed Al-Tayer made the revelation at a press conference held to announce the World Green Economy Summit on Sept. 28-29.

Rental market

The Dubai Land Department has signed a memorandum of understanding with Dubai Chambers to enhance the emirate’s rental market’s investment environment, according to Dubai Media Office.

As a result of the MoU, Dubai Chambers will be able to offer real estate and office space to business councils and groups.

It will also facilitate market research and joint training workshops related to the rental sector in Dubai.

In a statement, Abdul Aziz Al-Ghurair, chairman of Dubai Chambers, said the partnership complements Dubai Chambers’ 2022-2024 strategy and the ongoing efforts to boost confidence in the real estate sector, which remains a key contributor to the emirate’s economy.

A constructive dialogue between the public and private sectors is essential to Dubai’s sustainable economic growth and development, he said.

 


Saudi Arabia agrees to fund $63m Senegal road project

Saudi Arabia agrees to fund $63m Senegal road project
Updated 27 September 2022

Saudi Arabia agrees to fund $63m Senegal road project

Saudi Arabia agrees to fund $63m Senegal road project

RIYADH: The Saudi Fund for Development is pumping $63 million into a coastal road project in Senegal, it has been announced.

The agreement with the African country will see the construction of a 12 km, two-lane highway in Dakar.

The project will also contribute to raising the level of road safety, meeting the needs of residents of cities and villages, and reducing the rates of injuries and deaths resulting from traffic accidents.

The move is the latest cash injection the Saudi Fund for Development into Senegal, having previously financed 27 loans to contribute to 25 projects and programs, with a value of about $447 million.

It has also awarded grants worth $19 million in the sectors of transportation, transportation, infrastructure, health, housing, urban development, energy, education, water and sanitation.

In August, the Fund signed an agreement with the Cameroonian government to finance the construction of the Mbalmayo Regional Hospital Project, by providing a soft development loan of $12 million.

The agreement was signed by SFD CEO Sultan Al-Marshad, and the Cameroonian Minister of Economy, Planning, and Regional Development, Alamine Ousmane Mey.

The agreement will help to build and equip the hospital with 200 beds and develop specialized medical departments, centers, and buildings spanning a total area of 14,000 sq. meters. 

The development plan also comprises rehabilitating the roads that connect the hospital to the main roads to ensure easy access.