Macro Snapshot — Eurozone swings to current account deficit; Australia boasts lowest unemployment since 1974 

The eurozone recorded its first current account deficit in a decade in March on a small trade deficit and an outflow of secondary incomes, or transfers between residents and non-residents. Reuters/File
The eurozone recorded its first current account deficit in a decade in March on a small trade deficit and an outflow of secondary incomes, or transfers between residents and non-residents. Reuters/File
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Updated 19 May 2022

Macro Snapshot — Eurozone swings to current account deficit; Australia boasts lowest unemployment since 1974 

Macro Snapshot — Eurozone swings to current account deficit; Australia boasts lowest unemployment since 1974 

RIYADH: The eurozone recorded its first current account deficit in a decade in March while Australia reached its lowest unemployment since 1974 and Japan saw a rise in exports by 12.5 percent year-on-year. 

Eurozone swings to current account deficit 

The eurozone recorded its first current account deficit in a decade in March on a small trade deficit and an outflow of secondary incomes, or transfers between residents and non-residents, European Central Bank data showed on Thursday.

The bloc of 19 countries sharing the euro recorded a current account deficit of 1.57 billion euros after a surplus of 15.73 billion euros a month earlier, according to adjusted figures.

In the 12 months to March, the current account surplus totaled 1.8 percent of the bloc’s gross domestic product, down from 2.6 percent in the preceding 12 months.

Australia boasts lowest unemployment 

Australia’s unemployment rate stood at its lowest in almost 50 years in April as firms took on more full-time workers, a tightening in the labor market that will ratchet up pressure for further hikes in interest rates.

Figures from the Australian Bureau of Statistics on Thursday showed the jobless rate held at 3.9 percent in April, from a downwardly revised 3.9 percent in March, matching market forecasts.

Employment missed forecast with a rise of just 4,000, though that reflected a large 92,400 gain in full-time jobs being offset by a 88,400 drop in part-time work.

The fall in unemployment will be welcomed by Prime Minister Scott Morrison who has made jobs the clarion cry of his election campaign ahead of what is expected to be a close vote on Saturday.

It also strongly suggests the Reserve Bank of Australia  will lift interest rates again in June as it scrambles to contain a flare up of inflation to two-decade highs.

The central bank’s hike to 0.35 percent this month was the first since 2011 and markets are odds on it will move to 0.60 percent at its June 7 policy meeting.

So strong is the inflation tide globally that investors are wagering rates will rise to at least 2.5 percent by the end of the year, even if that threatens to cripple the economy.

So far, the labor market has withstood the pressure with employment rising by 381,500 in the past 12 months. Underemployment also fell to its lowest since 2008 and this rate has a close correlation to wages over time.

Philippines kicks off rate hikes 

The Philippine central bank raised interest rates for the first time since 2018 on Thursday, joining peers around world in a rush to stem intensifying inflationary pressures that could derail the country’s economic recovery.

The central bank also said the strong economic rebound and labor market conditions in the first quarter provide scope “to continue rolling back its pandemic-induced interventions,” signaling further tightening could be expected.

The economy may expand even faster in the second quarter than the better-than-expected 8.3 percent annual pace in January-March, Bangko Sentral ng Pilipinas Gov. Benjamin Diokno said.

China lowers lending benchmark 

China is expected to cut benchmark lending rates at its monthly fixing on Friday, a second reduction this year, a Reuters survey showed, as it seeks to prop up credit demand to cushion an economic slowdown due to COVID-19 disruptions.

The loan prime rate, which banks normally charges their best clients, is set on the 20th of each month, when 18 designated commercial banks submit their proposed rates to the People’s Bank of China.

Eighteen traders and analysts, or 64 percent of 28 participants, in the Reuters snap poll predicted a reduction in either the one-year LPR or the five-year tenor.

Among them, 12 respondents forecast a marginal cut of 5 basis points to both tenors.

The remaining 10 participants believe the LPR will remain unchanged for the fourth straight month, in line with a steady borrowing cost of the central bank’s medium-term lending facility (MLF) loans, which now serves as a guidance to the lending benchmark.

New Zealand forecasts narrower deficit 

New Zealand’s government on Thursday promised to spend more than NZ$1 billion ($630 million) to help people cope with inflation that has reached three-decade highs in the Pacific nation.

The public deficit for the current financial year, ending on June 30, will be narrower than previously forecast but a return to surplus will take longer than expected, the government said in its annual budget announcement.

Heavy spending will be targeted toward defense, infrastructure, including new schools, and the country’s health system, which will see more funding for drugs and, again, infrastructure.

“As the pandemic subsides, other challenges both long-term and more immediate, have come to the fore. This Budget responds to those challenges,” Prime Minister Jacinda Ardern said in a statement.

“COVID-19, climate change and the war in Ukraine have taught us we need to build a more secure economy that protects New Zealand households from the external shocks we know are coming,” she added. Ardern was not at the release of the budget as she currently has COVID.

Sri Lanka holds rates

The Central Bank of Sri Lanka held its key lending and borrowing rates steady on Thursday following a massive 700 basis points increase at its previous meeting and reiterated the need for more fiscal measures and political stability in the economy.

The Standing Lending Facility rate remained unchanged at 14.50 percent while the Standing Deposit Facility Rate was steady at 13.50 percent.

“It is envisaged that the recent tightening of monetary conditions and the strengthening of monetary policy communication will help anchor inflation expectations of the public in the period ahead,” CBSL said in the statement.

Wages, though, are still lagging, at least by the official measure which showed annual growth ticked up only slightly in the first quarter to 2.4 percent, half the pace of inflation.

Japan exports rise 

Japan’s exports rose 12.5 percent in April from a year earlier, posting a 14th straight month of increase, Ministry of Finance data showed on Thursday.

The rise compared with a 13.8 percent increase expected by economists in a Reuters poll. It followed a 14.7 percent rise in March.

Imports rose 28.2 percent, versus the median estimate for a 35.0 percent increase, as a weaker yen helped boost already surging global commodity prices, inflating import bills.

The trade balance came to a deficit of 839.2 billion yen ($6.56 billion), against the median estimate for a 1.150 trillion yen shortfall.

“The RBA has returned to a more forward-looking approach for labor costs amid much higher inflation, shifting on leading indications from liaison and the anticipated feed through of the still-tightening labor market to wages outcomes,” said Taylor Nugent, an economist at NAB.

He sees the central bank hiking by a quarter point at each of the next three monthly meetings.

Oman’s annual inflation drops 

The Sultanate of Oman’s annual inflation dropped almost 0.92 percentage points in April to its lowest since September 2021, according to potentially revised data by the National Center for Statistics and Information.

The country’s annual Consumer Price Index in March stood at 3.59 percent compared to 2.67 percent in April 2022, showed the data.

Oman’s consumer price level reached 2.46 percent in September 2021 where it started to rise until it peaked at 4.35 in January 2022 and has since been on a gradual decline, according to data portal of the NCIS. 

The largest factors contributing to the drop in Oman’s CPI were Transport and Tobacco which fell from 6.63 and 2.98 in March to 2.42 and -1.05 in April respectively.

However, there was a slight rise in the prices of fish and seafood, fruit, meat, bread and cereals and a few others.

 

(With input from Reuters) 

 

 


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.