GLOBAL Developments Bottomline: The ECB lowered rates at the meeting last week, as did the Turkish central bank and Denmark. Up ahead this week are meetings in the US and across Europe (UK, Norway) as well as Asia (Japan) – while the Fed is widely expected to cut (Trump’s “Fed bashing” tweets are getting more frequent), the others are likely to hold steady. On the data front, there was finally some good news from Germany – exports picked up – while China and India continue to announce measures to prop up their slowing economies. US tensions with Iran still remain high (in spite of the reported clash between Bolton and Trump, and subsequently the latter’s dismissal) and the Yemeni attack on Saudi oil fields will feed geopolitical tensions in the region.
- Money supply in Bahrain increased by 8.5% yoy to BHD 13.4bn in Jul, according to the central bank. Data also disclosed that the total outstanding balance of public debt instruments dropped to BHD 11.3bn (-1.8% yoy).
- Egypt’s inflation fell to 7.5% in Aug (Jul: 8.7%) – the lowest since the start of 2013 – while core inflation also dropped to 4.9% from the previous month’s 5.9%, making a strong case for a rate cut at the next meeting on Sep 26.
- Foreign investment in Egyptian treasuries edged up to USD 20bn by end-Aug, from USD 19.2 in Jun.
- Egypt’s finance minister revealed plans to issue international bonds worth USD 3-7bn in the current financial year; while not committing to any specific type of bond issuance, the minister revealed interest in diversifying issuance currencies (yen and yuan, for which requirements were not met last year).
- Egypt’s finance minister revealed that a bill to unify tax procedures will be issued for consultation by end-Oct.
- Seven technological parks will be set up this year across various universities in Egypt, at an investment of EGP 1bn (USD 60.8mn), according to the minister for communications and information technology. The ministry will contribute the USD 50-100mn fintech fund to be launched next year by the central bank.
- Kuwaiti investments in Egypt amounts to about USD 4.7bn with 1,302 companies based in the country while bilateral trade stands at nearly USD 3bn.
- Iraq needs investments of at least USD 30bn to fix and upgrade the country’s power system, according to the minister of electricity.
- Iraq’s oil production capacity is nearing 5mn barrels per day (bpd) and it aims to add another 2mn over the next few years, as per the oil minister.
- Non-oil exports from Kuwait fell by 3.6% yoy to KWD 5.7mn in Aug 2019; Jordan was the top importing nation from Arab countries while among the GCC, Qatar topped the list. Separately, according to the ministry of finance, Kuwait’s trade surplus narrowed by 97.06% yoy to KWD 44.8mn (USD 147.66bn) in Apr-Jul 2019.
- According to the central bank of Kuwait, the banking sector’s net foreign assets increased by 6.1% yoy and 0.05% mom to KWD 18.48bn (USD 60.98bn) in Jul. Total assets grew by 5.2% yoy and 0.55% mom to KWD 11.03bn.
- The IMF, in its latest Article IV consultation, recommended that Saudi Arabia raise the VAT to 10% from the current 5% as a part of fiscal consolidation measures. Budget deficit is estimated to further widen this year to 6.5% of GDP from 5.9% last year. Real GDP growth is forecast at 1.9% this year, supported by the 2.9% growth in the non-oil sector supported by government spending.
- Saudi Aramco is preparing to list “very soon”, according to its chief executive, and as mentioned by the new energy minister last week; the IPO is planned for 2020-21, but the listing on the local exchange could potentially happen as early as end of this year. Nine banks have been hired as joint global coordinators for the IPO.
- Saudi Arabia will keep its oil output below 10mn barrels per day (bpd) until end of the year, with exports around 7mn bpd, disclosed the new energy minister.
- Unemployment rate among Saudi nationals fell to 12.3% in Q2 this year (Q1: 12.5%); Saudi women’s economic participation edged up to 23.2% from Q1’s 20.5%.
- About 3.2mn visitors to Saudi Arabia spent USD 9.6bn in Jul-Aug, supported by Hajj and summer visitors, according to the Saudi Commission for Tourism and National Heritage. This compares to 3mn tourists spending USD 8.8bn in the same period a year ago.
- Value of contracts awarded in Saudi Arabia grew by 32% qoq and 92% yoy to SAR 64.3bn ($ 17.2bn) in Q2, as per a report by the US-Saudi Arabian Business Council.
- M&As in Saudi Arabia surged to USD 72.6bn (from 14 deals) in H1 this year – driven by the USD 70bn Aramco acquisition of SABIC from PIF – according to a report by Mergermarket. The IPO market grew as well during H1, raising USD 752mn from 3 deals.
- Saudi Arabia has issued a royal order banning the provision of consultancy services to foreign firms. Only when experienced Saudi consultancy offices and companies’ expertise is not available can the government departments reach out to foreign consultancy companies.
- UAE’s GDP grew by 2.8% yoy in Q1 this year, supported by the oil sector (+11.4% yoy) as non-oil GDP inched up by only 0.2%.
- The Dubai PMI fell for a third consecutive month to 51.7 in Aug (Jul: 55.2) – the lowest reading since Feb 2016 – as new orders fell and with the slowdown most visible in the wholesale and retail and construction sectors. The construction sector posted the weakest improvement in business conditions in 3.5 years.
- The Composite Business Confidence Index, released by Dubai Economy, showed an improvement in Q2 (up 2.2 points from Q2 2018 to 114.9): respondents anticipate higher volumes and profits, with 46% expecting business situation to “slightly increase” and 22% planning to export to new markets (to Africa & Europe) from this quarter.
- Residential sales transactions in Dubai over Jun-Aug 2019 hit a four-year high, according to Property Finder: 8833 transactions worth AED 14.46bn (USD 3.9bn) were recorded during this period.