Macro Snapshot — UK inflation hits 40-year high of 9%; US housing starts fall in April

British inflation surged last month to its highest annual rate since 1982, pressuring Finance Minister Rishi Sunak to offer more help for households and the Bank of England to keep raising interest rates despite a risk of recession. Reuters/File
British inflation surged last month to its highest annual rate since 1982, pressuring Finance Minister Rishi Sunak to offer more help for households and the Bank of England to keep raising interest rates despite a risk of recession. Reuters/File
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Updated 18 May 2022

Macro Snapshot — UK inflation hits 40-year high of 9%; US housing starts fall in April

Macro Snapshot — UK inflation hits 40-year high of 9%; US housing starts fall in April

RIYADH: Britain’s inflation hit a staggering 40-year high as the war in the east continues, while the US’ housing dropped slightly in April and was accompanied by a plunge in building permits which posed a challenge for  entry-level and first time buyers in terms of affordability.

UK inflation 

British inflation surged last month to its highest annual rate since 1982, pressuring Finance Minister Rishi Sunak to offer more help for households and the Bank of England to keep raising interest rates despite a risk of recession.

Consumer price inflation hit 9 percent in April, the Office for National Statistics said on Wednesday, surpassing the peaks of the early 1990s recession that many Britons remember for sky-high interest rates and widespread mortgage defaults.

Britain has the highest inflation of Europe’s big economies and almost certainly in the Group of Seven, with Canada and Japan yet to report April data. Neither are likely to match Britain’s price growth which also looks set to be longer-lasting.

Last month, the IMF forecast Britain in 2023 faced slower economic growth and more persistent inflation than any other major economy.

Soaring energy bills were the biggest inflation driver, reflecting April’s increase in regulated energy tariffs. Knock-on effects from Russia’s invasion of Ukraine mean those bills are likely to jump again in October.

“We cannot protect people completely from these global challenges but are providing significant support where we can, and stand ready to take further action,” Sunak said.

A Reuters poll of economists had pointed to a reading of 9.1 percent, up from 7 percent in March, and sterling fell.

A survey on Tuesday showed two in three people had kept their heating off when they would normally have turned it on, almost half were driving less or changing supermarkets and just over a quarter say they have skipped meals. 

US housing starts fall in April

US homebuilding fell moderately in April, but a sharp decline in permits pointed to a slowdown in the housing market amid rising mortgage rates, which are contributing to reducing affordability for entry-level and first-time buyers.

Housing starts slipped 0.2 percent to a seasonally adjusted annual rate of 1.724 million units last month, the Commerce Department said on Wednesday. Data for March was revised lower to a rate of 1.728 million units from the previously reported 1.793 million units. Economists polled by Reuters had forecast starts declining to a rate of 1.765 million units.

Permits for future homebuilding dropped 3.2 percent to a rate of 1.819 million units.

A survey on Tuesday showed the National Association of Home Builders/Wells Fargo Housing Market sentiment index dropped to the lowest level in nearly two years in May.

Builders blamed the fifth straight monthly decline in sentiment on soaring prices for building materials as well as rapidly rising mortgage rates, which were squeezing entry-level and first-time home buyers from the market.

Chile’s economy grows 

Chile’s economy expanded 7.2 percent in the first quarter of 2022 from a year earlier, central bank data showed on Wednesday, fueled by growth in the services and retail sectors.

That is below expectations for a 7.9 percent increase, according to a Reuters poll of analysts and economists.

Gross domestic product fell 0.8 percent from the previous three months in seasonally adjusted terms, versus a forecast 0.4 percent drop.

“A large part of the activities registered positive figures, with the biggest gains in service activities — in particular, personal, transport and business — and in retail,” the central bank said.

Mining, agriculture, forestry, and fishing activities all declined, the bank added.

Japan’s economy contracts 

Japan’s economy shrank an annualized 1 percent in January-March from the previous quarter, government data showed on Wednesday, falling slightly less than expected as private consumption showed resilience despite resurgent coronavirus cases.

The gross domestic product figure translated into a quarterly drop of 0.2 percent, compared with a median market forecast of a 0.4 percent contraction, the Cabinet office data showed.

Private consumption, which makes up more than half of the economy, came in nearly flat versus a 0.5 percent fall expected by economists, the data showed.

Spain’s economic outlook

The Spanish economy could grow around 4 percent in 2022, half a percentage point less than expected in April, as rising inflation hurts consumer confidence and international trade slows, the Bank of Spain said on Wednesday.

The lower envisaged growth rate would bring it in line with the downwards revision this week from the European Commission. It had previously forecast a 5.6 percent GDP rise for Spain.

In April, the Spanish central bank had already lowered its economic growth outlook for this year and next due to the impact of inflation stoked by Russia’s invasion of Ukraine and forecast inflation would soar to 7.5 percent in 2022. 

China growth forecast

Analysts at Goldman Sachs said on Wednesday they were lowering their China 2022 GDP forecast to 4 percent from 4.5 percent as a result of pandemic-related damage to the economy in the second quarter of this year.

It was more likely China’s economy would undershoot than overshoot their target, they added.

“Even this lower growth projection embeds the assumption that COVID-19 is mostly under control going forward, the property market improves from here, and the government provides substantial policy offset through infrastructure spending in coming months,” they wrote.

China’s retail and factory activity fell sharply in April as wide COVID-19 lockdowns confined workers and consumers to their homes and severely disrupted supply chains. 

(With input from Reuters) 

 

 


Saudi-Uzbek trade exceeds $95m in the first half of 2022

Saudi-Uzbek trade exceeds $95m in the first half of 2022
Updated 17 August 2022

Saudi-Uzbek trade exceeds $95m in the first half of 2022

Saudi-Uzbek trade exceeds $95m in the first half of 2022
  • The two countries will bolster ties further with the signing of 12 new deals this week

RIYADH: The mutual trade between Saudi Arabia and the Republic of Uzbekistan reached $95 million in the first half of 2022, a substantial increase considering that bilateral trade barely exceeded $17 million last year.

According to a joint news statement, the value is expected to grow rapidly by the end of 2022. The numbers assume significance in the aftermath of the pandemic.

In fact, the number of Uzbek companies running on Saudi funds increased from about nine to 38 in the last five years. Of the 38, 19 are sole proprietors, and the rest are joint ventures.

The two nations will bolster the ties further by signing 12 new agreements on Wednesday and Thursday when Uzbekistan President Shavkat Mirziyoyev visits the Kingdom.

According to an Uzbek state agency, high-level talks will take place in Jeddah, where the two nations will discuss opportunities to enhance multilateral cooperation further.

The discussion will focus on the green economy, technology and digitalization, innovations, small business and entrepreneurship. 

Following the meeting, new agreements are expected to be signed in the energy, telecommunications, agriculture, chemical and petrochemical industries, besides encouraging ties in culture, sports and education.

The Kingdom has become one of the largest foreign investors in energy infrastructure and one of Uzbekistan’s most significant developers of green energy projects.

ACWA Power’s Uzbek interests

Recently, the Ministry of Energy of Uzbekistan and Saudi energy company ACWA Power signed several investment agreements for about $3 billion.

ACWA Power will develop and operate a wind energy project with a production capacity of 1,500 MW in the Karakalpakstan region of Uzbekistan.

When commissioned, the plant will become the largest of its kind in Central Asia and one of the largest wind power plants in the world. 

FASTFACTS

• The number of Uzbek companies running on Saudi funds increased from about nine to 38 in the last five years.

• Recently, the Ministry of Energy of Uzbekistan and Saudi energy company ACWA Power signed several investment agreements for about $3 billion.

• The Saudi Fund for Development has contributed to the implementation of many projects in Uzbekistan, including funding the Samarkand-Gozar Road project, with a total value of $30 million.

ACWA Power also signed an agreement to establish the 100MW Nokus wind farm project, the first renewable energy project to be implemented in partnership with Uzbekistan’s public and private sectors.

The power generating company also won a $108 million wind contract after proposing a tariff of 2.56 cents per kilowatt-hour, the lowest in Uzbekistan.

Additionally, the Ministry of Energy of Uzbekistan signed a 25-year power purchase agreement with ACWA Power to establish a combined-cycle gas turbine power plant in Shirin, located in Syrdarya, Uzbekistan. The deal amounts to $1.2 billion.

According to the statement, these projects will contribute to achieving Uzbekistan’s national goal of raising the total renewable energy generation capacity to 30 percent by 2030.

Saudi Fund for Development

Moreover, the Saudi Fund for Development has contributed to the implementation of many projects in Uzbekistan, including funding the Samarkand-Gozar Road project, with a total value of $30 million.

The fund also contributed to 20 projects in the republic, including building pumping stations and other projects involving sewage, chemicals, mining, building materials, water and agriculture.

According to the Ministry of Agriculture of Uzbekistan, the Saudi and Uzbek delegations have discussed issues of cooperation in agriculture, including the prospects for enhancing mutual trade in agricultural products.

Both parties will likely sign memorandums of cooperation in agriculture, veterinary medicine and livestock development at the meeting.

They also agreed to deepen cooperation in the agricultural sector to enhance trade in farming, livestock and other products between the countries.

After signing the memoranda, action plans will be prepared, including specific measures and areas for developing cooperation and joint projects.

The Saudi side invited the Uzbekistan delegation to attend its most prominent exhibition of the agro-industrial complex, which will be held at the end of October in Riyadh.


American Airlines bets on supersonic travel with Boom jet deal

American Airlines bets on supersonic travel with Boom jet deal
Updated 16 August 2022

American Airlines bets on supersonic travel with Boom jet deal

American Airlines bets on supersonic travel with Boom jet deal

CHICAGO: American Airlines Group Inc. on Tuesday agreed to buy up to 20 jets from aircraft maker Boom Supersonic, becoming the second major US airline to bet on ultra-fast passenger travel in the last two years.

The deal brings Boom’s order book to 130 airplanes, including options, valued at about $26 billion, Boom Chief Executive Blake Scholl said in an interview.

The return of interest in supersonic jets comes nearly two decades after Concorde, flown by Air France and British Airways, was retired following a deadly crash and high costs of fuel and maintenance.

Last year, United Airlines Holdings Inc agreed to buy 15 Boom Overture aircraft provided they meet certain safety, operating and sustainability requirements. A similar condition was part of the American Airlines agreement as well.

American also has an option to purchase 40 more of the jets, each of which can carry 65 to 80 passengers, the companies said.

The four-engine Overture jet can fly from Miami to London in just under five hours, cutting the nearly nine-hour flight time between the cities by about half.

American Airlines spokesperson Matt Miller said it was too early to discuss ticket prices, given the aircraft isn't expected to carry its first passengers until 2029.

Supersonic jets have come under criticism from environmentalists for burning more fuel per passenger than comparable subsonic planes.

The Overture jet, being designed to run fully on sustainable aviation fuel or a blend, will be rolled out of Boom’s Greensboro, North Carolina factory in 2025, followed by test flights in 2026.

Third Bridge senior analyst Christopher Raite sounded a word of caution on Boom’s delivery target, saying the delay in conducting test flights for Boom’s other jet, the XB-1, signaled that delivery of the Overture will be delayed.


87,467 families benefit from Saudi housing program in 2022

87,467 families benefit from Saudi housing program in 2022
Updated 16 August 2022

87,467 families benefit from Saudi housing program in 2022

87,467 families benefit from Saudi housing program in 2022

RIYADH: The number of families benefiting from Saudi Arabia’s Sakani housing options and financing solutions has reached 87,467 since the beginning of the year until the end of July. 

Some 104,492 families also received possession of their first homes during that period, the Saudi Press Agency reported. 

The program seeks to raise the proportion of housing ownership for Saudi families to 70 percent by 2030.

The Ministry of Housing and the Real Estate Development Fund formed Sakani in 2017 to facilitate homeownership in the Kingdom through the creation of new housing stock, allocating plots and homes to nationals, and financing their purchase.

Earlier this year, Sakani program announced that it aims to enable 180,000 new families to benefit from the program’s housing options and solutions during 2022. 


Oil prices drop over 1% on potential global recession concerns

Oil prices drop over 1% on potential global recession concerns
Updated 16 August 2022

Oil prices drop over 1% on potential global recession concerns

Oil prices drop over 1% on potential global recession concerns

NEW YORK: Oil prices fell over 1 percent on Tuesday in volatile trading as economic data spurred concerns about a potential global recession, while the market awaited clarity on talks to revive a deal that could allow more Iranian oil exports.

Brent crude futures fell $1.41, or 1.5 percent, to $93.69 a barrel, after hitting a session high of $95.95. West Texas Intermediate crude decreased $1.33, or 1.5 percent, to $88.08 a barrel, after rising to $90.65.

The contracts fell about 3 percent in their previous sessions.

The EU is assessing Iran’s response to what the bloc has called its “final” proposal to save a 2015 nuclear deal, and consulting with the US, an EU spokesperson said on Tuesday.

Iran responded to the proposal late on Monday but neither Tehran nor the EU provided any details on the content of the reply.

“It is still unclear what Iran has told the EU last night, so some tricky items might impact the outcome of the nuclear deal,” UBS analyst Giovanni Staunovo said.

Weak economic indicators weighed on prices.

US homebuilding fell to the lowest level in nearly 1-1/2 years in July, weighed down by higher mortgage rates and prices for construction materials, suggesting the housing market could contract further in the third quarter.

“Oil traders reacted because of concerns about an economic slowdown and housing uses energy,” said Phil Flynn, an analyst at Price Futures group. “That caught us by surprise.”

China’s central bank cut lending rates to try to revive demand as the nation’s economy slowed unexpectedly in July after Beijing’s zero-COVID policy and a property crisis slowed factory and retail activity.

State media quoted Premier Li Keqiang as saying that China will reasonably step up macro policy support for the economy.

Barclays lowered its Brent price forecasts by $8 per barrel for this year and next, as it expects a large surplus of crude oil over the near-term due to “resilient” Russian supplies.


Saudi Cabinet authorizes transport minister to discuss MoUs with Bahrain

Saudi Cabinet authorizes transport minister to discuss MoUs with Bahrain
Updated 16 August 2022

Saudi Cabinet authorizes transport minister to discuss MoUs with Bahrain

Saudi Cabinet authorizes transport minister to discuss MoUs with Bahrain

RIYADH: Saudi Arabia’s Cabinet on Tuesday authorized the minister of transport and logistic services to discuss with Bahrain two draft agreements to boost cooperation in the fields of road safety and maintenance. 

During the meeting, the council of ministers also authorized the chairman of Education and Training Evaluation Commission to discuss with the UAE a draft initial agreement to cooperate in the development of assessment, measurement and accreditation tools.

The ministers also approved two agreements in the fields of employment and domestic workers with Burundi, the Saudi Press Agency reported. 

The Cabinet has also authorized the health minister to discuss a draft memorandum of understanding with the Uzbek side for cooperation in the field. 

It also approved the rules governing the competency and contractor program.