Oil-producing Middle East nations are coping with low global oil prices, although more government reforms are needed, the IMF’s head for the Mideast said as the organization issued a new report yesterday showing weak economic growth in the region.
Masood Ahmed also told reporters that Iran’s economy beat expectations by growing by 4.5 percent this year and could keep up that pace if it can modernize its industries and allow more foreign investment after its nuclear deal with world powers.
Much of the IMF’s new report on the Middle East’s economic outlook will not come as a surprise to those living in the region since oil prices have halved following highs of more than US$100 per barrel in mid-2014.
All Gulf Arab countries have cut back on generous subsidies that kept gasoline prices low, while some have reorganized government agencies and halted construction projects.
With oil prices expected to remain low, the IMF report estimates that growth across Gulf states will be about 1.7 percent this year, while regionally “little improvement” is expected for next year.
It says that only Iraq, Kuwait and the United Arab Emirates will be able to see budget surpluses by 2021, while the war against the Islamic State group, Yemen’s civil war and the Syrian conflict continue to weaken confidence in the region.
“Some countries — Saudi Arabia, Bahrain and Oman — start from a position where they have to make more of an adjustment to be able to balance their budget in five years,” Ahmed told reporters in an interview on Tuesday. “They all do have policies that they’re articulating that will help them get there, but they will entail difficult choices.”
Among those tough choices will be cutting public-sector salaries and jobs in Saudi Arabia and Oman, he said.
Meanwhile, Iran’s economy has charged ahead through boosting oil production close to levels seen before Western nations imposed economic sanctions over its contested nuclear program. Iran will have to modernize both its banking system and its manufacturing industry, as well as allow more foreign direct investment in the country, to continue that growth.
“The big challenge for Iran is can you sustain that 4-to-5 percent growth over the medium term, or is it just a one-time increase you get?” Ahmed asked. “They can, but they have to move on addressing some of the other constraints in their economy.”
Easing further sanctions on Iran would encourage that growth, although Ahmed acknowledged that it would be a “political process, one we don’t have a view on.”
That also would have to come as some Iranian security forces detain those with Western ties, while its Revolutionary Guard, a powerful paramilitary organization, still holds a large stake in the economy.
Nvidia Corp CEO Jensen Huang (黃仁勳) is expected to miss the inauguration of US president-elect Donald Trump on Monday, bucking a trend among high-profile US technology leaders. Huang is visiting East Asia this week, as he typically does around the time of the Lunar New Year, a person familiar with the situation said. He has never previously attended a US presidential inauguration, said the person, who asked not to be identified, because the plans have not been announced. That makes Nvidia an exception among the most valuable technology companies, most of which are sending cofounders or CEOs to the event. That includes
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.
Taiwanese manufacturers have a chance to play a key role in the humanoid robot supply chain, Tongtai Machine and Tool Co (東台精機) chairman Yen Jui-hsiung (嚴瑞雄) said yesterday. That is because Taiwanese companies are capable of making key parts needed for humanoid robots to move, such as harmonic drives and planetary gearboxes, Yen said. This ability to produce these key elements could help Taiwanese manufacturers “become part of the US supply chain,” he added. Yen made the remarks a day after Nvidia Corp cofounder and chief executive officer Jensen Huang (黃仁勳) said his company and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) are jointly
United Microelectronics Corp (UMC, 聯電) expects its addressable market to grow by a low single-digit percentage this year, lower than the overall foundry industry’s 15 percent expansion and the global semiconductor industry’s 10 percent growth, the contract chipmaker said yesterday after reporting the worst profit in four-and-a-half years in the fourth quarter of last year. Growth would be fueled by demand for artificial intelligence (AI) servers, a moderate recovery in consumer electronics and an increase in semiconductor content, UMC said. “UMC’s goal is to outgrow our addressable market while maintaining our structural profitability,” UMC copresident Jason Wang (王石) told an online earnings
RSS