Weekly Economic COMMENTARY
– Brought to you by Nasser Saidi & Associates –
2nd June 2019
Global Developments Bottomline: In the last week of May, as the “cold war” with China continued, came a few more trade “actions” from the US – India will be stripped of its preferential market access to the US from Jun 5th, and Trump plans to link a 5% tariff on Mexican goods to illegal immigration. With the latest weak PMI data from China, expectations of policy support remain strong: it is estimated that the People’s Bank of China injected CNY 430bn ($62bn) last week via reverse bond repurchase agreements. The ECB’s Jun 6 meeting (being held in the backdrop of global trade wars, weak PMIs, weak Germany, and “Brexit?” under a new PM) is likely disclose details for the upcoming TLTRO loans and maintain a dovish stance. Expect frayed nerves at the G20 meeting in Japan.
- Bahrain’s parliament passed the 2019-20 budget into law: the budget deficit this year is estimated to decline to 4.7% of GDP vs 2018’s 6.2% (was projected to be 9.8%). Bahrain MP’s budget for foreign trips have been reduced by 30% as part of an austerity drive.
- Moody’s revised the Bahraini banking system outlook to stable from negative on expectations of 2.1% GDP growth in 2019 and $10bn support package from GCC peers.
- Bahrain exports increased by 16% yoy to BHD 204mn in Apr, with the top 10 nations accounting for 82% of exported value. Imports declined 12% to BHD 448mn.
- Remittances from Egypt rose by 27.8% mom to USD 2.3bn in Mar, according to the central bank. Money supply slowed by 11.33% to EGP 3.76trn in Apr (Mar: 11.39%).
- The Central bank of Egypt will now allow banks to include their equity investments in funds focused on SMEs within the minimum requirement of their SME loan portfolios.
- Egypt’s property tax revenue expanded by 60.8% yoy to EGP 3.7bn during Jul 2018-Mar 2019, with bulk of the revenue coming from tax on buildings (EGP 3.63bn) and the rest from tax on land. Egypt’s total revenue reached EGP 598.68mn in this period.
- Bilateral trade between Egypt and China grew by 7.6% yoy to USD 4.188bn in Jan-Apr 2019; Chinese exports to the country rose 13.2% to USD 3.73bn during the period.
- Egypt is planning to combine stamp duty and capital gains taxes on equity investments, according to the chairman of the stock exchange. Under the proposed change, government could refund some stamp duty if the amount exceeded capital gains charges payable at end of the year.
- Saudi Arabia’s investments into Egypt surged by 44% yoy to USD 125.5mn in Q2 2018-19, according to the Central Agency for Public Mobilization and Statistics.
- Iraq’s oil exports from the southern ports increased to 3.454mn barrels per day (bpd) in May, according to Reuters sources. This compares to previous exports of 3.354mn bpd (in Apr) and 3.254mn bpd (Mar).
- Kuwait’s sovereign wealth fund (SWF), with assets at USD 592bn, is ranked 4th among global SWFs and 2nd in the region after Abu Dhabi (USD 696.66bn).
- Inflation in Kuwait touched 0.8% yoy in Q1 this year, vs 0.4% recorded in Q4 2018.
- Lebanon’s 2019 budget – that cuts public spending and reduces the deficit-to-GDP ratio to 7.59% from 11.5% last year – has been given Cabinet approval. This led to a drop in CDS spreads and dollar bond gains.
- Oman’s Shura Council approved the New Foreign Capital Investment Law: it removes the need for Omani partners for foreign investors and also removes minimum and maximum investment levels for companies in certain sectors. Next, it needs to be approved/amended by the State Council (within 15 days) before the Law is sent for final approval to the King.
- Oman will implement a new selective tax on tobacco, pork meat, energy drinks and soft drinks from 15 Jun: imposed tax on soft drinks will be 50% and 100% on the rest.
- More than 27k Omani citizens have been recruited in the private sector this year; construction, sale, distribution and industry account for 58% of the recruitment.
- Qatar’s PM travelled to Saudi Arabia to attend the emergency Arab summit last week, the highest level of Qatari official to visit the country during the ongoing diplomatic rift.
- SAMA’s assets increased by more than SAR 26bn to SAR 1.919trn (USD 491.7bn) in Apr, from the month before. In yoy terms, assets declined by SAR 16.541bn.
- Tadawul cut the par value of 29 domestic government debt instruments issued by the Saudi government to SAR 1,000 from SAR 1mn, effective 9 June.
- The volume of residential new mortgage finance for individuals jumped by three times in Apr: residential financing contracts reached 45,860 contracts worth SAR 31,528bn as of Apr. This compares to 50,496 contracts worth SAR 29.5bn in 2018.
- Saudi Arabia’s trade surplus widened by 80.16% yoy to SAR 589.9bn by end-2018, with exports rising by 32.69% to SAR 1.104trn. Non-oil trade balance with the GCC moved into a SAR 9.55bn deficit last year, compared to a surplus SAR 4.59bn in 2017.
- Saudi Arabia dominated the MENA region’s IPO market in Q1 this year, according to EY, raising USD 58.3mn in capital from one listing.
- Remittances from Saudi Arabia declined by 8.5% yoy and 23% mom to SAR 10.723bn in Apr. In Q1, remittances were down 11.3% yoy to SAR 31.93bn.
- UAE’s central bank has revised downwards economic growth forecasts for this year to 2% from the previously estimated 3.5%. Non-oil growth is estimated at 1.8% (3.4% previous estimate) and growth in the oil sector will fall to 2.7% on lower oil production.
- UAE approved the distribution of VAT revenues: approximately AED 27bn collected will be distributed as 30% to the federal government and 70% to the local governments.
- UAE non-oil foreign trade increased to AED 1.628trn (USD 440bn) in 2018, with direct non-oil foreign trade accounting for 63% of the value.
- In the latest move to reduce costs of doing business, UAE decided to amend and waive fees for more than 1,500 government services provided by the Ministry of Interior, Ministry of Economy, and Ministry of Human Resources and Emiratisation. No further details were provided.
- UAE fuel prices increase further in Jun: depending on the grade of petrol, prices were up by 2.0-3.4% mom, while diesel price was up 1.18% mom to AED 2.56 per litre.
- Abu Dhabi’s manufacturing sector expanded by 6.02% yoy last year, creating an added value of AED 49.3bn (USD 13.4bn) to non-oil GDP.
- The Dubai DED disclosed that over 18,975 Chinese investors own 5,977 active business licenses in the emirate of Dubai.
- Hotel revenues in Abu Dhabi increased by 16.1% yoy to AED 1.7bn (USD 460mn) in Q1, with hotel rooms rising by 5.1% to 33,074 and occupancy rates touching 79%.
- Real estate transactions in Sharjah touched AED 5.2bn (USD 1.42bn) in Q1 this year from a recorded 13,195 transactions.