The second half of the year has begun amidst growing doubts about the sustainability of the global recovery. Financial markets are suggesting a double-dip recession is a real threat, and recent data have tended to support this view. At the same time policymakers are arguing that the global expansion remains intact, although most likely at a below-trend rate. So who is correct?
Recent growth fears have been centred on the US after a run of releases showing below-consensus data. The US jobs data for last month certainly highlighted a weak end to the first half of the year, aggravating fears of a mid-year lull.
The payroll figures showed private-sector jobs growth of 83,000, but with the unwinding of recent hiring to conduct the 2010 census, there was an overall net jobs loss of 125,000. However, more significant is that a weak round of remaining economic data for last month is now on the cards, thanks to a broad-based drop in hours worked and earnings having a negative impact on personal incomes and production. Civilian jobs figures also plummeted again last month after big declines in May, sending another ominous signal about the third quarter despite the drop in the jobless rate to 9.5 per cent.
This renewed softness in the world's largest economy comes amidEurope's debt crisis and with the euro zone, the UK and Japan all likely to face the strain of enormous austerity programmes introduced to reduce unsustainably large fiscal deficits. China is also showing signs of moderating growth as the government struggles to deflate its property bubble, although a double-digit growth rate is more than likely going to give way to a still reasonably strong 9 per cent pace.
In light of such developments, it appears sensible to begin factoring in a weaker second half for this year. However, despite such a setback, the likelihood remains that the global recovery will remain on track, albeit at a more sluggish pace.
A second dip to the lows of last year appears to be of relatively low probability at this stage, with the US still eyeing a further fiscal stimulus package this year, and with global central banks remaining more alert to the dangers of deflation than pre-emptive of any resumption of pricing pressures, which in any case look unlikely to materialise. After all, relatively sluggish growth was in all probability the bargain that global policymakers reckoned on when they embarked on their unprecedented stimulus measures, substituting private debt and spending with the public variety in 2008 and last year.
Now that the bills for this government spending are starting to come due, the path ahead seems likely to be more subdued than the V-shaped recovery implied by markets in the latter part of last year. However, having been sheltered by governments from outright depression last year, the private sector is now in a better position to begin taking up the strain as public-sector spending tails off.
Global manufacturing and services are still expanding, with global capital equipment expenditure rising strongly and employment now picking up around the world as well, albeit at varying rates. But after the sharp inventory-driven production gains of the first half of this year, at some point an adjustment with more modest demand was likely, causing output to moderate as we are now seeing. This, though, should not be confused with a return to the contractions of a year ago.
Where does the Middle East and, to be more specific, the Gulf, come in all of this? Try as they might to diversify, this region's economies still rely heavily on demand for their hydrocarbon resources. And at today's oil price of about US$72 per barrel, the outlook is fairly positive from a number of perspectives. Most obvious that the higher oil price this year should mean expanded oil output, a significant contributor to regional growth rates.
Average prices for the year are even higher than the current spot price, closer to $80, meaning that they would also have to fall very sharply from here before budgets based on levels closer to $60 per barrel would theoretically be jeopardised.
This means that governments will be able to stimulate demand further if needs be. From a global perspective, the more moderate price of oil is conducive to supporting global household demand, thus underpinning the recovery on which our trade with the rest of the world (particularly in the UAE) depends. And from another angle, the decline in commodity prices in general is helping to anchor inflation expectations globally, allowing central banks to maintain generous monetary stimulus measures, probably well into next year.
Having entered the downswing later than most, however, the region's economies are taking longer to emerge from it. Regional markets are also underperforming in relation to their emerging-market counterparts. Regional governments joined in the global monetary stimulus, in some cases leading it, but overall, local monetary conditions remain tight, with the exception of Qatar, where money supply growth is approaching 40 per cent.
Complicating the recovery elsewhere is the legacy of past lending excesses, with the consequence that banking sectors are preventing the liquidity being pumped in by the authorities from reaching the man in the street. In the UAE, this problem is particularly pronounced, with the latest data released by the UAE Central Bank showing that credit growth in May was just 1.8 per cent higher than in the same period last year.
The uncertainty about the recovery in the global economy will no doubt add to these tensions, potentially impeding consumer appetite for loans at the same time as their availability remains limited.
Again, however, a sense of perspective is required. Conditions are a far cry from those that confronted policymakers at the start of last year, and the omens are promising that the steady progression towards recovery will continue. Pricing power is picking up gradually across the region, and it appears likely to be only a matter of time before the liquidity pumped in by governments as well as from rising oil prices will start circulating more freely through local economies. Here, too, the debate about a double dip looks as far-fetched as it does in the rest of the world.
Tim Fox is the chief economist at Emirates NBD but is writing here in a personal capacity
business@thenational.ae
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
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: 2.0-litre 4-cylturbo
Transmission: seven-speed DSG automatic
Power: 242bhp
Torque: 370Nm
Price: Dh136,814
Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
What is Folia?
Prince Khaled bin Alwaleed bin Talal's new plant-based menu will launch at Four Seasons hotels in Dubai this November. A desire to cater to people looking for clean, healthy meals beyond green salad is what inspired Prince Khaled and American celebrity chef Matthew Kenney to create Folia. The word means "from the leaves" in Latin, and the exclusive menu offers fine plant-based cuisine across Four Seasons properties in Los Angeles, Bahrain and, soon, Dubai.
Kenney specialises in vegan cuisine and is the founder of Plant Food Wine and 20 other restaurants worldwide. "I’ve always appreciated Matthew’s work," says the Saudi royal. "He has a singular culinary talent and his approach to plant-based dining is prescient and unrivalled. I was a fan of his long before we established our professional relationship."
Folia first launched at The Four Seasons Hotel Los Angeles at Beverly Hills in July 2018. It is available at the poolside Cabana Restaurant and for in-room dining across the property, as well as in its private event space. The food is vibrant and colourful, full of fresh dishes such as the hearts of palm ceviche with California fruit, vegetables and edible flowers; green hearb tacos filled with roasted squash and king oyster barbacoa; and a savoury coconut cream pie with macadamia crust.
In March 2019, the Folia menu reached Gulf shores, as it was introduced at the Four Seasons Hotel Bahrain Bay, where it is served at the Bay View Lounge. Next, on Tuesday, November 1 – also known as World Vegan Day – it will come to the UAE, to the Four Seasons Resort Dubai at Jumeirah Beach and the Four Seasons DIFC, both properties Prince Khaled has spent "considerable time at and love".
There are also plans to take Folia to several more locations throughout the Middle East and Europe.
While health-conscious diners will be attracted to the concept, Prince Khaled is careful to stress Folia is "not meant for a specific subset of customers. It is meant for everyone who wants a culinary experience without the negative impact that eating out so often comes with."
THE BIO
Ms Davison came to Dubai from Kerala after her marriage in 1996 when she was 21-years-old
Since 2001, Ms Davison has worked at many affordable schools such as Our Own English High School in Sharjah, and The Apple International School and Amled School in Dubai
Favourite Book: The Alchemist
Favourite quote: Failing to prepare is preparing to fail
Favourite place to Travel to: Vienna
Favourite cuisine: Italian food
Favourite Movie : Scent of a Woman
MADAME%20WEB
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MATCH INFO
Juventus 1 (Dybala 45')
Lazio 3 (Alberto 16', Lulic 73', Cataldi 90 4')
Red card: Rodrigo Bentancur (Juventus)
THE SPECS
Engine: AMG-enhanced 3.0L inline-6 turbo with EQ Boost and electric auxiliary compressor
Transmission: nine-speed automatic
Power: 429hp
Torque: 520Nm
Price: Dh360,200 (starting)
Batti Gul Meter Chalu
Producers: KRTI Productions, T-Series
Director: Sree Narayan Singh
Cast: Shahid Kapoor, Shraddha Kapoor, Divyenndu Sharma, Yami Gautam
Rating: 2/5
Dengue%20fever%20symptoms
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Tips to stay safe during hot weather
- Stay hydrated: Drink plenty of fluids, especially water. Avoid alcohol and caffeine, which can increase dehydration.
- Seek cool environments: Use air conditioning, fans, or visit community spaces with climate control.
- Limit outdoor activities: Avoid strenuous activity during peak heat. If outside, seek shade and wear a wide-brimmed hat.
- Dress appropriately: Wear lightweight, loose and light-coloured clothing to facilitate heat loss.
- Check on vulnerable people: Regularly check in on elderly neighbours, young children and those with health conditions.
- Home adaptations: Use blinds or curtains to block sunlight, avoid using ovens or stoves, and ventilate living spaces during cooler hours.
- Recognise heat illness: Learn the signs of heat exhaustion and heat stroke (dizziness, confusion, rapid pulse, nausea), and seek medical attention if symptoms occur.
The%20specs
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Civil%20War
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Alex%20Garland%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%3C%2Fstrong%3E%20Kirsten%20Dunst%2C%20Cailee%20Spaeny%2C%20Wagner%20Moura%2C%20Nick%20Offerman%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A
THE BIO
Favourite place to go to in the UAE: The desert sand dunes, just after some rain
Who inspires you: Anybody with new and smart ideas, challenging questions, an open mind and a positive attitude
Where would you like to retire: Most probably in my home country, Hungary, but with frequent returns to the UAE
Favorite book: A book by Transilvanian author, Albert Wass, entitled ‘Sword and Reap’ (Kard es Kasza) - not really known internationally
Favourite subjects in school: Mathematics and science
