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) 

 

 


MENA Project Tracker —  Edamah requests bids on newest project; KAPP starts bids on IWPP projects 

MENA Project Tracker —  Edamah requests bids on newest project; KAPP starts bids on IWPP projects 
Updated 04 July 2022

MENA Project Tracker —  Edamah requests bids on newest project; KAPP starts bids on IWPP projects 

MENA Project Tracker —  Edamah requests bids on newest project; KAPP starts bids on IWPP projects 

RIYADH: Bahrain Real Estate Investments, known as Edamah has begun its hunt for bids for the 20,717 square meter plot investment project at Hidd within Muharraq governorate in Bahrain.

The development is located alongside Diyar Al Muharraq and Dilmunia waterfronts, near the Khalifa town housing project.

The leading property developer has held Bahrain’s sovereign wealth fund since its establishment in 2006, reported Trade Arabia.

It is also on the search for bids on a similar investment project development — which includes six more plots with a total area of 5,618 square meter at Askar within Southern governorate.

KAPP starts bids on water and power generation

Kuwait Authority for Partnership Projects, known as KAPP, has requested bids to develop Al-Zour North 2 and 3 and Al-Khiran 1 as part of the independent water and power producer projects.

The two plots are expected to generate a net capacity of 4,500 MW of power and 290 million imperial gallons a day of water, reported MEED.

This decision comes amid increased power demand in Kuwait — soaring to a record high of 15.67 Gigawatt last July.

The deadline for submitting project bids is on Aug. 16.


Saudi airline Flynas to operate AlUla-Cairo direct flights from October

Saudi airline Flynas to operate AlUla-Cairo direct flights from October
Updated 04 July 2022

Saudi airline Flynas to operate AlUla-Cairo direct flights from October

Saudi airline Flynas to operate AlUla-Cairo direct flights from October

RIYADH: Saudi Arabia’s budget airline Flynas announced the launch of its first direct flights between its heritage city AlUla and Cairo, starting from 6th October, according to the Saudi Press Agency. 

The airline will operate two direct flights per week, on Saturdays and Thursdays, between AlUla International Airport to Cairo International Airport.

Located in the north-west of Saudi Arabia, AlUla is one of the key tourist destinations that offers a variety of experiences in heritage, art, culture, recreation and adventure.


Saudi Aramco becomes first-ever MENA firm in Clarivate’s top 100 global innovators list

Saudi Aramco becomes first-ever MENA firm in Clarivate’s top 100 global innovators list
Updated 04 July 2022

Saudi Aramco becomes first-ever MENA firm in Clarivate’s top 100 global innovators list

Saudi Aramco becomes first-ever MENA firm in Clarivate’s top 100 global innovators list

RIYADH: Saudi Aramco has been named one of the top 100 global innovators by American analytics company Clarivate. 

In its report titled “Top 100 Global Innovators 2022,” Clarivate revealed that Saudi Aramco is the first-ever company from the Middle East and North Africa region to be placed in the list. 

“The regional diversity continues to increase, with the first-ever Middle Eastern list entry via energy firm Saudi Aramco,” wrote Clarivate in the report. 

Apart from Saudi Aramco, other new entrants to the list are China’s Alibaba, Germany’s Continental, US’ General Motors, South Korea’s Hyundai Motors and Kia Motors, US’s Philip Morris International, and UK’s Rolls-Royce. 

Clarivate added that companies have been included in the list based on factors like influence, success, globalization, and technical distinctiveness. 


TASI extends losses on fears of economic slowdowns: Closing bell

TASI extends losses on fears of economic slowdowns: Closing bell
Updated 04 July 2022

TASI extends losses on fears of economic slowdowns: Closing bell

TASI extends losses on fears of economic slowdowns: Closing bell

RIYADH: Saudi stock markets extended losses as investors worried that the latest central bank efforts to curb inflation would lead to rapid economic slowdowns.

The main index, TASI, fell 0.93 percent to reach 11,358, while the parallel market, Nomu, dropped 1.94 percent at 20,672.

Fawaz Abdulaziz Alhokair Co. led the decliners since the market opened with a 9.99 percent fall, followed by Abdulmohsen Alhokair Group for Tourism and Development which fell 9.92 percent.

Saudi Aramco, the largest player on the Saudi oil market, lost 1.29 percent, while Methanol Chemicals Co. fell 2.57 percent.

In the financial sector, the Kingdom’s largest valued bank Al Rajhi, dropped 0.50 percent, while The Saudi National Bank slipped 1.05 percent.

Among the biggest IT companies, Elm Co. gained 0.56 percent and Al Moammar Information Systems Co. edged down 2.08 percent.

Jadwa REIT Saudi Fund led the gainers with 4.75 percent gain, closely followed by Dar Alarkan Real Estate Development Co. with a 4.56 percent rise.

In the energy sector, West Texas Intermediate crude was trading at $109.69 per barrel and Brent crude was trading at $113.12 per barrel as of 3:24 p.m. Saudi time.


Saudi Arabia to help citizens affected by rise in global commodity prices: Crown Prince

Saudi Arabia to help citizens affected by rise in global commodity prices: Crown Prince
Updated 04 July 2022

Saudi Arabia to help citizens affected by rise in global commodity prices: Crown Prince

Saudi Arabia to help citizens affected by rise in global commodity prices: Crown Prince

RIYADH: Crown Prince Mohammed bin Salman has urged government agencies to think about Saudi Arabia’s neediest citizens in the wake of the increasing cost of some basic needs.

Chairing a meeting of the Council of Economic and Development Affairs, the Crown Prince stressed the important roles of ministries and government agencies in monitoring international developments, the Saudi Press Agency reported.

This includes food supply chains, monitoring markets, product availability and price levels, and protecting and encouraging fair competition, as well as combating and preventing monopolistic practices that affect legitimate competition or the interest of the consumer.

During the meeting held in Jeddah, the Council reviewed a number of economic and development issues, including a presentation on the price levels of a number of products in the Kingdom's markets, submitted by the Ministry of Commerce with participation of the Ministry of Environment, Water and Agriculture, and the Ministry of Economy and Planning.

The Council was also briefed on health developments related to the COVID-19 by the Ministry of Health.

The presentation included an update following the decision to lift the precautionary and preventive measures related to the pandemic, in addition to updates on administering vaccines, the most prominent preparations for this year’s Hajj season, and the state of the epidemiological situation internationally.

The Council also followed up on the periodic presentation submitted by the Ministry of Economy and Planning regarding the analysis of opening economic activities and the impact of the pandemic.

The Council has taken the necessary recommendations on these issues, SPA said.