1 Middle East IoT spend to reach $3.2bn in three
years (Issac John in Khaleej Times) With the GCC governments encouraging
industries and businesses to get ready for the Internet of Things (IoT) and
leverage its uses towards energy management, the total IoT spend in the Middle
East is set to double by 2019.
Schneider Electric, a global specialist in energy
management and automation, said IoT would trigger the next wave of enterprise
digital transformation, unifying the worlds of OT and IT and fuelling a mobile
and digitally enabled workforce.
According to the International Data Corporation
(IDC), the total IoT spending in the Middle East will reach $1.8 billion in
2016 and then increase to $3.2 billion by 2019, with manufacturing,
transportation and utilities accounting for up to 50 per cent of this total.
Vendors and solution providers must be quick to adapt their offerings to be
compatible with the IoT.
2 UAE hikes fuel prices (Gulf News) The United Arab
Emirates’ Ministry of Energy hiked fuel prices further for the month of June. The
new prices were announced as global oil prices recover due to rise in demand
and disruptions in supplies specially from Nigeria.
Brent, the global benchmark, was trading at around
$50 per barrel, the highest since November. In a land mark decision in July
last year, the Ministry of Energy liberalised fuel prices and new pricing
policy linked to global prices was implemented.
A fuel price committee headed by the Under Secretary
of the Ministry of Energy was constituted to determine fuel prices every month.
The prices are based on the average global prices for diesel and petrol with
the addition of operating costs and profit margins of the distributing
companies. The new fuel prices will come into effect from June 1.
3 The case against negative interest rates (Robert
Skidelsky in The Guardian) Negative interest rates are simply the latest
fruitless effort since the 2008 global financial crisis to revive economies by
monetary measures.
When cutting interest rates to historically low
levels failed to revive growth, central banks took to so-called quantitative
easing: injecting liquidity into economies by buying long-term government and
other bonds. It did some good, but mostly the sellers sat on the cash instead
of spending or investing it.
Enter negative interest rate policy. The central
banks of Denmark, Sweden, Switzerland, Japan, and the eurozone have all
indulged. The US Federal Reserve and the Bank of England are being tempted.
The policy is supposed to work by aligning the
market rate of interest with the expected rate of profit, an idea derived from
the Swedish economist Knut Wicksell. The problem is that whereas until now it
had been believed that nominal interest rates cannot fall below zero, an
investor’s expected rate of return on a new investment may easily fall to zero
or lower when aggregate demand is depressed.
The World Bank has pointed out that negative rates
can have undesirable effects. They can erode bank profitability by narrowing
interest-rate margins. They can also encourage banks to take excessive risks,
leading to asset bubbles. Lower interest rates on deposits may cause large
sections of the economy to become cash-based, while pension and insurance
companies may struggle to meet long-term liabilities at a fixed nominal rate.
But, quite apart from these problems, the real case
against negative interest rates is the folly of relying on monetary policy
alone to rescue economies from depressed conditions. Keynes put it in a
nutshell: “If we are tempted to assert that money is the drink which stimulates
the system into activity, we must remind ourselves that there may be several
slips between the cup and the drink.”
Events following the crash of 2008 clearly show that
monetary policy on its own cannot achieve a level of economic activity close to
its potential. The state must be involved. Whether the capital spending appears
on the books of the central government or on the balance sheet of an
independent investment bank is secondary. Negative interest rates are simply a
distraction from a deeper analysis of what went wrong – and what continues to
go wrong.
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