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Global leaders urge G20 to set up $8bn COVID-19 fund

Global leaders urge G20 to set up $8bn COVID-19 fund

TradeArabia News Service in Dubai, reported that Global leaders urge G20 to set up $8bn COVID-19 fund before concluding that “The UN, the G20 and interested partners should work together to co-ordinate further action.” Saudi Arabia that was readying itself to take over the G20 reins never imagined that the world’s situation could go this way.

A 165-strong international group including 92 former presidents and prime ministers, along with current economic and health leaders in the developed and developing world, have come together to demand the creation of a G20 executive task force and an immediate global pledging conference which would approve and co-ordinate a multi-billion dollar coronavirus fighting fund. 

In an open letter addressed to G20 leaders, the group – which wants both to speed up the search for a vaccine, cure and treatments and revive the global economy – urges global collaboration and commitment to funding ‘far beyond the current capacity of our existing international institutions’.  

“The economic emergency will not be resolved until the health emergency is addressed: the health emergency will not end simply by conquering the disease in one country alone but by ensuring recovery from COVID-19 in all countries,” the statement says. 

The plea is for agreement within days for:

  • $8 billion to rapidly hasten the global effort for vaccines, cure and treatment;  
  • $35 billion to support health systems — from ventilators to test kits and protective equipment for health workers; and
  • $150 billion for developing countries to fight the medical and economic crisis, prevent a second wave of the disease flowing back into countries as they come out of the first wave. This means waiving debt interest payments for the poorest countries, including $44 billion due this year from Africa. 
  • $500-$600billion issue of additional resources by the IMF in the form of special drawing rights.  

The letter also urges the co-ordination of fiscal stimuli to avoid a recession becoming a depression. 

While welcoming the G20’s first communique on the COVID-19 crisis, the group is pressing the G20 to speed up an action plan. 

The group states: “All health systems – even the most sophisticated and best funded – are buckling under the pressures of the virus.  Yet if we do nothing as the disease spreads in poorer African, Asian and Latin American cities which have little testing equipment, hardly any ventilators, and few medical supplies; and where social distancing and even washing hands are difficult to achieve, COVID-19 will persist there – and re-emerge to hit the rest of the world with further rounds that will prolong the crisis. 

“World leaders must immediately agree to commit $8 billion – as set out by the Global Preparedness Monitoring Board – to fill the most urgent gaps in the COVID-19 response. This includes $1 billion this year for WHO, $3 billion for vaccines and $2.25 billion for therapeutics.  

“Instead of each country, or state or province within it, competing for a share of the existing capacity, with the risk of rapidly-increasing prices, we should also be vastly increasing capacity by supporting the WHO in coordinating the global production and procurement of medical supplies, such as testing kits, personal protection equipment, and ITU technology to meet fully the worldwide demand. We will also need to stockpile and distribute essential equipment. 

“$35 billion will be required, as highlighted by WHO, to support countries with weaker health systems and especially vulnerable populations, including the provision of vital medical supplies, surge support to the national health workforce (70% of whom in many countries are underpaid women) and strengthening national resilience and preparedness.  

“According to WHO, almost 30% of countries have no Covid\\\OVID-19 national preparedness response plans and only half have a national infection prevention and control program. Health systems in lower-income countries will struggle to cope; even the most optimistic estimates from Imperial College London suggest there will be 900,000 deaths in Asia and 300,000 in Africa. 

“We propose convening a global pledging conference – its purpose supported by a G20 Executive Task Force – to commit resources to meeting these emergency global health needs.” 

On the global economic outlook, the group proposes a range of measures and says: 

“Much has been done by national governments to counter the downward slide of their economies. But a global economic problem requires a global economic response. Our aim should be to prevent a liquidity crisis turning into a solvency crisis, and a global recession becoming a global depression. To ensure this, better coordinated fiscal, monetary, central bank, and anti-protectionist initiatives are needed. The ambitious fiscal stimuli of some countries will be all-the-more effective if more strongly complemented by all countries in a position to do so. 

“The long-term solution is a radical rethink of global public health and a refashioning – together with proper resourcing – of the entwined global health and financial architecture.  “The UN, the G20 and interested partners should work together to co-ordinate further action.”

– TradeArabia News Service

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Turkey tries to keep wheels of economy turning

Turkey tries to keep wheels of economy turning

Bulent Gökay, Keele University elaborates on how Turkey tries to keep wheels of economy turning despite worsening coronavirus crisis. It, contrary to its neighbours, would not go down the same way. Read on to find out why.


Turkey confirmed its first case of the new coronavirus on March 11, but since then the speed of its infection rate has surpassed that of many other countries with cases doubling every two days. On April 2, Turkey had more than 15,000 confirmed cases and 277 deaths from complications related to the coronavirus, according to data collated by John Hopkins University.

The Turkish government has called for people to stay at home and self-isolate. Mass disinfection has been carried out in all public spaces in cities. To encourage residents to stay at home, all parks, picnic areas and shorelines are closed to pedestrians.

Some airports are closed and all international flights to and from Turkey were banned on March 27. All schools, universities, cafes, restaurants, and mass praying in mosques and other praying spaces has been suspended, and all sporting activities postponed indefinitely.

Manufacturing remains open

Many small businesses in the service sector are closed, and many companies in banking, insurance and R&D have switched to working from home. But in many industrial sectors, such as metal, textile, mining and construction, millions of workers are still forced to go to work or face losing their jobs. In Istanbul, where more than a quarter of Turkey’s GDP is produced, the public transport system still carries over a million people daily.

Recep Tayyip Erdoğan, Turkey’s president, has openly opposed a total lockdown, arguing a stay-at-home order would halt all economic activity. On March 30, he said continuing production and exports was the country’s top priority and that Turkey must keep its “wheels turning”.

But in the short term, many of Turkey’s export markets for minerals, textiles and food, such as Germany, China, Italy, Spain, Iran and Iraq, are already closed due to the virus. This has led to enormous surpluses piling up in warehouses. Even where there are overseas customers, getting the goods delivered has proven difficult. The process of sanitising and disinfecting the trucks and testing the drivers before they travel takes many extra hours, sometime days, after waiting in long lines.

Still, Erdogan’s statements give the impression that he sees this pandemic not only as a serious crisis, but also as an opportunity for Turkish manufacturers. The hope is that, after the Chinese shutdown, European producers which depend on Chinese companies for a range of semi-finished products may consider Turkey as an alternative supplier in the longer term. That’s why the government is still allowing millions of workers to go to factories, mines and construction sites despite the huge health risk.

A bruised economy

The Turkish government announced a 100 billion lira (£12 billion) stimulus package on March 18. It included tax postponement and subsidies directed at domestic consumption, such as reducing VAT on certain items and suspension of national insurance payments in many sectors for six months. But this is an insignificant sum for an economy as big as Turkey’s.

Most of the support will go to medium and large companies that were forced to close, and only a very tiny amount to individual workers. In order to benefit from the scheme, a person must have worked at least 600 days in the past three years (450 days for those in Ankara). Those with most need get the lowest level of help or no help from the state.

The tourism sector, which accounts for about 12% of the economy, has already been decimated. Some 2.5 million workers will not be able to work as they had been expecting to in the peak tourist months between April and September.

Limited room for manoeuvre

Even before the virus hit Turkey the economy was already weak, still trying to recover from the impacts of a 2016 coup attempt and a 2018 currency crisis, both of which caused severe stress to Turkey’s economic and financial systems.

In March, Turkey’s Central Bank reduced its benchmark interest rate by 1%, and several of the country’s largest private banks announced measures to support the economy, such as suspending loan repayments. As a result, the Turkish lira initially held up reasonably well, compared with other emerging market economies, but it fell to an 18-month low on April 1 as the coronavirus death rates accelerated. Official interest rates have fallen below 10%, providing some protection to those holding Turkish lira versus some foreign currencies.

Turkey’s financial options to limit the impact of the crisis are limited. Credit rating agency Moody’s revised its prediction for the country GDP from 3% growth in 2020 to a 1.4% contraction. Still, it may get a reprieve from the low oil price. Turkey imports almost all its energy needs, and with the recent fall in the price of oil and gas, this means Turkey could save about US$12 billion (£9.6 billion) in energy imports.

It is hard to see very far ahead. During the next few months, it’s expected that Turkey, alongside South Africa and Argentina, could be sliding toward insolvency and debt default. After that, everything depends on how this crisis progresses and how long it will take to end.

Bulent Gökay, Professor of International Relations, Keele University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Gulf faces recession as oil deluge meets COVID-19

Gulf faces recession as oil deluge meets COVID-19

MENA sovereign wealth funds are set to yank billions from stock markets, with the cash needed back home reported Alison Tahmizian Meuse in an article Gulf faces recession as oil deluge meets COVID-19 in an Asian Times article dated March 30, 2020. It is said elsewhere notably in the local media that these sovereign funds could shed something like $300 billion.


A stairwell in the Queen Elizabeth II cruise liner docked at Port Rashid in Dubai, where the tourism sector has been devastated by the COVID-19 pandemic. Photo: AFP

Middle East oil exporters are bracing for recession and the lowest growth rates since the 1990s, with economists warning that the “twin shocks” of Covid-19 and plummeting oil prices will have a knock-on effect across the region.

“Quarantines, disruption in supply chains, the crash in oil prices in light of the breakdown of OPEC+, travel restrictions, and business closings point to a recession in the MENA region, the first in three decades,” the Institute of International Finance warned this week.

Oil exporters in the Gulf and North Africa are projected to see growth levels drop to 0.8%, IIF said, based on an average price per barrel of $40. At the time of publication on Monday, crude was hovering at cents above $20 per barrel.

Petro-titans like Saudi Arabia, which have shifted major resources toward sovereign wealth funds in recent years, are expected to recall funds back home as their collective surplus of $65 billion is flipped inside out to a deficit of the same amount or more.

These sovereign wealth funds could shed up to $75 billion in stocks in the coming period, Reuters on Sunday quoted JPMorgan’s Nikolaos Panigirtzoglou as saying.

Saudi Arabia’s Public Investment Fund currently holds significant shares in everything from ride-hailing app Uber to Japan’s SoftBank.

Such funds have likely already offloaded as much as $150 billion-worth of stock in the month of March, said Panigirtzoglou.

How did we get here?

Saudi Arabia earlier this month launched an oil price war, flooding the market with crude in a game of chicken against Russia after the latter refused to collaborate on production cuts.

Moscow, which desired lower prices to compete with US shale, did not blink.

The result has been, Bloomberg reports, a “cascade” of oil surplus, with some landlocked producers literally paying buyers to relieve them of supplies they cannot store.

From Saudi Arabia to Algeria, MENA exporters are expected to see hydrocarbon earnings fall by nearly $200 billion this year, according to the Institute of International Finance report, resulting in a loss of more than 10% of GDP in this sector alone.

As the price war was launched, the novel coronavirus began spreading through the Gulf, shattering hopes of diversifying toward tourism in the near future.

Saudi Arabia, with approximately 1,300 confirmed cases as of Monday, has shuttered the gates of Mecca over fears it could become the new virus epicenter after Iran.

The religious pilgrimage to Islam’s holiest sites, mandatory for every Muslim, nets Saudi Arabia billions of dollars each year.

Knock-on effect

The financial troubles in the Gulf do not stop at the Persian Gulf, but are slated to have a painful knock-on effect across the Middle East region.

Young people from Lebanon, Jordan, and Egypt – with its population of 100 million, have for decades turned to the Gulf Arab states for jobs after graduation, doing everything from running restaurants in Riyadh to working in banks in Dubai.

Such positions have become even more crucial in a time of heightened visa restrictions in the United States and Europe.

A recession in the Gulf, thus spells an even worse outlook for already struggling economies in the Levant, which often look to the oil producers for help during hard times.

“A global recession will lead to a reduction in trade, foreign direct investment, tourism flows, and remittances to Egypt, Jordan, Morocco, and Lebanon,” IIF said.

Egypt, the report notes, is expected to see a “significant drop” in critical Suez Canal transit revenues, as global trade suffers.

The Egyptian government earlier this month revoked the press credentials of Guardian correspondent Ruth Michaelson after she reported on a researcher’s findings that Egypt was seeing a higher number of Covid-19 cases than reported.

UAE best-positioned in GCC to absorb oil shock

UAE best-positioned in GCC to absorb oil shock

Following the recent oil price collapse, risks of a political and financial storm for MENA producers can easily be imagined but here is Waheed Abbas, Dubai, March 18, 2020, with his UAE best-positioned in GCC to absorb oil shock.


Nation will be able to finance current account deficit for 35 years even with prices this low


UAE best-positioned in GCC to absorb oil shock
Oil prices have plummeted over the last few weeks, with Brent dropping 45 per cent in the past month.
(Reuters file)

The UAE is best-positioned among GCC economies to weather the decline in oil prices as it can finance its current account deficit longer than any of its regional peers, says a new report.

According to Capital Economics, the UAE can finance its current account deficit for 35 years if oil prices stay at $25 a barrel. Kuwait comes second followed by Qatar, Saudi Arabia, Bahrain and Oman.

“In the four largest Gulf economies – Saudi Arabia, the UAE, Kuwait and Qatar – current account deficits could be financed through a drawdown of large foreign exchange savings for a considerable amount of time. Saudi Arabia could do so for around a decade and the other three countries for even longer,” said Jason Tuvey, senior emerging markets economist at

Capital Economics. The report said the UAE still runs a current account surplus at $30 a barrel.

Brent crude was trading down $3.37, or 12 per cent, at $25.35 a barrel by 1720GMT after dropping as low as $25.23, its weakest since 2003. US crude was down $5.19, or 19 per cent, at $21.76. The session low was the lowest since March 2002.

Data showed that UAE-based sovereign wealth funds held over $1.21 trillion worth of assets in August 2019 compared to $825.76 billion by Saudi Arabia, $592 billion by Kuwait, $320 billion by Qatar and $22.14 billion by Kuwait.

Oil prices have plummeted over the last few weeks, firstly due to coronavirus and then the collapse of Opec+ talks on production cuts. Brent has dropped 45 per cent in the past month from $57.60 a barrel on February 17 to $31.60 on March 17.

Tuvey noted that large foreign exchange savings provide substantial buffers and the likes of Bahrain and Oman, which are most vulnerable to a period of low oil prices, and can probably rely on financial support from their neighbours to avert devaluations.

He said dollar pegs in Bahrain and Oman are more vulnerable, with foreign exchange savings only able to cover current account shortfalls for a couple of years at most. Bahrain secured a $10 billion financing package from its neighbours in mid-2018.

In recent days, GCC governments have stepped up fiscal support in order to mitigate the economic hit from efforts to contain the virus. “If oil prices stay low even after the virus fears have subsided, austerity will come on to the agenda and this means that an eventual recovery in non-oil sectors will be slow-going,” he said.

Khatija Haque, head of Mena research at Emirates NBD, has said that the UAE posted a budget surplus of Dh37 billion ($10 billion) in 2019 and is well-positioned to withstand lower oil prices in 2020.

“If we strip out volatile oil revenues, we estimate the UAE’s non-oil budget deficit narrowed to just under 20 per cent of non-oil GDP, down from 27 per cent of non-oil GDP in 2015, and pointing to a tightening of fiscal policy in recent years,” Haque said.

Monica Malik, chief economist at Abu Dhabi Commercial Bank, said the sharp fall in oil prices and the outlook for a price war adds significant downside risks to the economic outlooks of GCC countries.

“We estimate that all GCC countries will realise a significant fiscal deficit at the current oil price of $37 per barrel, with Oman and Saudi Arabia seeing particularly significant shortfalls relative to GDP. A weaker oil revenue backdrop will require a meaningful pull-back in government spending, as was the case in 2015 and 2016, to limit the size of the fiscal deficit,” Malik said.

She sees a forecasted increase in output from Saudi and Russia and the changing dynamics of oil market fundamentals will likely bolster global oil stocks significantly in 2020. A number of oil-importing countries are also likely to accumulate inventories at the current low price levels, which in turn would lower oil demand during second-half of 2020.

Furthermore, the outlook for inventories beyond 2020 will depend on global demand and coronavirus-related developments in the coming months, she added.

Edward Bell, commodity analyst at Emirates NBD Research, has said that dust has not entirely settled yet caused by travel restrictions and lockdowns due to coronavirus.

– waheedabbas@khaleejtimes.com

The Middle East still looking for a growth model

The Middle East still looking for a growth model

Posted on March 8, 2020, in The Arab Weekly, Six decades after independence, Middle East still looking for growth model by Rashmee Roshan Lall is an accurate survey of the region that faces, as we speak, prospects of harshest times. How is the Middle East still looking for a growth model? Investing in the human capital of children and young people as well as enhancing their prospects for productive employment and economic growth is little more complicated than relying on Crude Oil exports related revenues. These are the main if not the only source of earnings of the region now plummeting perhaps for good before even peaking. In effect, all petrodollar inspired and financed development that, put simply, was transposed from certain parts of the world, using not only imported materials but also management and all human resources can not result in anything different from that described in this article.


Though a large youthful population would normally be regarded an economic blessing, it’s become the bane of the MENA region.


The Middle East still looking for a growth model
Dramatic changes. Employees of Aramco oil company at Saudi Arabia’s Abqaiq oil processing plant. (AFP)

It’s been 75 years since World War II ended and the idea of decolonising the Middle East and North Africa began to gain ground but, while formal colonisation ended about six decades ago, the region seems unable to find a clear path to growth.

Rather than an “Arab spring,” what may be needed is a temperate autumn, a season of mellow fruitfulness to tackle the region’s biggest problems. These include finding a way to use the demographic bulge to advantage, reducing inequality of opportunity and outcome and boosting local opportunity.

Here are some of the region’s key issues:

Youth ‘explosion’

The MENA region’s population grew from around 100 million in 1950 to approximately 380 million in 2000, the Population Reference Bureau said. It is now about 420 million and half that population lives in four countries — Egypt, Sudan, Iraq and Yemen.

The 2016 Arab Human Development Report, which focused on youth, said most of the region’s population is under the age of 25.

The youth bulge is the result of declining mortality rates in the past 40 years as well as an average annual population growth rate of 1.8%, compared with 1% globally. The absolute number of young people is predicted to increase from 46 million in 2010 to 58 million in 2025.

Though a large youthful population would normally be regarded an economic blessing, it’s become the bane of the MENA region. The demographic trend suggests the region needs to create more than 300 million jobs by 2050, the World Bank said.

Jihad Azour, International Monetary Fund (IMF) director for the Middle East and Central Asia, said MENA countries’ growth rate “is lower that what is required to tackle unemployment. Youth unemployment in the region exceeds 25%-30%.” The average unemployment rate across the region is 11%, compared to 7% in other emerging and developing economies.

Unsurprisingly, said Harvard economist Ishac Diwan, a senior fellow at the Middle East Initiative, young Arabs are unhappier than their elders as well as their peers in countries at similar stages of development.

Last year’s Arab Youth Survey stated that 45% of young Arab respondents said they regard joblessness as one of the region’s main challenges, well ahead of the Syrian war (28%) and the threat of terrorism (26%).

The region’s population is expected to nearly double by 2030 and the IMF estimated that 27 million young Arabs will enter the labour market the next five years.

Poverty and inequality

Most Arab people do not live in oil-rich countries. Data from the UN Economic and Social Commission for Western Asia (ESCWA) stated that 116 million people across ten Arab countries (41% of the total population), are poor and another 25% were vulnerable to poverty. This translates to an estimated 250 million people who may be poor or vulnerable out of a population of 400 million.

The MENA region is also regarded as the most unequal in the world, with the top 10% of its people accounting for 64% of wealth, although the average masks enormous differences from one country to another.

The middle class in non-oil producing Arab countries has shrunk from 45% to 33% of the population, ESCWA economists said. In a report for the Carnegie Corporation last year, Palestinian-American author Rami G. Khouri described what he called “poverty’s new agony,” the fact that a poor family in the Middle East will remain poor for several generations.

Egypt is a case in point. In 2018, Cairo vowed to halve poverty by 2020 and eliminate it by 2030. However, Egypt’s national statistics agency released a report on household finances last year that said that 33% of Egypt’s 99 million people were classified as poor, up from 28% in 2015. The World Bank subsequently nearly doubled that figure, saying 60% of Egyptians were “either poor or vulnerable.”

Wealth gaps between countries are greater in the region than in others because it has some of the world’s richest economies as well as some of the poorest, such as Yemen.

Inequality is not the only problem in the region. Former World Bank economist Branko Milanovic said the uneven picture means that last year’s protests in Lebanon, Algeria, Sudan and Iraq cannot be explained by “a blanket story of inequality.”

Indeed, Algeria, a relatively egalitarian country, was roiled by protests, first against a long-serving president and then against the wider political system.

French economist Thomas Piketty, who wrote the bestselling book on income inequality, “Capital in the Twenty-First Century,” said Arab countries must come up with a way to share the region’s vast and unequally distrib­uted wealth.

Lost decades of growth

In the decade from 2009, the region’s average economic growth was one-third slower than in the previous decade. The IMF said per capita incomes have been “near stagnant” and youth unemployment has “worsened significantly.”

The state is the largest employer in many Arab countries and over-regulation of the private sector left it underdeveloped and unable to overcome the significant barriers to trade and economic cooperation across regional borders. Meanwhile, inflexible labour laws stifled job creation and cronyism allowed inefficiency to stay unchallenged. In 2018, the average rank of Arab countries on the World Bank’s Doing Business survey was 115th out of 190 countries.

Along with structural factors, conflict has had a debilitating effect on economic growth. Three years ago, the World Bank noted that the Syrian war had killed approximately 500,000 people, displaced half the population — more than 10 million people — and reduced more than two-thirds of Syrians to poverty.

By 2017, conflict in Yemen and Libya had displaced more than 15% and 10% of their respective populations of 4 million and 6 million. Taken together, the Syrian, Yemen and Libyan civil wars have affected more than 60 million people, about one-fifth of the MENA population.

Infrastructural damage runs into the billions of dollars but it is the loss — or outright collapse, as in Yemen — of economic activity that has affected real GDP growth.

Countries in the region affected by conflict lost $614 billion cumulatively in GDP from 2010-15 — 6% of the regional GDP, ESCWA’s 2018 report on institutional development in post-conflict settings stated.

New thinking needed

This is the year when, for the first time, an Arab country holds the chairmanship of the Group of 20 of the world’s largest economies. It could be an opportunity to consider existing trends within the region, what needs to be changed and how.

In the words of Oxford development macroeconomist Adeel Malik, “the Arab developmental model… seems to have passed its expiration date.” In a 2014 paper for the Journal of International Affairs, Malik said “failure of the Arab state to deliver social justice is ultimately rooted in the failure of a development model based on heavy state intervention in the economy and increasingly unsustainable buyouts of local populations through generous welfare entitlements.”

It’s a good point, for the region’s richest countries just as much as its poorest. Oil-rich states are affected by dramatic changes in oil prices and the increasingly urgent suggestion that the world is at “peak oil.” An IMF report warned that, by 2034, declining oil demand could erode the $2 trillion in financial wealth amassed by Gulf Cooperation Council members. The IMF said “faster progress with economic diversification and private sector development will be critical to ensure sustainable growth.”

Creativity and courage will be needed if the Arab world is to meet the expectations of its youthful population and the challenges posed by its increasing inequality.

New Entertainment Complexes to Prime Locations across the Kingdom

New Entertainment Complexes to Prime Locations across the Kingdom

The Saudi Entertainment Ventures Company (Seven), established by the Public Investment Fund (PIF) and mandated to invest, develop and operate entertainment destinations in Saudi Arabia, has announced the expansion of new entertainment complexes to prime locations across the kingdom.

New Entertainment Complexes to Prime Locations across the Kingdom

Seven to build 20 leisure complexes in Saudi Arabia was confirmed by all local media.

RIYADH, These will delight residents and tourists alike and contribute to positioning Saudi Arabia as a hub for entertainment and leisure, said a statement from Seven.

The entertainment complexes will meet the fast-growing tourism sector and contribute to realising the goals outlined in Saudi Vision 2030, it stated.

These projects are being developed in key strategic geographic locations, providing large resident populations with innovative leisure choices that will appeal to all the family. Each complex will feature several entertainment and leisure choices including cinemas, play areas, rides, food and beverage (F&B) outlets, attractions and more, it added.

Chairman Abdullah Al Dawood said Seven is building the entertainment ecosystem of the kingdom, having already opened the first cinema in Saudi Arabia in 35 years.

“We have a clearly structured development plan to build 20 entertainment destinations, 50 cinemas and two large theme parks in prime locations across the kingdom,” stated Al Dawood.

In Jeddah, Seven will develop several entertainment complexes adding to the leisure choices for over four million residents and visitors.

With entertainment complexes coming up by the azure waters of the Red Sea as well as in areas that are popular among residents, the leisure ecosystem of Jeddah will witness a dramatic transformation.

In line with the vision of the leadership to offer more attractions that add to the quality of life of residents and visitors to the holy cities of Makkah and Madinah, Seven will open new entertainment complexes.

Another addition is in Taif, the fifth biggest city in Saudi Arabia and the unofficial ‘summer capital’, where the cool climes draw people to its location on the slopes of the Sarawat Mountains.

Known as the spring by the sea for its popularity among tourists as a scuba-diving destination with white sandy shores, Yanbu is another strategic location. With easy connectivity from Riyadh and Dammam, Al-Kharj will also feature a Seven entertainment complex.

Another area which will feature a project by Seven will be Buraydah, located in the centre of Saudi Arabia, said the statement from Seven.

Abha and Khamis, set in the Asir Mountains and known for equitable all-year weather, will also have new entertainment complexes by Seven, adding to their touristic value.

The port city of Jazan by the Red Sea, serving as a large agricultural heartland of the kingdom, features several ambitious infrastructure projects and is another natural choice for Seven – along with Tabuk, one of the historic sites, rich in rock art, archeological sites, castles and mosques.

Adding to the entertainment ecosystem of the capital city of Riyadh is the development of the entertainment complex at Al Hamra that will serve the densely populated neighbourhoods in the north-east of Riyadh.

At the intersection of King Abdullah Road and East Ring Road, the project will serve over 2.5 million people within a radius of a 30-minute drive. Another exciting upcoming addition to Riyadh is the entertainment complex at Al Nahda, with the Nahda Park Metro Station just a few metres away. Announced last year, work on these projects is progressing as per schedule.

Further adding to the communities of  Dammam and Al Khobar, which serve as vital hubs for several key industries and global businesses, Seven is bringing waterfront attractions that will create unforgettable moments of joyful entertainment for everyone. Announced last year, these projects will also offer a range of entertainment choices for residents and visitors.

“We are committed to realising the goals of Saudi Vision 2030 to accelerate the creation of world-class entertainment assets in the Kingdom that support economic diversification, create new jobs, and contribute to socio-economic progress. Our complexes will position the kingdom as an entertainment, culture and tourism hub of the region,” he stated.

“At Seven, we believe in promoting and creating opportunities for the private sector to thrive in the fast-evolving entertainment landscape of the kingdom,” noted Al Dawood.

“We are inviting the most ambitious and creative business partners and vendors to join us in our remarkable step forward to shape the entertainment landscape of the Kingdom,” he added.

TradeArabia News Service

IMF note on Gulf’s depleting wealth ‘a call to action’

IMF note on Gulf’s depleting wealth ‘a call to action’

In ZAWYA’s GCC, an article dated13 February 2020, by Nada Al Rifai is about the IMF note on Gulf’s depleting wealth ‘a call to action’ – Mubadala official referring to the IMF’s report on Oil demand declining is a huge challenge for GCC.

GCC countries need to absorb growing young population into future labor market.

IMF note on Gulf's depleting wealth 'a call to action'
The King Fahd highway in Riyadh, Saudi Arabia. Image used for illustrative purpose
Getty Images

The International Monetary Fund’s (IMF) recent report noting that GCC states could see their financial wealth depleted in the next 15 years is an important call to action for the region, a senior officer at the Abu Dhabi state fund said.

“The quest for economic diversification and the bridge that hydrocarbon has given us is something that we’ll continue to be looking at and focus on for the next 20 to 40 years,” Waleed Al Mokarrab Al Muhairi, Deputy Group CEO, Mubadala, told delegates at the Milken Institute Summit held in Abu Dhabi.

On whether the 15 years’ time horizon for the Gulf states is too aggressive, Al Muhairi said: “Whatever the number is, it is an important call for action. Everybody in the GCC is thinking about diversifying, but not everybody is at the same level of diversification.”

While the UAE’s hydrocarbon wealth was transformed over the last 45 years into world-class infrastructure, great education, and good healthcare, Mubadala’s Al Muhairi said, this would still not be enough.

“If you want to maintain relevance as an economic hub and to ensure the best quality of life for your citizens and the people who live in one of the most open economies in the region, we need to keep growing. To keep growing, we need to ensure that the economy is innovation-led, to become a technology developer and exporter, and to continue to look for ways to address some of the big issues of the day,” he said.

“We have one of the youngest populations on Earth, and while we don’t necessarily have an employment problem today, it is really important that we think about how we absorb all those young people and make sure they have productive ways to contribute to the overall wellbeing of society,” he said.

A recent report by Fitch Solutions said that Arab Gulf countries are expected to advance labour force nationalisation policies, yet some countries of the bloc will go in for stricter policy implementation than others.

Countries like the UAE and Qatar that are relatively wealthier, have more fiscal flexibility and smaller youth populations are under less pressure to implement labour force nationalisation than other GCC countries such as Oman and Saudi Arabia. Read more here.

(Reporting by Nada Al Rifai, editing by Seban Scaria)

(nada.rifai@refinitiv.com)

Construction Activity Can Signal When Credit Booms Go Wrong

Construction Activity Can Signal When Credit Booms Go Wrong

An IMF blog article by Deniz Igan dated February 12, 2020, holds that Construction Activity Can Signal When Credit Booms Go Wrong. This state of affairs seems to apply almost universally.  Indeed, as per the French saying “when the building goes, everything goes,” it appears that it took time for the international financial institution to reach this conclusion, especially with regards to the countries of the  MENA region.


In Spain, private sector credit as a share of GDP almost doubled between 2000 and 2007. This increase was accompanied by a boom in housing prices—which doubled in real terms over the same period. The economy as a whole also grew at a record pace.

But then in 2008, Spain’s credit bubble burst, and with it came loan defaults, bank failures, and a prolonged economic slowdown.

A less-noticed development in Spain was in the construction sector, where employment grew by an astounding 47 percent, compared to the economy-wide increase of 27 percent.

New IMF staff research, based on a large sample of advanced and emerging market economies since the 1970s, shows that long-lasting credit booms that featured rapid construction growth never ended well.

New evidence on credit booms

Rapid credit growth—known as “credit booms”—presents a trade-off between immediate, buoyant economic performance and the danger of a future crisis. The risk of a “bad boom”—where a rapid credit growth episode is followed by a financial crisis or subpar economic growth—increases when there is also a boom in house prices.

Long-lasting credit booms that featured rapid construction growth never ended well.

Our research shows that the experience with the dangerous combination of credit booms and rapid expansion in the construction sector goes beyond the Spanish borders and extends to time periods not related to the global financial crisis.

We find that signals from construction activity may help to tell apart the dangerous booms, which need to be controlled, from the episodes of buoyant but healthy credit growth (“good booms”).

Credit booms do not lift all boats alike

During booms, output and employment expand faster. But not all sectors behave the same. Most of the extra growth is concentrated in a few industries—specifically, construction and, at a distant second, finance.

However, the same industries that benefit the most during booms experience the most severe downturns during busts. This implies that credit booms tend to leave few long-term footprints on a country’s industrial composition.

Construction Activity Can Signal When Credit Booms Go Wrong

Construction is special

Construction is the only sector that consistently behaves differently between good and bad credit booms. On average, output and employment in the construction sector grow between 2 and 3 percentage points more in bad booms than in good ones. In all other sectors, the difference is smaller and not significant (except trade, but only when it comes to output growth).

Construction Activity Can Signal When Credit Booms Go Wrong

What makes construction special? Construction does not have the growth potential of many other industries. In other words, too much investment in construction may divert resources away from more productive activities and result in lower output.

Also, the temporary boost in construction employment and the relatively low level of skills needed may discourage some workers from investing in their education and skills. This may have long-lasting effects on output after the boom ends.

Finally, construction projects have large up-front financing needs, and final consumers of the product (for example, houses or hotels) also tend to borrow to finance their purchases. As a result, debt may increase significantly more during booms led by construction.

The predictive power of construction activity

An unusually rapid expansion of the construction sector helps flag bad credit booms. A 1 percentage point increase in output and employment growth in the construction sector during a boom raises the probability of the boom being bad by 2 and 5 percentage points, respectively.

Construction growth is also a strong predictor of the economic costs of bad booms than other variables. A 1 percentage point increase in output growth in the construction sector during a bad boom corresponds to nearly a 0.1 percentage point drop in aggregate output growth during the bust.

Policy takeaways

If policymakers observe a rapid expansion in the construction sector during a credit boom, they should consider tightening macroeconomic policies and using macroprudential tools (such as higher down payments for mortgages).

In some cases, policy action will be triggered by other indicators, such as house prices or household mortgages. Sometimes, however, these other indicators may not sound the alarm (for example, because the construction boom is financed by the corporate sector or by foreigners), yet risks accumulate. Then, unusually rapid growth of construction could give a signal, for instance, to impose limits on banks’ exposure to real estate developers and other construction firms.

Finally, given that data on output and employment in the construction sector are often available with a few months’ lag, higher-frequency indicators such as construction permit applications could act as valuable signals. Construction indicators should also be included in models that assess risks to future economic activity.

MENA outlook promises to be ‘fascinating’ for investors in this decade

MENA outlook promises to be ‘fascinating’ for investors in this decade

GULF TIMES, Qatar top-selling English daily newspaper in its BUSINESS section posted on January 28, 2020, this article on MENA outlook promises to be ‘fascinating’ for investors in this decade, says HSBC.

“A multi-faceted investment strategy is needed to achieve the three objectives of income, growth and stability,” points out Willem Sels, chief market strategist, HSBC Private Banking.

MENA outlook promises to be ‘fascinating’ for investors in this decade
Willem Sels

The outlook for the Middle East and North Africa (Mena) region for the new decade is a “fascinating” one, full of continued economic reforms, transformation and market liberalisation, according to HSBC.
“With these developments, opportunities are expected to be widespread, across multiple industries and across the region. The combination of supportive monetary policy and responsive central banks are a few of the additional supportive variables for the region,” it said in a release yesterday.


The new decade will not be as kind to investors as the last and this will mean a new path for investments, said HSBC Private Banking in its first quarter’s investment outlook.
“We will most likely see a US recession at some point in the next ten years, and while central banks’ policies should remain accommodative, it is clear that the new decade will mean a new path for investments,” says HSBC Private Banking in its investment outlook for the first quarter of 2020.
“A multi-faceted investment strategy is needed to achieve the three objectives of income, growth and stability,” pointed out Willem Sels, chief market strategist, HSBC Private Banking.
In a low growth and low interest rate environment, returns are unlikely to be as high as they were in the past decade, and in an environment where broad-based market upside is lower than in the past, and political risks remain high, HSBC Private Banking believes diversifying risk exposures will be especially important.
HSBC Private Banking says portfolios should avoid excessive cash balances as well as the lowest rated end of high yield.  It favours dollar investment grade, emerging markets’ local and hard currency debt, complemented with dividend stocks, real estate and private debt instruments to generate further income.
It also sees opportunities to boost the return potential of portfolios by focusing on quality companies with sustained earnings growth and, where appropriate, it believes some leverage can help boost the net income of portfolios. It can also make sense selectively to look to hedge funds and private equity to capture growth opportunities and private equity to look through short-term market volatility.
“It’s a new path for investments, but sometimes, new paths lead you to the most interesting sights” Sels noted.
In 2020-21, HSBC Private Banking says investors can expect interesting opportunities for long term growth in sectors, geographies or themes related to the ‘Fourth Industrial Revolution’ or ‘sustainability’.
It is also optimistic that the ageing, urban, digital, mobile, sharing-based, knowledge-based, circular, fast-paced and increasingly Asian global economy provides companies and investors with plenty of opportunities.

UAE remains least corrupt country in MENA region

UAE remains least corrupt country in MENA region

Khaleej Times of the UAE in an article by Waheed Abbas/Dubai dated January 23, 2020, informs that the UAE remains least corrupt country in MENA region per the latest Corruption Perceptions Index by Transparency International in its CPI 2019: Middle East and North Africa.

It shows a score of 39, the same as last year. There seems to be little progress in improving control of corruption in the Middle East and North Africa region generally but the massive protests currently thronging the streets in mostly the republics types of states of the MENA could be taken as seeking for improvement. Excerpts of the Khaleej Times follow.


With a score of 71, the United Arab Emirates is the best regional performer, followed by Qatar (62). At the bottom of the region, Syria scores 13, followed by Yemen with a score of 15. Both countries are significant decliners on the CPI, with Yemen dropping eight points since 2012 and Syria dropping 13 points during the same period.

Lack of political integrity

The region faces significant corruption challenges that highlight a lack of political integrity. According to our recent report, Global Corruption Barometer — Middle East and North Africa, nearly one in two people in Lebanon is offered bribes in exchange for their votes, while more than one in four receives threats if they don’t vote a certain way.

In a region where fair and democratic elections are the exception, state capture is commonplace. Powerful individuals routinely divert public funds to their own pockets at the expense of ordinary citizens. Separation of powers is another challenge: independent judiciaries with the potential to act as a check on the executive branch are rare or non-existent.

To improve citizens’ trust in government, countries must build transparent and accountable institutions and prosecute wrongdoing. They should also hold free and fair elections and allow for citizen engagement and participation in decision-making.

Image: Shutterstock / Hiba Al Kallas

For any press enquiries please contact press@transparency.org

UAE remains least corrupt country in MENA region

(Supplied)

The UAE has been rated least corrupt country, yet again, in the Middle East and North Africa by the Berlin-based Transparency International’s Corruption Perception Index (CPI) 2019.

Globally also, the country retained its 21st ranking, scoring 71 points.

At the bottom of the region, Syria scores 13, followed by Yemen with a score of 15. Both countries are significant decliners on the CPI, with Yemen dropping eight points since 2012 and Syria dropping 13 points during the same period.

“The region faces significant corruption challenges that highlight a lack of political integrity. According to our recent report, Global Corruption Barometer – Middle East and North Africa, nearly one in two people in Lebanon is offered bribes in exchange for their votes, while more than one in four receives threats if they don’t vote a certain way,” said Transparency International said in the report released on Thursday.

“To improve citizens’ trust in government, countries must build transparent and accountable institutions and prosecute wrongdoing. They should also hold free and fair elections and allow for citizen engagement and participation in decision-making,” it said.

With a score of 53, Saudi Arabia improved by four points since last year. In 2017, the Saudi Crown Prince Mohammad Bin Salman carried out an “anti-corruption” purge as part of his reform of the country.

Regionally, the UAE is followed by Qatar, Saudi Arabia, Oman, Jordan, Bahrain and Kuwait.

Globally, the top countries are New Zealand and Denmark, with scores of 87 each, followed by Finland (86), Singapore (85), Sweden (85) and Switzerland (85).

More than two-thirds of countries score below 50 on this year’s CPI, with an average score of just 43. Similar to previous years, the data shows that despite some progress, a majority of countries are still failing to tackle public sector corruption effectively.

“Governments must urgently address the corrupting role of big money in political party financing and the undue influence it exerts on our political systems,” said Delia Ferreira Rubio Chair Transparency International.

waheedabbas@khaleejtimes.com