CAIRO: Egypt’s central bank on Thursday cut its key interest rates for the second month in a row, after inflation fell further and as central banks globally ease monetary policy.
The overnight deposit and lending rates were cut by 100 basis points to 13.25% and 14.25% respectively.
All 11 economists surveyed by Reuters had said the Central Bank of Egypt’s (CBE) monetary policy committee would cut rates. Five said the bank would cut by 100 bps, three predicted a 150 bps cut and three 50 bps.
“It’s good for the economy, but broadly in line with expectations,” said Allen Sandeep, head of research at Egypt-based Naeem Brokerage, which predicted a 150 bps cut.
“We expect the monetary easing cycle to continue as inflation is likely to drop further before the MPC meets again in November,” Sandeep said.
The central bank cut rates after inflation figures fell to their lowest in more than six years, it said in a statement.
“Globally, the expansion of economic activity continued to weaken, financial conditions eased, and trade tensions continued to weigh on the outlook,” the bank said. “International oil prices remain subject to volatility due to potential supply-side factors that include geopolitical risks.”
July inflation came in significantly below expectations, and the headline figure fell further in August to a six-year low of 7.5%. Headline inflation reached a 2019 high of 14.4% in February.
At its last policy meeting in August, the central bank slashed its overnight deposit and lending rates by 150 basis points to 14.25% and 15.25% respectively.
The low July inflation figures took analysts by surprise as they had expected inflationary pressures to rise in the wake of a round of subsidy cuts that pushed fuel prices 16-30% higher.
The fuel price hikes were the last in a series of subsidy cuts tied to a three-year $12 billion loan from the IMF. Other reforms tied to the deal included devaluing the currency by about half and introducing a value-added tax.
The reforms have made Egypt an emerging market darling, and economists have hailed the measures. But millions of Egyptians are still struggling to make ends meet, despite the more positive economic data.
“It could have been more but I’m glad the MPC cut the rates. It is a good move,” said Angus Blair, chairman of business and economic forecasting think-tank Signet.
“It will not affect the economy too much as Egypt’s household and corporate sectors are not too leveraged,” he said. “It will, however, help to bring down the government’s debt burden and give it greater fiscal maneuverability.”
The bank’s decision to make a second consecutive cut came after Egypt’s main stock index suffered heavy losses between Sunday and Tuesday following rare weekend protests against alleged government corruption.
The benchmark EGX30 index rebounded, gaining 3.2% on Wednesday and 1.9% on Thursday.
Egypt’s central bank makes second consecutive cut to key rates
Egypt’s central bank makes second consecutive cut to key rates
- The overnight deposit and lending rates were cut by 100 basis points to 13.25% and 14.25% respectively
Egypt’s inflation drops to 23.4% in December amid falling food prices
- Banking sector shows strong resilience with record capital adequacy
RIYADH: Egypt’s annual inflation rate slowed to 23.4 percent in December 2024, down from 25 percent in November, according to figures from the Central Agency for Public Mobilization and Statistics.
The consumer price index for the country stood at 239.7 points in December, reflecting a deceleration largely driven by a drop in food prices.
Key food categories saw notable price decreases, with vegetables falling by 14 percent, dairy products, cheese, and eggs decreasing by 0.7 percent, fish and seafood dropping by 0.6 percent, and meat and poultry experiencing a slight reduction of 0.1 percent.
However, other sectors showed price increases, putting upward pressure on the overall inflation rate.
For example, telephone and fax services surged by 11 percent, fruit prices rose by 7.5 percent, and medical products, devices, and equipment saw a 5.5 percent increase.
Other notable price hikes included postal services (up 3.6 percent), hotel services (up 3.2 percent), and recreational and cultural services (up 2.8 percent).
Meanwhile, costs for telephone and fax equipment grew by 2.6 percent, while actual housing rentals increased by 1.6 percent. Hospital services saw a rise of 1.4 percent, with furniture, carpets, and floor coverings up by 1.3 percent.
Smaller price increases were recorded in oils and fats, electricity, gas, and fuel materials (up 0.7 percent), transportation services (up 0.5 percent), and basic foodstuffs like grains and bread (up 0.3 percent). Sugar and sugary foods, as well as private transportation costs, also saw slight increases of 0.2 to 0.3 percent.
Banking sector
Egypt’s banking sector continues to demonstrate stability and resilience, playing a vital role in maintaining the country’s economic, financial, and monetary stability, according to the Central Bank of Egypt’s latest Financial Soundness Indicators.
The sector’s capital adequacy ratio reached 19.1 percent by the end of Q3 2024, comfortably surpassing the regulatory minimum of 12.5 percent. This marks a 0.5 percent improvement from the previous period, highlighting the sector’s growing financial health.
In terms of asset quality, nonperforming loans represented just 2.4 percent of total loans, with provisions coverage for these loans standing at a strong 87.4 percent.
Liquidity levels remained robust, with local currency liquidity at 32.1 percent and foreign currency liquidity at 77.7 percent, well above the regulatory requirements of 20 percent and 25 percent, respectively.
The banking sector’s loan-to-deposit ratio was recorded at 61.3 percent by the end of Q3 2024, reflecting conservative lending practices. Meanwhile, profit margins remained impressive, with a return on equity of 32.2 percent for the 2023 fiscal year.
Saudi Arabia’s flynas begins Jeddah-Djibouti flights; flyadeal launches 5 routes
RIYADH: Saudi low-cost airline flynas launched its first direct flight between Jeddah and Djibouti on Jan. 8, further expanding its network in Africa.
According to a press statement, the inaugural celebration was held at King Abdulaziz International Airport and was attended by Djibouti’s Ambassador to the Kingdom Dya-Eddine Said Bamakhrama and representatives from flynas and Jeddah Airport Co.
The inaugural flight was welcomed at the African country by Faisal Al-Qabbani, Saudi Arabia’s ambassador to Djibouti, and Hassan Humad Ibrahim, theDjibouti’s minister of infrastructure and transport.
The expansion is part of the airline’s “We Connect the World to the Kingdom” initiative and supports Saudi Arabia’s National Civil Aviation Strategy, which aims to expand connectivity to 250 international destinations and reach 330 million passengers.
The initiative is also expected to strengthen the Kingdom’s National Tourism Strategy, which aims to attract more than 150 million tourists by the end of this decade.
In the statement, flynas said it will operate three weekly flights from Jeddah to Djibouti.
Flyadeal launches five new routes
In a separate statement, Saudi low-cost airline flyadeal said that it launched five routes from its operating bases of Dammam, Riyadh, and Jeddah, marking the start of a major expansion drive that includes entry to Pakistan next month.
According to the statement, the routes include 14 domestic flights a week from Dammam to Najran, Tabuk, and Yanbu.
The airline said that it launched flights from Riyadh and Jeddah to the Jordanian capital, Amman, with a total of 10 flights a week.
The statement added that preparations are also underway for the start of twice-weekly flights to Pakistan’s financial capital, Karachi, from Riyadh and Jeddah, effective Feb. 2.
“Expanding our domestic and international networks has been the focus of our planning team in recent months to provide leisure and business travelers with more choice, options and more importantly, greater air connectivity,” said Steven Greenway, CEO of flyadeal.
He added: “As more aircraft join flyadeal’s fleet during 2025, we will continue to inject additional capacity into our three bases with new routes and extra frequencies, part of a system wide expansion plan over the next 12 months.”
Launched in 2017, flyadeal currently serves almost 30 year-round and seasonal destinations in Saudi Arabia and selected Middle East, European, and North African cities. The airline operates a fleet of 36 Airbus A320 narrowbody aircraft.
Oil Updates — crude prices steady as winter fuel demands balance US fuel inventories activity
SINGAPORE: Oil prices were little changed on Thursday, with investors weighing firm winter fuel demand expectations against large builds of fuel inventories in the US, the world’s biggest oil user, and macroeconomic concerns.
Brent crude futures fell 6 cents to $76.1 a barrel by 10:27 a.m. Saudi time. US West Texas Intermediate crude futures fell 5 cents to $73.27.
Both benchmarks fell more than 1 percent on Wednesday as a stronger dollar, and the bigger-than-expected rise in US fuel stockpiles weighed on prices.
“The oil market is still grappling with opposite forces — seasonal demand to support the bulls and macro data that supports a stronger US dollar in the medium term ... that can put a ceiling to prevent the bulls from advancing further,” said OANDA senior market analyst Kelvin Wong.
JPMorgan analysts expect oil demand for January to expand by 1.4 million barrels per day year-on-year to 101.4 million bpd, primarily driven by “increased use of heating fuels in the Northern Hemisphere.”
“Global oil demand is expected to remain strong throughout January, fueled by colder-than-normal winter conditions that are boosting heating fuel consumption, as well as an earlier onset of travel activities in China for the Lunar New Year holidays,” the analysts said.
The market structure in the Brent futures is also indicating that traders are becoming more concerned about supply tightening at the same time the demand is increasing.
The premium of the first-month Brent contract over the six-month contract reached its widest since August on Wednesday. A widening of this backwardation, when futures for prompt delivery are higher than for later delivery, typically indicates that supply is declining or demand is increasing.
Nevertheless, official Energy Information Administration data showed rising gasoline and distillates stockpiles last week in the US.
The US dollar firmed further on Thursday, underpinned by rising Treasury yields ahead of US President-elect Donald Trump’s entrance into the White House on Jan. 20.
Looking ahead, WTI crude oil is expected to oscillate within a range of $67.55-$77.95 into February as the market awaits more clarity on Trump’s administration policies and fresh fiscal stimulus measures out of China, said OANDA’s Wong.
Saudi Industrial Production Index up 3.4% as output expands: GASTAT
RIYADH: Saudi Arabia’s Industrial Production Index climbed 3.4 percent year on year in November to reach 103.8, driven by an uptick in mining and quarrying activities, official data showed.
According to data from the General Authority for Statistics, the mining and quarrying sub-index recorded a 1.2 percent annual rise, underpinned by a modest increase in the Kingdom’s oil output, which grew to 8.93 million barrels per day in November from 8.82 million bpd in the same month of the previous year.
Manufacturing activities also showed robust growth, expanding 7.2 percent year on year, driven largely by a 17.6 percent surge in the manufacture of coke and refined petroleum products. Additionally, the production of chemicals and chemical products rose 1.6 percent, while food manufacturing increased by 1.5 percent during the same period.
This comes as Saudi Arabia emphasizes industrial production under Vision 2030, aiming to diversify its economy and reduce oil dependence by fostering growth in mining, manufacturing, and other non-oil sectors.
The report noted a mixed performance in other sectors. The sub-index for electricity, gas, steam, and air conditioning supply fell by 2.1 percent year on year, while water supply, sewerage, waste management, and remediation activities surged 10.5 percent.
The index for oil activities rose 3.8 percent in November compared to the same month in 2023, reflecting the increased output in the Kingdom’s mining sector. Meanwhile, non-oil activities grew 2.4 percent, buoyed by gains across most non-oil economic activities, except for the electricity and utilities sector, which posted declines.
Despite the annual growth, the IPI fell 2.3 percent in November compared to October 2024. Mining and quarrying activities declined 0.5 percent month on month, while manufacturing contracted by 3.1 percent over the same period.
The electricity, gas, steam, and air conditioning supply sub-index posted a steep 21.5 percent monthly drop, and water supply, sewerage, waste management, and remediation activities decreased by 4.7 percent.
Oil activities fell by 2.1 percent month on month, while non-oil activities recorded a 2.7 percent decline in November compared to October.
The mixed performance highlights the volatility in industrial activity, but the overall annual growth underscores progress in Saudi Arabia’s ongoing efforts to diversify its economy and reduce dependence on oil revenues.
70% of Saudi employers say technological literacy is increasingly important skill, report finds
- World Economic Forum predicts net gain of 78m jobs by 2030, as half of employers globally plan to reshape businesses to benefit from technology-related opportunities
- However, largest job growth is expected to be among frontline roles such as farm workers, delivery drivers and construction workers
DUBAI: Macroeconomic conditions, geopolitical tensions and advancements in technology are among the factors shaping the global workforce, as the World Economic Forum projects 170 million jobs will be created worldwide by 2030.
The latest edition of the forum’s “Future of Jobs” report also predicted the displacement of 92 million jobs, leaving a net gain of 78 million over the next five years.
The largest job growth is expected to be among frontline roles such as farm workers, delivery drivers and construction workers. The WEF also expects increased demand for healthcare and educational professionals, and in the fields of artificial intelligence and energy, particularly renewable energy and environmental engineering.
The report said skills gaps are the leading barrier to business transformation. Nearly 40 percent of skills required for jobs are set to change and 63 percent of employers cited this as a key challenge they face.
Half of employers globally said they planned to reshape their business to benefit from technology-related opportunities and this will be reflected in the job market, with 77 percent of employers intending to upskill their employees.
Despite this growing demand for technological skills, human skills, such as creative and analytical thinking and agility, will remain essential, the WEF said.
However, 41 percent of employers said they plan to reduce workforce size because AI is capable of automating some tasks, with cashiers, administrative assistants and secretaries expected to see the largest declines in the next five years.
Companies in the Middle East and North Africa region are more positive about the availability of talent for recruitment by 2030 than their global peers, the report found, with 46 percent of regional employers expecting the hiring outlook to improve.
“The big trends creating new jobs globally — such as increasing digitalization, adoption of artificial intelligence and the transition away from a carbon-heavy economy — are the same ones driving economic transformation across the Middle East,” Till Leopold, the WEF’s head of work, wages and job creation, told Arab News.
Employers in the region, most notably in Saudi Arabia and the UAE, are also planning to accelerate the process of automation. For example, the proportion of work tasks expected to be mostly automated through the use of technology is projected to reach 45 percent by 2030 in the Kingdom and 43 percent in the UAE, both well above the global average of 34 percent.
As companies invest more in the latest technology, more 70 percent of employers in Saudi Arabia and 87 percent in the UAE identified technological literacy as a skill on the rise, along with growing demand for skills in networks and cybersecurity, and AI and big data.
The report stressed the need for “urgent and collective action across government, business and education” as employment continues to evolve, with key priorities including efforts to bridge skills gaps, invest in reskilling and upskilling initiatives, and enable easy access to the fastest-growing jobs and skills development.
“It is essential that public- and private-sector leaders work together to ensure people across the region are equipped with the right skills to benefit from these opportunities, including technology literacy, resilience and creative thinking,” said Leopold.
