Global public debt expected to exceed $100 tn this year: IMF
Global public debt to hit 93% of global GDP this year, and to approach 100% of GDP by 2030
Updated 12 sec ago
AFP
WASHINGTON: Global public debt is expected to reach a record $100 trillion this year, the IMF said Tuesday, warning that the fiscal outlook for many countries may be even “worse than expected.”
In its latest report on fiscal policy, the International Monetary Fund said it expects global public debt to hit 93 percent of global gross domestic product (GDP) this year, and to approach 100 percent of GDP by 2030 — 10 percentage points higher than in 2019, before the Covid-19 pandemic hit.
“Global public debt is very high,” Era Dabla-Norris, the deputy director of the IMF’s Fiscal Affairs Department, told reporters ahead of the report’s publication.
“There are very good reasons to believe that the debt burden — or the debt outlook — could be worse than expected,” she said, pointing to current spending pressures to address issues like climate change, overly-optimistic debt projections, and the possibility of large amounts of unidentified debt.
“So the bottom line is that it’s time for countries to get their fiscal house in order,” she said.
The IMF report introduced a new “debt-at-risk” approach to assessing the risks to debt projections.
It estimated that, in a worst-case scenario, global public debt could hit 115 percent of GDP by 2026 — almost 20 percentage points higher than the Fund’s baseline estimate.
The report found that “global factors increasingly drive the fluctuations in government borrowing costs across countries,” suggesting that elevated levels of debt in key countries could “increase the volatility of sovereign yields and debt risks” for others.
Moderating inflation and interest rate cuts in many economies meant now was an “opportune” time for countries to rebuild their fiscal buffers, the IMF said, adding that they were “better placed” than before to absorb the effect of fiscal tightening.
The size of the fiscal adjustment needed to bring global public debt back under control was between 3.0 and 4.5 percent of GDP, on average, the IMF said — almost twice the size of past adjustments.
Oil Updates – prices fall as demand outlook weakens, Iran supply disruption concerns ease
Brent, WTI down nearly 4 percent
Israeli PM Netanyahu says willing not to strike Iran oil targets
Updated 11 sec ago
Reuters
SINGAPORE: Oil prices slid as much as $3 to a near two-week low during Asian trade on Tuesday on the back of a weaker demand outlook and after a media report said Israel is willing not to strike Iranian oil targets, which eased fears of a supply disruption.
Brent crude futures were down $2.81, or 3.6 percent, to $74.65 per barrel at 9:40 a.m. Saudi time, having dropped earlier to $74.26, its lowest since Oct. 2.
US West Texas Intermediate futures fell $2.72, or 3.7 percent, to $71.11 per barrel. The contract fell as low as $70.75, its weakest since Oct. 3.
Both benchmarks had settled about 2 percent lower on Monday. They are down almost $5 so far this week, nearly wiping out cumulative gains made in the seven sessions up to last Friday when investors were concerned about supply risks as Israel planned to retaliate against a missile attack from Iran.
Israeli Prime Minister Benjamin Netanyahu told the US that Israel is willing to strike Iranian military targets and not nuclear or oil ones, the Washington Post reported late on Monday.
“Weakening demand has led to traders withdrawing the ‘war premium’ from prices,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
“However, geopolitics still continues to support oil at this level. Without geopolitics in the equation, oil would have tumbled even more, maybe even below $70 per barrel mark amid the current weakening demand narrative.”
OPEC on Monday cut its forecast for global oil demand growth in 2024, with China accounting for the bulk of the downgrade. China’s demand is now seen growing by 580,000 barrels per day this year, down from 650,000 bpd.
OPEC also lowered its global oil demand growth projection for next year to 1.64 million bpd from 1.74 million bpd.
China’s customs data showed that September oil imports fell from a year earlier, as plants curbed purchases because of weak domestic fuel demand and narrowing export margins.
Independent market analyst Tina Teng said that while the demand outlook remains weak due to record high US production and soft Chinese demand, “oil retreated from the Middle East-tension-led surge as the market reaction may have been overdone.”
In the Middle East, Israel expanded its targets in its war against Hezbollah militants in Lebanon on Monday, killing at least 21 people in an airstrike in the north.
Saudi inflation steady at 1.7% in September amid rising housing costs: GASTAT
Updated 52 min 35 sec ago
MIGUEL HADCHITY
RIYADH: Saudi Arabia’s annual inflation rate hit 1.7 percent in September, compared to the same period last year, driven by rising housing costs, official data showed.
The report from the General Authority for Statistics highlighted a 9.3 percent increase in housing, water, electricity, gas, and other fuel prices, which significantly contributed to the inflation rise.
Housing rents saw an 11.2 percent jump, with apartment rental prices up 10 percent. This category’s weight in the overall index had a considerable impact on the inflation rate.
This comes as rising housing prices in Saudi Arabia are being fueled by a limited supply of properties, alongside a growing population and an influx of expatriates seeking accommodation in the Kingdom.
Food and beverage prices rose by 0.8 percent, driven by a 5.2 percent increase in vegetable prices. Restaurant and hotel prices climbed 1.7 percent, influenced by a 1.5 percent rise in catering services.
The education sector experienced a 1.6 percent rise, mainly due to a 3.8 percent increase in fees for intermediate and secondary education.
Conversely, furnishings and home equipment prices dropped by 3.7 percent, due to a 7 percent decrease in furniture, carpets, and flooring prices.
Clothing and footwear prices dropped by 3.2 percent, with ready-made clothing prices falling by 5.5 percent.
Transportation costs also decreased by 3.3 percent, primarily due to a 4.5 percent reduction in vehicle purchase prices. Communication services saw a slight decrease of 1.6 percent.
Monthly inflation
On a monthly basis, the consumer price index inched up 0.1 percent in September compared to August, largely driven by a 0.6 percent rise in housing-related expenses, including a 0.8 percent increase in actual housing rents.
The report also noted minor increases in food and beverages with 0.3 percent, restaurants and hotels, and personal goods and services with 0.1 percent each, compared to the previous month.
Meanwhile, there were decreases in the prices of clothing and footwear by 0.2 percent, furnishings, household equipment and maintenance by 0.3 percent, recreation and culture by 0.3 percent, communications by 0.1 percent, and tobacco by 0.1 percent.
The prices of education and transportation products remained stable.
Wholesale price index
In a separate report, GASTAT revealed the Wholesale Price Index rose 3.1 percent in September compared to the same month last year, driven by an 8 percent increase in transportable goods, including a 12 percent rise in basic chemical prices and refined petroleum products.
Food products, beverages, tobacco, and textiles dropped 0.3 percent, while ores and minerals fell 3.6 percent, influenced by a decline in stone and sand prices.
On a monthly basis, the WPI edged up 0.3 percent in September, with transportable goods rising 0.9 percent due to a 9.6 percent increase in basic chemical prices.
The prices of ores and minerals decreased by 0.2 percent, due to a 0.2 percent drop in the prices of stone and sand.
Metal products, machinery and equipment decreased by 0.1 percent, while fish and other fishing products decreased by 2.7 percent, driven by a 0.1 percent dip in the agriculture and fishing products.
Goods and services
Another GASTAT bulletin showed notable shifts in the average prices of goods and services across Saudi Arabia in September.
The data, which tracks price movements on a monthly basis, highlighted both increases and decreases in various categories, reflecting dynamic market conditions.
Philippines Banana, Alsharbatli saw the highest increase at 15.8 percent, followed by local lettuce at 9.5 percent, local zucchini at 9.5 percent, Abu Sorra Egyptian orange at 8.6 percent, and Pakistani mandarin at 8.4 percent. Prices of coal and African teak wood increased by 1.7 percent each.
Conversely, several items experienced significant price drops during the same period. Lebanese peach saw the highest drop at 7.4 percent, followed by Indian pomegranates at 6 percent, hotel accommodation at 5.3 percent, local glass cheese at 5 percent, and dates at 4.8 percent.
Chinese iron-binding cables decreased by 3.1 percent, black national cement by 2.4 percent, 15 cm black block and Romanian wood by 1.2 percent each.
Saudi Arabia, Philippines ink first energy cooperation agreement
Updated 14 October 2024
Nadin Hassan
RIYADH: Saudi Arabia and the Philippines have signed their first agreement on energy cooperation, marking a milestone in their bilateral relations and supporting the Kingdom’s sustainability drive.
The memorandum of understanding, signed by Saudi Energy Minister Prince Abdulaziz bin Salman and the Southeast Asian country’s Energy Secretary Raphael Lotilla in Riyadh, aims to establish a broad framework for collaboration across various energy sectors.
The agreement encompasses critical areas such as petroleum, natural gas, refining, and petrochemicals, as well as electricity, renewable energy, and energy storage solutions. Both nations are committed to enhancing energy efficiency initiatives as part of their joint vision for a sustainable future.
This comes as Saudi Arabia aims to generate 50 percent of its energy from renewable sources by 2030.
In an interview with Arab News, Lotilla stated that this is the first time that such an agreement is being signed between the two governments.
“The MoU as a framework covers many areas; in fact, the entire scope of the energy transition. Our ambitions are not at the same levels; we are a bit behind because it’s 50 percent by 2040, so we have much to learn from Saudi Arabia,” he said.
The official added: “Our president was always impressed with the fact that even if Saudi Arabia is, right now, the leader in terms of fossil fuel production, it has a progressive outlook and is looking at the transition that would benefit not only itself but also the planet.”
Lotilla highlighted the Philippines’ demographic advantage, describing the nation as being in a “demographic sweet spot” due to its young and expanding workforce, projecting that it could become a trillion-dollar economy by 2030, alongside Indonesia and other regional leaders.
This energy partnership builds on robust existing ties, with Saudi Arabia hosting around 800,000 Filipinos and bilateral trade being valued at over $400 million annually. The MoU seeks to extend collaboration beyond fossil fuels, incorporating new technologies, climate solutions, and renewable energy initiatives.
“We are looking, for example, at the energy efficiency and conservation measures that Saudi Arabia has adopted,” Lotilla said, pointing to cooling systems as a vital area of focus.
Both countries experience high energy demands driven by extreme temperatures, with El Niño pushing electricity demand in the Philippines up by 14 percent last year.
The agreement emphasizes climate change mitigation technologies and endorses the Circular Carbon Economy framework promoted by Saudi Arabia, which aims to reduce toxic emissions through capture, reuse, storage, and transport technologies.
“Energy storage is also another area that we would like to explore with Saudi Arabia,” Lotilla said.
He continued: “We hope to discover more indigenous natural gas, and carbon capture, storage, and utilization are important as we develop those indigenous sources. These are just among the things that we are looking at.”
Additionally, Lotilla indicated that the agreement lays the groundwork for investments in renewable hydrogen projects. “The experience of Saudi Arabia when it comes to oil and gas exploration would be important because it uses essentially the same technology, except that it is renewable hydrogen that is going to be drilled for,” he said.
The potential for biofuels is significant, given Saudi Arabia’s refining capabilities and the Philippines’ agricultural resources. Lotilla noted the possibility of producing sustainable aviation fuel from nonstandard coconuts, as the Philippines produces 15 million metric tonnes of coconuts annually — second only to Indonesia.
The government is also exploring the use of banana biomass for biofuel production, opening up avenues for additional investments.
Raphael Lotilla with Arab News reporter Nadin Hassan. AN
Lotilla stressed the critical need for infrastructure development, particularly in transmission networks, saying: “The Philippines is an archipelagic country, and we need to connect the different islands through submarine cables. One area of investment is in building that infrastructure, and that’s where the investor can also get fair returns.”
The MoU fosters private sector cooperation, encouraging partnerships with energy-focused companies and reflecting both nations’ intent to leverage business expertise to drive innovation and development.
The flexible nature of the agreement allows both countries to pursue additional collaboration areas, ensuring a responsive approach to emerging energy trends and challenges.
The Philippines is also seeking Saudi Arabia’s assistance in achieving 100 percent electrification in the Bangsamoro Autonomous Region for Muslim Mindanao, which currently has less than 50 percent household access to electricity.
Lotilla emphasized the significance of this initiative for economic and human development, saying: “This would require some $200 million of investments, and we are trying to attract private investors as well as sovereign funds to help us attain that 100 percent electrification goal by 2028.”
He added that electrification would significantly impact student learning and workforce productivity, helping to uplift one of the country’s most impoverished regions.
In another interview with Arab News, Rommel Romato, chargé d’affaires of the Philippine Embassy in Riyadh, stated that the agreement creates numerous promising economic opportunities for Filipino businesses.
“With this MoU, we expect to achieve better outcomes, particularly an increase in exports from the Philippines to Saudi Arabia and for the Philippines to tap into the vast Saudi market. We also anticipate more joint ventures between Philippine businesses and their counterparts in the energy sector, among others.”
Rommel Romato, chargé d’affaires of the Philippine Embassy in Riyadh. AN
Beyond energy
Both countries are exploring collaborations in agriculture, technology and tourism, as well as healthcare and education.
Lotilla acknowledged that current bilateral trade between the Philippines and Saudi Arabia exceeds $400 million annually, though the trade balance currently favors the Kingdom, which exports more to the Asian country than it imports.
This trade imbalance stems from Saudi Arabia’s primary exports to the Philippines — including petroleum and related products — while the Philippines exports agricultural goods and services of lower monetary value in comparison.
Closing Bell: TASI sheds points to close at 11,959, Nomu sees 1.28% rise
Updated 14 October 2024
Nour El-Shaeri
RIYADH: Saudi Arabia’s Tadawul All Share Index closed at 11,959.67 points on Monday, losing 109.54 points, or 0.91 percent.
The MSCI Tadawul 30 Index also fell 13.98 points, or 0.93 percent, to finish at 1,496.69.
The parallel market Nomu saw a gain of 321.54 points, or 1.28 percent, to conclude at 25,444.92.
The main index posted a trading value of SR7.3 billion ($1.94 billion), with 80 stocks advancing and 140 declining. Nomu reported a trade volume of SR107.6 million.
Despite TASI’s slowdown, Etihad Atheeb Telecommunication Co. saw growth in its stock as its share price surged 9.95 percent to SR107.20. Middle East Specialized Cables Co. followed next with its share price jumping 6.28 percent to close at SR43.15.
Al Majed Oud Co. was also among the top performers, climbing 5.82 percent to SR167.20. Middle East Healthcare Co. and Al-Etihad Cooperative Insurance Co. increased 4.66 and 4.54 percent to SR71.80 and SR22.58, respectively.
Conversely, Al-Baha Investment and Development Co. recorded the most significant dip, declining 7.89 percent to SR0.35.
ACWA Power Co. and Abdulmohsen Alhokair Group for Tourism and Development also experienced falls, with their shares dropping to SR441 and SR2.81, reflecting declines of 7.35 and 5.07 percent, respectively. Batic Investments and Logistics Co. and Fawaz Abdulaziz Alhokair Co. also reported losses.
Nomu’s performance was bolstered by Shatirah House Restaurant Co., also known as Burgerizzr, which saw a 29.97 percent jump to SR18.82.
Fesh Fash Snack Food Production Co. and Amwaj International Co. also recorded notable gains, with their shares closing at SR11.94 and SR45.60, marking an increase of 12.01 and 7.29 percent, respectively. Jahez International Co. for Information System Technology and Mayar Holding Co. also fared well.
On Nomu, Mohammed Hadi Al Rasheed and Partners Co. was the worst performer, declining by 10 percent to SR75.60. Other underperformers included WSM for Information Technology Co. and United Mining Industries Co., whose share prices dropped 5.13 percent and 4.71 percent to SR37 and SR32.40, respectively.
Yaqeen Capital Co. and Raoom Trading Co. were also among the worst performers.
Jarir Marketing Co. announced its financial results for the first nine months of the year recording a SR7.7 billion in sales, a 2.2 percent increase compared to the year before.
The company saw a marginal decrease in its net profits, recording SR698 million this year, compared to SR699 million the same period last year, according to a bourse filing.
The company’s growth is mainly due to the increase in sales of the smart phones section and the computer and tablets section.
The company’s gross profit also increased by 2.5 percent, which is higher than the percentage of increase in sales due to the relative improvement in the profit margin of smart phones as a result of the discounts received from vendors, the company stated.
“Although other income increased, but the net profit slightly declined at 0.2 percent, affected by the increase in selling and marketing expenses, general and administrative expenses, and non-operating expenses,” the filing added.
Jarir closes its Monday trading session at SR13, a 0.15 percent increase.
OPEC further trims global oil demand outlook for 2024, 2025
Updated 14 October 2024
Nirmal Narayanan
RIYADH: Global oil consumption will increase by 1.93 billion barrels per day in 2024, down from a previous estimate of 2.03 million bpd, according to OPEC.
The monthly report of the alliance indicates that global crude demand will rise by 1.64 million bpd in 2025, a decrease from the earlier forecast of 1.74 million bpd. This marks the group’s third consecutive downward revision.
The Vienna-based organization said the revision was “largely due to actual data received combined with slightly lower expectations” for some regions.
OPEC also said that the world economy will witness a growth of 3 percent and 2.9 percent in 2024 and 2025, respectively – a projection unchanged from last month.
The organization said that the market remains well above the historical average of 1.4 million bpd seen before the pandemic, primarily propelled by strong air travel and road mobility, as well as growing industrial, agricultural, and construction activities.
OPEC’s oil demand growth forecast remains above the projection made by the International Energy Agency in September.
IEA said that global oil demand is on course to increase by 900,000 bpd in 2024 and 950,000 bpd next year, driven by China’s economic slowdown and widespread adoption of electric vehicles.
OPEC said that global oil demand is expected to reach 104.1 million bpd in 2024 and 105.8 million bpd in 2025.
The alliance also trimmed its forecast of Chinese market growth to 580,000 bpd from a previous projection of 650,000 bpd growth.
Amid these revisions, in September OPEC raised its forecasts for world oil demand for the medium and long term in an annual outlook, driven by growth led by India, Africa, and the Middle East and a slower shift to electric vehicles and cleaner fuels.
According to the alliance’s annual report, world crude demand in 2028 will reach 111 million bpd and 112.3 million bpd in 2029. The 2028 figure is up 800,000 bpd from last year’s prediction.
OPEC forecasted that there will be 2.9 billion vehicles on the road, up 1.2 billion from 2023.
Despite electric car growth, vehicles powered by a combustion engine will account for more than 70 percent of the global fleet in 2050, affirming strong oil demand growth for the long term.
