High oil prices to power Gulf economies amid inflation risks: Reuters poll

High oil prices to power Gulf economies amid inflation risks: Reuters poll
The expected growth in Kuwait at 6.4 percent, and in the United Arab Emirates at 5.6 percent, would be the fastest in around a decade. Image: Shutterstock
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Updated 26 April 2022

High oil prices to power Gulf economies amid inflation risks: Reuters poll

High oil prices to power Gulf economies amid inflation risks: Reuters poll
  • Saudi Arabia, the region’s largest economy and world-leading exporter of crude oil accounts for about about 80 percent of total exports 

BENGALURU: The Gulf Cooperation Council’s economic growth will accelerate this year to a pace not seen in a decade, according to a Reuters poll of economists, who said high inflation and a slowing global economy were the biggest downside risks.

Crude prices, a major driver for Gulf economies, shot up after Russia invaded Ukraine in February and have remained elevated, giving a major boost to economies in the oil and gas-rich region.

An April 12-22 Reuters poll predicted growth overall in the six GCC economies would average 5.9 percent this year, which would be the fastest since 2012.

“GCC economies have seen a relatively strong start to 2022. The hydrocarbons sectors have benefited from increased oil production so far this year, with crude oil production up 12 percent for the UAE and 19 percent over the same period for Saudi Arabia,” said Khtija Haque, chief economist at Emirates NBD.

“Survey data for the first quarter of the year point to a solid expansion in non-oil sectors as well, with strong growth in business activity and new work in the UAE, Saudi Arabia, and Qatar.”

For Saudi Arabia, the region’s largest economy and world-leading exporter of crude oil, about 80 percent — or 17 of 22 contributors — upgraded their forecasts from the previous poll in January.

It was expected to grow 6.3 percent in 2022, up from the 5.7 percent forecast three months ago, before slowing to 3.2 percent growth next year.

If that happens, 2022 growth would be the fastest since 2011, when oil averaged around $111 per barrel.

The expected growth in Kuwait at 6.4 percent, and in the United Arab Emirates at 5.6 percent, would be the fastest in around a decade.

Qatar, Oman, and Bahrain are expected to grow around 4 percent, the fastest in several years.

However, when asked for the top two downside risks to GCC economies this year, 10 of 12 economists who answered an additional question said high inflation and a slowdown in the global economy.

Inflation in most of the GCC economies has risen in recent months against the backdrop of high food prices caused by the Russia-Ukraine war.

Although modest in comparison to many other countries, GCC inflation is expected to rise above 2 percent this year, with the highest median forecast for Qatar at 3.5 percent, and the lowest for Saudi Arabia at 2.5 percent .

“In the face of higher commodity and global food prices, we have revised our 2022 inflation forecast for the GCC region to be about 3.5 percent from around 2.5 percent,” noted Ilker Domac, regional head of economics at Citi.

“Since GCC countries import 85 percent of their food, a sustained upward pressure on international food prices could pose a challenge for policymakers in the region.”

Also, uncertainty caused by the conflict in Ukraine could have an adverse impact on a global economy just emerging from the ravages of the pandemic.

The International Monetary Fund last week slashed its 2022 global growth forecast, citing war impact and describing inflation as a “clear and present danger”.

The GCC, highly dependent on revenues from energy exports, would face weaker demand from an economic slowdown - especially in China, one of the world’s biggest oil and gas importers.

“From the regional perspective, global growth concerns become a worry if they hit oil prices. Price pressures are certainly being felt though on the assumption inflation eases into 2023, the present trends should not derail efforts to keep non-oil sector recoveries on track”, said Maya Senussi, senior economist at Oxford Economics.


Informa and SAFCSP form new events company to attract 500,000 visitors a year by 2030

Informa and SAFCSP form new events company to attract 500,000 visitors a year by 2030
Updated 34 sec ago

Informa and SAFCSP form new events company to attract 500,000 visitors a year by 2030

Informa and SAFCSP form new events company to attract 500,000 visitors a year by 2030

RIYADH: Events firm Informa and the Saudi Federation for Cybersecurity, Programming and Drones have agreed to form a joint venture company to boost the Kingdom’s entertainment sector and create jobs for the nation’s youth.  

Officials announced that Tahaluf, meaning ‘Alliance’, will become a global trademark designed to create a vast chain of events that accommodate Saudi Arabia’s key sectors, such as beauty, real estate, technology, AI, food, pharmaceutical services, and healthcare.

Tahaluf plans to employ approximately 200 people in the coming 5 years. In addition, the organization will manage events that will attract around 500,000 visitors every year by the end of the decade.  

“Saudi Arabia has hosted an expanding portfolio of global events in recent years, and now, through Tahaluf, SAFCSP is investing to further elevate the Saudi events industry and related creative and digital sectors,” said Faisal Al-Khamisi, chairman of SAFCS.  

Tahaluf is expected to launch and commence trading on Jan. 1 2023, and is in line with Saudi Arabia’s goal of diversifying its economy in line with the implementation of Vision 2030.  

Al-Khamisi added: “Tahaluf will be a significant contribution to SAFCSP’s mission of supporting skills development and creating career opportunities for Saudi youth in dynamic, professional sectors and will also contribute to the overall diversification and modernisation of key industries in Saudi Arabia.”


Ceer EV plant to be built in Emaar EC in $95m deal

Ceer EV plant to be built in Emaar EC in $95m deal
Updated 37 min 49 sec ago

Ceer EV plant to be built in Emaar EC in $95m deal

Ceer EV plant to be built in Emaar EC in $95m deal

RIYADH: Emaar The Economic City has announced the sale of an industrial plot to Ceer National Automotive Co. to build a specialized factory for electric vehicles in a move that will create thousands of high-skilled jobs. 

The deal was valued at SR359.04 million ($95.53 million), which Ceer will pay Emaar EC in installments over 15 years, the company said in a statement to Tadawul. The asset book value stood at SR19 million. 

Once complete, the manufacturing facility will create thousands of direct and indirect high-skilled jobs, the majority of which will be filled by Saudi nationals. Construction at the site will begin in early 2023. 

Ceer, the first Saudi electric vehicle brand, was announced by Crown Prince Mohammed bin Salman at the beginning of November, and will see EVs designed, manufactured, and sold to consumers in Saudi Arabia and the Middle East and North Africa region.

“We have found a place that meets all our needs. KAEC offers us a great location with world-class logistics, effective access for our global and Saudi-based suppliers, and an ideal location to develop our future workforce,” said Ceer CEO James DeLuca in a press statement. 

According to a Ceer press release, the site in Industrial Valley near King Abdullah Port in KAEC will cover over 1 million square meters. 

The factory will feature the latest technologies to ensure manufacturing efficiency while minimizing energy and water usage, making it a zero-waste-to-landfill site. 

Ceer, a joint venture between the Public Investment Fund and Hon Hai Precision Industry Co., also known as Foxconn, will license component technology from BMW to design and build vehicles, including sedans and sport utility vehicles in the Kingdom. 

Foxconn will develop the electrical architecture of the vehicles, resulting in a portfolio of products that will lead in infotainment, connectivity and autonomous driving technologies. 

The establishment of Ceer comes in line with the PIF strategy to focus on unlocking the capabilities of promising sectors in the Kingdom, including the automotive industry and creating opportunities for the growth and diversification of its economy. 


Saudi Arabia offering $6tn of investment opportunities in travel and tourism: Minister

Saudi Arabia offering $6tn of investment opportunities in travel and tourism: Minister
Updated 29 November 2022

Saudi Arabia offering $6tn of investment opportunities in travel and tourism: Minister

Saudi Arabia offering $6tn of investment opportunities in travel and tourism: Minister

RIYADH: Saudi Arabia is offering investment opportunities worth $6 trillion in the travel and tourism sector through to 2030, as the Kingdom steadily pursues its journey to emerge as a global tourist destination by the end of this decade, according to the Saudi Minister of Tourism, Ahmed Al-Khateeb. 

Speaking at the World Travel and Tourism Council Global Summit in Riyadh on Nov. 29, Al-Khateeb said that collective action globally is required to combat the challenges in the tourism sector. 

“We built our tourism industry against the backdrop of a global disaster (COVID-19 pandemic). And we now have $6 trillion of investment opportunities through 2030,” said Al-Khateeb. 

He added: “We value collaboration, we have proved that it will work. Our shared commitment to partnerships will drive the global industry forward. Saudi Arabia is reimagining tourism, making use of the power of partnership and ensuring that no one is left behind.” 

Al-Khateeb noted that he is proud of Saudi Arabia’s achievements, both as a rapidly developing destination and as a global partner driving change across the travel and tourism sector. 

“As the travel and tourism sector recovers stronger, we must put people and the planet first, at the very center of every decision we take,” he said. 

The minister further noted that the travel and tourism industry will create 126 million new jobs in the next decade globally, which means one in every three new jobs created will be from the tourism sector. 

Reaffirming Saudi Arabia’s commitment toward the industry and the young population in the nation, Al-Khateeb pointed out that the Kingdom is training 100,000 people annually to work in the tourism sector. 

Arnold Donald, chairman of WTTC, said that Saudi Arabia is evolving rapidly as a tourist destination. 

“This is my third visit to Saudi Arabia within the last 14 months, and each visit has been very impressive when compared to my previous visit. Saudi Arabia’s bold ambitions embody the region’s drive and energy in the travel and tourism sector,” said Donald. 

He added: “This is a Kingdom that aspires to become one of the top 5 tourist destinations in the world, welcoming 100 million domestic and international travelers a year.” 

Donald said the public and private sectors are working together in pursuit of a common goal in Saudi Arabia, which is an example to the entire world. 

“Partnership across the public and private sectors should come first to push forward the action that will benefit all,” added Donald. 

For her part, Julia Simpson, president and CEO of WTTC said that investments worth $800 billion are happening in the travel and tourism sector of Saudi Arabia now, and that is the biggest ever in the history of the industry. 

She also added that the travel and tourism sector will witness tremendous growth over the next decade. 

“Travel and tourism sector will outpace global growth over the next decade. We will be growing at a rate of 5.8 percent annually, but globally GDP will grow 2.8 percent,” said Simpson. 

During her speech, Simpson also announced the launch of the world’s first environmental and social impact report for travel and tourism, describing it as a “groundbreaking piece of research that allows us to measure and track the sector's footprint.”

She also highlighted the necessity to embrace sustainable aviation fuel to reduce emissions in the transport sector. 

“In 2019, transport accounted for 38 percent of emissions. It is critical to ensure wide scale availability of sustainable aviation fuel,” added Simpson.


UAE brings forward oil production capacity expansion to 2027

UAE brings forward oil production capacity expansion to 2027
Updated 29 November 2022

UAE brings forward oil production capacity expansion to 2027

UAE brings forward oil production capacity expansion to 2027

DUBAI: The board of Abu Dhabi’s ADNOC endorsed plans on Monday to bring forward the company’s five million barrel per day oil production capacity expansion to 2027 from a previous target of 2030, to meet rising global energy demand, according to Reuters.

The UAE’s hydrocarbon reserves increased by 2 billion stock tank barrels of mostly Murban-grade crude and 1 trillion standard cubic feet of natural gas in 2022, the state oil firm said in a statement.

The additional reserves increase the UAE’s reserve base to 113 billion STB of oil and 290 TSCF of natural gas.

ADNOC’s board of directors, which was chaired by the UAE’s President Sheikh Mohammed bin Zayed on Monday, also approved the creation of ADNOC Gas.

A gas processing and marketing entity to be effective from January, the company will combine the operations, maintenance and marketing of ADNOC Gas Processing and ADNOC LNG into one consolidated entity.

ADNOC said it plans to float a minority stake in the new company on the Abu Dhabi Securities Exchange in 2023.

A five-year business plan and capital expenditure of 550 billion dirhams ($150 billion) for the period 2023-2027 was also approved by the board to enable the company’s growth strategy.

ADNOC will also create a low carbon solutions and international growth vertical focused on new energies, gas, LNG and chemicals. The board directed the firm to pursue a net zero by 2050 ambition to support the UAE’s drive toward net zero carbon.

“The world needs maximum energy, minimum emissions and it needs all the energy solutions if we are to ensure global energy security,” ADNOC’s chief Sultan Al-Jaber was quoted as saying in the statement.

 


S&P Global lowers 2023 growth forecast for emerging markets

S&P Global lowers 2023 growth forecast for emerging markets
Updated 29 November 2022

S&P Global lowers 2023 growth forecast for emerging markets

S&P Global lowers 2023 growth forecast for emerging markets

BENGALURU: S&P Global Ratings lowered its 2023 growth forecast for emerging economies on Tuesday, citing persistent pressures from the Russia-Ukraine conflict, a lingering COVID-19 pandemic and tight monetary policy conditions, according to Reuters.

The ratings agency now projects real gross domestic product growth of 3.8 percent next year, down from its previous forecast of a 4.1 percent expansion.

“The downward revision to growth comes from all EMs (emerging markets) excluding China and Saudi Arabia, with most economies poised to expand below their longer-run trend rates,” it said, adding that forecasts for 2024 and 2025 remain broadly unchanged, averaging at 4.3 percent.

While inflation in emerging markets have passed the peak or are peaking soon on the back of declining food and fuel inflation, it is still poised to remain above central banks’ targets in many economies, forcing monetary policies to stay restrictive, the agency warned.

“But the deceleration in inflation--coupled with a worsening growth outlook--could bring policy easing onto the agenda in several EMs, especially in Latin America, by the middle of next year,” S&P said.