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

 


Stuck bags add to tangles at Paris airports amid travel boom

Stuck bags add to tangles at Paris airports amid travel boom
Updated 02 July 2022

Stuck bags add to tangles at Paris airports amid travel boom

Stuck bags add to tangles at Paris airports amid travel boom
  • Union activists said many more passengers flew without their bags
  • The scene at Charles de Gaulle on Saturday was busy but typical for the first weekend in July

PARIS: Airlines worked Saturday to deliver luggage to passengers around the world after a technical breakdown left at least 1,500 bags stuck at Paris’ Charles de Gaulle airport, the latest of several tangles hitting travelers this summer.
The airport’s baggage sorting system had a technical malfunction Friday that caused 15 flights to depart without luggage, leaving about 1,500 bags on the ground, according to the airport operating company. The airport handled about 1,300 flights overall Friday, the operator said.
Union activists said many more passengers flew without their bags, apparently because of knock-on effects from the original breakdown.
It came as airport workers are on strike at French airports to demand more hiring and more pay to keep up with high global inflation. Because of the strike, aviation authorities canceled 17 percent of flights out of the Paris airports Friday morning, and another 14 percent were canceled Saturday.
Passengers on canceled flights were alerted days ahead of their flights. The scene at Charles de Gaulle on Saturday was busy but typical for the first weekend in July, when France’s summer travel season kicks off.
Unions plan to continue striking Sunday but no flights have been canceled so far. They have threatened to renew the strike next weekend if negotiations with company management don’t succeed in finding a compromise.
Until now, French airports had been largely spared the chaos seen recently at airports in London, Amsterdam and some other European and US cities. Airlines and airports that slashed jobs during the depths of the COVID-19 crisis are struggling to keep up with soaring demand as travel resurges after two years of virus restrictions.


Oil prices up 2 percent on supply outages

Oil prices up 2 percent on supply outages
Updated 01 July 2022

Oil prices up 2 percent on supply outages

Oil prices up 2 percent on supply outages

LONDON: Oil prices rose about 2 percent on Friday, recouping most of the previous session’s declines, as supply outages in Libya and expected shutdowns in Norway outweighed expectations that an economic slowdown could dent demand, according to Reuters.

Brent crude futures were up $2.20, or 2 percent, at $111.23 a barrel by 1348 GMT, having dropped to $108.03 a barrel earlier in the session.

WTI crude futures gained $2.25, or 2.1 percent, to $108.01 a barrel, after retreating to $104.56 a barrel earlier.

Both contracts fell around 3 percent on Thursday, ending the month lower for the first time since November.

We “still see risks to prices as skewed to the upside on tight inventories, limited spare capacity and muted non-OPEC+ supply response,” Barclays said in a note.

Libya’s National Oil Corporation declared force majeure on Thursday at the Es Sider and Ras Lanuf ports as well as the El Feel oilfield. Force majeure is still in effect at the ports of Brega and Zueitina, NOC said.

Production has seen a sharp decline, with daily exports ranging between 365,000 and 409,000 bpd, a decrease of 865,000 bpd compared to production in “normal circumstances,” NOC said.

Elsewhere, 74 Norwegian offshore oil workers at Equinor’s Gudrun, Oseberg South and Oseberg East platforms will go on strike from July 5, the Lederne trade union said on Thursday, likely halting about 4 percent of Norway’s oil production.

Ecuador’s government and indigenous groups’ leaders on Thursday reached an agreement to end more than two weeks of protests which had led to the shut-in of more than half of the country’s pre-crisis 500,000 bpd oil output.

On Thursday, the OPEC+ group of producers, including Russia, agreed to stick to its output strategy after two days of meetings. However, the producer club avoided discussing policy from September onwards.

Previously, OPEC+ decided to increase output each month by 648,000 barrels per day in July and August, up from a previous plan to add 432,000 bpd per month.

US President Joe Biden will make a three-stop trip to the Middle East in mid-July that includes a visit to Saudi Arabia, pushing energy policy into the spotlight as the United States and other countries face soaring fuel prices that are driving up inflation.

Biden said on Thursday he would not directly press Saudi Arabia to increase oil output to curb soaring prices when he sees the Saudi king and crown prince during a visit this month.

A Reuters survey found that OPEC pumped 28.52 million bpd in June, down 100,000 bpd from May’s revised total.

Oil prices are expected to stay above $100 a barrel this year as Europe and other regions struggle to wean themselves off Russian supply, a Reuters poll showed on Thursday, though economic risks could slow the climb.

India introduced export duties on gasoil, gasoline and jet fuel on Friday to help maintain domestic supplies, while also imposing a windfall tax on oil producers who have benefited from higher global crude oil prices. 


Russia seizes control of partly foreign-owned energy project

Russia seizes control of partly foreign-owned energy project
Updated 01 July 2022

Russia seizes control of partly foreign-owned energy project

Russia seizes control of partly foreign-owned energy project

MOSCOW: Russian President Vladimir Putin has handed full control over a major oil and natural gas project partly owned by Shell and two Japanese companies to a newly created Russian firm, a bold move amid spiraling tensions with the West over Moscow’s military action in Ukraine, according to Associated Press.

Putin’s decree late Thursday orders the creation of a new company that would take over ownership of Sakhalin Energy Investment Co., which is nearly 50 percent controlled by British energy giant Shell and Japan-based Mitsui and Mitsubishi.

Putin’s order named “threats to Russia’s national interests and its economic security” as the reason for the move at Sakhalin-2, one of the world’s largest export-oriented oil and natural gas projects.

The presidential order gives the foreign firms a month to decide if they want to retain the same shares in the new company.

Russian state-controlled natural gas giant Gazprom had a controlling stake in Sakhalin-2, the country’s first offshore gas project that accounts for about 4 percent of the world’s market for liquefied natural gas, or LNG. Japan, South Korea and China are the main customers for the project’s oil and LNG exports.

Kremlin spokesman Dmitry Peskov said Friday that there is no reason to expect a shutdown of supplies following Putin’s order.

Shell held a 27.5 percent stake in the project. After the start of the Russian military action in Ukraine, Shell announced its decision to pull out of all of its Russian investments, a move that it said has cost at least $5 billion. The company also holds 50 percent stakes in two other joint ventures with Gazprom to develop oil fields.

Shell said Friday that it’s studying Putin’s order, which has thrown its investment in the joint venture into doubt.

“As a shareholder, Shell has always acted in the best interests of Sakhalin-2 and in accordance with all applicable legal requirements,” the company said in a statement. “We are aware of the decree and are assessing its implications.”

Seiji Kihara, deputy chief secretary of the Japanese cabinet, said the government was aware of Putin’s decree and was reviewing its impact. Japan-based Mitsui owns 12.5 percent of the project, and Mitsubishi holds 10 percent.

Kihara emphasized that the project should not be undermined because it “is pertinent to Japan’s energy security,” adding that “anything that harms our resource rights is unacceptable.”

“We are scrutinizing Russia’s intentions and the background behind this,” he told reporters Friday at a twice-daily news briefing. “We are looking into the details, and for future steps, I don’t have any prediction for you at this point.”

Asked during a conference call with reporters if Putin’s move with Sakhalin-2 could herald a similar action against other joint ventures involving foreign shareholders, Peskov said, “There can’t be any general rule here.”

He added that “each case will be considered separately.”

Sakhalin-2 includes three offshore platforms, an onshore processing facility, 300 kilometers of offshore pipelines, 1,600 kilometers of onshore pipelines, an oil export terminal and an LNG plant.
 

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Riyadh no longer one of the 100 most expensive cities for expats: Mercer

Riyadh no longer one of the 100 most expensive cities for expats: Mercer
Updated 01 July 2022

Riyadh no longer one of the 100 most expensive cities for expats: Mercer

Riyadh no longer one of the 100 most expensive cities for expats: Mercer

RIYADH: Saudi Arabia’s capital, Riyadh, has dropped 72 places in a ranking of the world’s most expensive cities for expats as it tumbled out of the top 100, according to a report issued by Mercer.

Riyadh was positioned at 103 in Mercer's Cost of Living Index 2022, falling from 29 in the previous year’s list. 

Commenting on Riyadh’s fall, Khaled Al-Mobayed, CEO of Menassat Reality Co., a Riyadh-based real estate developer, said: “The results came in contrary to the expectations, due to the pandemic’s ongoing consequences and the rising cost of logistics and supply chain.”

“Being out of the 100 top expensive cities is a good sign despite the challenges that the economy has gone through,” he added.

UAE's Dubai took over Lebanon's capital, Beirut, as the most expensive city among Arab countries in the region, ranking 31.

Despite being placed third in 2021, Beirut was not even on this year’s list of 227 cities due to the country’s economic turmoil.

The city’s fall reflects the severe drop in value of the Lebanese pound, according to Lebanese economic analyst Bassel Al-Khatib, who pointed out the minimum wage is now worth $20, while it was $450 before the economic crisis gripping the country. 

“Lebanon is extremely expensive to those who get paid in Lebanese pounds yet very cheap for those who get pain in US dollars,” he told Arab News, adding: “Lebanon was expensive for both citizens and foreigners, and with the currency dropping 95 percent and the dollar reaching record levels, the situation changed.”

“Everything has become expensive but not for foreigners who have dollars. All services by the government such as water, electricity fees, or internet are still the same but food prices skyrocketed,” he added.

Abu Dhabi was the second highest Arab city from the region, ranked at 61, while Jeddah came in at 111 this year compared to 94 in 2021.

Jordan's capital Amman ranked 115, followed by Bahrain's Manama at 117, Oman's Muscat at 119 and Kuwait city at 131.

Egypt's capital, Cairo, was placed at 154 while Rabat, Algiers and Tunis came as the least expensive in the region, ranking 162, 218 and 220 respectively.

Hong Kong topped the list as the most expensive city in the world in 2022, moving from second rank last year and taking the top spot from Turkmenistan’s capital, Ashgabat.

Switzerland’s Zurikh and Geneva followed as second and third most expensive cities, replacing Hong Kong and Beirut respectively.

Turkey’s capital, Ankara, came in as the least expensive city, ranking 227, taking the spot from Kyrgyzstan’s capital Bishkek.


France eyes ‘good investment opportunities’ in Saudi Arabia: Official

France eyes ‘good investment opportunities’ in Saudi Arabia: Official
Updated 01 July 2022

France eyes ‘good investment opportunities’ in Saudi Arabia: Official

France eyes ‘good investment opportunities’ in Saudi Arabia: Official

RIYADH: France is intensifying efforts to take advantage of Saudi investment opportunities in all sectors, mostly energy, technology, water and other industrial services, the country's Ambassador in Saudi Arabia said.

Saudi Arabia is an attractive region and a suitable environment for investments in all its vital sectors, Ludovic Pouille told a press conference.

The French government and the private sector are working to expand the number of companies operating in the Kingdom, which currently stands at about 135, Aleqtisadiah reported citing Pouille.

The aim is to gain large investment spaces, and to benefit from the reforms and economic developments undertaken by Saudi Arabia, which constitute a good opportunity for French companies, he said. 

The French ambassador said France will take the model of agreements between the Al-Ula Authority and his country’s institutions in the fields of infrastructure and culture, as a starting point for expanding the map of investments in the future.