China's stalling economy poses a bigger risk to the prosperity of the GCC than the escalating debt crisis in Europe, economists and the IMF warn.
The alarm came as data released yesterday signalled China's manufacturing sector shrank this month for the 11th month running. Similar data indicated factory production in the euro zone fell deeper into recession territory during the month.
But it is the shaky performance of the world's second-largest economy, rather than the euro-zone turmoil, that could cause more harm to this region.
"The biggest risk the GCC faces is not necessarily from the euro-zone crisis but from a hard landing in China," said Jean-Michel Saliba, the eastern Europe, Middle East and Africa economist at Bank of America Merrill Lynch.
"This is a huge black swan for the GCC if it materialises."
China's booming economy of recent years had been fuelled by a steadily surging flow of oil, petrochemicals and other materials from the GCC. But its energy-guzzling engine has started to splutter this year, raising the threat of softening demand for oil and other GCC goods.
Growth in China is expected to drop below 8 per cent this year for the first time since 1999.
Prices of Brent crude, the international benchmark, eased below US$108 per barrel in trading yesterday and are down about 14 per cent from their year high of $126.
Yesterday's dip came after the latest HSBC Flash China manufacturing purchasing managers' index showed activity remained negative this month, although slightly improved from the month before. The oil market had already been reeling after a pledge by Saudi Arabia to release more supplies.
Any sustained erosion in prices poses a threat to the trillions of dollars of infrastructure projects and social spending launched across many parts of the GCC in the past two years. The region's budgets have been drawn up on an estimation of an average oil price of $80 per barrel, Deutsche Bank analysts believe.
The IMF highlighted the external risks to Saudi Arabia, the GCC's largest economy, in a report released this week. Results from tests of economic models revealed the kingdom should be worried about China's slowdown.
"The results show that a negative output shock in the euro area or the United States has relatively little impact on the Saudi economy, whereas the sensitivity to shocks in China is more substantial," IMF analysts wrote in the report, released on Wednesday.
Four quarters of shrinking growth in China would result in a 0.5 per cent drop in Saudi's own economic expansion. In contrast, the same performance in the euro zone or the US economies over the same period would only put a 0.1 per cent dent in the kingdom's growth.
"These results partly reflect the effect that economic developments in each of these countries have on oil prices, with the China shock producing the biggest decline in oil prices and adversely affecting the Saudi economy," the report said.
The kingdom's trade with China has rocketed from next to nothing in 1990 to 13 per cent of Saudi's exports in 2010 and 11 per cent of its imports. Chinese trade links with the GCC have also swelled outside of oil. It is now the second-largest export destination for Dubai non-oil goods.
Still, the GCC's increased focus on China, India and other parts of Asia should be rewarded in the long term as growth in emerging markets outflanks the developed world.
"The urbanisation of China and Asia is one of the key strategic trends we are seeing," said Rajiv Biswas, the Asia-Pacific chief economist at IHS Global Insight.
"This will bring demand for chemicals and oil, which the GCC can benefit from."
tarnold@thenational.ae
Killing of Qassem Suleimani
Killing of Qassem Suleimani
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Brief scoreline:
Manchester United 2
Rashford 28', Martial 72'
Watford 1
Doucoure 90'
Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5
Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants
Results
Ashraf Ghani 50.64 per cent
Abdullah Abdullah 39.52 per cent
Gulbuddin Hekmatyar 3.85 per cent
Rahmatullah Nabil 1.8 per cent
The alternatives
• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.
• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.
• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.
• 2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.
• PayPal is probably the best-known online goods payment method - usually used for eBay purchases - but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.
In-demand jobs and monthly salaries
- Technology expert in robotics and automation: Dh20,000 to Dh40,000
- Energy engineer: Dh25,000 to Dh30,000
- Production engineer: Dh30,000 to Dh40,000
- Data-driven supply chain management professional: Dh30,000 to Dh50,000
- HR leader: Dh40,000 to Dh60,000
- Engineering leader: Dh30,000 to Dh55,000
- Project manager: Dh55,000 to Dh65,000
- Senior reservoir engineer: Dh40,000 to Dh55,000
- Senior drilling engineer: Dh38,000 to Dh46,000
- Senior process engineer: Dh28,000 to Dh38,000
- Senior maintenance engineer: Dh22,000 to Dh34,000
- Field engineer: Dh6,500 to Dh7,500
- Field supervisor: Dh9,000 to Dh12,000
- Field operator: Dh5,000 to Dh7,000
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
The specs
Engine: four-litre V6 and 3.5-litre V6 twin-turbo
Transmission: six-speed and 10-speed
Power: 271 and 409 horsepower
Torque: 385 and 650Nm
Price: from Dh229,900 to Dh355,000
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
