From a rise in US unemployment claims to a fall in industrial production in the euro zone and a deceleration in Japanese growth, signs of the global economic recovery losing traction are everywhere to be seen.
Although the prospect of lurching into a double-dip recession appears less likely at the moment, most economists expect the outlook to cool in the second half of the year. High unemployment, weak consumer demand and a shortage of credit will act as a hangover from the financial crisis, dragging on growth. The momentum of recovery is expected to stall as advanced countries wean their economies off the stimulus measures that acted as a cushion during the hard times.
"We do see global risks increasing in the second half of the year," said Monica Malik, the chief economist at EFG-Hermes in Dubai. "We are moving from the first stage 'easy' recovery into a patchy growth outlook with far greater volatility." For the Gulf, the risks of a slowdown in the global economy are considerable. A drop in investment appetite could impact on capital flows which have experienced a short-term recovery since the downturn.
"Given that the region's main non-oil sector offer was real estate, outside of investment in the oil and gas sector, mainly in Saudi Arabia and Qatar, the rest of the region will have lower foreign direct investment (FDI) than anticipated at the start of this year," said John Sfakianakis, the chief economist at Banque Saudi Fransi. A combination of a slowdown in the region's property market and concerns about corporate restructuring could further deter foreign capital, say economists.
During the past decade, such flows have formed an important part of the region's economic transformation. FDI is important as it allows GCC governments to use more of their wealth from oil to build foreign currency reserves rather than finance domestic projects. It also enables the region to boost its diversification efforts through the transfer of expertise. FDI projects in Saudi Arabia create 375,000 jobs, 27 per cent of them for nationals, and generate salaries of US$7.8 billion (Dh28.64bn), according to research by NCB Capital. The kingdom has a total FDI stock of $147.1bn, followed by $73.4bn for the UAE. Kuwait attracts the least FDI in the region, with a stock of $986 million.
As a leading supplier of the world's oil and petrochemicals, the risk for the region from a slowdown is that it may choke demand for its main exports. With governments in Europe embarking on austerity programmes to cut budget deficits, and households in many large economies holding back on spending, the outlook for a global rebound that has spurred exports may become less certain. EFG-Hermes lowered its expectation for the price of oil to $75 for the second half of the year, slightly below its forecast of $77 for the year as a whole.
"Lower potential growth worldwide will impact on oil prices and this region should expect reduced oil revenues with more diversified parts like Saudi Arabia and the UAE suffering less than places like Kuwait," said Alessandro Magnoli Bocchi, the chief economist at Kuwait China Investment Company (KCIC). However, even if prices slipped to $60, they would still be almost double what they were at the trough of the recession, and sufficient to allow all states, except Bahrain, to continue their investment spending comfortably without falling into deficit. Prices have so far averaged $77 this year, compared with an average of $61 last year.
Another reason to be optimistic is that the GCC's fiscal health is in better condition than in European countries, which are being forced to cut back their expenditure in an attempt to gain control of bulging budget deficits. Other risks to the region's economic recovery are domestic-based. Persistently sluggish credit growth is proving a challenge in countries across the world as borrowers and lenders' appetite for credit remains low.
In the GCC, attempts to develop the role of the non-oil private sector hinge on the ability of businesses to access bank credit. After an abundant flow of finance contributed to an average credit growth of 30 per cent in 2007-08, the IMF forecasts credit expansion in the region to be in the low single digits this year. Banque Saudi Fransi expects private-sector credit growth in the region's biggest economy, Saudi Arabia, to be about 5 to 8 per cent this year, better than last year but far short of the pre-global recession era. "In an environment where the global economy is jittery, appetite for expansion and credit in the private sector will be affected," said Mr Sfakianakis.
"This may mean the postponement of projects will be more prevalent than before the crisis." tarnold@thenational.ae
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THE SPECS
Engine: 1.5-litre turbocharged four-cylinder
Transmission: Constant Variable (CVT)
Power: 141bhp
Torque: 250Nm
Price: Dh64,500
On sale: Now
UAE currency: the story behind the money in your pockets
How Apple's credit card works
The Apple Card looks different from a traditional credit card — there's no number on the front and the users' name is etched in metal. The card expands the company's digital Apple Pay services, marrying the physical card to a virtual one and integrating both with the iPhone. Its attributes include quick sign-up, elimination of most fees, strong security protections and cash back.
What does it cost?
Apple says there are no fees associated with the card. That means no late fee, no annual fee, no international fee and no over-the-limit fees. It also said it aims to have among the lowest interest rates in the industry. Users must have an iPhone to use the card, which comes at a cost. But they will earn cash back on their purchases — 3 per cent on Apple purchases, 2 per cent on those with the virtual card and 1 per cent with the physical card. Apple says it is the only card to provide those rewards in real time, so that cash earned can be used immediately.
What will the interest rate be?
The card doesn't come out until summer but Apple has said that as of March, the variable annual percentage rate on the card could be anywhere from 13.24 per cent to 24.24 per cent based on creditworthiness. That's in line with the rest of the market, according to analysts
What about security?
The physical card has no numbers so purchases are made with the embedded chip and the digital version lives in your Apple Wallet on your phone, where it's protected by fingerprints or facial recognition. That means that even if someone steals your phone, they won't be able to use the card to buy things.
Is it easy to use?
Apple says users will be able to sign up for the card in the Wallet app on their iPhone and begin using it almost immediately. It also tracks spending on the phone in a more user-friendly format, eliminating some of the gibberish that fills a traditional credit card statement. Plus it includes some budgeting tools, such as tracking spending and providing estimates of how much interest could be charged on a purchase to help people make an informed decision.
* Associated Press
The specs
Engine: 2.7-litre 4-cylinder Turbomax
Power: 310hp
Torque: 583Nm
Transmission: 8-speed automatic
Price: From Dh192,500
On sale: Now
Voices: How A Great Singer Can Change Your Life
Nick Coleman
Jonathan Cape
Israel Palestine on Swedish TV 1958-1989
Director: Goran Hugo Olsson
Rating: 5/5
Confirmed%20bouts%20(more%20to%20be%20added)
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MATCH INFO
Manchester City 4 (Gundogan 8' (P), Bernardo Silva 19', Jesus 72', 75')
Fulham 0
Red cards: Tim Ream (Fulham)
Man of the Match: Gabriel Jesus (Manchester City)
French Touch
Carla Bruni
(Verve)
Essentials
The flights
Etihad and Emirates fly direct from the UAE to Delhi from about Dh950 return including taxes.
The hotels
Double rooms at Tijara Fort-Palace cost from 6,670 rupees (Dh377), including breakfast.
Doubles at Fort Bishangarh cost from 29,030 rupees (Dh1,641), including breakfast. Doubles at Narendra Bhawan cost from 15,360 rupees (Dh869). Doubles at Chanoud Garh cost from 19,840 rupees (Dh1,122), full board. Doubles at Fort Begu cost from 10,000 rupees (Dh565), including breakfast.
The tours
Amar Grover travelled with Wild Frontiers. A tailor-made, nine-day itinerary via New Delhi, with one night in Tijara and two nights in each of the remaining properties, including car/driver, costs from £1,445 (Dh6,968) per person.
Company%20Profile
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BORDERLANDS
Starring: Cate Blanchett, Kevin Hart, Jamie Lee Curtis
Director: Eli Roth
Rating: 0/5
A list of the animal rescue organisations in the UAE