Home > Insights > The World Bank: Oil Price Fall would Cost MENA Economies 116 BN USD
Monday, 13 Apr 2020

The World Bank: Oil Price Fall would Cost MENA Economies 116 BN USD


Insights MENA

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Economic Outlook

Economic Outlook

  • The MENA economies will face 116 BN USD in costs from the impact of coronavirus and the drop in oil prices in 2020, according to World Bank forecasts. The Covid-19 pandemic is affecting MENA economies across four channels: the deterioration of public health; falling global demand for the region's goods and services; declines in MENA domestic supply and demand because of social distancing measures; and, importantly, falling oil prices.
  • Egypt annual urban inflation decreased to 1% in March 2020 compared to 5.3% in February, according to CAPMAS. It is worthy to mention that this is the second consecutive month that inflation has slowed after three months of acceleration.
  • Egypt fuel pricing committee has cut the price of all fuel grades by 25 EGP per liter and has also cut the price of mazut (heavy fuel oil) for factories. The price of 95-octane is now 8.50 EGP per liter, 92-octane is 7.50 EGP per liter, and 80-octane is 6.25 EGP per liter.
  • Egypt is planning to import 800,000 tons of wheat during the upcoming season as part of government efforts to boost reserves of strategic commodities. Egypt also expects to harvest 6 million tons locally, potentially giving the country enough wheat to cover 7 to 8 months.
  • The Central Bank of Egypt (CBE) will offer treasury bills (T-bills) valued at 19 BN EGP (1.2 BN USD) on behalf of the Ministry of Finance. The first tranche of the T-bills amounts to 5 BN EGP (538.78 MM USD) and will be offered through 91-day notes, while the second tranche will be offered through 266-day notes worth 10.5 BN EGP (665.5 MM USD).
  • The Saudi Arabian Oil Company (Saudi Aramco) has decided to delay its pricing decision for crude exports for May delivery, in anticipation for OPEC+ talks. Aramco is expected to announce its crude prices for May by today. The world’s major oil producers are negotiating an output cut to restore market balance.
  • Fitch Ratings has affirmed Saudi Arabia long-term foreign-currency issuer default rating (IDR) at 'A', with a stable Fitch expected that the government budget deficit will surge to around 12% of the Gross Domestic Product (GDP) or 80 BN USD in 2020 compared to 4.5% in 2019.
  • Saudi Arabia Industrial Production Index (IPI) decreased by 72% y-o-y in February 2019. The decline in the industrial production index is mainly attributed to a 3.38% decrease in the production rate of the mining and quarrying activity, which represents 74.5% of the IPI weight share.
  • UAE Ministry of Economy decreased the fees of several services in a bid to support the economy in the face of the novel coronavirus (COVID-19) outbreak. The reduction will have a financial impact estimated at 113 MM AED (30.7 MM USD) in 2020.
  • The Abu Dhabi Investment Office (ADIO) has invested 367 MM AED (100 MM USD) in four agriculture technology (AgTech) companies to build facilities that tackle agriculture challenges, which will turn sand into farmlands and create more job opportunities.
Political Events

Political Events

  • Saudi Arabia extended a nationwide curfew until further notice due to the coronavirus after reporting more than 300 new infections on each of the last five days. Moreover, UAE warned of possible action against countries refusing to allow migrant workers to be repatriated.
  • Emirates Airlines will operate passenger services to selected destinations from the Dubai International Airport (DXB) effective as of Sunday, 12 April. All departing passengers will undergo thermal scanning in DXB’s Terminal 3 and will be reminded to bring face masks, gloves, and abide by social distancing rules.
Stock Market

Stock Market

  • The EGX 30 ended Thursday’s session up 2%. The Commercial International Bank (CIB), the index’s heaviest constituent, ended up 5.0%. EGX 30’s top performing constituents were CIB up 5.0%, Dice up 4.0%, and EFG Hermes up 3.6%. Thursday’s worst performing stocks were Ibnsina Pharma down 3.2%, Kima down 3.1% and Madinet Nasr Housing down 2.7%. The market turnover was 874 MM EGP (55.4 MM USD), and domestic investors were the sole net buyers.
  • Tadawul All Share Index (TASI) has kept its upward performance by the end of Thursday's trading session for the 8th consecutive session. The benchmark index edged up by 10% or 6.9 points to 7,006.24 points, hitting its highest level since 5 March.

Note:  Weekly values are calculated on Thursday of each week.

Companies Transactions

Companies Transactions

  • Pharma chain 19011 has acquired 100% of Roshdy Group in a transaction worth 362 MM EGP (22.94 MM USD). This is the second chain 19011 has acquired after buying Al Image Group’s 17 outlets in 2019 in a transaction worth 80 MM EGP (5 MM USD). Naeem Securities brokered the transaction between 19011 and Roshdy.
  • Ebtikar Financial Investments has purchased the remaining 50% stake of microfinance company Vitas Egypt. Ebtikar, which is jointly owned by B Investments (50.1%) and MM Group (49.9%), bought Vitas Group’s entire stake and will now have sole ownership of the firm. MM Group is planning to take Ebtikar public on the EGX in 2021.
  • Private sector education company CIRA has resumed construction of its Regent British School in Mansoura after Prime Minister Moustafa Madbouly gave the go-ahead for construction works to continue and is operating at 60% capacity.
  • The Saudi Stock Exchange (Tadawul) has approved the request of Arab Sea Information System Company to transfer from the parallel market to the main market. It is worth noting that the company has a capital of 100 MM SAR (26.56 MM SAR) distributed over 10 million shares.
  • The extraordinary general meeting (EGM) of Alinma Bank has approved a capital raise by issuing one bonus share for every three original existing shares. The bank's capital will increase by 3% to 20 BN SAR (5.3 BN USD) from 15 BN SAR (3.9 BN USD) to enhance the banks' resources to achieve good growth rates in the upcoming years.
  • Gulf Pharmaceutical Industries (Julphar) plans to decrease the share capital by 27 MM AED (137 MM USD) by canceling a number of the company's shares.With the capital reduction, Julphar seeks to write off accumulated losses shown in the financial statements for 2019. The company's accumulated losses are driven by the suspension of exports to Saudi Arabia, Oman, and Kuwait.
  • The board of directors of Ahli United Bank (AUB) has approved suspending all acquisition offer procedures in Kuwait and Bahrain until December 2020 in coordination with Kuwait Finance House (KFH). The decision was subject to the Central Bank of Bahrain (CBB) approval in light of the ongoing unprecedented circumstances of the coronavirus pandemic.
Sports and Culture

Sports and Culture

  • Total wealth of UAE billionaires decreased in 2020 due to fall in property prices, impact of coronavirus and due to financial scandal at the troubled NMC Healthcare. With combined wealth of 5 BN USD, the four Emirati billionaires Abdulla Al Ghurair, Majid Al Futtaim, Abdullah Al Futtaim and Hussain Sajwani, control 3.7 BN USD, 3.3 BN USD, 2.1 BN USD and 1.4 BN USD, respectively, worth of assets. Their wealth fell by 28% compared to 14.6 BN USD in 2019, according to Forbes data.
  • Britain's Prince William and his wife Kate surprised children at a school with a video-call to offer thanks to their parents who are key workers keeping the country running during the coronavirus pandemic. Schools closed for most children three weeks ago to curb the spread of the virus but are still open to care for the children of people who work in hospitals for the National Health Service (NHS) and other key sectors.

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