The euro zone got through the holiday season in reasonable shape, and the optimists (and I am not one of them) suddenly began to feel the worst was behind them. But there are still awesome negative forces at work - and 2012 looks like it will be the year it all falls apart for the European economies.
With the interconnectedness of the modern global economy, this would be bad news for us all, from Shanghai to Mumbai to Dubai, as well as for New York. There are severe strains in the global credit markets that will pose a threat to capital flows and international trade.
But first, some good news. Europe did not fall apart in the first few days of the new year. The euro has held up quite well during the prolonged crisis, despite being stuck firmly beneath US$1.30. Many economists had predicted a steeper decline.
Sentiment in the bond markets was a little more benevolent. The French got away an €8 billion (Dh37.48bn) auction with some room to spare; the European Central Bank's multibillion-euro provisioning of cheap borrowing facilities obviously had a calming effect.
So EU policymakers were probably thinking "so far, so good", until they got another rude shock from Standard & Poor's, as the ratings agency took the much-forecast decision to downgrade French and Austrian sovereign debt on Friday. Cue for outrage in Paris, where the government's desire to retain its top-tier "AAA" status attained the level almost of a fetish, and much ranting about an Anglo-Saxon conspiracy.
But the S&P move will probably be seen in hindsight as a wake-up call to hammer home the message that euro-zone countries will permanently have to pay more to fund their sovereign debt. This will certainly be the case for Italy and Spain, while poor old Greece looks to be on the steepest stretch of a slippery slope that can only end in sovereign default. It will be almost a relief when it finally happens.
The biggest worry is that a failure by any of the bigger countries on international bond markets, or a Greek default, will trigger a big run on the euro, and lead the rating agencies to come out with further downgrades. Germany and the "core" euro-zone countries have so far avoided such speculation, but some experts believe it is only a matter of time before the agencies get around to them.
A recent research paper from Capital Economics, a London consultancy that had a consistently good track record last year, spelled out the dangers for the rest of the world from a euro debacle. "The euro zone is slipping into a recession which we expect to be deep and prolonged and to result in the break-up of the single-currency area.
"This will be a major drag on other European economies … Business surveys for the euro zone point to a very steep decline in output, beginning in late 2011."
Of course, the beating heart of the euro zone is Germany, whose economy grew by about 3 per cent overall last year. But the final quarter, when according to many analysts GDP actually went into negative territory, could be a portent of things to come.
Declining demand in eastern Europe, to say nothing of the Middle East and Asia, for German products will do nothing to help the German export machine pull the rest of the euro zone out of the ditch.
Capital Economics forecasts a 1 per cent shrinkage for euro-zone economies this year, worse than the 0.5 per cent fall seen for the austerity-blighted UK.
All of this is of deep concern to the Gulf economies. Though most are no longer such big traders with euro-zone countries or the UK, the threat of world recession prompted by a European meltdown is of direct importance via the oil price, still by far the most important economic indicator for the region.
Capital Economics says the price of oil has been kept up by the possibility of an escalation of the sanctions war against Iran, but believes this will fade to leave oil at $85 by the end of the year. That is close to the limits of regional policymakers' comfort zones.
The euro, and the euro zone, are still with us, holding on by their fingertips. When they finally lose their grip, it will be a moment of reckoning for the world economy.
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
UAE currency: the story behind the money in your pockets
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
Director: Laxman Utekar
Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
FORSPOKEN
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Starfield
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Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
The specs
Engine: 3.5-litre twin-turbo V6
Power: 380hp at 5,800rpm
Torque: 530Nm at 1,300-4,500rpm
Transmission: Eight-speed auto
Price: From Dh299,000 ($81,415)
On sale: Now
Emergency
Director: Kangana Ranaut
Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry
Rating: 2/5
COMPANY%20PROFILE
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UAE Premiership
Results
Dubai Exiles 24-28 Jebel Ali Dragons
Abu Dhabi Harlequins 43-27 Dubai Hurricanes
Final
Abu Dhabi Harlequins v Jebel Ali Dragons, Friday, March 29, 5pm at The Sevens, Dubai
The more serious side of specialty coffee
While the taste of beans and freshness of roast is paramount to the specialty coffee scene, so is sustainability and workers’ rights.
The bulk of genuine specialty coffee companies aim to improve on these elements in every stage of production via direct relationships with farmers. For instance, Mokha 1450 on Al Wasl Road strives to work predominantly with women-owned and -operated coffee organisations, including female farmers in the Sabree mountains of Yemen.
Because, as the boutique’s owner, Garfield Kerr, points out: “women represent over 90 per cent of the coffee value chain, but are woefully underrepresented in less than 10 per cent of ownership and management throughout the global coffee industry.”
One of the UAE’s largest suppliers of green (meaning not-yet-roasted) beans, Raw Coffee, is a founding member of the Partnership of Gender Equity, which aims to empower female coffee farmers and harvesters.
Also, globally, many companies have found the perfect way to recycle old coffee grounds: they create the perfect fertile soil in which to grow mushrooms.
What drives subscription retailing?
Once the domain of newspaper home deliveries, subscription model retailing has combined with e-commerce to permeate myriad products and services.
The concept has grown tremendously around the world and is forecast to thrive further, according to UnivDatos Market Insights’ report on recent and predicted trends in the sector.
The global subscription e-commerce market was valued at $13.2 billion (Dh48.5bn) in 2018. It is forecast to touch $478.2bn in 2025, and include the entertainment, fitness, food, cosmetics, baby care and fashion sectors.
The report says subscription-based services currently constitute “a small trend within e-commerce”. The US hosts almost 70 per cent of recurring plan firms, including leaders Dollar Shave Club, Hello Fresh and Netflix. Walmart and Sephora are among longer established retailers entering the space.
UnivDatos cites younger and affluent urbanites as prime subscription targets, with women currently the largest share of end-users.
That’s expected to remain unchanged until 2025, when women will represent a $246.6bn market share, owing to increasing numbers of start-ups targeting women.
Personal care and beauty occupy the largest chunk of the worldwide subscription e-commerce market, with changing lifestyles, work schedules, customisation and convenience among the chief future drivers.
Company profile
Name: Dukkantek
Started: January 2021
Founders: Sanad Yaghi, Ali Al Sayegh and Shadi Joulani
Based: UAE
Number of employees: 140
Sector: B2B Vertical SaaS(software as a service)
Investment: $5.2 million
Funding stage: Seed round
Investors: Global Founders Capital, Colle Capital Partners, Wamda Capital, Plug and Play, Comma Capital, Nowais Capital, Annex Investments and AMK Investment Office
A list of the animal rescue organisations in the UAE
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The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
