- Egypt Targets 5% Economic Growth by Mid-2018
Egypt targets a five percent economic growth rate in the year to June 2018, the finance ministry said Sunday as the government seeks to revive an economy battered by political turmoil.
Egyptian authorities have battled high unemployment, inflation and a collapse in tourism income since the 2011 uprising that toppled former president Hosni Mubarak.
President Abdel Fattah al-Sisi, who led the 2013 military overthrow of Mohamed Morsi, Egypt’s first elected civilian president, vowed to get the economy back on track after his election the following year.
In a statement Sunday, the finance ministry said it aimed to “raise growth for 2017/2018 to five percent” and to create “real, productive jobs that help lower unemployment to 11 percent and raise citizens’ incomes.”
Consumers have been hit by surging price hikes since November when Cairo floated its currency and slashed fuel subsidies as part of an economic reform package linked to a $12 billion International Monetary Fund loan.
The Egyptian pound had been pegged at 8.83 to the dollar, but has since weakened to more than 19 pounds to the dollar.
Egypt’s inflation rate jumped to 19.4 percent in November from 13.6 percent the previous month, according to the central bank.
Despite its woes, the government has projected 5.2 percent GDP growth in the year to June 2017.
Economic output grew 4.3 percent in the year to June 2016, the ministry of planning said in November.
The finance ministry hopes to bring unemployment — which officially stood at 12.6 percent from July to September — down to 11 percent in the year to June 2018.
The ministry said it also wants to cut its budget deficit to 9.5 percent of GDP in the year to June 2018, down from 12.2 percent the previous year.
It said it hopes to cut public debt to 94 percent of GDP in the year to June 2018, with a medium-term target of 80 percent.
“The government will continue to implement a structural reforms package to support productive sectors especially industry and exports, while attracting investments,” the ministry said.
It said it would press ahead with implementing a value added tax and “policies to rationalise spending.”
Oil Prices Recover Slightly Amidst Demand Concerns in U.S. and China
Oil Prices Continue Slide as Market Skepticism Grows Over OPEC+ Cuts
Global oil markets witnessed a continued decline on Wednesday as investors assessed the impact of extended OPEC+ cuts against a backdrop of diminishing demand prospects in China.
Brent crude oil, the international benchmark for Nigerian crude oil, declined by 63 cents to $76.57 a barrel while U.S. WTI crude oil lost 58 cents to $71.74 a barrel.
Last week, the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, agreed to maintain voluntary output cuts of approximately 2.2 million barrels per day through the first quarter of 2024.
Despite this effort to tighten supply, market sentiment remains unresponsive.
“The decision to further reduce output from January failed to stimulate the market, and the recent, seemingly coordinated, assurances from Saudi Arabia and Russia to extend the constraints beyond 1Q 2024 or even deepen the cuts if needed have also fallen to deaf ears,” noted PVM analyst Tamas Varga.
Adding to the unease, Saudi Arabia’s decision to cut its official selling price (OSP) for flagship Arab Light to Asia in January for the first time in seven months raises concerns about the struggling demand for oil.
Amid the market turmoil, concerns over China’s economic health cast a shadow, potentially limiting fuel demand in the world’s second-largest oil consumer.
Moody’s recent decision to lower China’s A1 rating outlook from stable to negative further contributes to the apprehension.
Analysts will closely watch China’s preliminary trade data, including crude oil import figures, set to be released on Thursday.
The outcome will provide insights into the trajectory of China’s refinery runs, with expectations leaning towards a decline in November.
Russian President Vladimir Putin’s diplomatic visit to the United Arab Emirates and Saudi Arabia has added an extra layer of complexity to the oil market dynamics.
Discussions centered around the cooperation between Russia, the UAE, and OPEC+ in major oil and gas projects, highlighting the intricate geopolitical factors influencing oil prices.
U.S. Crude Production Hits Another Record, Posing Challenges for OPEC
U.S. crude oil production reached a new record in September, surging by 224,000 barrels per day to 13.24 million barrels per day.
The U.S. Energy Information Administration reported a consecutive monthly increase, adding 342,000 barrels per day over the previous three months, marking an annualized growth rate of 11%.
The surge in domestic production has led to a buildup of crude inventories and a softening of prices, challenging OPEC⁺ efforts to stabilize the market.
Despite a decrease in the number of active drilling rigs over the past year, U.S. production continues to rise.
This growth is attributed to enhanced drilling efficiency, with producers focusing on promising sites and drilling longer horizontal well sections to maximize contact with oil-bearing rock.
While OPEC⁺ production cuts have stabilized prices at relatively high levels, U.S. producers are benefiting from this stability.
The current strategy seems to embrace non-OPEC non-shale (NONS) producers, similar to how North Sea producers did in the 1980s.
Saudi Arabia, along with its OPEC⁺ partners, is resuming its role as a swing producer, balancing the market by adjusting its output.
Despite OPEC’s inability to formally collaborate with U.S. shale producers due to antitrust laws, efforts are made to include other NONS producers like Brazil in the coordination system.
This outreach aligns with the historical pattern of embracing rival producers to maintain control over a significant share of global production.
In contrast, U.S. gas production hit a seasonal record high in September, reaching 3,126 billion cubic feet.
However, unlike crude, there are signs that gas production growth is slowing due to very low prices and the absence of a swing producer.
Gas production increased by only 1.8% in September 2023 compared to the same month the previous year.
While the gas market is in the process of rebalancing, excess inventories may persist, keeping prices low.
The impact of a strengthening El Niño in the central and eastern Pacific Ocean could further influence temperatures and reduce nationwide heating demand, impacting gas prices in the coming months.
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