GLOBAL Developments Bottomline: Ahead of the IMF-World Bank meetings this week, the new IMF chief called for finding a “lasting solution on trade” while stating that the ongoing trade conflicts could cost the global economy close to $700bn or 0.8% of output by 2020. There were bursts of optimism from Brexit hopes and the “Phase 1” trade deal with China and alongside very gloomy economic data. However, with the trade deal only verbal so far, are markets being too optimistic as the thorny issues of currency manipulation and intellectual property remain largely unresolved? Also, the new 25% tariff imposed by US on some European food and beverage imports are due to take effect on Fri this week. Separately, geopolitics came to the forefront again as Trump’s decision to withdraw US troops effectively triggered the Turkish invasion into Syria and subsequent violence.
- The World Bank, in its latest outlook, lowered its growth estimates for the Middle East and North Africa to an average 0.6% this year (down 0.8 ppts from Apr 2019 update; 2018:1.2%).Thedownward revision was due to cuts in oil production, spillovers from geopolitical tensions and the ongoing US-China trade wars.
- Bahrain’s real GDP grew by 0.8% yoy in Q2, after the non-oil sector grew by 1.2% and oil sector growth dipped by 0.8%.
- Money supply (M3) in Bahrain increased by 10% to BHD 12.5bn as of end-Aug while value of outstanding loans and credit by retail banks was up by 6.9% to BHD 9.8bn.
- Bahrain’s exports grew by 2% yoy to BHD 187mn in Aug; Saudi Arabia (BHD 36mn), US (BHD 20mn) and China (BHD 19mn) were the top importers.
- Bahrain’s labour and social development minister disclosed that 17,700 Bahraini jobseekers were hired in the private sector this year.
- Egypt’s inflation declined sharply to 4.8% yoy in Sep (Aug: 7.5%), the lowest level in almost 7 years, on lower food prices; core inflation fell to 2.6% (Aug: 4.9%).
- The sale of minority stakes in two state-owned firms in Egypt is planned by end-Dec; government also plans to sell additional shares in 2 listed state-owned firms.
- In the 5th review of Egypt’s program, the IMF encouraged sustained reforms to ensure GDP growth and lower unemployment while revealing that the country needs to absorb 3.5mn new workers in the next 5 years.
- Egypt’s tourism revenue increased by $2.7bn to $12.5bn in 2018-19 financial year.
- Egypt’s draft law to replace the current income tax law proposes that all subsidiaries of foreign companies be subject to taxes; it also increases the maximum limit of exemption on personal income tax to EGP 24k per annum from EGP 8k.
- Egypt is studying a proposal to reduce trading investor costs (i.e. fees and commissions) to make it more attractive and competitive.
- Bilateral trade between Iraq and Jordan grew by 27% yoy to USD 654mn in 2018; in Jan-Jul this year, trade declined by 6% to USD 330mn.
- Net foreign assets in Kuwait’s banking sector grew by 7.08% yoy and 0.7% mom to KWD 18.61bn ($61.3bn) in Aug.
- About 59.3% Kuwaitis refused offers to join the private sector in 2017, according to the Public Authority for Manpower; it jumped to 80% last year (4,618 out of 5,778), reported Al-Jarida daily.
- Following a 2-day visit to the UAE, Lebanon’s PM stated that the UAE had promised investments and financial assistance. While the UAE travel ban to Lebanon was lifted, no official explicit commitment was revealed by either party.
- All government revenues in Oman will be collected only via electronic payments starting Jan 2020, according a ministry of finance circular. The 1% commission of the fee paid will be absorbed by the government.
- Bilateral trade between Oman and the US exceeded USD 4bn in 2018; US exports to Oman grew by 21.7% to USD 2.415bn.
- Islamic banking’s share in Oman grew to 13.4% of total banking as of end-Jun this year; the total assets of Islamic banking institutions increased to OMR 4.59bn.
- Saudi Aramco is expected to publish its IPO prospectus later this month: Wall Street Journal reported that the Arabic prospectus would be out Oct 25 and English two days later.
- Fitch downgraded Saudi Aramco to “A” with a stable outlook, given the attack on its oil production facilities,andfollowing the downgrade of Saudi Arabia on Sep 30.
- Saudi Arabia’s disclosed to OPEC that its oil production fell by 660k barrels per day (bpd) in Sep, on the back of attacks, versus 9.13mn bpd in Aug. Secondary sources place Saudi oil production lower: falling 1.28mn bpd mom to 8.856mn bpd.
- Tourists in Saudi Arabia increased spending by 12% yoy to SAR 77.3bn in Jan-Aug this year and the number of foreign tourist trips also grew by 11% during this period. Average spending on domestic tourism grew by 3.4% to SAR 33.8bn.
- Saudi Arabia’s gold reserves, at 323.1 tonnes in Oct or 3.1% of total reserves, was the highest among Arab nations according to the World Gold Council.
- WEF’s Global Competitiveness Report 2019 places UAE – ranked 25th globally – as the most competitive economy in the Arab region.
- Investment banking fees accelerated by 15.2% yoy to an estimated USD 651.4nmn in Jan-Sep 2019 in the Middle East and North Africa, according to Refinitiv. The value of announced M&A transactions with any MENA involvement currently stand at an all-time high of USD 120.6bn this year (+160%). Fees generated from completed M&A transactions surged by 218% yoy to an 11-year high of USD 210.3mn.
- The startup ecosystem in the MENA region saw USD 517mn being invested in 354 deals in 2019, with UAE remaining the top funding recipient (62%), according to Magnitt.
- Dubai’s PMI edged up to 52.6 in Sep (Aug: 51.7), rising for the first time in 4 months; overall input prices rose at the fastest pace in 6 months while staffing costs rose fractionally since Aug.
- The UAE central bank reduced the 3% early settlement fee for mortgages to just 1% on the outstanding mortgage amount or AED 10k whichever is less. The bank also removed the 70-year age limit for the last mortgage repayment in order to ease mortgage loan requirements.
- Six-month deposits in UAE banks grew by 10.4% to AED 182.2bn ($ 49.6bn) during Jan-Aug; the deposits accounted for 19.4% of the total deposits value in this period.
- Borrowing in US dollar accounted for 81.1% of UAE banks’ loans in H1, according to the central bank, while euro-denominated loans made up 10.9% of loans.
- Excise taxes on sugary drinks and e-cigarettes will be increased from Dec 1 this year, according to the ministry of finance.
- The UAE economy minister expects other ministries to reduce federal fees, in line with the ministries that had reduced fees in Jul this year.
- Value of non-oil foreign trade through Abu Dhabi ports stood at AED 121.5bn (USD 33.1bn) in Jan-Jul this year. Saudi Arabia was the top export partner (AED 5.1bn in Jul) followed by US (AED 1.18bn) and Kuwait (AED 950mn).
- The share of aviation and tourism to UAE GDP will more than double to USD 128bn in 20 years, according to International Air Transport Association. The sector currently accounts for 13% of UAE’s GDP.
- The UAE’s Ministry of Human Resources and Emiratisation announced waiving fines issued for violations for over 27k companies and 12k workers issued before Aug 1 this year.