We are in a crisis like no other. The Covid-19 pandemic and the plunge in global oil prices are posing a two-pronged challenge to the Gulf Co-operation Council countries. While reducing the pandemic's health toll is the top priority, member states are also having to address the economic impact of these combined shocks through swift policy action and enhanced regional co-operation. But there can be opportunity in every crisis. If GCC countries act decisively – building on their tech-savvy, well-educated youth and rapidly expanding the digital economy – the region will emerge from this crisis with a stronger foundation for a more diversified economy in the future.
Indeed, the wide-ranging containment measures are helping to slow the spread of the virus. Some countries, such as Saudi Arabia and the UAE, have begun to gradually reopen certain businesses and lift curfews. Nevertheless, these containment measures, though necessary to protect the people, are having a devastating effect on job-rich sectors such as retail, hospitality and tourism, with consequent risks to financial systems and the broader economy.
The Purchasing Managers' Index, or PMI, which measures economic trends in the manufacturing and service sectors, does not look promising. It is down some 12 per cent on average since January, which signals much weaker activity. Meanwhile, the Google Mobility Database indicates that retail and transportation have declined by an average of 40-60 per cent since early March.
In addition, oil prices have plummeted to historic lows in response to the collapse in global demand and uncertainty over the supply outlook. While Opec+, the group of petroleum-exporting nations, reached an agreement to reduce production by around 10 million barrels per day last month, global demand could decline by almost three times that amount compared with a year ago. This demand-supply imbalance is resulting in an unprecedented increase in inventories and downward pressure on prices. They have not been this low since 2001 and, if they remain at these levels, more than $160 billion of the GCC's annual revenue could be wiped out.
Governments are working hard to soften the blow through fiscal measures and central bank liquidity support. These efforts have supported a successful return by some countries to global capital markets, with Qatar, Saudi Arabia and the UAE issuing a combined $24bn last month, and recent gains in most GCC equity indices. Nonetheless, the twin shocks are expected to result in the deepest contraction in recent memory.
The IMF projects GCC growth to shrink by 3.3 per cent this year – equivalent to losing about $260bn in economic output. That projection does not take into account the impact of the latest Opec+ agreement, which could shave an additional two to four percentage points from respective country forecasts, or the additional risks that a deeper and more protracted global economic downturn would bring. Today, we are seeing signs that the economic recovery will take more time than initially expected.
The challenges are many. But the crisis presents an opportunity to accelerate the diversification of the region’s oil-based economies. Swift, comprehensive and well-sequenced policies will help GCC economies emerge stronger and more prosperous.
The immediate priority for governments remains to protect lives. This means strengthening healthcare systems, essential services and social safety nets to meet the needs of their resident populations, even in places where there is only limited room for policy changes.
The second priority is to preserve the engines of the economy. Countries have provided timely support to the private sector and households, both through targeted fiscal measures, easing monetary policy, and supporting the liquidity of central banks.
Where possible, governments should continue to pursue a mix of these timely and targeted policies and liquidity support to hard-hit sectors and groups. This can include, for example, providing temporary direct subsidies or deferred tax payments. It can also mean offering firms incentives to boost their spending by, for example, allowing fewer deductions at later stages of an investment (a form of accounting known as accelerated depreciation). This would support production of under-supplied goods and services.
Saudi Arabia’s recent measures to reduce government spending in some areas and to identify additional non-oil revenues will help create this space. They should be balanced in the near term against growth needs with compensation given to support lower-income households.
The immediate priority for governments remains to protect lives
Countries with more limited fiscal space and large financing needs must begin fiscal adjustment now while reorienting government spending away from lower-priority areas or postponing non-essential spending to meet the pressing needs of today. Such policies should be part of a broader package of gradual medium-term fiscal consolidation with plans to rebuild buffers and ensure fiscal sustainability. Central banks should stand ready to provide further liquidity to banks, maintain or increase credit lines, modify or defer loan payments or provide guarantees.
The third priority is to lay the groundwork for the future. The severity of the shock and the resulting uncertainty call for an agenda of comprehensive economic transformation. In some countries, fiscal adjustments will have to come earlier than planned.
Governments will need to resume fiscal consolidation. But now more than ever, they must deliver on long-needed structural reforms to diversify their economies, spur private sector-led growth and create jobs. GCC countries could do more to increase small and medium-sized enterprises’ access to finance; improve the business environment, governance and transparency; promote domestic capital market development and advance the digital economy.
The last objective in particular holds considerable promise. Past technology investments are now bearing fruit. Advances in e-government have minimised interruptions to critical public services during lockdown, and strong internet and telecoms infrastructure have allowed many to work from home. While the short-term outlook is grim, technology-oriented sectors are still thriving, underscoring how economic structures can adapt quickly in places with high mobile penetration and technology usage. More broadly, digital transformation will facilitate competition by lowering barriers to entry, enabling tech-savvy youth to translate their dreams into future engines of growth.
Continuing to empower the tech-savvy younger generation to work and start businesses in the private sector should be the main pillar of the economic strategy in the post-Covid era. Governments in the region can no longer be the first port of call for someone looking for a job or a company looking to sell its products. They need to become an enabler—not a driver—of private sector growth.
By forcefully addressing the immediate needs and strategically preparing for the recovery, GCC economies will have positive spillovers to the broader Middle East and North Africa region. By building stronger economies, the region could see its $100bn in outward remittance flows expand. By ensuring their own future prosperity, GCC countries will also provide an anchor of stability and growth for the region as a whole.
Jihad Azour is the IMF’s director for the Middle East and Central Asia
SPEC%20SHEET%3A%20APPLE%20M3%20MACBOOK%20AIR%20(13%22)
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Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
more from Janine di Giovanni
Killing of Qassem Suleimani
PREMIER LEAGUE FIXTURES
Saturday (UAE kick-off times)
Watford v Leicester City (3.30pm)
Brighton v Arsenal (6pm)
West Ham v Wolves (8.30pm)
Bournemouth v Crystal Palace (10.45pm)
Sunday
Newcastle United v Sheffield United (5pm)
Aston Villa v Chelsea (7.15pm)
Everton v Liverpool (10pm)
Monday
Manchester City v Burnley (11pm)
England squad
Moeen Ali, James Anderson, Jofra Archer, Jonny Bairstow, Dominic Bess, James Bracey, Stuart Broad, Rory Burns, Jos Buttler, Zak Crawley, Sam Curran, Joe Denly, Ben Foakes, Lewis Gregory, Keaton Jennings, Dan Lawrence, Jack Leach, Saqib Mahmood, Craig Overton, Jamie Overton, Matthew Parkinson, Ollie Pope, Ollie Robinson, Joe Root, Dom Sibley, Ben Stokes, Olly Stone, Amar Virdi, Chris Woakes, Mark Wood
Types of bank fraud
1) Phishing
Fraudsters send an unsolicited email that appears to be from a financial institution or online retailer. The hoax email requests that you provide sensitive information, often by clicking on to a link leading to a fake website.
2) Smishing
The SMS equivalent of phishing. Fraudsters falsify the telephone number through “text spoofing,” so that it appears to be a genuine text from the bank.
3) Vishing
The telephone equivalent of phishing and smishing. Fraudsters may pose as bank staff, police or government officials. They may persuade the consumer to transfer money or divulge personal information.
4) SIM swap
Fraudsters duplicate the SIM of your mobile number without your knowledge or authorisation, allowing them to conduct financial transactions with your bank.
5) Identity theft
Someone illegally obtains your confidential information, through various ways, such as theft of your wallet, bank and utility bill statements, computer intrusion and social networks.
6) Prize scams
Fraudsters claiming to be authorised representatives from well-known organisations (such as Etisalat, du, Dubai Shopping Festival, Expo2020, Lulu Hypermarket etc) contact victims to tell them they have won a cash prize and request them to share confidential banking details to transfer the prize money.
Ukraine%20exports
%3Cp%3EPresident%20Volodymyr%20Zelenskyy%20has%20overseen%20grain%20being%20loaded%20for%20export%20onto%20a%20Turkish%20ship%20following%20a%20deal%20with%20Russia%20brokered%20by%20the%20UN%20and%20Turkey.%3Cbr%3E%22The%20first%20vessel%2C%20the%20first%20ship%20is%20being%20loaded%20since%20the%20beginning%20of%20the%20war.%20This%20is%20a%20Turkish%20vessel%2C%22%20Zelensky%20said%2C%20adding%20exports%20could%20start%20in%20%22the%20coming%20days%22%20under%20the%20plan%20aimed%20at%20getting%20millions%20of%20tonnes%20of%20Ukrainian%20grain%20stranded%20by%20Russia's%20naval%20blockade%20to%20world%20markets.%3Cbr%3E%22Our%20side%20is%20fully%20prepared%2C%22%20he%20said.%20%22We%20sent%20all%20the%20signals%20to%20our%20partners%20--%20the%20UN%20and%20Turkey%2C%20and%20our%20military%20guarantees%20the%20security%20situation.%22%3C%2Fp%3E%0A
THE SPECS
Engine: 3.9-litre twin-turbo V8
Transmission: seven-speed dual clutch
Power: 710bhp
Torque: 770Nm
Speed: 0-100km/h 2.9 seconds
Top Speed: 340km/h
Price: Dh1,000,885
On sale: now
More from Neighbourhood Watch:
UAE currency: the story behind the money in your pockets
MATCH INFO
Uefa Champions League semi-finals, second leg:
Liverpool (0) v Barcelona (3), Tuesday, 11pm UAE
Game is on BeIN Sports
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
ESSENTIALS
The flights
Emirates flies from Dubai to Phnom Penh via Yangon from Dh2,700 return including taxes. Cambodia Bayon Airlines and Cambodia Angkor Air offer return flights from Phnom Penh to Siem Reap from Dh250 return including taxes. The flight takes about 45 minutes.
The hotels
Rooms at the Raffles Le Royal in Phnom Penh cost from $225 (Dh826) per night including taxes. Rooms at the Grand Hotel d'Angkor cost from $261 (Dh960) per night including taxes.
The tours
A cyclo architecture tour of Phnom Penh costs from $20 (Dh75) per person for about three hours, with Khmer Architecture Tours. Tailor-made tours of all of Cambodia, or sites like Angkor alone, can be arranged by About Asia Travel. Emirates Holidays also offers packages.
BUNDESLIGA FIXTURES
Saturday, May 16 (kick-offs UAE time)
Borussia Dortmund v Schalke (4.30pm)
RB Leipzig v Freiburg (4.30pm)
Hoffenheim v Hertha Berlin (4.30pm)
Fortuna Dusseldorf v Paderborn (4.30pm)
Augsburg v Wolfsburg (4.30pm)
Eintracht Frankfurt v Borussia Monchengladbach (7.30pm)
Sunday, May 17
Cologne v Mainz (4.30pm),
Union Berlin v Bayern Munich (7pm)
Monday, May 18
Werder Bremen v Bayer Leverkusen (9.30pm)
Tributes from the UAE's personal finance community
• Sebastien Aguilar, who heads SimplyFI.org, a non-profit community where people learn to invest Bogleheads’ style
“It is thanks to Jack Bogle’s work that this community exists and thanks to his work that many investors now get the full benefits of long term, buy and hold stock market investing.
Compared to the industry, investing using the common sense approach of a Boglehead saves a lot in costs and guarantees higher returns than the average actively managed fund over the long term.
From a personal perspective, learning how to invest using Bogle’s approach was a turning point in my life. I quickly realised there was no point chasing returns and paying expensive advisers or platforms. Once money is taken care off, you can work on what truly matters, such as family, relationships or other projects. I owe Jack Bogle for that.”
• Sam Instone, director of financial advisory firm AES International
"Thought to have saved investors over a trillion dollars, Jack Bogle’s ideas truly changed the way the world invests. Shaped by his own personal experiences, his philosophy and basic rules for investors challenged the status quo of a self-interested global industry and eventually prevailed. Loathed by many big companies and commission-driven salespeople, he has transformed the way well-informed investors and professional advisers make decisions."
• Demos Kyprianou, a board member of SimplyFI.org
"Jack Bogle for me was a rebel, a revolutionary who changed the industry and gave the little guy like me, a chance. He was also a mentor who inspired me to take the leap and take control of my own finances."
• Steve Cronin, founder of DeadSimpleSaving.com
"Obsessed with reducing fees, Jack Bogle structured Vanguard to be owned by its clients – that way the priority would be fee minimisation for clients rather than profit maximisation for the company.
His real gift to us has been the ability to invest in the stock market (buy and hold for the long term) rather than be forced to speculate (try to make profits in the shorter term) or even worse have others speculate on our behalf.
Bogle has given countless investors the ability to get on with their life while growing their wealth in the background as fast as possible. The Financial Independence movement would barely exist without this."
• Zach Holz, who blogs about financial independence at The Happiest Teacher
"Jack Bogle was one of the greatest forces for wealth democratisation the world has ever seen. He allowed people a way to be free from the parasitical "financial advisers" whose only real concern are the fat fees they get from selling you over-complicated "products" that have caused millions of people all around the world real harm.”
• Tuan Phan, a board member of SimplyFI.org
"In an industry that’s synonymous with greed, Jack Bogle was a lone wolf, swimming against the tide. When others were incentivised to enrich themselves, he stood by the ‘fiduciary’ standard – something that is badly needed in the financial industry of the UAE."
Simran
Director Hansal Mehta
Stars: Kangana Ranaut, Soham Shah, Esha Tiwari Pandey
Three stars
THE BIO: Mohammed Ashiq Ali
Proudest achievement: “I came to a new country and started this shop”
Favourite TV programme: the news
Favourite place in Dubai: Al Fahidi. “They started the metro in 2009 and I didn’t take it yet.”
Family: six sons in Dubai and a daughter in Faisalabad
360Vuz PROFILE
Date started: January 2017
Founder: Khaled Zaatarah
Based: Dubai and Los Angeles
Sector: Technology
Size: 21 employees
Funding: $7 million
Investors: Shorooq Partners, KBW Ventures, Vision Ventures, Hala Ventures, 500Startups, Plug and Play, Magnus Olsson, Samih Toukan, Jonathan Labin
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%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Rob%20Marshall%3Cbr%3E%3Cstrong%3EStars%3A%20%3C%2Fstrong%3EHalle%20Bailey%2C%20Jonah%20Hauer-King%2C%20Melissa%20McCarthy%2C%20Javier%20Bardem%3Cbr%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E2%2F5%3Cbr%3E%3Cbr%3E%3C%2Fp%3E%0A
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
