MADRID: Spain said yesterday no new measures were needed to rein in its public deficit after official data showed its biting austerity measures in 2012 helped push the country deeper into recession.
The euro zone’s fourth largest economy shrank by 1.4 percent year-on-year in 2012 as households slashed spending, the national statistics institute said.
That was a slightly better performance than the decline of 1.5 percent forecast by the government.
But gross domestic product contracted 0.8 percent in the final quarter of 2012, the steepest decline since the second quarter of 2009 and more than double the 0.3 percent fall posted in the previous three-month period.
The figures were slightly bleaker than preliminary data released last month by the statistics institute which saw the economy falling by 0.7 percent in the final quarter on a quarterly basis and by 1.37 percent for the entire year.
Spain is grappling with a double-dip recession and 26 percent unemployment, prompted by the collapse of a decade-long property boom in 2008.
Prime Minister Mariano Rajoy’s conservative government forecasts the economy will return to growth in the second half of 2013.
It predicts an economic contraction of 0.5 percent in 2013 followed by an expansion of 1.2 percent in 2014, a more optimistic forecast than those of most analysts and international organizations.
Activity appeared to be cramped by spending cuts and tax rises, aimed at saving 150 billion euros ($ 194 billion) between 2012 and 2014, which have prompted mass street protests.
The economic contraction in the fourth quarter was caused mainly by a fall in domestic demand, the national statistics institute said.
Consumer spending fell 1.9 percent while government expenditure dropped 0.3 percent.
The government has vowed to lower the public deficit from the equivalent of 9.4 percent of gross domestic product last year to 2.8 percent in 2014.
Analysts say those targets will be hard to reach in a period of declining economic activity.
But Budget Minister Cristobal Montoro said Spain does not need new measures to rein in its spending shortfall in 2013 even though the country slightly missed its targets for the shortfall last year.
“There is no need for new cutbacks,” he told a news conference.
Spain’s overall public deficit reached 6.74 percent of GDP in 2012, compared with a target agreed with the European Commission of 6.3 percent, he said.
The public deficit of Spain’s 17 powerful autonomous regions stood at 1.73 percent of GDP last year, compared to the target of 1.5 percent.
“I insist that what we achieved is really big, important, really notable and it will help Spain and its regional governments recover their credibility,” Montoro said.
Other official data released yesterday offered signs of economic strengthening.
Spain’s inflation rate remained unchanged at 2.8 percent in February compared to January after declining from October, the national statistics institute said in a separate report.
The country’s current account deficit meanwhile plunged by 78 percent in 2012 to 8.3 billion euros from 37.5 billion euros in the previous year as rising exports helped slash its trade balance, the Bank of Spain said.
It was the third consecutive yearly fall in the current account deficit following declines of 17.8 percent in 2011 and of 18.2 percent in 2010.
Spain ran up the world’s second-biggest current account deficit during the housing boom up to 2008.
In December Spain posted a current account surplus of 4.9 billion euros, compared with a current account deficit of 3.9 billion euros during the same period a year earlier.
Spain sees no need for more cuts as recession deepens
Spain sees no need for more cuts as recession deepens
Saudi Arabia’s POS spending climbs 24.4% to $3.6bn in final week of June
RIYADH: Saudi Arabia’s point-of-sale transactions climbed to SR13.6 billion ($3.6 billion) in the week ending June 28, marking a 24.4 percent rise compared to the previous seven-day period, according to the latest official figures.
The point-of-sale transactions bulletin issued by the Saudi Central Bank showed that the number of transactions also rose by 8.6 percent to reach 219.9 million.
Spending on recreation and culture posted the highest weekly increase, surging 49.3 percent to reach SR294.7 million. The number of transactions in this category rose slightly to 2.26 million.
Clothing and footwear followed with a 44.2 percent surge in spending, totaling SR830.9 million. The number of transactions in this section rose 34.5 percent to 6.2 million.
Telecommunications came third, with a 38.7 percent increase in value to SR123.9 million and a rise in transactions to just over 2 million.
Spending on public utilities increased by 28.8 percent, reaching SR52.3 million through 690,000 transactions.
Gas stations registered SR963.5 million in transactions, up 18.4 percent from the prior week. Transaction volume climbed to 17.2 million.
Expenditures in the health sector reached SR840 million, an increase of 17.9 percent, while spending on transportation rose 18.7 percent to SR746 million. The number of transportation transactions hit 2.9 million.
Jewelry sales rose by 34.7 percent to reach SR352.7 million from 280,000 sales.
Education services recorded sales of SR 212.1 million, up 9.7 percent, with the number of transactions in the sector reached 118,000.
Sales at hotels reached SR212.5 million, a 28.3 percent weekly increase, while transactions advanced 26.4 percent to 680,000.
Spending on construction and building materials totaled SR328 million, representing a 7.9 percent boost from the previous week. The number of transactions stood at 1.7 million.
Among cities, Hail recorded the highest increase in POS transaction value, rising 41.5 percent to SR226.2 million across 4 million transactions.
Abha followed with a 37.6 percent rise in spending, totaling SR195.3 million from 3.48 million transactions.
Additional cities across the Kingdom contributed SR3.93 billion in POS sales, reflecting a 32.6 percent increase from the previous week.
Madinah posted SR516 million in transactions, up 27.7 percent, while Jeddah recorded SR1.93 billion, marking a 20.4 percent increase.
Makkah followed with SR471.7 million, up 20.2 percent from the prior week.
Riyadh remained the highest in overall value with SR4.68 billion in sales, a 19.7 percent weekly rise, and 70.3 million transactions.
Dammam registered SR673.3 million, increasing 18.1 percent.
Khobar and Buraidah posted SR385.7 million and SR327.7 million, respectively, while Tabuk reported SR278.5 million in POS spending.
Saudi PMI rises to 57.2 in June as non-oil sector hits 3-month high
RIYADH: Saudi Arabia’s non-oil private sector expanded at its fastest pace in three months in June, supported by rising domestic demand, accelerated hiring, and a pickup in purchasing activity, a survey showed.
According to Riyad Bank’s Purchasing Managers’ Index compiled by S&P Global, the headline PMI rose to 57.2, up from the 55.8 figure recorded in May, signaling a strong improvement in business conditions and surpassing the long-run average of 56.9.
The index remains well above the neutral 50 mark, indicating sustained expansion across the Kingdom’s non-oil economy.
The robust growth in Saudi Arabia’s non-oil business activity aligns with the broader goals of the Vision 2030 program, which seeks to diversify the Kingdom’s economy and reduce its reliance on oil revenues.
Saudi Arabia’s PMI for June outpaced that of its regional peers, with the UAE and Kuwait recording readings of 53.5 and 53.1, respectively.
Naif Al-Ghaith, chief economist at Riyad Bank, said: “The latest reading reflects a strong improvement in overall business conditions, supported by higher output levels, rising demand, and an active labor market.”
He added: “Firms largely linked the pickup in activity to improving sales, new project starts, and better demand conditions, although the pace of output growth was softer compared to previous highs.”
In May, a report released by Saudi Arabia’s General Authority for Statistics revealed that the Kingdom’s gross domestic product grew 2.7 percent year on year in the first quarter, driven by strong non-oil activity.
Commenting on the GDP figures at the time, Minister of Economy and Planning Faisal Al-Ibrahim, who also chairs GASTAT’s board, noted that the contribution of non-oil activities to the Kingdom’s economic output reached 53.2 percent — an increase of 5.7 percent from previous estimates.
The minister also added that the Kingdom’s economic outlook remains positive, supported by structural reforms and high-quality, state-led projects across various sectors.
In its latest PMI report, S&P Global stated that non-oil firms in the Kingdom reported a further rise in new orders in June, with the rate of growth continuing to accelerate from its recent low in April.
Companies that participated in the survey noted that the acquisition of new clients and the benefits of enhanced marketing had improved demand growth across non-oil sectors.
“New orders continued to lead the expansion, registering the fastest growth in four months and surpassing the long-run trend. Businesses credited this increase to stronger demand, effective marketing strategies, and improved client acquisition,” added Al-Ghaith.
According to the report, non-oil private companies in Saudi Arabia hired staff at the fastest rate since May 2011, as firms expanded teams to manage increased workloads.
This historically strong increase continued a robust period of job creation seen since the start of 2025, with companies citing high demand for skilled staff as a driving force behind intensified recruitment efforts and increased salary offers.
Consequently, overall staff costs rose at the fastest pace since the survey began in 2009.
Purchasing activity accelerated to a two-year high as firms responded to rising input needs, with nearly 40 percent of respondents increasing their purchases.
Input prices also rose sharply, aligning with the trend observed in the second quarter of the year. This compelled companies to pass on higher costs to customers, although some businesses opted to reduce prices as part of competitive pricing strategies.
Despite price pressures, non-oil firms in Saudi Arabia remained confident of an uplift in activity over the next 12 months, with sentiment ticking up to a two-year high.
S&P Global stated that this optimism for future growth was largely driven by resilient domestic economic conditions, robust demand, and improving sales pipelines.
“On the future outlook, sentiment among non-oil businesses remains highly positive. Confidence about future activity climbed to a two-year peak, supported by healthy order pipelines and stronger domestic economic conditions. However, cost pressures became more pronounced in June,” said Al-Ghaith.
He noted that staff costs had risen at a record pace as firms sought to retain talent, while purchase prices recorded their fastest increase since February, partly due to stronger demand and rising geopolitical risks.
“Despite these cost challenges, firms broadly raised their selling prices, reversing the declines seen in May and signalling an improved ability to pass on higher costs to customers,” said Al-Ghaith.
The PMI survey data were collected from around 400 private sector companies across the manufacturing, construction, and wholesale sectors, as well as retail and services.
Oil Updates — prices retreat as US tariff uncertainty looms, OPEC+ set to raise output
SINGAPORE: Oil prices fell on Thursday after gaining 3 percent in the previous session as investors are wary higher US tariffs may be reinstated, which could cause lower fuel demand, and as major producers are expected to announce an output hike.
Brent crude futures fell 45 cents, or 0.65 percent, to $68.66 a barrel by 8:45 a.m. Saudi time. US West Texas Intermediate crude declined 44 cents, or 0.66 percent, to $67.01 a barrel.
Both contracts rose to their highest in one week on Wednesday as Iran suspended cooperation with the UN nuclear watchdog, raising concerns the lingering dispute over the Middle East producer’s nuclear program may again devolve into armed conflict, and the US and Vietnam reached a preliminary trade deal.
Still, there is increasing uncertainty around US trade policy as the 90-day pause on the implementation of higher tariffs will end on July 9 without any new trade deals with several large trading partners such as the European Union and Japan.
Additionally, the Organization of the Petroleum Exporting Countries (OPEC) and its allies such as Russia, known as OPEC+ will likely agreed to raise their output by 411,000 barrels per day (bpd) at their meeting this weekend.
With the uncertainty around both events, and the upcoming July Fourth Independence Day holiday in the US, “market participants will probably not want to carry too much risk into the long US weekend,” ING analysts said in a note on Thursday.
Adding to the negative sentiment, a private-sector survey showed on Thursday service activity in China, the world’s biggest oil importer, expanded at the slowest pace in nine months in June as demand weakened and new export orders declined.
A surprise build in US crude inventories also highlighted demand concerns in the world’s biggest crude consumer.
The US Energy Information Administration said on Wednesday domestic crude inventories rose by 3.8 million barrels to 419 million barrels last week. Analysts in a Reuters poll had expected a drawdown of 1.8 million barrels.
Gasoline demand on a weekly basis dropped to 8.6 million barrels per day, prompting concerns about consumption in the peak US summer driving season.
The market will be watching the release of the key US monthly employment report on Thursday to shape expectations around the depth and timing of interest rate cuts by the Federal Reserve in the second half of this year, analysts said.
Lower interest rates could spur economic activity, which would in turn boost oil demand.
A private payrolls report on Wednesday showed a contraction for the first time in two years though analysts cautioned there is no correlation between it and the government data.
Global oil demand rose 1.5% in 2024 despite production dip: OPEC report
RIYADH: Global oil demand climbed by 1.49 million barrels per day, or 1.5 percent, year on year in 2024 to reach an average of 103.84 million bpd, according to newly released data from the Organization of the Petroleum Exporting Countries.
Demand rose across nearly all regions, with the strongest gains recorded in non-OECD Asia, particularly China and India, followed by the Middle East, Africa, Latin America and OECD Europe. Within OPEC member countries, oil demand rose by 0.12 million bpd, or 1.3 percent, year on year.
However, total world crude oil production declined for the first time since 2020, falling by 0.77 million bpd, or 1 percent, to average 72.58 million bpd in 2024. OPEC attributed the drop to lower output from both its members and non-OPEC producers participating in the Declaration of Cooperation.
OPEC nations cut production by 0.57 million bpd, or 2.1 percent, while non-OPEC DoC participants saw a steeper decline of 0.78 million bpd, or 5.2 percent. In contrast, crude production from countries not involved in the DoC rose by 0.58 million bpd, or 1.8 percent.
Refining capacity
Global refining capacity increased by 1.04 million bpd in 2024 to reach 103.80 million bpd. Most of this expansion came from the non-OECD region, notably China, India, and the Middle East.
For the first time since 2019, members of the Organisation for Economic Co-operation and Development also saw a modest increase in refining capacity—up by 0.16 million bpd—driven by additions in the Americas, although partially offset by closures in Europe and Asia Pacific.
Refinery throughput also saw a modest rise, growing by 0.52 million bpd, or 0.6 percent, to 85.97 million bpd. This was largely due to increased run rates in OECD Americas and non-OECD regions, including the Middle East, Africa, India, and Other Asia.
Exports down, product shipments up
OPEC’s crude oil exports declined by 0.70 million bpd, or 3.5 percent, in 2024 to average 19.01 million bpd. Asia continued to be the primary destination for OPEC crude, receiving 13.67 million bpd, or 71.9 percent of total exports.
In contrast, exports of petroleum products from OPEC members rose by 0.29 million bpd, or 6.1 percent, reaching an average of 5.07 million bpd during the year.
Global proven crude oil reserves stood at 1,567 billion barrels at the end of 2024, marking a slight increase of 2 billion barrels, or 0.1 percent, from the previous year. Proven reserves in OPEC members remained unchanged at 1,241 billion barrels.
Gulf bourses end mixed on US tariff uncertainty
- Saudi Arabia’s benchmark index edged 0.1% higher
- Dubai’s main share index dropped 0.4%
LONDON: Stock markets in the Gulf ended mixed on Wednesday as investors monitored global trade developments ahead of the US’ potential re-imposition of sweeping tariffs on July 9.
President Donald Trump said on Tuesday he was not thinking of extending the July 9 deadline for countries to negotiate trade deals with the US, and continued to express doubt that an agreement could be reached with Japan.
Saudi Arabia’s benchmark index edged 0.1 percent higher, after two consecutive sessions of losses, helped by 1.7 percent rise in Saudi Arabian Mining Company.
The cautious mood dominating the region contributed to mixed sector performances, said Joseph Dahrieh, managing principal at Tickmill.
“Investors are awaiting further developments to gain more clarity, while low oil prices continue to pose a risk, despite a positive economic outlook,” he said.
Among gainers, oil giant Saudi Aramco rose 0.8 percent.
Oil futures edged up as Iran suspended cooperation with the UN nuclear watchdog and markets weighed expectations of more supply from major producers next month, while the US dollar softened further.
Dubai’s main share index dropped 0.4 percent, hit by a 1.3 percent fall in toll operator Salik Company.
Separately, Dubai commuters may soon have a new way to beat traffic, as Joby Aviation successfully completed the first test flight of its fully-electric air taxi in the emirate this week — a significant step toward the city’s goal of integrating airborne transport into its mobility network as early as next year.
In Abu Dhabi, the index eased 0.1 percent, while the Qatari index closed flat.
A report on Tuesday suggested that the US labor market stayed resilient in May, sharpening the focus on US nonfarm payrolls figures due on Thursday as investors try to gauge when the Federal Reserve is likely to cut interest rates next.
Fed Chair Jerome Powell on Tuesday reiterated the US central bank’s plans to “wait and learn more” before lowering rates.
Outside the Gulf, Egypt’s blue-chip index added 0.4 percent, with Talaat Moustafa Holding rising 0.9 percent.
