Macro Snapshot — Egypt’s unemployment rate dips to 7.2%; US economic outlook weakens

Egypt’s unemployment rate dropped to 7.2 percent in the first quarter, down from 7.4 percent in the previous quarter. Reuters/File
Egypt’s unemployment rate dropped to 7.2 percent in the first quarter, down from 7.4 percent in the previous quarter. Reuters/File
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Updated 15 May 2022

Macro Snapshot — Egypt’s unemployment rate dips to 7.2%; US economic outlook weakens

Macro Snapshot — Egypt’s unemployment rate dips to 7.2%; US economic outlook weakens

RIYADH: Egypt’s unemployment rate dropped to 7.2 percent in the first quarter, down from 7.4 percent in the previous quarter, the country’s state statistics agency CAPMAS said on Sunday.

US economic outlook 

The US economic outlook has weakened and inflation is set to remain higher than previously expected for a while yet, a Federal Reserve Bank of Philadelphia survey of professional economic forecasters showed on Friday.

Real gross domestic product is forecast to grow at a 2.3 percent annual rate this quarter, down 1.9 percentage points from the last survey three months ago, with the annual rate seen falling to 2.3 percent next year and 2 percent in 2024, both lower than the previous estimate.

The Philadelphia Fed’s latest snapshot of the views of 34 leading economic forecasters also revealed they project current-quarter headline Consumer Price Index inflation will average 7.1 percent at an annual rate, up from 3.8 percent at the time of the last survey. They also forecast headline Personal Consumption Expenditures inflation this current quarter to be 5.7 percent at an annual rate, up from 3.1 percent previously.

Forecasts for headline and core CPI and PCE inflation in 2022 and 2023 were also revised upward.

Despite the weakening outlook for economic growth as the Fed battles 40-year-high inflation, the forecasters expect only a small bump in unemployment.

They see the unemployment rate at 3.6 percent this quarter. That is the same level they expect in 2022 and 2023, with it only moving up to 3.8 percent over the following two years.

taly’s funding cost 

Market volatility may push Italy’s borrowing costs slightly higher this year, to their highest since 2019, the country’s head of debt said on Friday.

A looming rate hike by the European Central Bank as soon as July along with the end of its asset purchase program has inflated Italian government bond yields, pushing them to their highest since late 2018. 

“Our target for 2022 stands at 0.83 percent. It might be upwardly revised by a couple of basis points back to its 2019 levels,” Davide Iacovoni told Reuters in an interview.

Russian inflation jumps 

Consumer inflation in Russia accelerated in April to 17.83 percent in year-on-year terms, its highest level since January 2002, data showed on Friday, as it got a boost from the volatile rouble and unprecedented western sanctions that disrupted logistics chains.

But monthly inflation slowed to 1.56 percent in April from 7.61 percent in March when it staged the biggest month-on-month increase since January 1999, data from the federal statistics service, Rosstat, showed.

Inflation in Russia has accelerated sharply after Russia began what it calls “a special military operation” in Ukraine on Feb. 24.

The fall in the rouble to record lows in March boosted demand for a wide range of goods from food staples to cars on expectations that prices will rise even more. The rouble has recovered since and firmed to a near five-year high against the euro on Friday. Spain’s April final CPI 

Spain’s consumer prices rose 8.3 percent year-on-year in April, according to data from the National Statistics Institute on Friday, compared with9.8 percent in March and a Reuters poll forecast of 8.4 percent.

Core inflation, which strips out volatile food and energy prices, was at 4.4 percent year-on-year, up from a reading of 3.4 percent a month earlier and the highest rate since December 1995, data from the National Statistics Institute showed.

Spanish EU-harmonized prices rose 8.3 percent from a year earlier, down from 9.8 percent in March and in line with the Reuters forecast of 8.3 percent.

Russia’s invasion of Ukraine and the subsequent pressure on energy and food markets has stoked inflation, which was already accelerating as the global economy emerged from the coronavirus pandemic.

In Spain, INE said that the cost of both food and non-alcoholic drinks in April was higher than in the previous month and a year earlier. This was driven particularly by a surge in the price of oils and fats, along with prices in hotels, cafes and restaurants and, with the resumption of tourism, the cost of package holidays.

This was mitigated by electricity prices being lower than a year before. Gas and heating fuel are now costing more than they did last year, however, it said.

INE noted that prices for cars and air passenger transportation are rising, but petrol and lubricants were cheaper in April than in March.

Norway GDP points to recovery 

Norway’s economy contracted in the first quarter amid coronavirus lockdowns, but growth resumed toward the end of the period, Statistics Norway data showed on Friday.

Norway has scrapped its coronavirus curbs in recent months with most adults and many children now vaccinated. “In March, the activity in the mainland economy was approximately back to the same level as in November, the month before the (latest) lockdown was introduced,” SSB economist Paal Sletten said in a statement.

The January-March quarter saw a decline in mainland GDP of 0.6 percent compared with the October-December period, the statistics office said, more than the 0.5 percent drop predicted in a Reuters poll of analysts.

Mainland GDP, which excludes the often volatile impact of Norway’s oil and gas production, is the most commonly watched measure of how the Norwegian economy is performing.

In March, the final month of the quarter, mainland GDP grew 1.0 percent, beating an average prediction of 0.8 percent.

The crown currency weakened slightly to trade at 10.23 against the euro at 0622 GMT, down from 10.21 just before the data release.

The central bank, which has raised rates three times since last September, plans seven more hikes by the end of 2023.

ECB rate hike 

European Central Bank Governing Council member Mario Centeno said on Friday that the ECB should begin an interest rate hike cycle in early July, and he called for any withdrawal of stimulus to be done gradually.

He said the normalization of monetary policy was “necessary and desirable,” adding that any perception there had not been “a sufficiently vigorous response” might require further, more aggressive tightening to control inflation at a later date.

Normalization must be done gradually, he added, and policymakers should not “overreact” to inflation rising across Europe or risk penalizing economic growth.

He said the ECB is likely to end its bond-buying stimulus program early in the third quarter of this year and then start a cycle of interest rate hikes.

“It is anticipated that this could happen in the first weeks of the third quarter,” he said at a banking conference in Lisbon.

With inflation soaring to a record high of 7.5 percent in the euro zone last month, well above the ECB’s 2 percent target, policymakers are increasingly advocating a rapid unwinding of stimulus, and several have called for a rate hike in July. 

South Africa’s central bank 

South Africa’s Reserve Bank is set to make its first 50 basis point hike to its repo rate in more than six years next week, taking it to 4.75 percent, to prevent potential second-round effects from higher consumer prices, a Reuters poll forecast on Friday.

Despite a cost of living crisis expected to have a severe impact on growth, 16 of 24 economists in the May 9-12 survey concluded the central bank would raise its repo rate by 50 basis points on May 19. The remaining eight opted for a 25 bps increase.

Last month only four of 17 economists thought a 50 bps hike was likely, against 13 who said 25 basis points.

A median of 16 economists showed an almost 60 percent probability the SARB would hike interest rates by 50 bps this month.

“We expect the SARB to step up the pace of policy normalization in its May MPC meeting, delivering a 50 bps rate hike to 4.75 percent,” said Jeffrey Schultz, economist at BNP Paribas

 


REVIEW: Circlys - saving platform

Photo/Supplied
Photo/Supplied
Updated 03 July 2022

REVIEW: Circlys - saving platform

Photo/Supplied
  • Eligible members must have accounts documented through the national information center “Nafath,” have a fixed income and a Saudi bank account

Many people when they have a certain income worry about having a proper amount of savings in their bank accounts.

Saving is known to be one of the best steps toward a healthy financial status and there are many ways to go about it.

One example is Circlys, an official Saudi closed joint-stock company, headquartered in Riyadh and specializing in financial technology.

It is a certified cooperative saving application provided for customers in Saudi Arabia under the supervision of the Saudi Central Bank, the Ministry of Commerce and the Ministry of Investment.

Eligible members must have accounts documented through the national information center “Nafath,” have a fixed income and a Saudi bank account. Every subscriber must sign a claim in case of defaulting and to guarantee their rights.

Circlys offers different saving opportunities throughout the year with durations varying between six and 12 months. Monthly shares start at SR500. Subscribers can choose the month they would like to receive the sum they register to get, and payments from each subscriber are deducted based on their salary period. Amounts will be received within three days after the salary receiving date.

The idea of the saving platform is inspired by a common saving concept in the Arab region called “Jamea’a,” where a group of three or more individuals agrees on saving the same amount of money in turns, provided that each individual pays the agreed-upon amount in the specified time. It is not permissible to breach the deadline or evade payment.

With a 4.7 rating by users, the savings platform has more than 180,000 beneficiaries and 10,000 saving circles. The phone app is available in English and Arabic on Android and iOS. For more information, visit circlys.com


Algeria to review gas prices with all its clients

Algeria to review gas prices with all its clients
Updated 03 July 2022

Algeria to review gas prices with all its clients

Algeria to review gas prices with all its clients
  • Algeria’s oil and gas earnings are up 70 percent and have reached $21.5 billion in the five first months of 2022

ALGIERS: Algeria is negotiating with all its clients to review gas prices, state oil and gas producer Sonatrach’s CEO, Tewfik Hakkar, told reporters on Sunday.

Hakkar added that the review of the prices is not targeting a single company or country.

The statement comes almost a week after Spain began re-exporting gas to Morocco in reverse flow via the Gazoduc Maghreb-Europe pipeline, marking the first direct flow of piped gas from Europe to Africa.

Spain and Morocco agreed earlier this year to consider using the GME pipeline for reverse flow to the North African country with the gas to be sourced from the global LNG market.

On Nov. 1, Algeria, which has cut off diplomatic ties with Morocco, stopped supplying natural gas to its neighboring country through the GME pipeline.

Algeria is now supplying Spain using the Medgaz undersea pipeline with an annual capacity of 8 billion cubic meters, which does not go through Morocco.

Earnings up

Algeria’s oil and gas earnings are up 70 percent and have reached $21.5 billion in the five first months of 2022, compared to $12.6 billion in the same period last year, an executive at state oil and gas producer Sonatrach told reporters on Sunday.

Along with gas, Algeria is a large oil producer with 12.2 billion barrels of proven oil reserves. The country exports 540,000 barrels per day of its total production of about 1.1 million bpd. All proven oil reserves are held onshore, though offshore exploration is in the early stages.


NRG Matters: DEWA expands its energy production capacity; Germany cuts natural gas consumption by 35% in May

NRG Matters: DEWA expands its energy production capacity; Germany cuts natural gas consumption by 35% in May
Updated 03 July 2022

NRG Matters: DEWA expands its energy production capacity; Germany cuts natural gas consumption by 35% in May

NRG Matters: DEWA expands its energy production capacity; Germany cuts natural gas consumption by 35% in May

RIYADH: On a macro level, Germany reduced consumption of natural gas by 35 percent in May. Zooming in, Dubai’s DEWA added 700MW of energy production capacity, to reach a total of 14,117 MW. 

Looking at the bigger picture

  • Germany has reduced its consumption of natural gas by 35 percent during the first five months of 2022, compared to the same period last year, Bloomberg reported citing an industry lobby group. Only part of the drop was due to a milder winter, it added. 

Through a micro lens:

  • Dubai Electricity and Water Authority has added 700 MW of energy production capacity, to reach a total of 14,117 MW, according to the Dubai Media Office. 

This includes 600 MW from the Hassyan Power Complex, which runs on natural gas, and 100 MW from photovoltaic solar panels at the 5th phase of the Mohammed bin Rashid Al-Maktoum Solar Park, which DEWA is implementing.

  • The Egyptian Nuclear and Radiological Regulatory Authority has issued a construction license to build the first reactor at Al Dabaa Nuclear Power Plant, according to a statement.

On Egypt’s Mediterranean coast, the El Dabaa site is 320 km west of Cairo. The plant will comprise four VVER-1200 units, like those already in operation at the Leningrad and Novovoronezh nuclear power plants in Russia, and the Ostrovets nuclear power plant in Belarus.


TRSDC signs first JV worth $400m with Al Mutlaq Group

TRSDC signs first JV worth $400m with Al Mutlaq Group
Updated 03 July 2022

TRSDC signs first JV worth $400m with Al Mutlaq Group

TRSDC signs first JV worth $400m with Al Mutlaq Group

RIYADH: The Red Sea Development Co. has signed a joint venture agreement worth SR1.5 billion ($400 million) with Almutlaq Real Estate Investment Co., a subsidiary of the Al Mutlaq Group. 

Under the agreement, the two companies will develop the Jumeirah Red Sea, a 159-key luxury resort situated on The Red Sea destination’s hub island, Shura, currently under construction and expected to open in early 2024. 

The island forms part of the first phase of development, and will comprise 11 luxury, premium and lifestyle hotels and resorts, residential units, a championship golf course, 118 berth marina, and a comprehensive retail, dining, and entertainment offering.

The strategic partnership marks the first JV established by TRSDC.

“This joint venture investment reinforces the private sector’s alignment with our commitment to regenerative tourism and sustainable development. Our project naturally lends itself to promising business opportunities, with the ability to leverage the Kingdom’s key strategic assets, and drive economic growth and diversification as outlined by Vision 2030,” said John Pagano, CEO of TRSDC. 

“We are extremely pleased to partner with TRSDC and its best-in-class management team on this exciting and compelling project. We have been studying the giga-projects for some time, and the Red Sea is achieving its vision. The destination is coming to life, and we look forward to welcoming our first guests in 2024,” said Tariq Almutlaq, chairman of AREIC.

Investors’ interest

TRSDC is in discussions with several other investors under a similar framework to invest in The Red Sea Project’s commercial assets, including hotels and resorts, leisure, and retail and dining experiences. Moreover, AMAALA and additional soon-to-be-announced projects in the developer’s expanding portfolio bring with them additional opportunities for investors.

“We are attracting an abundance of third-party investment interest, particularly those focused on ESG who are confident that this is an exciting opportunity and one that they do not want to miss out on,” said Jay Rosen, chief financial officer at TRSDC.

Green financing

The announcement follows TRSDC achieving financial close on its SR14.120 billion ($3.76 billion) green financing earlier this year with four leading Saudi banks (Banque Saudi Fransi, Riyad Bank, Saudi British Bank, and Saudi National Bank). As the first-ever riyal denominated green financing, TRSDC was acknowledged with an award for Project Finance Deal of Year in the Capital Markets Saudi Arabia Awards 2021 plus the Best New Green Loan Financing Project Award at the International Finance Awards 2022.

The Red Sea Project has demonstrated significant progress on the ground, with Phase-1 now more than 50 percent complete and several key assets already fully operational, including a four-star management hotel, on-site offices, and the largest landscape nursery in the region.

TRSDC and AMAALA have awarded over 1,000 contracts worth in excess of SR25 billion. Work is on track to welcome the first guests in early 2023, when the first hotels will open, with the balance of phase one set to complete by early 2024.


Fuel, feedstock prices for Saudi industrial sector to be adjusted from Q4 of 2023

Fuel, feedstock prices for Saudi industrial sector to be adjusted from Q4 of 2023
Updated 03 July 2022

Fuel, feedstock prices for Saudi industrial sector to be adjusted from Q4 of 2023

Fuel, feedstock prices for Saudi industrial sector to be adjusted from Q4 of 2023

RIYADH: Saudi Arabia’s Ministry of Industry and Mineral Resources has decided to adjust the fuel and feedstock prices for the industrial sector from the fourth quarter of 2023, according to a ministry statement to companies.

The prices will be reviewed annually until 2030, it stated.

Price adjustment policy will be applicable to natural gas products, Arab heavy crude oil, ethane, heavy fuel oil, and Arab light crude oil.