World Bank offers dim outlook for the global economy in face of higher interest rates

World Bank offers dim outlook for the global economy in face of higher interest rates
Real global GDP is set to climb 2.1% this year, the World Bank said. That's up from a 1.7% forecast issued in January but well below the 2022 growth rate of 3.1%. Photo/ Shutterstock
Short Url
Updated 07 June 2023
Follow

World Bank offers dim outlook for the global economy in face of higher interest rates

World Bank offers dim outlook for the global economy in face of higher interest rates

WASHINGTON: The global economy is likely slowing sharply this year, hobbled by high interest rates, the repercussions of Russia’s invasion of Ukraine and the lingering effects of the coronavirus pandemic.
That’s the latest outlook of the World Bank, a 189-country anti-poverty agency, which estimates that the international economy will expand just 2.1 percent in 2023 after growing 3.1 percent in 2022.
Speaking to reporters Tuesday, Indermit Gill, the World Bank’s chief economist, called the latest findings “another gloomy report.” The bank, he said, expects “last year’s sharp and synchronized slowdown to continue to this year into a sharp slowdown.”
“By the end of next year, a third of the developing world will not meet the per-capita income level that they had at the end of 2019,” he said.
Still, the bank’s latest Global Economic Prospects report marks an upgrade from its previous forecast in January. That estimate had envisioned worldwide growth of just 1.7 percent this year.
The Federal Reserve and other major central banks have been aggressively raising interest rates to combat a resurgence of inflation, set off by a stronger-than-expected rebound from the pandemic recession, persistent supply shortages and energy and food price shocks caused by the Ukraine war.
But the global economy has proved surprisingly resilient in the face of higher borrowing costs, and the World Bank predicts that growth will accelerate to 2.4 percent in 2024.
The United States has continued to generate unexpectedly robust job gains — employers added 339,000 workers in May, far more than economists had forecast — even though the Fed has raised its benchmark rate 10 times in the past 15 months. In its report Tuesday, the World Bank upgraded its forecast for US economic growth this year to 1.1 percent. Though weak, that is more than double the growth the World Bank had envisioned in January.
The eurozone, which represents the 20 countries that share the euro currency, is expected to post collective growth of 0.4 percent this year. That, too, marks a slight upgrade: In January, the World Bank had expected no growth at all for the eurozone this year. Europe, struggling with higher energy prices caused by the Ukraine war, enjoyed relief from a surprisingly warm winter, which reduced demand for heat.
The World Bank upgraded its 2023 outlook for China after Beijing late last year relaxed its draconian zero-COVID policies, which had restricted travel and hammered its economy. The world’s second-biggest economy is now expected to grow 5.6 percent in 2023, up from 3 percent last year. The World Bank envisions Japan’s growth decelerating to 0.8 percent this year from 1 percent in 2022. It foresees India’s growth slowing to a still-strong 6.3 percent from 7.2 percent last year.
The bank predicts that global trade will slow markedly this year. It foresees a sharp drop in the price of energy and other commodities this year and next.


Islamic banks set to flourish in GCC: Moody’s

Islamic banks set to flourish in GCC: Moody’s
Updated 7 sec ago
Follow

Islamic banks set to flourish in GCC: Moody’s

Islamic banks set to flourish in GCC: Moody’s

RIYADH: In the backdrop of Gulf Cooperation Council countries’ economic diversification efforts, Islamic banks are poised to outperform their conventional counterparts in profit margins, as per a recent report by Moody's Investors Service. 

Fueled by stable oil prices and steadfast economic agendas, the GCC anticipates increased business activities within Islamic financial institutions over the next 12 to 18 months. 

In its latest report, the global credit rating agency forecast that the profitability margins of these Shariah-compliant banks will surpass those of traditional banks in 2024, largely attributed to their inherent margin advantage. 

As the regional economy expands, the asset quality of GCC Islamic banks is expected to remain robust.  

Additionally, their strong capital and liquidity positions will better equip them to meet the growing regional demand for Islamic banking services, as outlined in the report. 


Saudi Aramco acquires stake in MidOcean Energy amid efforts to enter the global LNG business

Saudi Aramco acquires stake in MidOcean Energy amid efforts to enter the global LNG business
Updated 8 min 47 sec ago
Follow

Saudi Aramco acquires stake in MidOcean Energy amid efforts to enter the global LNG business

Saudi Aramco acquires stake in MidOcean Energy amid efforts to enter the global LNG business

RIYADH: Energy giant Saudi Aramco is on track to enter the global liquefied natural gas market thanks to a new agreement.

The leading intergraded energy and chemicals firm has agreed to acquire a strategic minority stake in MidOcean Energy for $500 million, according to a statement.

This move aligns well with the company's goal of becoming a prominent LNG player, according to Aramco Upstream President Nasir Al-Naimi.


UAE-Thailand economic agreement to strengthen bilateral trade, says envoy

UAE-Thailand economic agreement to strengthen bilateral trade, says envoy
Updated 18 min 17 sec ago
Follow

UAE-Thailand economic agreement to strengthen bilateral trade, says envoy

UAE-Thailand economic agreement to strengthen bilateral trade, says envoy

RIYADH: Trade and economic relationships between the UAE and Thailand are poised for significant growth as both nations prepare to sign a Comprehensive Economic Partnership Agreement amid ongoing negotiations, according to a senior envoy. 

Sorayut Chasombat, ambassador of Thailand to the UAE, stated during a media briefing that the CEPA is expected to contribute $300 million to the country’s gross domestic product. 

“We want to be a strong partner of the UAE in this region. We recognize the UAE’s role in this part of the world in promoting peace, stability, and prosperity within the region,” said Chasombat during the briefing at the Royal Thai embassy.  

He added: “With the completion of CEPA, it will add at least $300 million to the Thai GDP. It will add at least $250 million to the bilateral trade between the two countries.”  

Negotiations for the free trade CEPA between Thailand and the UAE began in May, and the latest round of negotiations, currently taking place in Bangkok, is scheduled to conclude on Sept. 28. 

The UAE is Thailand’s sixth-largest trading partner globally and holds the first position in the Middle East. Bilateral trade between the two countries reached $11.1 billion in the first seven months of 2023. 

As of July 2023, Thailand exported goods worth $1.81 billion to the UAE, while imports from the Arab nation amounted to $9.3 billion. 

Chasombat also affirmed Thailand’s robust participation in COP28, given the country’s commitment to becoming carbon neutral by 2050 and achieving net-zero emissions by 2065. 

“Thailand is well known for sustainable development. We plan to have strong participation at the upcoming COP28, next year’s World Government Summit, and the World Trade Organization Ministerial Conference. We would give our utmost support to the UAE,” he noted.  

COP28, the UN Climate Change Conference, is scheduled to take place in Dubai from Nov. 30 to Dec. 12 this year. 

Highlighting tourism ties, Chasombat disclosed that the UAE is second only to Saudi Arabia in terms of the number of tourists visiting Thailand. 


QatarEnergy inks $3.9bn deal with Hyundai for 17 LNG carriers 

QatarEnergy inks $3.9bn deal with Hyundai for 17 LNG carriers 
Updated 39 min 24 sec ago
Follow

QatarEnergy inks $3.9bn deal with Hyundai for 17 LNG carriers 

QatarEnergy inks $3.9bn deal with Hyundai for 17 LNG carriers 

RIYADH: QatarEnergy has signed a contract with South Korea’s Hyundai Heavy Industries to construct 17 new liquefied natural gas carriers, marking the beginning of the second phase of the energy firm’s maritime fleet expansion program. 

Valued at 14.2 billion Qatari riyals ($3.9 billion), this deal, according to Qatar News Agency, aims to support increased LNG production from the North Field Expansion and Golden Pass projects while addressing long-term fleet modernization needs. 

In addition to the 60 carriers contracted during the first phase of the program, which were constructed in Korean and Chinese shipyards, this agreement will raise the total number of new LNG carriers to be delivered to QatarEnergy and its subsidiaries to 77. 

Furthermore, there are plans for additional carriers in the future, as reported by QNA. 

The agreement was signed by Saad bin Sherida Al-Kaabi, the minister of state for energy affairs and the CEO of QatarEnergy, and Sam Hyun Ka, vice chairman at Korea Shipbuilding & Offshore Engineering Co. Ltd. 

Al-Kaabi stated that the agreement represents another milestone in the relationship with Hyundai Heavy Industries and the Korean shipbuilding industry.

He added: “Hyundai Heavy Industries will construct these 17 LNG carriers to the highest technical, environmental, and quality standards, ensuring optimal fuel efficiency and significant reductions in carbon emissions. This underscores our ongoing commitment to leadership in sustainability, innovation, and growth in the LNG industry.” 

Hyun Ka said: “We take pride in our partnership with Qatar and participation in one of the world's largest LNG projects. We have strong faith that this opportunity will enhance the long-term cooperation between our two companies and our nations.” 

QatarEnergy’s LNG carrier fleet expansion program plays a crucial role in meeting future shipping demands as the country expands its production capacity from the North Field.


Shura Council urges reevaluation of housing support policies for homebuyers

Shura Council urges reevaluation of housing support policies for homebuyers
Updated 28 September 2023
Follow

Shura Council urges reevaluation of housing support policies for homebuyers

Shura Council urges reevaluation of housing support policies for homebuyers

RIYADH: Saudi Arabia’s homebuyers would soon be able to cope with the undue strain of buying a house, with the Shura Council calling upon the Real Estate Development Fund to reevaluate its policies in favor of the people. 

According to El-Ekhbariya TV, the council urged the fund to consider encouraging real estate developers to sell residential units with affordable installments. 

In a resolution passed during the joint session on Wednesday, the council also requested a study to explore the possibility of increasing the nonrefundable amount provided by the fund to citizens, aiding them in acquiring their homes. 

Furthermore, the council encouraged the fund to explore diverse investment opportunities to ensure long-term financial sustainability. 

The potential changes in support mechanisms and increased investment opportunities also signal a commitment to bolstering the country’s property market while developing financial sustainability for citizens and the fund. 

This development is expected to significantly impact the housing market and potentially open new avenues for citizens to achieve their homeownership dreams. 

It remains to be seen how the fund will respond to the Shura Council’s call for reevaluating its housing support policies. Still, this move marks a positive step toward addressing housing issues in Saudi Arabia. 

In June, the fund deposited SR916 million ($244.1 million) in the accounts of affordable housing beneficiaries. 

According to the Saudi Press Agency, the total amount deposited from June 2017 to June 2023 surpassed SR49.3 billion. 

Additionally, the fund approved over 115,000 requests out of the 148,000 submitted to get clearance on the various stages of house construction, which included people seeking to build their own homes. 

To streamline the process, the fund set up electronic channels to enable people to update the construction phases of their homes, ensuring the required engineering and technical standards are met. 

The Kingdom aims to increase the proportion of Saudi households that own a house from 47 percent in 2016 to 70 percent by 2030. 

The fund’s Sakani program is a significant initiative in collaboration with other government entities to provide affordable housing solutions to Saudi citizens.   

It aims to address the housing needs of the population by offering various housing options, financing programs and support services.