ISTANBUL: Turkish inflation surged to nearly 25 percent in September from a year earlier, official data showed on Wednesday, hitting its highest in 15 years and sharpening focus on whether the central bank will be able to deliver another hefty rate hike.
The size of the increase — prices jumped by 6.3 percent from a month earlier — far outpaced expectations and underscored the deep impact of a currency crisis on the economy and consumers.
The lira has lost nearly 40 percent of its value this year against the dollar, hit by concerns about President Tayyip Erdogan’s influence over the central bank and a rift with Washington.
That sell-off has pushed up prices of everything from food to fuel and eroded confidence in what was once a high-flying emerging market.
“The central bank will need to react to this,” said Inan Demir, senior emerging markets economist at Nomura. “This is not something that could be ignored and they will have to hike at their next meeting.”
The lira weakened slightly after the release of the data and was at 6.0500 to the US dollar, about 1 percent weaker on the day, at 0748 GMT. It has been underpinned in recent weeks by the central bank’s massive September rate hike and hopes for an improvement in ties with the United States, particularly over the fate of a jailed American pastor.
Inflation rose to 24.52 percent in September from a year earlier, the data from the Turkish Statistical Institute showed. In August the year-on-year figure was 17.9 percent.
The month-on-month jump of 6.3 percent outstripped the 3.6 percent forecast in a Reuters poll of 15 economists.
The central bank last month raised interest rates by 6.25 percentage points to put a floor under a lira and try to rein in inflation. Erdogan, a self-described “enemy of interest rates,” has repeatedly called for lower rates to keep cheaper credit flowing, particularly to the construction industry.
Following the last rate hike, Erdogan said his patience with interest rates had limits. Such comments have undermined confidence in the central bank’s independence and triggered the currency sell-off in the first place.
Not all economists agreed the central bank would increase rates at its next meeting this month.
“Given the scale of last month’s rate hike and continued pressure from President Erdogan for rates not to be raised further, we think that policy will be left on hold,” said Jason Tuvey of Capital Economics in a note, adding inflation likely had a “bit further” to rise in the coming months.
Food and non-alcoholic drinks prices, key to consumer price inflation, surged 6.4 percent month-on-month. Furnishing and household equipment posted the highest monthly increase at 11.41 percent, followed by transportation at 9.15 percent, the data showed.
Producer prices rose 10.88 percent month-on-month in September for an annual rise of 46.15 percent, the data showed.
Financial markets have long been concerned about Erdogan’s control over monetary policy, which they say has undermined the central bank’s ability to fight inflation.
In a decade and a half in power, Erdogan and his government have built bridges, power plants and hospitals and improved the lives of millions of lower-income, pious Turks.
But economists say the boom years focused more on consumption rather than productivity — that Turkey built shopping malls when it should have been investing more in factories and education.
The lira sell-off has put focus on problems in the real economy and the potential for a crisis at Turkey’s banks.
For years Turkish companies have loaded up on cheap euro and dollar loans. But the lira crisis has driven up the cost of servicing that debt, meaning lenders face a wave of defaults.
“The currency has appreciated and the central bank has hiked rates aggressively, so going forward, toward the end of the year, inflation numbers should stabilize,” said Bernd Berg, a global macro and foreign exchange strategist at Woodman Asset Management in Zurich.
“To me the worst of currency crisis is over and we should see some stabilization.”
Analysts have said that the next important event for the lira will be the trial of the US evangelical Christian Pastor Andrew Brunson.
Brunson is charged with links to Kurdish militants and supporters of Fethullah Gulen, the cleric blamed by Turkey for a failed coup attempt in 2016. He has denied the accusation, as has Gulen, and Washington has demanded his immediate release.
The diplomatic rift — and US President Donald Trump’s doubling of steel tariffs in response to Brunson’s detention — has added to the pain for the lira.
Brunson’s lawyer said he filed an appeal for his client’s release from house arrest on Wednesday.
The pastor is next due in court on Oct. 12.
Turkey inflation surges to nearly 25%, highest in 15 years
Turkey inflation surges to nearly 25%, highest in 15 years
- September inflation shows biggest annual spike in 15 years
- Inflation put focus on next central bank meeting
Saudi Arabia issues 36k investment licenses since Vision 2030 launch
RIYADH: Saudi Arabia has now issued more than 36,000 investment licenses, a five-fold rise compared to the overall active permits before the launch of Vision 2030.
According to the government-backed Invest Saudi platform, the Kingdom witnessed an 118 percent growth in entrepreneurial license issuance in 2024 compared to the previous year, while permits in the wholesale and retail trade sector increased by 123 percent during the same period.
The Kingdom launched the Invest Saudi initiative to attract foreign direct investment by offering incentives, streamlining regulatory processes, and facilitating partnerships.
As part of this, the Kingdom updated its investment law in August to ensure enhanced protections for international investors, including adherence to the rule of law, fair treatment, and property rights, while ensuring robust safeguards for intellectual property and facilitating smooth fund transfers.
“Saudi Arabia is growing steadily in achieving remarkable milestones and attracting investments, exceeding the targets of Saudi Vision 2030 with exceptional results in license issuance and the growth of promising sectors,” said Invest Saudi on X.
It added that the most licensed sectors since the launch of Vision 2030 are manufacturing, construction, professional and scientific, as well as wholesale and retail trade, and information and communication technology.
Invest Saudi further said that the Kingdom has surpassed its regional headquarters target outlined in the Vision 2030 program, as more than 500 international firms have established their Middle Eastern base in the country.
The Kingdom’s regional headquarters program provides benefits for international firms, including a 30-year exemption from corporate income tax and withholding tax on headquarters activities for companies, as well as discounts and support services.
Some of the major companies that have launched their regional headquarters in Saudi Arabia include US-based multinational investment banks Morgan Stanley and Citi Group, as well as BlackRock Inc., Northern Trust, Bechtel, and PepsiCo.
Invest Saudi is supporting the Kingdom’s National Investment Strategy, which is aiming to increase FDI by more than 20x from SR17 billion ($4.5 billion) in 2019 to SR388 billion in 2030.
It is also targeting increasing investment from 22 percent of GDP in 2019 to 30 percent by the end of the decade.
Saudi education spending kicks off 2025 with 25% surge, pushing POS transactions to $4bn
RIYADH: Saudis spent SR207.3 million ($55.2 million) on education between Dec. 29 and Jan. 4, marking a 25.8 percent increase compared to the previous week.
According to the weekly point-of-sale transactions bulletin, this sector recorded the largest positive change over the seven-day period. It also witnessed growth in terms of the number of transactions, surging by 0.6 percent to reach 131,000.
Overall, Saudi Arabia’s POS spending registered a weekly increase of 9.2 percent, reaching SR15.1 billion, up from SR13.8 billion the week before. Figures from the Kingdom’s central bank showed that the hotel sector saw the second-largest gain at 15.1 percent to SR400.6 million.
Spending on recreation and culture followed, recording a 14.8 percent uptick to SR328.6 million.
Transactions on jewelry recorded an increase of 12.8 percent to reach SR355.4 million, and expenditure on construction and building materials surged by 3.9 percent to SR399.9 million.
Similarly, spending on food and beverages also grew 3.9 percent to SR2.16 billion, claiming the biggest share of the total POS value.
Expenditure in restaurants and cafes followed, recording a 10.1 percent increase to SR2.13 billion.
Spending on miscellaneous goods and services accounted for the third biggest POS share, with a 12.3 percent uptick, reaching SR1.8 billion.
Transactions in the leading three categories accounted for approximately 40.8 percent or SR6.1 billion of the week’s total value.
At 2.8 percent, the smallest increase occurred in spending on gas electronics, leading total payments to reach SR176 million.
Expenditures on transportation increased by 6.5 percent to SR140 million, while spending on public utilities surged by 7.3 percent to reach SR57.5 million.
Geographically, Riyadh dominated POS sales, representing around 33.8 percent of the total, with expenses in the capital reaching SR5.1 billion — a 7 percent decrease from the previous week.
Jeddah followed with a 13.1 percent surge to SR2.1 billion, and Dammam came in third at SR755 million, up 8.5 percent.
Buraidah experienced the most significant surge in spending, increasing 13.5 percent to SR358.7 million.
Tabuk and Abha recorded increases of 5.5 percent and 9.4 percent, reaching SR285.3 million and SR170.5 million, respectively.
Makkah and Jeddah saw the largest increases in terms of number of transactions, surging 11 percent and 8.5 percent, respectively, to 9.6 million and 27.4 million transactions.
Emirati billionaire to invest $20bn in US data centers, Trump says
- Hussain Sajwani promised investment feeds for constructing data centers for developing AI and expanding cryptocurrency
- Investment by DAMAC Properties in the UAE is intended to highlight Trump’s ability to attract new money for big projects
PALM BEACH, Florida: Emirati billionaire Hussain Sajwani promised a $20 billion investment in the booming US data center industry in the coming years, he and US President-elect Donald Trump announced on Tuesday at Trump’s home in Palm Beach, Florida.
With an election victory largely driven by voters’ economic concerns, Trump has doubled down on bolstering investments in domestic industries and proposed higher tariffs on Chinese goods as the US tries to curb China’s access to the chips needed for advanced data centers.
“We’re planning to invest $20 billion and even more than that, if the opportunity in the market allows us,” said Sajwani, chairman of Dubai developer DAMAC, at Trump’s Mar-a-Lago home.
DAMAC owns the Middle East’s only Trump-branded golf course in Dubai, which opened in 2017, and the billionaire celebrated the New Year with Trump in Florida.
Trump has an affinity for announcements promising economic growth, though such investments do not always pan out. Early in his first term, he announced a $10 billion Foxconn investment in a Wisconsin factory that promised thousands of jobs but was mostly abandoned.
Last month Trump and SoftBank Group CEO Masayoshi Son announced the Japanese tech investor would invest $100 billion in the US over the next four years, focused around AI.
The introduction of OpenAI’s GenAI chatbot ChatGPT in late 2022 kicked off a wave of investment in generative AI technology and the pricey infrastructure required to support it, including power generation and transmission.
Microsoft said last week it would spend about $80 billion this fiscal year to ramp up its AI capacity.
Restrictions on the export of coveted AI chips used in advanced data centers to China have tightened under the Biden administration, and Trump has nominated China hard-liners to key diplomatic and economic roles in his administration.
Oil Updates — crude rises on tighter OPEC supply, US jobs data
SINGAPORE: Oil prices rose on Wednesday as supplies from Russia and OPEC members tightened while data showing an unexpected increase in US job openings pointed to expanding economic activity and consequent growth in oil demand.
Brent crude was up 37 cents, or 0.5 percent, at $77.42 a barrel at 10:30 a.m. Saudi time. US West Texas Intermediate crude climbed 44 cents, or 0.6 percent, to $74.69.
Oil output from the Organization of the Petroleum Exporting Countries fell in December after two months of increases, a Reuters survey showed. Field maintenance in the UAE offset a Nigerian output hike and gains elsewhere in the group.
In Russia, oil output averaged 8.971 million barrels a day in December, below the country’s target, Bloomberg reported citing the energy ministry.
On the economic front, job openings rose in the US in November and the number of layoffs was low, while workers were reluctant to quit, the Job Openings and Labor Turnover Survey showed.
“Robust US economic data continues to bolster the outlook for the US economy and oil demand, further supported by a larger-than-anticipated drawdown in crude inventories,” said IG market strategist Yeap Jun Rong.
“After trading within a prolonged tight range since October last year, selling pressures may have been exhausted for now, paving the way for a modest recovery,” Yeap said.
US crude oil stocks fell last week while fuel inventories rose, market sources said, citing American Petroleum Institute figures on Tuesday.
Going forward, analysts expect oil prices to be on average down this year from 2024 due in part to production increases from non-OPEC countries.
“We are holding to our forecast for Brent crude to average $76/bbl in 2025, down from an average of $80/bbl in 2024,” BMI, a division of Fitch Group, said in a client note.
“The bearish view is being led by our fundamental data forecast, which points to an oversupply this year, with supply growth outstripping demand growth by 485,000 barrels per day.”
Saudi Cabinet approves new law to regulate petroleum, petchem sector
RIYADH: Saudi Arabia’s Cabinet has approved a new Petroleum and Petrochemical Law to ensure a reliable and secure supply of products within the Kingdom.
The law, which was approved on Jan. 7, is designed to optimize the use of raw materials in the sector and support the localization of the value chain, according to a report by the Saudi Press Agency.
The new legislation will replace the existing Petroleum Products Trade Law and is expected to achieve several key objectives, including regulating petroleum and petrochemical operations. It aims to accelerate the sector’s growth, foster economic development, and encourage increased investment in the industry.
Upon the law’s approval, Saudi Arabia’s Minister of Energy Prince Abdulaziz bin Salman expressed gratitude to the Cabinet, emphasizing that the law would help establish a robust legislative framework for the Kingdom’s energy sector. He added that the new directive would facilitate the optimal use of petroleum and petrochemical resources.
The law will regulate the use, sale, purchase, and transportation of petrochemical products, as well as oversee the operation of distribution stations and petrochemical facilities, the Saudi Press Agency report noted.
In addition to the Petroleum and Petrochemical Law, the Cabinet approved several other agreements on Jan. 7. These include a memorandum of understanding for cooperation between Saudi Arabia’s Ministry of Justice and Singapore’s Ministry of Law, an MoU on health cooperation with Morocco’s Ministry of Health and Social Protection, and an MoU to strengthen digital government collaboration between Saudi Arabia’s Digital Government Authority and Qatar’s Ministry of Communications and Information Technology.
The Cabinet also endorsed an air services agreement between Saudi Arabia and Eswatini, a Southern African nation.
Furthermore, the Cabinet reviewed ongoing development programs and projects aimed at diversifying the Kingdom’s economy, exploring new revenue streams, and maximizing the use of available resources.
