Egypt’s output falls sharply amid inflationary pressure as PMI drops to 45.4: S&P Global

Egypt’s output falls sharply amid inflationary pressure as PMI drops to 45.4: S&P Global
The key reason for this downturn was a rapid decrease in business activity, with S&P research revealing that companies were forced to cut output as they faced accelerated cost rises. (Shutterstock)
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Updated 05 December 2022

Egypt’s output falls sharply amid inflationary pressure as PMI drops to 45.4: S&P Global

Egypt’s output falls sharply amid inflationary pressure as PMI drops to 45.4: S&P Global

RIYADH: Egypt’s non-oil businesses witnessed a marked contraction in operating conditions in November, resulting in output falling at the sharpest rate since the early pandemic as the country continues to face inflationary pressure amid the weakening Egyptian pound, according to S&P Global. 

The impact of this was visible in Egypt’s Purchasing Managers’ Index which fell from 47.7 in October to 45.4 in November — the second lowest since June 2020, the report noted.

The rating agency said that the new low extends the current sub-50.0 sequence to two years.

The key reason for this downturn was a rapid decrease in business activity, with S&P research revealing that companies were forced to cut output as they faced accelerated cost rises. 

“Egyptian firms faced an immediate hit to demand from a rapid depreciation of the pound since late October, with the November PMI results signaling the worst drops in output and new orders since May 2020,” said David Owen, an economist at S&P Global Market Intelligence.  

He said the pound's depreciation against the US dollar led to a marked increase in prices paid for raw materials, which have already been exacerbated by import restrictions since early 2022.  

According to S&P Global, Egypt’s purchase price inflation hit a 52-month high, leading 42 percent of surveyed firms to report a rise in total input costs over the month. 

While new orders continued to fall rapidly for firms, Egypt saw employment levels still expanding for the fourth time in five months as business confidence recovered slightly from October's series low. 

But S&P said the rate of decline in new orders deepened in November, amid reports of spending cuts at customers due to rapid inflation and elevated interest rates. 

"The latest downturn also came in the midst of an emergency 2 percent hike in interest rates, amid continued efforts to bring inflation down from its current four-year high of 16.2 percent,” said Owen.  

While the latest FX move signals a further rise in inflation in November, he said it is hoped that slowing demand and falling commodity prices will start to alleviate price pressures in the medium- to long-term. 

Looking ahead, the report noted that Egyptian firms were slightly more optimistic about future output in November, albeit following a series record low in October. However, it added that concerns about high inflation, rising interest rates, currency weakness and a global economic slowdown remained dampeners on sentiment. 


Microsoft, Huawei and Oracle among $9bn of tech deals announced during LEAP23 in Riyadh 

Microsoft, Huawei and Oracle among $9bn of tech deals announced during LEAP23 in Riyadh 
Updated 8 sec ago

Microsoft, Huawei and Oracle among $9bn of tech deals announced during LEAP23 in Riyadh 

Microsoft, Huawei and Oracle among $9bn of tech deals announced during LEAP23 in Riyadh 

CAIRO: Saudi Arabia witnessed the signing of $9 billion worth of investment contracts on the first day of the global tech event LEAP23 that began on Feb. 6 in Riyadh. 

Aimed at supporting future technology, digital entrepreneurship and tech startups, the deals were announced by Saudi Arabia’s Minister of Communications and Information Technology, Abdullah Al-Sawaha, during his opening speech at the event that will run till Feb. 9. 

These deals include Microsoft’s $2.1 billion investment that the tech giant is putting in to develop a super-wide cloud in the Kingdom, while Oracle’s agreed to invest $1.5 billion to establish a new cloud region in the country.  

Chinese tech firm Huawei also pumped in $400 million to offer cloud services in the Kingdom, while state oil firm Aramco formed a partnership with Zoom worth $434 million to establish a cloud area. In addition, the event saw the signing of $4.5 billion worth of other deals with a wide range of global and local firms for various sectors.  

These investments aim to strengthen the Kingdom’s position as the largest digital economy in the Middle East and North Africa region aligned with Crown Prince Mohammed bin Salman’s goal to empower the technology sector.  

Al-Sawaha stated that hosting the LEAP23 conference is a global affirmation of the great support directed by the Kingdom to transform the economy into a digital landscape that promises rapid developments in line with Vision 2030.  

The conference also witnessed some major announcements including Meta launching the opening of the first Metaverse Academy in MENA, headquartered in Saudi Arabia; WEO Technology and Camel Lab launching Hektar, a multi-content social media app. In addition, MENA Communication and STC announced the launching of Beem – a new application for instant messaging, high-quality voice and video calls, and business features.  

Al-Sawaha stressed that the technology sector holds unprecedented opportunities supported by the Crown Prince in sub-sectors including digital economics, Internet of Things, health tech, quantitative sciences, space and satellites, fintech and open sources.  

In his opening speech, the minister stated that the event is set to host more than 250,000 attendees, as opposed to 100,000 last year, and will continue to see more investments as the Kingdom holds a $42 billion opportunity platform and stands as the largest technology market in the region.  

He added that Saudi Arabia continues to lead the human technical workforce with more than 340,000 workers in the market and female participation in the technical sector reaching 32.5 percent, higher than the average of the EU and Silicon Valley.  

Taking place at the Riyadh Front Center for Exhibitions and Conventions, the conference was launched under the title “Towards New Horizons” with more than 400 global and local technology companies. 


Oil market to reach balance in 2023: KAPSARC expert

Oil market to reach balance in 2023: KAPSARC expert
Updated 1 min 5 sec ago

Oil market to reach balance in 2023: KAPSARC expert

Oil market to reach balance in 2023: KAPSARC expert

RIYADH: The oil market is on track to reach balanced levels between supply and demand in 2023, King Abdullah Petroleum Studies and Research Center expert Colin Ward said in an exclusive interview with Arab News.

During 2023, oil supply is projected to surge 2.7 million barrels per day while demand is expected to increase by 1.8 million bpd, the research expert disclosed.

“We're going to see a market that pretty much hit some form of balance,” Ward told Arab News on the sidelines of the International Association for Energy Economics conference in Riyadh. 

Despite this, the KAPSARC expert noted that many unprecedented events could consequently alter demand figures such as whether or not there is a recession coming.

In addition to this, China’s reopening also poses a factor that could impact the demand for oil, Ward revealed.

“We're already seeing indications that their demand for jet fuel is going up significantly because people are traveling a lot more,” he explained.

Speaking on the supply side, Ward reveals that the conflict between Russia and Ukraine as well as the behavior of the Organization of the Petroleum Exporting Countries and other key market players could potentially influence supply figures.

“If we are worried that the price cap is going to somehow have pushed back to where Russia may not wish to provide as much oil to the market, the 2 million barrels that OPEC pulled off is acting as a supply buffer, which means that it could come back online,” he exposed. 

In response to the price cap, people have been stocking up in order to assure that supplies are going to last, the KAPSARC expert pointed out.

“Going forward, there's going to be a period of probably a month or two where the logistics of delivering oil from sources to the consumers are going to take some time to get sorted out,” the researcher highlighted.

“We expect that there's probably going to be an increase in fuels being produced by some nations like China, India, perhaps Turkey or some others who would be able to supply the global market with these fuels,” he added.

The 44th IAEE International Conference is being held in the Saudi capital from Feb. 4 to 9, in what is a first for the Middle East and North African Region.

The event’s theme is “Pathways to a clean, stable, and sustainable energy future”, and is being hosted by KAPSARC and Saudi Association for Energy Economics.

More than 500 delegates from 40 countries are anticipated to attend the conference, with topics set to be discussed including energy, economic development, and climate change, the Circular Carbon Economy, and the role of hydrogen in the energy transition.

The IAEE is a global non-profit organization formed in the US in 1977 and works to promote dialogue and the exchange of ideas around the economic analysis of energy resources.


Saudi Arabia expands its mineral exploration with 377 mining complexes  

Saudi Arabia expands its mineral exploration with 377 mining complexes  
Updated 06 February 2023

Saudi Arabia expands its mineral exploration with 377 mining complexes  

Saudi Arabia expands its mineral exploration with 377 mining complexes  

RIYADH: Saudi Arabia’s mining sector is witnessing unprecedented growth as the government is pushing to develop the industry with increased investment and upgraded laws to attract more private players.   

This saw the number of mining complexes in the Kingdom as of the end of 2022 rising to 377, with an estimated area of 44,365 sq. km, according to the latest government data. 

Makkah is home to the majority of 76 mining complexes last year.   

This is followed by Riyadh and Madinah with 60 and 53 complexes respectively, while Asir’s complexes totaled 34, revealed the ministry.   

Saudi Arabia possesses more than 20 different types of minerals, including gravel, gold, iron, copper, granite and marble, stated the Ministry of Industry and Mineral Resources in a tweet. 

The Kingdom has 35 locations with specific geological formations, called mineral belts, that contain abundant mineral deposits  

As of 2022, these belts represent 14 percent of the Kingdom’s size and cover 305,000 sq. km.  The ministry added that the mineral deposits of these belts are around 75 percent of the Kingdom’s total mineral deposits, which have a projected value of SR5 trillion ($1.3 trillion).   

Around 94 percent of the mineral belts are located in the Arabian Shield, which spans over 622,00 sq. km.   

The belts are spread over the country’s administrative regions, also led by Makkah which contains nine belts, revealed the ministry data.  

The remaining 26 belts are located around the Kingdom — seven in Asir, six in Riyadh, five in Tabuk, four in Madinah, two in Baha, and one each in Qassim and Najran. 

Most of the mineral belts contain gold and sulfides, where the former has 16 and the latter 15.  In addition, there are three belts for nickel and one belt for zinc. 

The Ministry upgraded its mining investment law in 2020 to develop the mining sector and designed a long-term integrated mining system aimed at protecting both employees and the environment.  

The government expects such improvements to spill over to adjacent sectors by way of providing jobs and boosting local spending in Saudi Arabia. 


Dubai’s government and private sector discuss common vision for the future at landmark event

Dubai’s government and private sector discuss common vision for the future at landmark event
Updated 06 February 2023

Dubai’s government and private sector discuss common vision for the future at landmark event

Dubai’s government and private sector discuss common vision for the future at landmark event

RIYADH: Representatives of Dubai’s government and private sectors are set to discuss developing a common vision for the future of the emirate at a three-day event starting on Feb. 6.

Organized by the Executive Council of Dubai, the Innovation Talks series will include substantial sessions and knowledge seminars delivered by government and private sector officials focusing on the importance of innovation at a time of prompt global change.

“The program has embraced innovation as an effective tool for developing government capabilities, and included it as one of the main criteria for evaluating the performance of government agencies,” said Sharina Lootah, coordinator of the UAE Innovates 2023 events.

The gathering will tackle the significance of innovation when it comes to offering services, boosting the effectiveness of procedures, and keeping pace with the latest technical and technological developments.

“The Government of Dubai is working to ensure that Dubai remains a leader in setting global standards in the field of government excellence and adopting innovation as a criterion for excellence by building global partnerships and developing capabilities in accordance with international best practices,” Lootah added.

The first day of the event saw an opening speech by the Secretary General of The Executive Council of Dubai Abdulla Mohammed Al Basti.

It also featured a knowledge seminar on “Innovation and Economy in the Media sector” and a keynote speech by CEO of the Dubai Future Foundation Khalfan Belhoul on the UAE’s future as well as other seminars hinged on innovation.

The second day will include a major speech by Chairman and CEO of DP World Sultan bin Sulayem on “Dubai’s Story in Sustainable Innovation in Shipping and International Logistic”.

On the final day of the event, Assistant Director General of Dubai Digital and CEO of the Dubai Data Establishment Younus Al Nasser is set to deliver a vital speech on the “Role of Data in Innovation and Future Shaping”.

The last day will also entail important knowledge seminars and will conclude with a panel discussion on “Social Innovation Towards Sustainability”.


Private sector needs to help drive forward climate change innovation, Princess Noura tells IAEE International Conference

Private sector needs to help drive forward climate change innovation, Princess Noura tells IAEE International Conference
Updated 06 February 2023

Private sector needs to help drive forward climate change innovation, Princess Noura tells IAEE International Conference

Private sector needs to help drive forward climate change innovation, Princess Noura tells IAEE International Conference

RIYADH: A catalytic event is needed to encourage the private sector to scale up renewable and sustainable energy projects to aid the transition to green fuel, according to Princess Noura Turki Al-Saud, a founding partner at AEON Strategy.

Speaking on the second day of the International Association for Energy Economics Conference, Princess Noura praised recent moves by world leaders in the battle against climate change, but called for more involvement from private companies.

She made the comments during a panel discussion on the pathways to energy transitions, where she also praised the impact of the 2016 Paris Agreement, saying it “brought in the private sector.” 

However, Princess Noura felt that pilot projects in this area need to be further developed, and added: “That would really come with private sector involvement, and for the private sector to really be involved and putting that capital that is necessary to drive innovation and to scale up these technologies and to find the necessary solutions, you really need to have strong governance and transparency.”

She added that the Paris Agreement not only brought in the financial sector, it also attracted civil society into the dialogue. 

“That in itself created the conversation that is wider than what's just happening within the negotiation rooms, which is a process in itself which takes, I would say more than decades,” said the princess.

This session further explored whether climate ambitions and energy security can be harmonized, and the realistic pathways to best meet global, and regional goals and the aspirations of a just energy transition. 

Khalid Abuleif, senior sustainability advisor to the Ministry of Energy, said he considers the climate accords signed in Copenhagen in 2009 – which did not have any legally binding commitments for reducing carbon emissions – as a success rather than a failure. 

“In Copenhagen, we realized at that point, that top-down type of agreement would not really help us get to our goals and reach a consensus of the whole world moving together to address this issue.”

Abulief spoke about the two approaches that currently exist in the world, saying: “One approach that is very much implemented by our partner in the EU, which is, you know, the top-down processing that focuses on the move away from fossil fuel. 

He went on: “The other path focuses on…getting to have a much wider scope to it, because it deals with both successes – that we have to move in the future towards renewable – but also we do not ignore ‘what do we have today?’”

Abulief said that the Saudi initiative is building in the wider band, adding: “We’ve done emission reduction aspects, and we have our targets on that basically doubled what we promised in 2015.”

He added that Saudi Arabia’s approach toward sustainability is holistic, with its energy policies balanced between trade-offs, and its climate actions accelerated to form one of the optimal energy transition pathways.

Princess Noura argued that what is missing is the catalytic effect necessary to scale up these pilot projects and the solutions right. 

“That would really come with private sector involvement, and for the private sector to really be involved and putting that capital that is necessary to drive innovation and to scale up these technologies and to find the necessary solutions, you really need to have strong governance and transparency.”

Ken Koyama, senior managing director, and chief economist at the Institute of Energy Economics in Japan, called for a “pragmatic, inclusive, and holistic approach” to tackle the transition to green energy, while “simultaneously addressing climate change and energy security.”

He added that promoting energy transition towards carbon neutrality means the demand for critical minerals and rare metals will increase exponentially.

The 44th IAEE International Conference is being held in Riyadh from Feb. 4 to 9, in what is a first for the Middle East and North African Region.

The event’s theme is “Pathways to a clean, stable, and sustainable energy future”, and is being hosted by The King Abdullah Petroleum Studies and Research Center and Saudi Association for Energy Economics.

More than 500 delegates from 40 countries are set to attend the 44th International Association for Energy Economics International Conference, which is being held in the Middle East and North African region for the first time.