1 IMF chief sees disappointing global growth in 2016
(The Guardian) Global economic growth will be disappointing next year and the
outlook for the medium-term has also deteriorated, the head of the
International Monetary Fund has warned.
The IMF managing director, Christine Lagarde, said
the prospect of rising interest rates in the US and an economic slowdown in
China were feeding uncertainty and a higher risk of economic vulnerability
worldwide.
Added to that, growth in global trade has slowed
considerably and a decline in raw material prices was posing problems for
economies reliant on commodities, while many countries still had weak financial
sectors as the financial risks increase in emerging markets, she said.
“All of that means global growth will be
disappointing and uneven in 2016,” Lagarde said, noting that mid-term prospects
had also weakened as low productivity, ageing populations and the effects of
the global financial crisis dampened growth. In October, the IMF forecast that
the world economy would grow by 3.6% in 2016.
The US Federal Reserve hiked interest rates for the
first time in nearly a decade this month and made clear that was a tentative
beginning to a “gradual” tightening cycle. There are “potential spillover
effects”, with the prospect of increasing interest rates there already having
contributed to higher financing costs for some borrowers, including in emerging
and developing markets, Lagarde said.
Emerging market companies with debt in dollars and
revenue in sinking local currencies could struggle as the Fed begins what is
expected to be a series of interest rate increases. Lagarde warned that rising
US interest rates and a stronger dollar could lead to companies defaulting on
their payments and that this could “infect” banks and states.
But she said the risks associated with these changes
could be overcome by supporting demand, maintaining financial stability and
reforming structures. “Most highly developed economies, except the USA and
possibly Britain, will continue to need loose monetary policy, but all
countries in this category should comprehensively factor spillover effects into
their decision-making,” Lagarde said.
2 Subsidy reform hits Saudi industry (Gulf News) Due
to the recent energy subsidy reforms in Saudi Arabia, many companies have
announced to the Saudi stock exchange that they are expecting a cut in profitability
in the first quarter of 2016.
Saudi Arabia released the budget for 2016 with a
predicted deficit of $87 billion, which includes reforms that cut energy
subsidies. This has resulted in an increase in gasoline prices and electricity
tariffs. A meagre blanket increase in water has been applied as well, and
energy prices have been increased for industrial customers.
Five companies have released their expected costs
following the budget announcement. Saudi Arabia Fertilizers Co (SAFCO) said the
announcement has brought in an 8 per cent increase in production costs, Saudi
Basic Industries Corp (SABIC) costs will increase 5 per cent, and Saudi
Arabia’s Yanbu National Petrochemical Co (Yansab) said it will see an increase
of 6.5 per cent. Saudi Arabia’s National Industrialisation Co (Tasnee) and
Saudi Cement Co said the changes will cost them 190 million riyals (Dh186
million) and 68 million riyals respectively.
Farouk Soussa, Citi’s head of Middle Eastern
economics said, “Privatisation is positive, it can create a source of funding
and let the private sector do more of the heavy lifting for growth. But this is
a rather inopportune moment, markets are depressed, and there could be a tussle
later when the market recovers.”
3 India mobile subscribers cross 1 billion (Khaleej
Times) India's mobile phone subscriber base peaked to more than 1 billion users
for the first time, data released by the telecom regulator has shown, making
India the only country after China to achieve that milestone.
China's subscriber base is approximately 1.2 billion
users, according to the country's Bureau of Statistics. Total wireless
subscribers in India, Asia's third-largest economy, rose to more than 1 billion
at the end of October from 996.7 million at September-end, the data showed.
Mobile subscriptions in India have surged in recent
years, helped by the launch of cheaper smartphones and record low call rates as
a result of a cut throat competition among mobile phone operators to expand
customer base.
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