The outcomes of the Kingdom’s assertive foreign policy, especially with relation to Iran, have been mixed, and are keeping political and security risks elevated. Longer-term growth will be driven by government reforms under its Vision 2030, which aims to reduce its dependence on oil export revenues and boost the private sector.
Oil slumps near $64 as OPEC clash looms and trade war escalates Oil fell near $64 a barrel as Saudi Arabia and Russia prepared for a clash with allied crude producers over whether to lift output and as China and the US exchanged threats over trade. Futures in New York dropped as much as 2.3 percent, on course for the lowest close since April 9 after a 2.7 percent decline on June 12. Iran says Venezuela and Iraq will join in blocking a proposal to increase production that’s backed by Saudi Arabia and Russia when OPEC and its allies meet in Vienna this week. China said it would impose tariffs on a variety of US goods, including crude and gasoline, in response to President Donald Trump’s $50 billion levy on Chinese imports.Crude has dropped more than 10 percent from its high in May amid signs Saudi Arabia and Russia are seeking to lift output curbs that have eliminated a global surplus and boosted prices.Meanwhile, traders are trying to digest the impact from both the US and China issuing tariffs on goods and the threat of a broader trade war between the world’s two largest economies.
Saudi prices rise by 2.8% so far in 2018 as VAT makes impact
Prices in Saudi Arabia have risen by 2.8 percent year-on-year so far in 2018 due to the introduction of VAT and utility and fuel price reform, according to new research. Jadwa Investment, citing the latest General Authority for Statistics (GaStat) inflation release for April, also showed that prices rose by 2.6 percent year-on-year in the month, declining by 0.2 percent month-on-month. Jadwa said food and beverages prices rose by 5.7 percent year-on-year in April, but declined by 0.9 percent month-on-month for the second time in a row. Housing and utilities prices rose slightly by 0.5 percent in April year-on-year, despite a spike in fuel prices in January, Jadwa noted, adding that housing rents, which have been showing negative growth rates since July 2017, weighed on this segment. The research also said that after a decline in January, annual growth in point of sale retail sales have rebounded, with the average year-to-date rise of 13 percent, compared to 7 percent in the same period last year. Despite the fact that this year saw the implementation of VAT, Jadwa said it still expects to see higher inflation rates in Ramadan.
Dubai’s Abraaj Offloads $52 Million Stake In Orascom Construction As Pressure Mounts Abraaj Group has sold off its entire stake in Egypt’s Orascom Construction for about $52 million, a move that comes as the Dubai-based private equity firm faces mounting challenges.Prior to the sell off, Abraaj held 6,256,155 ordinary shares, or 5.4%, of the issued share capital of the Egyptian construction giant, with ordinary shares priced at $8.30 each, according to a statement on Nasdaq Dubai. The Middle East’s largest private equity firm, founded in 2002 by Arif Naqvi, is currently in the midst of a restructure and is contending with the fallout from allegations that it mishandled funds. In February 2018, reports emerged that Abraaj misused funds intended for healthcare projects in South Asia and Sub-Saharan Africa, leading its investors to launch an investigation. Abraaj denied the allegations and hired the auditing firm KPMG to verify its receipts.
UAE Courts Economic Growth As It Reforms Visa Rules For Foreign Workers And Tourists The UAE has introduced a new low-cost insurance system for foreign workers, replacing the previous mechanism of bank guarantees for each worker as it looks to bolster economic growth and improve investment flows. According to the state news agency WAM, the new rules come into effect after they were approved by the cabinet. With the new regulations, the previous mandatory deposit of AED 3,000 has been replaced with a new insurance scheme that cost just AED 60 annually per worker. The Cabinet noted that such a move will help companies save AED 14 billion in costs which they could in turn redirect to develop their businesses. The new policy for a worker covers the end of service benefits, vacation allowance, overtime allowance, unpaid wages and worker’s return ticket. In the case of an injury, the insurance amount could rise to AED 20,000 per worker. The UAE has also moved to revamp residency rules, allowing a two-year extension for students to continue on their parents’ visa after they complete their university education. Tourism too is set to get a boost with the UAE exempting the entry fees for 48-hours transit passengers. Those stopping by for 96 hours will get a visa for a fee of just AED 50.
Abu Dhabi fund allocates $3bn aid package to Ethiopia
Abu Dhabi Fund for Development (ADFD), the national entity for development aid, has allocated a AED11 billion ($3 billion) economic aid package to the Ethiopian government to support sustainable socio-economic development. ADFD said it has deposited an amount of AED3.7 billion in the National Bank of Ethiopia to bolster the country’s fiscal and monetary policy, as well as to enhance the liquidity and foreign exchange reserves of its central bank. The remaining AED7.3 billion seeks to stimulate the Ethiopian economy and encourage joint investments.Mohammed Saif Al Suwaidi, director general of ADFD, and Teklewold Atnafu, governor of the National Bank of Ethiopia, signed a memorandum of understanding (MoU) outlining the terms of the funding in Addis Ababa, the capital of Ethiopia.Al Suwaidi said: “In addition to helping Ethiopia overcome the challenges it faces, the funding will encourage the UAE private sector to enter the Ethiopian market and benefit from the investment opportunities it offers.”He added that the funding will boost the country’s gross national income and revitalise key strategic sectors.
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