July 2017

Gulf Industry Magazine brings you the latest tenders available in the Gulf region.

UAE inflation edges up to 2.2pc

The inflation rate in consumer prices in the UAE during the first five months of 2017 stood at 2.2 per cent, according to Statistics Centre – Abu Dhabi (SCAD), a report said.

The relative change rate in consumer prices during May hit 2 per cent as compared with the same month last year, Emirates news agency WAM reported, citing a SCAD statement.

SCAD attributed the increase to a 3.5 per cent rise in prices of housing, water, electricity, gas and other types of fuels, which accounted for 55.3 per cent of the total price hike during the first five months of the year comparatively with the same period in 2016. The hike in transportation prices claimed 33.1 per cent of the total rise during the first five months of 2017 as compared to the same period in 2016.

Prices in the recreation and culture category dropped by 9 per cent during the first five months comparatively with the same period in 2016, contributing by 19.3 per cent to reducing the inflation rise.


Luxury brands continue growth in Mideast

The percentage of consumers in the UAE, Russia and China claiming to have increased their spending in the luxury market in the last five years was 70 per cent, compared to 53 per cent in the more mature markets such as the EU, US and Japan, a report said.

The fourth annual Global Powers of Luxury Goods report issued by professional services provider Deloitte Global examines and lists the 100 largest luxury goods companies globally, based on publicly available data for consolidated sales of luxury goods in FY2015 (ending within the 12 months to 30 June 2016). It also discusses the key trends shaping the luxury market and provides a global economic outlook.

“Travel and tourism is still a great growth opportunity for the luxury sector,” said James Babb, Clients and Industries leader, Deloitte, Middle East.

“Almost half of luxury purchases are made by consumers who are travelling, either in a foreign market (31 per cent) or while at the airport (16 per cent). This rises to 60 per cent among consumers from emerging markets, who typically do not have access to the same range of products and brands that can be found in more mature markets.”

Based on publicly available data, the world’s 100 largest luxury goods companies generated sales of $212 billion in FY2015. The average luxury goods annual sales for a top 100 company is now $2.1 billion.


Global mobile subscriptions hit 7.6bn in Q1

Global mobile subscriptions are growing at around four per cent year-on-year, reaching 7.6 billion in the first quarter (Q1) of the year, according to the latest Ericsson Mobility Report.

India grew the most in terms of net additions during the quarter (+43 million), followed by China (+24 million), Indonesia (+10 million), Pakistan (+5 million) and Nigeria (+3 million).

Mobile broadband subscriptions are growing by around 25 per cent year-on-year, increasing by approximately 240 million in Q1 2017 alone. The total number of mobile broadband subscriptions is now around 4.6 billion.

LTE subscriptions continue to grow strongly, with 250 million new subscriptions added during Q1 2017 to reach a total of around 2.1 billion. The net addition for WCDMA/HSPA was around 10 million subscriptions during the quarter.

The majority of 3G/4G subscriptions have access to GSM/EDGE as a fallback. During Q1 2017, GSM/EDGE-only subscriptions declined by 110 million. Other technologies declined by 40 million.


Oil demand growth below expectations in H1

Oil demand growth has undershot expectations in the first half (H1) of 2017, removing support to oil prices just when the market needed it most, a report said.

Globally, demand expanded by just 900,000 barrels per day (bpd) in the first quarter (Q1) of 2017, added the research report titled “Global Energy Weekly: Red flags for oil demand” from Bank of America Merrill Lynch.

This paltry figure was followed by a modest acceleration to 1.1 million barrels per day (bpd) in Q2. In essence, global oil demand ran at just half the growth rate of the last two years. This should not be overlooked. While it is true that supply is largely to blame for lower oil prices, oil demand has failed to improve at the speed required to rebalance the global oil market.

“While most investors blame supply for today›s low oil prices, demand has also failed to improve at the speed required to rebalance the global oil market. Looking into 2H17, we now doubt that demand growth will accelerate sufficiently and see downside risks to our forecasts of 1.3 million bpd in both 2H17 and 2018. In the absence of a mirroring supply response, softer consumption could push 2018 balances into surplus. Put differently, demand will not break the current downward price momentum for now,” the report said.


World economy ‘likely to see big growth in H2’

The world economy is showing decent signs of growth for the second half (H2) of the year, although momentum is expected to moderate somewhat, a report said.

Europe’s growth is above trend, and the lack of significant tightening by the European Central Bank (ECB) should sustain it, with Asia still the main driver of global growth, added the report titled “Global Focus Q3 2017: Swans, bulls and bears” released by Standard Chartered.

The last Global Focus highlighted the rekindled animal spirits and elevated confidence that were driving the world economy to a solid H1 performance, themes that have played out as expected. Monetary policy is still the only game in town – tightening by major central banks remains the key risk – but the reflation euphoria that followed Donald Trump’s election has now died down, with the reflationary policies that he promised failing to be implemented.

Within a six-month period, positive expectations of reflation in the US have been replaced by concerns over deflation risks. Standard Chartered is forecasting one more hike this year, followed by another two in early 2018.

In China, strong H1 performance gives the authorities room to tighten monetary policy and also focus on deleveraging. As a result, H2 growth is expected to be slightly lower than H1, but to stay above 6.5 per cent (6.6 per cent forecast for the full year). This should be positive for the world economy.

In the Middle East, countries are recognising the need to become more self-reliant in protecting their own interests. The UAE and Saudi Arabia have significantly increased coordination on regional and global affairs in the past two to three years.

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