DUBAI: Saudi Arabia does not share the International Monetary Fund’s pessimism about its economic prospects, the central bank governor said on Tuesday.
The IMF has predicted that COVID-19 lockdowns and the fall in oil prices would shrink the Saudi GDP by 6.8 percent this year, but that did not correspond with the views of the Kingdom’s independent experts, Saudi Arabian Monetary Authority chief Ahmed Abdulkarim Alkholifey said.
“The IMF forecasts are much more pessimistic than ours,” Alkholifey said. “The IMF must have its own reasons for reaching that. There have been big changes and huge modifications from the pandemic.”
He said the Kingdom’s own projection for 2020 was the responsibility of official statisticians, but the economy was down 1 percent in the first three months of 2020. “There certainly has been a recession, but there is no need to be that pessimistic,” he said.
The Kingdom had emerged from strict lockdowns imposed in March, economic activity had returned to pre-pandemic levels and retail sales had surged ahead of Wednesday’s increase in VAT, Alkholifey said.
The risks to recovery came from a second wave of infection, a deeper global slowdown, and geopolitical tensions, he said, and the main impact on Saudi business would be seen when the central bank’s multibillion-dollar support packages ended.
IMF Middle East director Jihad Azour said measures taken by Gulf states to mitigate the effects of the pandemic had been “acceptable” at about 2-3 percent of GDP, and capital flight was being reversed.
IMF ‘is too pessimistic’ on Saudi economic prospects
https://arab.news/2njkd
IMF ‘is too pessimistic’ on Saudi economic prospects
- The IMF has predicted that COVID-19 lockdowns and the fall in oil prices would shrink the Saudi GDP by 6.8 percent this year
- The risks to recovery came from a second wave of infection
G7 countries to release oil reserves as IEA agrees to largest ever market intervention
- IEA recommends release of 400 million barrels
RIYADH: Germany, Japan and Austria will release part of their oil reserves after the International Energy Agency recommended the release of 400 million barrels of oil from stockpiles, the largest such move in IEA history.
In a statement, IEA Executive Director Fatih Birol said the flow of oil, gas and other commodities through the Strait of Hormuz have all but stopped, leading global energy supply to fall by around 20 percent.
Ahead of the confirmation of the move — a larger intervention than the 182.7 million barrels that were released in 2022 by in response to Russia’s invasion of Ukraine — several countries began setting out plans to bring their reserves into play as countries grapple with soaring crude prices amid the US-Israeli war with Iran.
Birol said: “I can now announce that IEA countries have decided to launch the largest ever release of emergency oil stocks in our agency's history.
“IEA countries will be making 400 million barrels of oil available to the market to offset the supply lost through the effective closure of the strait.
“This is a major action aiming to alleviate the immediate impacts of the disruption in markets.”
Germany’s Economy Minister Katherina Reiche confirmed on Wednesday her government plans to limit petrol price increases at filling stations to once a day and to introduce more stringent antitrust regulation of the sector.
She did not give an exact timing for those measures, but added that the US and Japan would be the largest contributors to the release of the oil reserves.
The US has not confirmed it would do so, but its Interior Secretary Doug Burgum told Fox News on Wednesday that “these are the kinds of moments that these reserves are used for.”
The announcements did not stop oil prices rising, with Brent crude up 3.26 percent to $90.66 a barrel at 4:29 p.m Saudi time, and West Texas Intermediate up 3.12 percent to $86.05. Both were some way below the $119 a barrel seen earlier in the week.
“The situation regarding oil supplies is tense, as the Strait of Hormuz is currently virtually impassable,” Germany’s Reiche said.
“We will comply with this request and contribute our share, because Germany stands behind the IEA’s most important principle: mutual solidarity,” Reiche said about the IEA’s request.
According to a statement by Reiche’s ministry, Germany will contribute 2.64 million tonnes of oil. This corresponds to 19.51 million barrels.
Reiche stressed there was no supply shortage in the country, which has a legally mandated reserve of oil and oil products intended to cover 90 days’ demand.
South Korea will release 22.46 million barrels of oil, which represents 5.6 percent of the total IEA ask, the country's industry ministry said.
“The government will consult with the IEA secretariat on details, such as the timing and amount, from the perspective of national interests in accordance with domestic conditions,” the ministry said in a statement.
The ministry said it would continue to coordinate closely with major countries in responding to high oil prices to minimise any domestic impact.
Austrian Economy Minister Wolfgang Hattmannsdorfer said his country was releasing part of the emergency oil reserve and extending the national strategic gas reserve, adding: “One thing is clear: in a crisis, there must be no crisis winners at the expense of commuters and businesses.”
Acting ahead of the IEA move, G7 member Japan announced plans to release 15 days' worth of private-sector oil reserves and one month's worth of state oil reserves.
“Rather than wait for formal IEA approval of a coordinated international reserve release, Japan will act first to ease global energy market supply and demand, releasing reserves as early as the 16th of this month,” Prime Minister Sanae Takaichi said in a broadcast statement.
Following a meeting with the IEA on Wednesday, G7 energy ministers said: “In principle, we support the implementation of proactive measures to address the situation, including the use of strategic reserves.”
All IEA member countries are required to keep 90 days’ worth of their nation’s oil use in reserve in case of global disruption.
