MANILA: Growth in developing Asia could slow for a second straight year in 2019 and lose further momentum in 2020, the Asian Development Bank (ADB) said on Wednesday, warning of rising economic risks from a bitter Sino-US trade war and a potentially disorderly Brexit.
Developing Asia, which groups 45 countries in the Asia-Pacific region, is expected to grow 5.7 this year, the ADB said in its Asian Development Outlook report, slowing from a projected 5.9 percent expansion in 2018 and 6.2 percent growth in 2017.
The 2019 forecast represents a slight downgrade from its December forecast of 5.8 percent. For 2020, the region is forecast to grow 5.6 percent, which would be the slowest since 2001.
“A drawn out or deteriorating trade conflict between the People’s Republic of China and the United States could undermine investment and growth in developing Asia,” Yasuyuki Sawada, ADB’s chief economist, said in a statement.
The lender also cited uncertainties stemming from US fiscal policy and a possible disorderly Brexit as risks to its outlook because they could slow growth in advanced economies and cloud the outlook for the world’s second largest economy.
“Though abrupt increases in US interest rates appear to have ceased for the time being, policy makers must remain vigilant in these uncertain times,” Sawada said.
China’s economy will probably grow 6.3 percent this year, the ADB said, unchanged from its December projection, but slower than the country’s 6.6 percent expansion in 2018 despite recent government stimulus measures including more tax cuts and increased state spending on infrastructure.
Growth in the Chinese mainland is projected to cool further to 6.1 percent in 2020.
Beyond trade risks, the ADB said China’s growth will also be retrained by restrictions on shadow banking, which is expected to limit credit expansion even as fiscal stimulus provides some offset.
“I should emphasize although the government would like to stabilize growth, it wouldn’t want to push up the growth rate as in previous years when you saw a big stimulus package, like in the period of 2008-2009,” said Jian Zhuang, senior economist at ADB in Beijing.
Chinese banks may still remain reluctant to lower lending costs for companies partly on worries of rising risks of corporate defaults in a slowing economy. The central bank could take further actions, such as cutting the benchmark 1-year lending and deposit rates, the ADB said.
China has set its 2019 economic growth target at 6.0 to 6.5 percent.
By region, South Asia will remain the fastest growing in Asia Pacific, with the ADB predicting an expansion of 6.8 percent this year — lower than its previous forecast of 7.1 percent — and 6.9 percent next year.
From an estimated 7.0 percent growth in 2018, India’s economy is projected to expand at a faster pace of 7.2 percent in 2019 and 7.3 percent in 2020, the ADB said, as lower policy rates and income support to farmers boost domestic demand.
This year’s growth forecast for Southeast Asia was trimmed to 4.9 percent from an earlier estimate of 5.1 percent, as the Manila-based lender expect Malaysia, Singapore, Philippines and Thailand to grow slower than previously thought.
Next year, Southeast Asia is predicted to grow 5.0 percent.
Citing stable commodity prices, the ADB lowered its average inflation forecast for developing Asia to 2.5 percent this year from 2.7 percent previously, and it is expected to remain subdued at 2.5 percent in 2020.
Trade war, Brexit could slow developing Asia’s 2019 and 2020 growth: ADB
Trade war, Brexit could slow developing Asia’s 2019 and 2020 growth: ADB
- Developing Asia, which groups 45 countries in the Asia-Pacific region, is expected to grow 5.7 this year
- The 2019 forecast represents a slight downgrade from ADB’s December forecast of 5.8 percent
Rapid expansion of batteries crucial to meet COP28 climate goals: IEA
RIYADH: Global battery production must be scaled up to meet the climate security goals set at COP28, according to the International Energy Agency.
In its latest report, IEA said battery technology witnessed unprecedented growth in 2023, outstripping almost all other clean power source solutions.
The think tank added that an expected sharp fall in battery costs will accelerate the shift to renewable energy from fossil fuels in the coming years.
“Growth in batteries outpaced almost all other clean energy technologies in 2023 as falling costs, advancing innovation and supportive industrial policies helped drive up demand for a technology that will be critical to delivering the climate and energy targets outlined at the COP28 climate conference in Dubai,” said IEA in the report.
It added: “After their deployment in the power sector more than doubled last year, batteries need to lead a sixfold increase in global energy storage to enable the world to meet 2030 targets.”
During the COP28 summit, nearly 200 countries agreed to triple renewable energy capacity by 2030, double the pace of power source efficiency improvements, and transition away from fossil fuels.
The report added that 1,500 gigawatts of battery storage would be required to triple renewable capacity globally by the end of this decade.
However, IEA warned that a shortfall in deploying enough batteries could stall clean energy transitions in the power sector.
Battery manufacturing
According to IEA, battery manufacturing has more than tripled in the last three years, with China accounting for 83 percent of current production capacity, up from 75 percent in 2020.
The report added that 40 percent of announced plans for new battery manufacturing are in advanced economies such as the US and EU.
“If all those projects are built, those economies would have nearly enough manufacturing to meet their own needs to 2030 on the path to net zero emission,” said IEA.
In the earlier days, the most common type of batteries, those based on lithium-ion, were typically associated with consumer electronics. However, today, the energy sector accounts for over 90 percent of overall battery demand, said the report.
The intergovernmental organization added that battery deployment in the power sector increased by more than 130 percent in 2023 compared to the previous year, adding a total of 42 GW.
Moreover, batteries have enabled electric car sales to surge from 3 million in 2020 to almost 14 million last year in the transport sector.
Earlier in April, another report by IEA revealed that global sales of electric cars grew by approximately 25 percent in the first quarter of this year compared to the same period in 2023.
“The electricity and transport sectors are two key pillars for bringing down emissions quickly enough to meet the targets agreed at COP28 and keep open the possibility of limiting global warming to 1.5 degrees Celsius, ” said Fatih Birol, IEA’s executive director.
He added: “Batteries will provide the foundations in both areas, playing an invaluable role in scaling up renewables and electrifying transport while delivering secure and sustainable energy for businesses and households.”
Falling costs
According to IEA, battery costs have fallen by over 90 percent in less than 15 years, one of the fastest declines ever seen in clean energy technologies.
However, the agency highlighted that costs must come down further without compromising quality and technology.
“The combination of solar PV (photovoltaic) and batteries is today competitive with new coal plants in India. And just in the next few years, it will be cheaper than new coal in China and gas-fired power in the US. Batteries are changing the game before our eyes,” said Birol.
According to IEA, ensuring energy security also requires greater diversity in supply chains, including extracting and processing the critical minerals used in batteries.
Birol noted that governments worldwide have an important role in building resilient local and international supply chains to ensure that securely and sustainably produced batteries come to market at a reasonable cost.
“Legislation such as the Inflation Reduction Act in the US, the Net-Zero Industry Act in the EU, and the Production Linked Incentive in India are good examples of how policy can affect real change in the industry by backing technology manufacturing,” said Birol.
He also underscored the necessity to implement supportive policies to help speed up deployment by minimizing barriers to market entry for developers and reducing red tape that can stifle new projects.
Key to energy transition
In its report, IEA also highlighted the versatility of battery storage to ensure clean energy transition.
“In the power sector, batteries help smooth out the variability of renewable electricity from technologies such as wind and solar,” said the agency.
IEA added that battery storage can alleviate grid congestion in times of high supply, offering an outlet to capture and store excess renewable electricity that would otherwise be lost.
“Reducing emissions and getting on track to meet international energy and climate targets will hinge on whether the world can scale up batteries fast enough. More than half the job that we need to do will rely, at least in some part, on battery deployment,” added Birol.
Moreover, batteries can also provide critical service in the case of emergencies caused by extreme weather or other disruptions.
The deployment of batteries will also provide the grid with highly technical services, such as voltage and frequency control, that can help system operators and provide access to people who lack electricity.
“In a pathway to achieving universal energy access worldwide by 2030, they help 400 million people in emerging and developing economies gain electricity access through decentralized solutions like solar home systems and mini-grids with batteries,” IEA concluded.
More than two-thirds of UAE retail investors hold stocks in AI companies: eToro survey
RIYADH: More than 70 percent of retail investors in the UAE have stocks of companies developing artificial intelligence, according to a survey by trading platform eToro.
The 71 percent mark underscores a widespread understanding of AI’s potential as a catalyst for innovation and a source of competitive edge.
UAE retail investors’ interest in AI goes beyond holding stocks. When asked about their use or plans to use AI tools like ChatGPT to guide investment decisions, 39 percent reported that they already employ these technologies.
Global Markets Strategist at eToro, Ben Laidler, said: “Microsoft’s recent $1.5 billion investment in Abu Dhabi’s G42 is a big endorsement of the UAE’s potential as a global AI hub, which is reflected in the survey results showing widespread AI adoption by local investors and consumers.”
Millennials lead the charge when it comes to generational users, with 40 percent of those aged 25-44 using AI tools.
Baby Boomers and Gen X investors follow closely, with 39 percent and 38 percent, respectively.
Underlining the critical role that artificial intelligence might play in future investment strategies, an additional 52 percent of respondents, beyond those already using AI tools, said they are willing to adopt the technology to guide or adjust their portfolios in the future.
This trend defies generational stereotypes, with the older cohorts of investors directing the charge.
Baby Boomers lead in interest in integrating AI into investment planning, with 60 percent showing enthusiasm, followed by Gen X at 58 percent.
Laidler said: “AI stocks were the performance juggernauts of 2023, leading the tech sector revival and propelling the S&P 500 into bull market territory. AI trends helped make NVIDIA and Meta the best S&P 500 stock performers of last year, with their share prices tripling.”
He added: “Whilst we’re unlikely to see a repeat performance in 2024, the benefits of AI’s rapid adoption are broadening across the stock market and economy as it rapidly moves from hype to reality.”
Furthermore, eToro analyzed which companies experienced the highest proportional increase in UAE-based investors on its platform from quarter to quarter, revealing that AI stocks were the most popular theme during the first three months of the year.
Omani officials forge economic alliances with Saudi Arabia, Japan, and US
RIYADH: Oman’s industrial infrastructure is set to receive a boost following a new agreement with Saudi Arabia, fostering private sector participation in the country’s economic growth.
A memorandum of understanding, aimed at financing the infrastructure of several industrial zones in Oman, was signed during a meeting between Minister of Finance Sultan bin Salem Al-Habsi and Sultan Abdulrahman Al-Marshad, CEO of the Saudi Fund for Development, the Oman News Agency reported.
Discussions centered on cooperation mechanisms between Oman and the fund, along with updates on collaborative development projects.
The aim is to develop the industrial and logistical sectors by providing all necessary basic services, thereby encouraging the private sector to contribute to Oman’s economic development in line with Oman Vision 2040, as reported by the agency.
This memorandum falls within the framework of cooperation between the two parties to support developmental areas in Oman. These encompass infrastructure, higher and vocational education programs, and water, along with the industry and mining sectors. Additionally, it includes transportation and communications sectors, as well as developmental projects in the energy sector.
On another note, Ali bin Masoud Al-Sunaidi, chairman of the Public Authority for Special Economic Zones and Free Zones, met with Ken Saito, minister of economy, trade and industry of Japan, and his accompanying delegation in Tokyo.
During the meeting, they reviewed the business cooperation between the two countries and the major projects under construction in the economic and free zones and industrial cities in Oman, notably the low-carbon iron production project in the Special Economic Zone in Duqm.
The visit also included meetings with officials from companies engaged in iron and its derivatives production, and renewable energy equipment manufacturing companies, as well as a visit to Yokohama Port to learn about its experience in receiving ships specialized in energy and petroleum product transportation.
Also on April 24, Oman and the US explored ways to enhance trade, investment, and address challenges comprehensively during the second strategic dialogue held in Washington.
The Omani side was chaired by Sheikh Khalifa bin Ali bin Issa al-Harthy, undersecretary for Diplomatic Affairs, Ministry of Foreign Affairs, while the US side was chaired by Jose Fernandez, undersecretary of state for Economic Growth, Energy, and the Environment.
Both sides discussed opportunities for American companies in Oman, focusing on ICT, semiconductors, and clean energy services, expressing commitment to enhancing cooperation in clean energy solutions and mineral investments.
They addressed environmental priorities under the Omani-American cooperation memorandum, fostering communication between researchers from both countries for clean energy research.
Saudi NHC, Spain’s Urbas to construct almost 600 housing units in Al-Fursan suburb
RIYADH: Saudi Arabia’s Al-Fursan suburb will soon be home to 589 new residential units worth around SR1 billion ($266 million) thanks to a deal sealed by the National Housing Co.
Inked with Urbas Middle East Real Estate Co., a subsidiary of the Spanish Urbas Group, the agreement involves the development as well as construction of the housing units on an area spanning 150,000 sq. m, the Saudi Press Agency reported.
This collaboration marks a significant milestone in the development of the Al-Fursan suburb. It also promises to set new standards in property development.
“This agreement complements the efforts of the recent visit to Spain and continues to attract international investments with major companies to provide various housing products that fulfill and meet the desires of citizens,” Saudi Minister of Municipal and Rural Affairs and Housing Majid Al-Hogail said in a post on X.
“As an extension of our journey in attracting the best international experiences and expertise in the real estate development industry, I was pleased to meet the CEO of the Spanish company Urbas, which is planned to be one of the companies developing the Al-Fursan neighborhood project in Riyadh,” Al-Hogail added.
The minister also highlighted how this step will contribute to providing innovative housing options and facilitate the exchange of experiences between Saudi and international developers.
Moreover, NHC has also revealed the sale of 1,300 residential units within Al-Fursan in the first quarter of 2024, generating a total value exceeding SR1.5 billion.
This accomplishment emphasizes the firm’s keenness in creating vibrant, quality living spaces that meet and exceed the expectations of modern residents.
Al-Fursan, known as one of the largest urban development projects in the region, is designed to align with the Kingdom’s Vision 2030.
The suburb covers an area of 35 million sq. m. and is set to feature over 50,000 housing units, accommodating more than 250,000 residents.
It is equipped with over 190 crucial facilities, including educational, healthcare, and recreational services, all surrounded by more than 6 million sq. m. of green spaces. This widespread greenery is part of a broader initiative to further elevate the living environment and contribute to the Saudi Green Initiative by planting over half a million trees.
Urbas Group has experience in over 20 countries with 30,000 residential units. Urbas Middle East plans to grow in Saudi Arabia, showing its commitment to global expansion.
IMF surcharges on borrowings exacerbate global inequities: report
BENGALURU: Countries, mostly middle and lower-income, have been burdened by surcharges on top of interest payments on their borrowings from the International Monetary Fund, widening global inequities, according to a report by US think tanks.
WHY IT’S IMPORTANT
Indebted member countries paid about $6.4 billion in surcharges between 2020-2023, the report from Boston University’s Global Development Policy Center and Columbia University’s Initiative for Policy Dialogue released on Tuesday showed.
And the number of countries paying these surcharges has more than doubled in the last four years.
The IMF is expected to charge an estimated $9.8 billion in surcharges in the next five years, according to an earlier report by the Center for Economic and Policy Research.
Critics of the policy argue that surcharges do not hasten repayment and instead punish countries already struggling with liquidity constraints, increase the risk of debt distress and divert scarce resources that could be used to boost the struggling economies.
BY THE NUMBERS
Countries such as Ukraine, Egypt, Argentina, Barbados and Pakistan pay the most in surcharges, the report showed, accounting for 90 percent of the IMF’s surcharge revenues.
These surcharges, levied on top of the fund’s increasingly steeper basic rate, are IMF’s single largest source of revenue, accounting for 50 percent of total revenue in 2023.
KEY QUOTES
“IMF surcharges are inherently pro-cyclical as they increase debt service payments when a borrowing country is most need of emergency financing," Global Development Policy Center’s Director Kevin Gallagher said.
“Increasing surcharges and global shocks are compounding the economic pressure on vulnerable countries.”
CONTEXT
Data published by the Institute of International Finance earlier this year showed global debt levels hit a record of $313 trillion in 2023, while the debt-to-GDP ratio — a reading indicating a country’s ability to pay back debts — across emerging economies also scaled fresh peaks.
IMF shareholders agreed last week on the importance of addressing challenges faced by low-income countries, Managing Director Kristalina Georgieva said on Friday.
