Category: Economy

On Monday, the United Arab Emirates will introduce a form of unemployment insurance in the latest economic reform by the Gulf country as it focuses on attracting talent and investing amid increasing regional economic competition.

UAE Prime Minister, ruler of trade hub Dubai and Vice-President Sheikh Mohammed bin Rashid al-Maktoum said on Twitter, “The intention is to strengthen labour market competitiveness, provide a social umbrella for workers and establish a stable working environment for all”.

However, the statement did not specify who will be eligible to apply equally to citizens and non-citizen residents in the UAE. according to the IMF, 85% of the population were foreigners who got permission to reside in Gulf countries like UAE. They were traditionally tied to employment and losing jobs meant the workers would have to leave the country.

Meanwhile, Saudi Arabia is pushing to retain the initiative over its neighbour and introducing new visa types and social reforms to attract and keep skilled labours.

Several Gulf states have some form of unemployment assistance for residents, including Qatar, Oman, Kuwait, and Saudi Arabia, as well as Bahrain, which has a form of unemployment insurance for residents who aren’t citizens.

UAE Minister of Economy Abdulla bin Touq Al-Marri will lead a high-level business delegation this week to India. The visit from May 11-15 will is scheduled to discuss ways to further trade and investments between the two nations. It will assume significance as both countries implemented the Comprehensive Economic Partnership Agreement (CEPA) on May 1.

In the next five years, CEPA is expected to double bilateral trade from US$60 billion to US$100 billion. The duty-free access to the UAE market will be availed by the domestic exporters in various sectors like textiles, agriculture, jewellery and dry fruits under the trade agreement.

The official said, “It will be an important visit as we have implemented the free trade pact”. Minister from Small and Medium Enterprises from UAE will also be part of the delegation. They will visit Delhi and Mumbai to hold discussions with industry leaders. The 70-member delegations will represent different sectors like food, sovereign wealth funds, special economic zones, and aviation.

On average, India will benefit from preferential market access provided by the UAE on over 97% of its tariff lines (or goods) accounting for 99% of Indian exports to the UAE, especially in labour-intensive sectors such as textiles, sports goods, leather, footwear, plastics, furniture, and engineering products.

On Thursday, the Bank of England raised its key interest rate to the highest in 13 years. With a 6-3 vote, the Monetary Policy Committee voted to raise interest rates for a fourth consecutive meeting, boosting the rate that the Bank of England pays other banks by a quarter per cent to 1 per cent. Some even wished to increase more to 1.25% with a warning that the economy might shrink in the final quarter of the year.

While trying to rein in inflation without undermining consumer confidence, the Bank of England is struggling to demonstrate its business. In the United Kingdom, rising consumer prices are fuelling a cost-of-living crisis typified by skyrocketing energy bills and rising food and transportation costs.

The US Federal Reserve moved to avert inflation a day after it approved its biggest hike rate in more than two decades and signalled that more will follow. By a half-percentage point, the Fed raised its key short-term interest rate 0.75 per cent to 1 per cent. From Sweden to Australia, the other central banks have also started taking similar actions.

The Bank of England faces a challenging task. In a note to clients, Dmitri Theodosiu, head of foreign exchange and interest rates trading at Investec, stated that inflationary pressures from external forces are becoming increasingly intense.

Saudi Arabia recorded the highest rate of growth in the last 10 years at 9.6% in the first quarter of 2022. As per the latest data, the activity in the country related to crude oil, natural gas and refining rose by 20.4% whereas non-oil activity increased by 3.7%.

As a result, the largest economy in the Arab world saw its growth supported by government services activities, which rose by 2.4%. Brent is also up by 30% since the beginning of this year and falls from a 14-year high of $140 per barrel in March.

The growth is directly linked with the oil prices continued to trade higher amid supply concerns regarding the EU sanctions on Russian oil & gas imports in the back of Moscow’s military invasion in Ukraine.

The nation has quickly recovered from its lockdown phase and forecasts a 7.7% growth by the end of this year. Meanwhile, the oil sector is projected to rise by 15.5%, whereas, the non-oil economy is expected to grow by 3.4%.

The GDP’s estimate according to Gastat’s process adopts simplified assumptions about “extrapolating some indicators” related to production, income, expenditure price and foreign trade.

On Monday, India and Germany stressed the significance of a free, open and inclusive Indo-Pacific. In accordance with international law, both the nations underlined the importance of unimpeded commerce and freedom of navigation.

Following the sixth round of Inter-Governmental Consultations, Prime Minister Narendra Modi and German Chancellor Olaf Scholz issued a joint statement. Scholz called the Indo-Pacific one of the most dynamic global regions in his remark at the joint press event with Mr Modi. Indo-Pacific is also confronted with a number of conflicts and challenges.

According to him, Germany will continue to strengthen its commitment to various projects on the ground, including India as its most important partner in the region.

Meanwhile, Mr Modi said on Twitter, “The 6th India-Germany Inter-Governmental consultations were productive. Chancellor Scholz and I. along with ministers, officials from Germany and India discussed ways to boost cooperation in areas like sustainable development, mobility, economic growth and more”.

The statement further relieved that both the leaders condemned terrorism in all forms and manifests including any use of terrorist proxies and cross-border terrorism. They called all countries to work towards rooting out terrorist safe havens and infrastructure. They seek to disrupt the terrorist’s network and financing in accordance with international law along with international humanitarian law.

The oil Sector propels Saudi Arabia’s GSP growth with a 9.6% rise in the first quarter of a decade. The nation has registered nearly 10% growth as compared to the same period last year due to the high global crude prices.

According to the report, growth in the oil sector was 20.4% year-on-year, while growth in the non-oil sector was 3.7%.

On Sunday, preliminary results were released after Saudi Arabia resisted United States requests to boost output in order to rein in prices that have risen since the Ukraine war began.

The Saudi statistics authority said in its initial estimate published online, “Oil activities led the real Gross Domestic Product (GDP) of Saudi Arabia to achieve the highest growth rate in the last 10 years”. However, the agency said that the data for the quarter was “still incomplete” and could be revied”.

The International Monetary Fund said last week that as a result of the conflict in Ukraine and the subsequent rise in crude prices, oil-producing states such as Saudi Arabia are expected to see their GDP grow by 7.6% in 2022.

Rating agency Fitch also predicted last month that the kingdom will record a budget surplus in 2022 for the first time since 2013.

From May 1, India and UAE’s Free Trade Agreement has come into effect which will help domestic exporters in various sectors like agriculture, textile, dry fruits, gems and jewellery to get duty-free access to the UAE market.

On Sunday, the Central Board of Indirect Taxes and Customs and the Directorate General of Foreign Trade (DGFT) issued notification for the operationalisation of the agreement.

The Commerce Secretary  BVR Subrahmanyam handed over the Certificate of Origin to three exporters from the gem and jewellery sector in Delhi as a gesture for operationalising the agreement. He said, “Today, CEPA between India and the UAE is coming into force. Today, we are sending the first consignment from India to UAE, which will benefit from this agreement”.

In five years, the two-way trade will increase from USD 60 billion to USD 100 billion through the trade pact.

India is likely to benefit from preferential market access provided by the UAE for more than 97% of its tariff line which accounts for 99% of Indian exports to the UAE in value terms. Especially from labour-intensive sectors like textile, leather, footwear, sports goods, plastics, furniture and engineering products.

The Comprehensive Economic Partnership Agreement will not attract any customs duty under the pact for the consignments exported to Dubai.

On Wednesday, Indonesia once again widened the scope of its export ban on raw materials for cooking oil including crude and refined palm oil along with other products.

This latest round of flip-flops might have a direct impact on the Indian edible oil. India is one of the biggest importers of Indonesian palm oil and this export ban brings the nation to square one. Earlier this month, it was clarified the ban would not cover crude palm oil, which is widely consumed.

The nation consumed nearly 12-12.5 million toned of edible oil of which around 63% (8-8.5 million tonnes) is palm oil. Out of the total consumption of 8-8.5 million tonnes, 45% come from Indonesia and the rest from Malaysia.

According to trade sources, if imports of palm oil abruptly come to a halt from May onwards, it will lead to a sharp increase in edible oil prices in India, which are already skyrocketing due to the ongoing Russia-Ukraine crisis.

Director-General of Solvent Extractor’s Association of India (SEA) B.V. Mehta said, “Ever since the Russia-Ukraine crisis, India’s sunflower oil supplies have gone down from 200,000-250,000 per month to less than 100,00 tommed per month causing a sharp spike in prices. On top of this if Indonesia decides to suspend palm oil exports, then it will cause serious trouble for us”.

On Tuesday, Union Minister Nitin Gadkari urged billionaire and CEO of Tesla, Elon Musk to manufacture Tesla cars in India. In an interactive session at the Raisina Dialogue, Gadkari said, “India is a large market and there is a huge potential for all-electric vehicles”.

He further added that it is a very easy alternative if the CEO is ready to manufacture Tesla in the country. He said the nation has got all competencies, the vendors are available and have got all types of technology due to which he can reduce the cost.

The road transport and highway minister said that he is requesting Elon Musk to come and manufacture in India. He added, “He is welcome in India. We don’t have any problem, but, suppose, he wants to manufacture in China and sell in India, it cannot be a good proposition for India. Our request to him is, to come to India and manufacture here.

He suggested that in India he will get a good market and is a win-win situation for both.

Gadkari also discussed instances in which two-wheeled electric vehicles caught fire. He urged companies to take preventive measures to prevent this from happening. In his view, the country’s EV industry has just begun, and the government does not wish to impede its development.

British Prime Minister Boris Johnson will announce a raft of commercial agreements to hail a “new era” in bilateral trade and investment ties during his visit to India.

A high Commission from the UK said that both countries’ businesses will confirm more than 2 billion pounds in new investments and export deals on Tuesday. The investment will be done with a focus on creating almost 11,000 jobs across the UK from software engineering to health.

The statement stated that PM Johnson will use his visit to boost collaboration with one of the fastest-growing economies, slashing trade barriers for UK businesses and driving jobs and growth in the UK.

The two-day visit of PM Johnson will further expand ties between the two nations and exchange views on global challenges including the crisis Ukraine crisis and the Indo-Pacific situation.

Johnson quoted, “As I arrive in India today, I see vast possibilities for what our two great nations can achieve together. From next-generation 5G telecoms and AI to new partnerships in health research and renewable energy- the UK and India are leading the world”. He further added that this powerhouse partnership will deliver jobs, growth and opportunities for their people and will go strength to strength in the coming years.