British economy slumped by record 10% in 2020

Life continues in Britain’s third coronavirus lockdown that has closed all nonessential stores in an effort to suppress COVID-19 infections. (AFP)
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Updated 13 February 2021
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British economy slumped by record 10% in 2020

  • Country's economy is set to shrink in early 2021 due to the effects of a third COVID lockdown

LONDON: Britain’s coronavirus-ravaged economy suffered its biggest crash in output in more than 300 years in 2020 when it slumped by 9.9 percent, but it avoided heading back toward recession at the end of the year and looks on course for a recovery in 2021.

Official figures showed gross domestic product (GDP) grew 1.0 percent from October through December, the top of a range of economists’ forecasts in a Reuters poll.
This makes it likely that Britain will escape two straight quarters of contraction — the standard definition of recession in Europe — even though the economy is set to shrink in early 2021 due to the effects of a third COVID lockdown.
“As and when restrictions are eased, we continue to expect a vigorous rebound in the economy,” said Dean Turner, an economist at UBS Global Wealth Management.
Britain’s economy grew 1.2 percent in December alone, after a 2.3 percent fall in output in November when there was a partial lockdown, pointing to greater resilience to COVID restrictions than at the start of the pandemic.
That left output 6.3 percent lower than in February before the start of the pandemic, the Office for National Statistics said.
However, the Bank of England forecasts the economy will shrink by 4 percent in the first three months of 2021 because of the new lockdown and Brexit disruption.
It thinks it will take until early 2022 before GDP regains its pre-COVID size, assuming vaccination continues at the current rapid pace, which outstrips the rest of Europe’s. Many economists think recovery will take longer.
“Today’s figures show that the economy has experienced a serious shock as a result of the pandemic, which has been felt by countries around the world,” Finance Minister Rishi Sunak said.
Sunak, facing the heaviest borrowing since World War II, said he would continue to focus on protecting jobs when he sets out a new annual budget on March 3.

BACKGROUND

● Britain’s economy grew 1.2 percent in December alone, after a 2.3 percent fall in output in November when there was a partial lockdown.

● That left output 6.3 percent lower than in February before the start of the pandemic, the Office for National Statistics said.

● However, the Bank of England forecasts the economy will shrink by 4 percent in the first three months of 2021 because of the new lockdown and Brexit disruption.

Unemployment has risen much less than feared at the start of the crisis, largely due to subsidies to keep people in work, though sectors such as hospitality and high-street retail remain hard hit.
Last year’s fall in output was the biggest since modern official records began after WWII. Longer-running historical data hosted by the Bank of England suggest it was the biggest drop since 1709, when Britain suffered a “Great Frost.”
Britain has reported Europe’s highest death toll from COVID-19 and is among the world’s highest in terms of deaths per head.
The GDP fall is steeper than almost any other big economy’s, though Spain — also hard-hit by the virus — suffered an 11 percent decline.
Some of the damage reflects how Britain’s economy relies more on face-to-face consumer services than other countries, as well as disruption to schooling and routine healthcare, which few other countries factored in to the GDP.
Sunak, in an interview with Sky News, said Britain’s economic performance could be seen as being marginally above that of some of its peers last year.
GDP is almost always compared on a “real” or inflation-adjusted basis, which shows Britain was the worst performer in the Group of Seven large advanced economies. But Sunak said Britain did better on a “nominal” basis, which ignores inflation.
Taking this approach, Britain’s economy is closer to its pre-crisis size than Germany, France or Italy’s, according to figures provided by the ONS, which said it “may be useful” to look at nominal as well as real measures of GDP.
But most international differences on inflation adjustment center on government spending, and looking at household spending alone, Britain remains a laggard. Household spending in the fourth quarter was 8.4 percent below pre-crisis levels, compared with a 2.6 percent shortfall in the US and 6.8 percent in France.
“The UK’s underperformance can’t simply be attributed to the different way the ONS measures government expenditure to most other countries,” said Samuel Tombs of Pantheon Macroeconomics.


Saudi Arabia leads GCC IPO market with 594% surge in proceeds: Markaz

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Saudi Arabia leads GCC IPO market with 594% surge in proceeds: Markaz

RIYADH: Saudi Arabia led the Gulf Cooperation Council initial public offering market with an annual 594 percent surge in the first quarter of 2024, according to Kuwait Financial Centre.

A report issued by the organization, commonly known as Markaz, detailed the dynamic landscape of IPO activities across the GCC region, revealing significant shifts and trends in investment flows.

The report highlighted that Saudi Arabia has demonstrated considerable growth, raising a total of $503 million from eight offerings.

Despite the Kingdom’s activity, the overall GCC region witnessed a downturn in IPO activity in terms of value, with total proceeds amounting to $931 million through nine offerings in the first three months of 2024 – a 73 percent year-on-year decline.

The same period of 2023 saw issuers raise $3.5 billion through 12 offerings.

For the first quarter of 2024, Saudi Arabia capturing 54 percent of the total proceeds in the GCC, while the UAE accounted for the remaining 46 percent, which came from just one offering – signaling an 87 percent decrease compared to the same period last year. 

Other countries in the group did not witness any new listings activity during this quarter.

On a sectoral basis, transportation emerged as the frontrunner, driven by Dubai-based Parkin Co.’s offering, which raised $429 million, constituting nearly 46 percent of total GCC IPO proceeds during the period. 

Additionally, Saudi Modern Mills Co.’s listing in the food and beverage sector garnered over $314 million, contributing 34 percent to the total proceeds.

Following these were IPOs from the pharmaceutical, healthcare equipment, and materials sectors, accounting for 14 percent, 2 percent, and 1 percent, respectively.

Exchange-wise, $445 million came from listings on the Kingdom’s Main Market, with $57 million on the Nomu-Parallel Market.

Meanwhile, the UAE markets accounted for the remaining 46 percent, with $429 million listed on Dubai’s exchange, showcasing the vibrancy of both countries’ capital markets.


Oil Updates - crude extends fall on signs of weak fuel demand, strong dollar

Updated 13 May 2024
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Oil Updates - crude extends fall on signs of weak fuel demand, strong dollar

SINGAPORE: Oil prices extended declines on Monday amid signs of weak fuel demand and as comments from US Federal Reserve officials dampened hopes of interest rate cuts, which could slow growth and crimp fuel demand in the world’s biggest economy, according to Reuters.

Brent crude futures slid 25 cents, or 0.3 percent, to $82.54 a barrel by 8:05 a.m. Saudi time, while US West Texas Intermediate crude futures were at $78.07 a barrel, down 19 cents, or 0.2 percent.

“Oil markets shrugged off the impact of the Middle East conflicts and shifted attention to the world economic outlook again,” Auckland-based independent analyst Tina Teng said.

China’s producer price index contracted in April, suggesting that business demand remained sluggish, she said, adding that recent US economic data signalled a slowdown as well.

Both benchmarks settled about $1 lower on Friday as Fed officials debated whether US interest rates are high enough to bring inflation back to 2 percent, offsetting gains earlier last week from the Israel-Gaza conflict.

Analysts expect the US central bank to keep its policy rate at the current level for longer, supporting the dollar. A stronger greenback makes dollar-denominated oil more expensive for investors holding other currencies.

Oil prices also fell amid signs of weak demand, ANZ analysts said in a note, as US gasoline and distillate inventories rose in the week ahead of the start of the US driving season.

Refiners globally are struggling with slumping profits for diesel as new refineries boost supplies and as mild weather in the northern hemisphere and slow economic activity eat into demand.

Still, the market remained supported by expectations that the Organization of the Petroleum Exporting Countries and their allies, together known as OPEC+, could extend supply cuts into the second half of the year.

Iraq, the second-largest OPEC producer, is committed to voluntary oil production cuts agreed by OPEC and is keen to cooperate with member countries on efforts to achieve more stability in global oil markets, its oil minister told the state news agency on Sunday.

The minister’s comments followed his suggestion on Saturday that Iraq had made enough voluntary reductions and would not agree to any additional cuts proposed by the wider OPEC+ producer group at its meeting in early June.

Earlier this month, OPEC+ called out Iraq for pumping over its output quota by a cumulative 602,000 barrels per day in the first three months of 2024.

The group said that Baghdad had agreed to compensate with additional production cuts over the rest of the year.

In the US, the oil rig count fell by three to 496 last week, their lowest since November, Baker Hughes said in its weekly report on Friday.
 


Closing bell: Saudi main index slips to close at 12,217 

Updated 12 May 2024
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Closing bell: Saudi main index slips to close at 12,217 

RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Sunday, losing 67.36 points, or 0.55 percent, to close at 12,217.05.   

The total trading turnover of the benchmark index was SR5.33 billion ($1.42 billion), as 78 of the stocks advanced while 147 retreated.   

On the other hand, the Kingdom’s parallel market Nomu rose 109.49 points, or 0.40 percent, to close at 27,195.93. This comes as 30 of the stocks advanced while as many as 27 retreated. 

Meanwhile, the MSCI Tadawul Index slipped 7.05 points, or 0.46 percent, to close at 1,530.49. 

The best-performing stock of the day was Saudia Dairy and Foodstuff Co. The company’s share price surged 9.97 percent to SR386.20.  

Other top performers include Saudi Chemical Co. as well as Al-Jouf Agricultural Development Co. 

The worst performer was Thimar Development Holding Co. whose share price dropped by 9.94 percent to SR14.14. 

Other subdued performers included Tanmiah Food Co. and Walaa Cooperative Insurance Co. 

On the announcements front, Etihad Etisalat Co., also known as Mobily, released its interim financial results for the period ending on March 31.  

According to a Tadawul statement, the company’s net profit hit SR638 million in the first quarter of 2024, reflecting a 37.2 percent surge compared to the same quarter last year.  

The increase was mainly driven by a rise in gross profits and a jump in earnings before interest, tax, depreciation, and amortization. While operating expenses also increased, financial charges, zakat, and income tax decreased.  

Moreover, the Tanmiah Food Co. also announced its interim financial results for the first three months of 2024.  

A bourse filing revealed that the firm’s net profit reached SR21 million by the period ending on March 31, unchanged in comparison to the corresponding period in 2023.  

Furthermore, Elm Co. announced its interim financial results for the year’s first quarter.  

According to a Tadawul statement, the company’s net profits climbed 7.1 percent to reach SR345 million in the first three months of 2024 compared to the same period a year earlier.  

This increase is primarily attributed to higher revenue, operating expenses, and income from Murabaha deposits. 

Allianz Saudi Fransi Cooperative Insurance Co. also announced its interim financial results for the period ending on March 31.  

A bourse filing revealed that the firm’s net profit stood at SR9.98 million at the end of the first quarter of 2024, up 4.01 percent when compared to the same quarter a year ago.  

The increase in net profit after zakat and income tax for the current quarter compared to the same quarter of previous years is primarily due to an 86 percent rise in net investment income. 

In addition, the United International Transportation Co., or Budget Saudi, announced its interim financial results for the first three months of 2024. 

According to a Tadawul statement, the company’s net profit hit SR69.7 million in the first quarter of 2024, reflecting a 0.565 percent surge compared to the same quarter last year.  

The surge in net profits is mainly attributed to steady growth in both long-term and short-term rental revenues. 

Saudi Electricity Co. also announced its interim financial results for the period ending on March 31. 

A bourse filing revealed that the firm’s net profit stood at SR897 million at the end of the first quarter of 2024, up 86.8 percent compared to the same quarter a year ago.  

The surge in net profit for the current quarter compared to the corresponding quarter of the previous year is primarily attributed to increased revenue requirements, new earnings from development projects, and higher revenue from Dawiyat Co., among other factors. 

Meanwhile, United Electronics Co., or eXtra, has announced that its shareholders approved the election of board members for the upcoming three-year term beginning May 13.  


Saudi Arabia’s date sector sees 13.7% export growth in Q1, 2024

Updated 12 May 2024
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Saudi Arabia’s date sector sees 13.7% export growth in Q1, 2024

RIYADH: Saudi Arabia’s palm and dates sector is experiencing significant growth, with exports increasing by 13.7 percent in the first quarter of 2024 compared to the same period last year. 

This food division is regarded as a significant contributor to diversifying income sources and boosting the gross domestic product, as the Kingdom has ambitions to establish its dates as the premier choice globally.  

The National Center for Palm and Dates has recently revealed a significant increase in value across various countries during the period, reaching SR644 million ($171.7 million), compared to SR566 million in the first quarter of 2023. 

In 2023, the value reported by NCPD increased by 14 percent, reaching SR1.462 billion, compared to SR1.280 billion in 2022. By the end of 2023, the number of countries importing Saudi dates had reached 119.  

In an interview with Arab News in March, Mohammed Al-Nuwairan, CEO of NCPD, emphasized that Saudi Arabia’s export portfolio extends beyond dates, encompassing derivatives like molasses, pastes, and others. This diversification enhances the sector’s export presence beyond the Kingdom’s borders.  

“East Asian countries are receiving attention from Saudi exports of dates, especially to Singapore, situated in the heart of countries targeted for exporting dates and their derivatives, such as Indonesia, Malaysia, and also China in particular. What supports this is the high demand for Saudi dates, which possess high nutritional values and production quality,” he said at that time. 

The total value of date and date by-product exports has surged by 152.5 percent since 2016, rising from SR579 million in 2016 to SR1.462 billion in 2023, marking a compound annual growth rate of 12.3 percent.  

According to the Saudi Press Agency, date exports to several countries, including Austria, Norway, and Argentina, as well as Brazil, Portugal, Germany and Canada, exceeded 100 percent. 

According to the Saudi Press Agency, date exports to several countries, including Austria, Norway, and Argentina, as well as Brazil, Portugal, Germany, and Canada, exceeded 100 percent.  

Additionally, the value of Saudi date exports increased to Morocco by 69 percent, Indonesia by 61 percent, and South Korea by 41 percent. Exports to the UK, the US, and Malaysia rose by 33 percent, 29 percent, and 16 percent, respectively.  


Saudi NHC teams up with Chinese firm to construct 20k residential units

Updated 12 May 2024
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Saudi NHC teams up with Chinese firm to construct 20k residential units

RIYADH: Residential supply is set to improve as the Saudi National Housing Co. and China Machinery Engineering Corp. signed a deal to build 20,000 units in the Kingdom. 

In a recent agreement signed in Beijing, the two companies joined forces to address housing needs more effectively by constructing apartments in suburban and residential areas within the Kingdom, directly benefiting individuals and families, the Saudi Press Agency reported. 

The deal was signed during the official visit of the Minister of Municipal and Rural Affairs and Housing and the Chairman of the Housing Program Committee, Majid Al-Hogail, to China as part of the broader efforts to contribute to achieving the targets of the Housing Program — one of the Kingdom’s Vision 2030 programs.  

This initiative aims to partner with leading global companies and attract international investments in the real estate sector. 

At the signing ceremony, CEO Mohammed Al-Buty represented NHC. 

The company emphasized that this agreement complements its qualitative projects with major global construction companies, SPA reported.  

It added that this initiative would be implemented in various areas within the suburbs and urban communities under NHC, distinguished by integrated facilities and services, including health, education, commercial, and public services. 

NHC, one of the largest real estate firms in the Middle East, aims to develop housing communities and improve living spaces in the Kingdom by creating nine integrated residential suburbs and delivering 300,000 units by the end of 2025.  

The company plans to implement integrated urban projects according to the highest standards at affordable prices, as well as enhance the sustainability of residential projects in various regions in Saudi Arabia.  

This comes as the Kingdom aims to elevate services for citizens and unify all efforts across sectors to achieve the targets of the Housing Program in line with the nation’s Vision 2030. This is part of its efforts to increase the homeownership rate for Saudi families to 70 percent. 

Last week, NHC signed a deal with China’s CITIC Construction Group to establish an industrial city and logistic zones for building materials. The undertaking will comprise 12 factories aimed at securing supply chains for the Saudi firm’s housing projects. 

In a statement, the NHC said the agreement with the Chinese construction group is part of its efforts to secure supply chains for its housing initiatives and ensure their timely completion and high quality. 

The Saudi company said the deal entails the construction of 12 factories specializing in building materials, harnessing Chinese expertise, and an uplift in business standards by local factories.  

It added that the agreement also aims to draw top-tier service providers across various company sectors, its subsidiaries, and other projects.