Macro Snapshot — Egypt GDP topped 5% in Q1; countries hike interest rates to stabilize economies

Egyptian planning minister expects the country’s economy to grow around 6 percent in the 2021-22 fiscal year. Reuters/File
Egyptian planning minister expects the country’s economy to grow around 6 percent in the 2021-22 fiscal year. Reuters/File
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Updated 23 May 2022

Macro Snapshot — Egypt GDP topped 5% in Q1; countries hike interest rates to stabilize economies

Macro Snapshot — Egypt GDP topped 5% in Q1; countries hike interest rates to stabilize economies

RIYADH: Egypt’s economy grew more than 5 percent in the first quarter of 2022, CNBC Arabia reported on Monday, citing Planning Minister Hala Al-Saeed.

She also said the economy would grow around 6 percent in the 2021-22 fiscal year, which ends in June.

On the other hand, many countries are taking steps to stabilize their respective economies by hiking interest rates.

Ghana ramps up interest rate 

Ghana’s central bank on Monday raised its main interest rate by 200 basis points to 19 percent to curb inflationary pressures and promote macroeconomic stability, Gov. Ernest Addison said.

In March, the Bank of Ghana raised its policy rate by 250 basis points to 17 percent — the largest hike in its history — to stem runaway inflation in one of West Africa’s more prosperous nations as the government cut spending to reduce the budget deficit and save a sliding local currency.

But in April the consumer inflation rate in the gold, oil and cocoa producer hit an 18-year high of 23.6 percent. 

Pakistan hikes main policy rate 

The State Bank of Pakistan raised its benchmark interest rate on Monday by 150 basis points to 13.75 percent, the second hike in less than two months, as the South Asian nation grapples with a sinking economy.

The key interest rates have been hiked by 400 bps in less than two months, according to the central bank.

“This action, together with much needed fiscal consolidation, should help moderate demand to a more sustainable pace while keeping inflation expectations anchored and containing risks to external stability,” the bank said in a statement.

Swiss bank may tighten monetary policy 

The Swiss National Bank will tighten monetary policy if inflation in Switzerland remains persistently high, governing board member Andrea Maechler said in an interview published on Monday.

The European Central Bank on Monday became the latest institution to signal it was hiking rates to combat soaring inflation, following similar moves by the US Federal Reserve and the Bank of England. Read full story

The SNB could follow suit, should Swiss inflation remain outside its target range 0-2 percent. April saw the highest inflation rate in Switzerland for 14 years, with prices rising by 2.5 percent.

“If the inflation we expect does not come down in the medium term to a range between 0 percent and 2 percent, we will not hesitate to tighten policy,” Maechler told Swiss newspaper Bilan.

The SNB now has the world’s lowest interest rate of minus 0.75 percent which along with its readiness to intervene in the currency markets has been the basis of its monetary policy over the last seven years.

Nigeria Q1 GDP growth slows 

Nigerian gross domestic product grew 3.11 percent in the first quarter, slower than in the previous quarter as a fall in oil production hit the rest of the economy, the national statistics office said on Monday ahead of a central bank interest rate decision on Tuesday.

It was the sixth consecutive quarter of growth, with non-oil sectors helping Nigeria bounce back from a severe recession caused by the COVID-19 pandemic. The full-year GDP figure for 2021 showed the fastest growth in seven years. 

Gross domestic product grew by 3.98 percent in the fourth quarter of 2021. In the first three months of last year, the growth rate was 0.51 percent.

“After the recession experienced by the country in 2020 occasioned by the COVID-19 pandemic, the economy has been on the path of growth,” the National Bureau of Statistics said.

 


NRG Matters: G7 forms climate club; Saudi SARCO, UK firm to develop $300m renewable energy projects

NRG Matters: G7 forms climate club; Saudi SARCO, UK firm to develop $300m renewable energy projects
Updated 12 sec ago

NRG Matters: G7 forms climate club; Saudi SARCO, UK firm to develop $300m renewable energy projects

NRG Matters: G7 forms climate club; Saudi SARCO, UK firm to develop $300m renewable energy projects

RIYADH: On a macro level, the Group of Seven nations has reached a deal to launch a “Climate Club” where they agree on joint rules and standards to fight global warming. 

Zooming in, the Saudi Arabian Refineries Co. has signed an initial agreement with UK-based Christof Global Impact to develop $300 million renewable energy projects. 

Looking at the bigger picture:

• The UK is working on a plan to limit the influence of rising gas prices on consumers’ electricity bills, as it faces rising inflation due to its reliance on costly fossil fuels, Bloomberg reported.

• The Group of Seven nations has reached a deal to launch a “Climate Club” where they agree on joint rules and standards to fight global warming, Bloomberg reported. 

The move comes with the hope of avoiding conflicts over green tariffs as well. 

Through a micro lens:

• The Saudi Arabian Refineries Co. has signed an initial agreement with UK-based Christof Global Impact to develop renewable energy projects, Trade Arabia reported. 

The first project, with an initial investment of SR1 billion ($266 million), will study an investment  partnership to build a refinery producing the “biodiesel” biofuel carbon.

The second project, at an estimated total cost of SR130 million for the first phase, aims to study investment in the technology of slop oil to convert waste oil wells, oil from shipping ships, waste of fuel tanks and petroleum materials into low carbon raw materials to reduce carbon emissions. 

• SSE plc and Equinor have partnered to purchase £341 million ($419 million) three UK electricity plants from Triton Power Co. as they plan to develop low carbon projects, Bloomberg reported. 

The partnership reflects European energy companies’ interest in cleaning up their operations as they move towards green power. 


Growth in Saudi Arabia’s liquidity slows to 7.8% year-on-year in May

Growth in Saudi Arabia’s liquidity slows to 7.8% year-on-year in May
Updated 28 June 2022

Growth in Saudi Arabia’s liquidity slows to 7.8% year-on-year in May

Growth in Saudi Arabia’s liquidity slows to 7.8% year-on-year in May

RIYADH: Saudi Arabia’s M3 monetary aggregate, known as “broad money,” grew in May by SR171.6 billion ($45.7 billion) from the same month a year ago to SR2.38 trillion.

M3 money supply, a benchmark indicator for liquidity in Saudi Arabia’s monetary system, increased by 7.8 percent from SR2.21 trillion in May last year, according to data published on Saudi Central Bank website on Tuesday.

The annual growth rate in May was the slowest since December 2021. It slowed down from 8.7 percent in April. 

Looking at the year-on-year changes in components of the M3 aggregate, time and saving deposits grew by SR78.3 billion to SR517.4 billion. Other quasi-money deposits and demand deposits increased by SR60 billion and SR38.8 billion to SR297.8 billion and SR1.36 trillion, respectively. Currency outside banks decreased by SR5.6 billion to SR206.6 billion over the same period.

The M3 money supply slipped 0.5 percent from its level in April. 


SAMA’s net foreign assets remain virtually unchanged at $435.5bn

SAMA’s net foreign assets remain virtually unchanged at $435.5bn
Updated 28 June 2022

SAMA’s net foreign assets remain virtually unchanged at $435.5bn

SAMA’s net foreign assets remain virtually unchanged at $435.5bn

Net foreign assets of Saudi Arabia's central bank remained virtually unchanged at the end of May, standing at SR1.63 trillion ($435.5 billion), according to a monthly statistical bulletin from the Kingdom's regulator.

The figure represents an increase of just SR289 million from April for the bank, also known as SAMA.

The institution’s total assets grew in May by SR19.2 billion to reach SR1.86 trillion. 

In April, those assets grew by 1 percent, according to data published on the bank’s website on June 28.

SAMA's deposits with banks abroad and miscellaneous assets increased by SR17.4 billion and SR12.5 billion, respectively, while the central bank's investment in foreign securities fell by SR13.4 billion to SR1.101 trillion over the same period.


Saudi Arabia fuels 34% of OPEC exports increase in 2021

Saudi Arabia fuels 34% of OPEC exports increase in 2021
Updated 28 June 2022

Saudi Arabia fuels 34% of OPEC exports increase in 2021

Saudi Arabia fuels 34% of OPEC exports increase in 2021

CAIRO: Saudi Arabia was responsible for a third of the 77 percent increase in exports from the Organization of the Petroleum Exporting Countries in 2021, according to the latest figures. 

OPEC’s annual statistical bulletin showed the Kingdom contributed to 34 percent of the total rise in petroleum exports, followed by Iraq, Kuwait and the UAE — with 15, 9 and 10 percent of the total share respectively in 2021.

Production

While the overall 2021 world crude oil production rose by 0.52 million barrels per day, OPEC countries alone produced 0.7 million more barrels per day compared to the previous year.

That is a 0.8 percent rise in total world production of crude oil and a 2.7 percent rise in OPEC production, meaning non-OPEC countries saw a fall in crude oil by 0.4 percent.

Demand

World demand for oil saw an upward turn,  growing by 6.3 percent, with the primary contributors being the Americas, Europe and China.

Of that world demand, distillates and gasoline accounted for around 55.2 percent whereas Residual fuel oil requirements totaled around 6.6 percent in 2021.

OPEC and its allies struggled to meet the level of demand therefore driving oil prices higher. 

Exports

The aggregate level of crude oil exported by OPEC countries saw a decline of 0.54 bpd.

Some 9 out of the 13 OPEC members saw a drop in the level of crude oil exports in 2021. 

Of the remaining four  — Algeria, Iran, Iraq, and Libya — the latter saw the largest spike in crude oil exports compared to 2020.

Rigs and Wells

The oil exporting members saw a decline in the number of completed wells by 280, the lowest recorded number since 2017.

While OPEC countries produce around 40 percent of the world’s crude oil, the 47 active rigs added in 2021 only amount to 10 percent of the total increase in rigs compared to 2020.

The US alone built 239 of the 460 new active rigs manufactured in 2021.

World proven oil reserves reported 1.55 billion barrels indicating almost no change over the 2020-21 time period.

As for gas reserves, total world gas fell by 0.5 billion cubic meters of natural gas whereas OPEC members recorded an increase of 0.8 bcm compared to last year.


Saudi Aramco to supply fuel at lower prices to Kenyan oil firm NOCK

Saudi Aramco to supply fuel at lower prices to Kenyan oil firm NOCK
Updated 28 June 2022

Saudi Aramco to supply fuel at lower prices to Kenyan oil firm NOCK

Saudi Aramco to supply fuel at lower prices to Kenyan oil firm NOCK

RIYADH: State-owned National Oil Corp. of Kenya has signed a deal with Saudi oil giant Aramco to import fuel at lower prices than the global costs of crude, local media reported.

This comes as part of the government’s efforts to lower pump prices in the African state, Business Daily reported. 

As per the government-to-government deal, NOCK will import 30 percent of Kenya’s monthly petroleum requirements from August.

“We already signed the memorandum of understanding and the next phase is negotiating the contract terms, we are waiting on them as from last Sunday,” NOCK CEO Leparan ole Morintat told Business Daily. 

“The plan is to start trials in August, for two months and see the impact of the exclusive prices that Saudi Aramco will be giving us. Then we will fully start in October,” he added. 

The duration of the contract is not disclosed. 

Saudi Aramco will finance the shipments or provide the product with an extended credit period and the Kenyan company will pay within 60 and 90 days.