Right Or Wrong


Right or Wrong                                                                             03 February 2023

The 2,157 real estate and properties transactions totalled US$ 2.45 billion, during the week, ending 03 February 2023. The sum of transactions was 237 plots, sold for US$ 425 million, and 1,920 apartments and villas, selling for US$ 1.57 billion. The top three transactions were for land, the highest in Al Wasl, sold for US$ 40 million, followed by a plot in Island 2, worth US$ 31 million and the other in Mohammad bin Rashid Gardens, for US$ 15 million. Al Hebiah Fifth recorded the most transactions, with 108 sales worth US$ 105 million, followed by Al Yufrah 1, with twenty-eight sales transactions, worth US$ 45 million, and Al Hebiah Fourth, with fourteen sales transactions, worth US$ 41 million. The top three transfers for apartments and villas were all for the former – Island 2 – for US$ 112 million, the next in Business Bay for US$ 60 million and in Palm Jumeirah for US$ 34 million. The mortgaged properties for the week reached US$ 458 million, with the highest being for land in Al Barsha South Fourth, mortgaged for US$ 88 million, whilst seventy-four properties were granted between first-degree relatives worth US$ 41 million.

According to a Dubai-based company, with offices in China, buyers from that country look set to reclaim their top ten spot on the UAE’s list of property purchasers this year after they slipped out of the rankings during the Covid pandemic. Driven Properties confirmed that it had already handled over US$ 17 million of property deals, (up 400% on the year), for Chinese buyers this year and it expects this specific sector to boom for the rest of the year. It was only five years ago that Chinese buyers lagged  behind  only the Indians, Brits and Pakistanis, as the top four foreign nationalities investing in Dubai property. Driven, which had sales of US$ 313 million between 2017-2019, reckons that China will become the new Russia in the Dubai sector – and they will have different buying habits; 80% of Russian buy apartments by the sea, whilst 80% of purchases by Chinese will be for studios. Another positive factor for Dubai is that over 90% of Chinese investors typically do not take on mortgages, so are not normally impacted by rising mortgage rates.

Abu Dhabi’s Aldar Properties has announced its first foray into the Dubai property arena, signing a JV agreement with Dubai Holding, to develop three new communities, along the E311 and E611 corridors, in close proximity to several residential communities. The development, covering 38.2 million sq ft, will see the capital’s interloper responsible for the full development cycle, including concept design, sales, delivery, and management. Encompassing 9k residential units, and the usual accoutrement of retail and community facilities, work will start this year.

Late last week, Danube Properties unveiled its largest real estate project, Viewz, in partnership with DMCC.  The twin tower US$ 381 million project will be developed in Cluster K of the JLT district and will be Danube’s first foray into the luxury residential market and its first in JLT. The project will feature Aston Martin furnished interior common areas and amenities, with buyers given the option to select Aston Martin furnished interiors. Viewz will deliver a range of studios, and 1B/R to 3 B/R apartments, along with Sky Villas – or duplexes – with prices for studios starting at US$ 259k; all 2-3 bedroom-apartments and Sky Villas come with private swimming pools built into the homes. Two skybridges will connect the two towers. To date, the developer’s portfolio, valued at over US$ 2.22 billion, comprises 10k units in twenty-one projects, of which eleven have already been delivered, with another three slated for completion before the end of H1.

On Monday, HH Sheikh Mohammed bin Rashid Al Maktoum officially opened the Arab Health Exhibition and Congress. At the inauguration, the Dubai Ruler noted that “our goal is to create a vibrant global healthcare hub that serves not only the needs of the people of our nation but also caters to the growing requirements of our vast region. Aligned with our goal of making the UAE one of the world’s best places to live and work, we are on a constantly evolving journey to raise standards of human development and welfare.” This year, the 48th edition was held under the theme of ‘innovation and sustainability in healthcare’ and continues to be the largest gathering of healthcare companies, technology and products in the MENA region. The four-day event attracted over 51k attendees, with over 3k exhibitors from seventy countries.

DEWA announced that Dubai’s energy demand – at 53,180GWh – rose by 5.5% last year, driven by population growth and business expansion across all key activities. Over the year, DEWA outperformed major European and American utilities with a reduced line loss of 2.2% and a world-record low electricity Customer Minutes Lost of 1.19 minutes per customer. Per the government’s strategy, DEWA is aiming to develop efficient infrastructure and increase production capacity to meet growing demand while incorporating smart technologies.

DP World has been awarded a concession, by Deendayal Port Authority, to build and operate a mega-container terminal at Deendayal port in Gujarat, India. Bankrolled by a Public-Private Partnership, under a Build-Operate-Transfer, the terminal will have a 1.1k berth, with a capacity of 2.19 million 20’ Equipment Units (TEUs), capable of handling vessels carrying more than 18k TEUs. The new development will result in enhanced efficiency and cost reductions, as well as assisting in trade growth in Northern, Western and Central India.

With the aim of connecting Dubai’s 3.2 million population, by using a “healthy mode of transport, access to key services and locations by walking and cycling within minutes,” sustainable architecture firm URB is to develop ‘THE LOOP’. The development will result in an impressive ninety-three km climate-controlled highway for recreational use.

With the US Federal Reserve raising its target interest rate by an expected 0.25% on Wednesday, the UAE Central Bank followed suit by lifting the Base Rate applicable to the Overnight Deposit Facility (ODF) by the same amount– from 4.4% to 4.65%. The CBUAE has also decided to maintain the rate applicable to borrowing short-term liquidity from the Central Bank, through all standing credit facilities, at 50 bp above the Base Rate.

January’s UAE S&P Global PMI continues to expand but softened on the month by 0.1 to 54.1, as the non-oil sector continues to demonstrate resilience despite the global economy in some disarray and high inflation levels. In January, 20% of businesses surveyed reported a rise in their output levels – with only 2% recording a decline – and new orders rose, as did employment. Growth was mainly driven by higher sales and a push to complete existing projects, but the slowing global economy impacted overall sales growth. The UAE Central Bank noted that the country’s economy grew by 7.6% last year, the highest rate since 2012, with the main drivers being progressive government initiatives, higher oil prices, a strong performance in its real estate sector and a rebound in travel and tourism. It also forecast that UAE’s economy is projected to grow 3.9% this year, while non-oil sector expansion is estimated at 4.2% and oil GDP projected at 3.0%.

The Ministry of Energy, as usual, adjusted fuel prices in the UAE on the first day of every month. According to the government, the UAE liberalised fuel prices help to rationalise consumption and encourage the use of public transport in the long run and incentivise the use of alternatives. The UAE Fuel Price Committee increased February retail petrol prices:

  • Super 98: US$ 0.882 – up by 9.71% on the month and down 9.71% YTD from US$ 0.757  
  • Special 95: US$ 0.798 – up by 9.73% on the month and up 9.73% YTD from US$ 0.727
  • Diesel: US$ 0.921 – up 2.74% on the month and up 2.74% YTD from US$ 0.896
  • E-plus 91: US$ 0.779 – up by 10.40.% on the month and up 10.40% YTD from US$ 0.706

In 2022, Dubai’s 10.5k wooden dhow movements ferried 1.7 million metric tonnes of merchandise – 12.0% higher on the year – from countries across the MENA region and further afield. The Marine Agency for Wooden Dhows, established in 2020 by Dubai’s Ports, Customs and Free Zone Corporation, continues with its strategy to improve overseas trade and contribute to the objectives of the Dubai Economic Agenda D33. Recent initiatives have resulted in faster entry and exit procedures for these wooden ships and has improved the efficiency in loading cargo. The Agency has managed to slash waiting times for departures from up to ten hours to just thirty minutes for sailing outside the emirate.

NBD REIT posted that its 31 December 2022 Net Asset Value (NAV) amounted to US$173 million (US$ 0.69 per share), 3.0% higher on the year. The Shari’a compliant real estate investment trust, managed by Emirates NBD, attributed this improvement to the continued positive momentum in the emirate’s real estate sector and the benefits from effective asset management initiatives. Its property portfolio, helped by occupancy hovering around 85% and an increase in gross income, rose 0.5% to US$ 365 million.

The DFM posted a 41.7% hike in 2022, year on year, net profit to US$ 40 million, with revenue 19.0% higher at US$ 96 million; in Q4, net profit came in at US$ 16 million on revenue of US$ 31 million. The Board has recommended a cash dividend of U$ 37 million, equating to 1.68% of the company’s capital, as well as stipulating that the company distributes a minimum of 50% of its net profit annually. Improvements were made across the board, including a 24.5% increase in trading value to US$ 24.5 billion, and a 41.4% increase in market cap of listed securities to US$ 158.6 billion.  Over the year, the DFM General Index rose by 4.4%., as foreign investors accounted for 48.7% of DFM’s trading value and for 19% of the market cap by year-end. During 2022, the DFM welcomed 167.3k new investors – up twenty-three times on the year – bringing the total number of investors to over 1 million from 212 nationalities.

Mashreq posted a 39.2% jump in 2022 with a 39.2% rise in operating profit, to US$ 1.20 billion, with net profit at US$ 1.10 billion, driven by a 12.1% annual rise in customer deposits. Over the year, impairment provision was reduced to US$ 135 million, as the non-performing loan ratio declined to 2.2%, with the loan-to-deposit ratio ending the year at 79.4%.

The DFM opened on Monday, 30 January 2023, 24 points (0.9%) lower on the previous week, gained 54 points (1.6%) to close on 3,383 by Friday 03 February. Emaar Properties, US$ 0.04 lower the previous week, lost a further US$ 0.05 to close the week on US$ 1.51. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 3.53, US$ 1.53, and US$ 0.40 and closed on US$ 0.64, US$ 3.68, US$ 1.52 and US$ 0.39. On 03 February, trading was at 80 million shares, with a value of US$ 61 million, compared to 133 million shares, with a value of US$ 73 million, on 27 January 2023.

For the month of January, the bourse had opened on 3,336 and, having closed the month on 3303 was 33 points (1.0%) lower. Emaar traded US$ 0.09 lower from its 01 January 2023 opening figure of US$ 1.60, to close the month at US$ 1.51. Four other bellwether stocks, Dewa, Emirates NBD, DIB and DFM started the month on US$ 0.59, US$ 3.54, US$ 1.55 and US$ 0.41 and closed on 31 January on US$ 0.65, US$ 3.53, US$ 1.51 and US$ 0.38 respectively. On 31 January, trading was at 92 million shares, with a value of US$ 77 million, compared to 66 million shares, with a value of US$ 18 million, on 31 December 2022.

By Friday, 03 February 2023, Brent, US$ 0.97 (1.1%) higher the previous week, slumped US$ 6.72 to (7.8%) to close on US$ 86.66.  Gold, US$ 143 (7.9%) higher the previous six weeks, shed US$ 68 (3.5%) to close, at 1,878, on Friday 03 February. Brent started the year on US$ 85.91 and shed US$ 0.45 (0.5%), to close 31 January on US$ 85.46. Meanwhile, the yellow metal opened January trading at US$ 1,830 and gained US$ 114 (6.2%) during the month, to close on US$ 1,944.

The Opec+ alliance of twenty-three oil-producing countries has agreed to roll over its existing oil output cuts at two million bpd set last October. It has been estimated by the International Energy Agency that nearly 50% of its 2023 1.9 million bpd growth forecast will emanate from the Asian region, and that demand will reach 101.2 million bpd – compared to its previous record of 100.6 million bpd posted in pre-Covid 2019.  It seems likely that supply will tighten in the coming months, bearing in mind an EU embargo on Russian crude products coming into effect on Sunday, 05 February, and that China, accounting for up to 15% of global demand, is recovering faster than expected – and not all this growth has been factored in. Furthermore, there is the chance that the global economy may yet escape a major recession and recover quickly from the current downturn. Over the past eleven months, oil prices have been volatile and having hit US$ 140 a barrel last March seems to have settled in the US$ 80 – US$ 90 range.

Relieved and embarrassed Rio Tinto officials, who had been left red-faced when it became known that it had managed to lose a capsule, no bigger than the size of a penny, breathed a sigh of relief when it was found on Wednesday. The problem facing officials was that the capsule – which was just 6mm in diameter and 8mm long – was lost somewhere along the 1.4k km Great Northern Highway. The search area was far bigger than the traditional haystack and the quarry was far more dangerous than the proverbial needle because it contained a minute quantity of radioactive Caesium-137, which could cause serious illness to anyone who came into contact with it, including skin damage, burns or radiation sickness, as well as long-term exposure could result in cancer. Miraculously, it has been found some two weeks  after it was “lost”.

The last commercial Boeing 747 ever built has been delivered to Atlas Air this week, some fifty-three years since the “Queen of the Skies” started her reign as a PanAm passenger jet, leaving New York on 22 January 1970. Over the years, Boeing manufactured 1,574 747s for more than one hundred customers. The tail is as tall as a six-storey building and the larger version could transport more than five hundred passengers, which in turn revolutionised air travel – indeed the 747 shrank the world. However, time has taken its toll and the move over the past twenty-five years was to more efficient twin-engine jets.

On Saturday, Flybe ceased trading for the second time in three years, cancelling all flights and making 276 workers, out of a workforce of 321 redundant. However, the good news is that other airlines ware in the market for staff experienced in the aviation sector. EasyJet has a reported 250 vacancies for cabin crew, whilst Ryanair posted it had vacancies in all categories, including pilots, engineers and ground staff. The airline had first fallen into administration in March 2020, then affecting 2.4k jobs, to be sold later in the year to Thyme Opco Ltd; it resumed flights in April 2022. Early Saturday morning, the UK regional airline announced that “Flybe has now ceased trading and all flights from and to the UK operated by Flybe have been cancelled and will not be rescheduled,” and advised people due to fly not to travel to airport. The Birmingham-based airline, with a fleet of eight leased Q400 turboprop aircraft, operated flights on twenty-one routes to seventeen destinations across the UK and the EU.

With Tesco announcing changes – by cutting 1.75k team manager posts, cancelling roles elsewhere and closing its counters and hot delis, because of lack of demand – more than 2k jobs are at risk. It is also closing eight pharmacies, moving overnight roles to daytime in twelve stores, reducing hours within some post offices cutting some jobs at its head office, and closing its Maintenance National Operating Centre in Milton Keynes. The supermarket will introduce a new tier of 1.8k lower paid shift leader positions that will take over running its shop floors. Like other big supermarkets, Tesco is facing increased competition from the German interlopers -Aldi and Lidl – and has to become more efficient and cut costs.

Meanwhile, Tesco is also in the news that it has acquired the brand and intellectual property of High Street stationery chain Paperchase. However, it did not buy any of the 106 shops, employing 820 staff, as Paperchase went into administration; seventy-five HO employees have already been dismissed. The chain had been struggling for several years and has seen sales decline and costs rise – a sure indictor that a business is in trouble. Tesco will now sell the stationer’s goods in its stores across the UK.

Swatch has announced 2022 increases in both revenue – up 2.5% to US$ 8.18 billion – and net profit by 5.0% to US$ 871 million, driven by sales of the MoonSwatch, its collaboration with Omega. YTD, its share value has already jumped 18.0% on optimism of China reopening after abandoning most of its Covid restrictions, with the Swiss watchmaker noting that “after the end of Covid measures, consumption quickly recovered, not only in China, but also in the surrounding markets of Hong Kong SAR and Macau,” and that “the sales growth in January in China reinforces the group’s expectation to aim for a record year in 2023.” Swatch is confident of sales nearing the US$ 10.00 billion mark this year.

A sign of the times is that China’s smartphone sales fell 13.1% on the year to 286 million units – the largest decline since 2013– on the back of a marked cut back in consumer spending. Vivo, the android handset maker, with an 18.6% market share, was the top-selling brand – despite its total shipments tanking 25.1% – followed by Honor and Apple tying with Oppo. Last year, global smartphone shipments fell more than 11.0%, hitting 1.2 billion – again the lowest since 2013; in Q4, iPhones was the top selling brand, with supply chain issues caused by worker unrest at the manufacturer, still hampering production.

Q4 saw Facebook’s parent company, Meta shed 4.4% and 55% in Q4 revenue and profit respectively to US$ 32.1 billion and US$ 4.6 billion. The disappointing return was down to two main drivers – escalating costs and a decrease in the average price per advertisement. Total expenses surged 22.0%, on the year, to US$ 25.8 billion, which included a US$ 4.2 billion restructuring cost. Despite being the conglomerate’s third straight quarter of declining sales, its market cap jumped over 20% in after-hours trading, as Meta, which also has Facebook, Instagram, Messenger, WhatsApp in its portfolio, announced a US$ 40 billion stock buyback.

PayPal becomes the latest tech giant to announce cuts in its workforce, following in the steps of Alphabet, Amazon, IBM, Meta, Microsoft, Spotify and Twitter. (A total of 97.2k jobs, up 649% on the year, were cut in the technology sector last year). The Fintech company posted that it would be retrenching 2k, (around 7%) of its workforce, with chief executive Dan Schulman noting that “these reductions will occur over the coming weeks, with some organisations impacted more than others.” Like its peers, the payment company is cutting back following a hiring surge that began after the onset of the Covid in March 2020. He also posted that it still needs to cut back on its payroll numbers despite already having slashed costs. PayPal’s market cap has taken a battering over the past twelve months, losing 54% in value, but gained 2.3% at the close of Tuesday trading to US$ 81.49.

Philips will shed a further 6k jobs worldwide, (half of which will be in this year), as it tries to restore its profitability, and improve the safety of its products, following a recall of respiratory devices. Over recent months, the Dutch health technology company had reduced its workforce by 13%, equivalent to 10k employees.  Roy Jakobs, appointed as chief executive last October, announced that patient safety would be put “squarely at the centre” of the new organisation, with the company  still recovering from the fallout of the recall of millions of ventilators used to treat sleep apnoea over worries that foam used in the machines could become toxic. The company is still in ongoing discussions with the US Department of Justice on a settlement following the recall, and of ongoing litigation and investigations. Q4 adjusted EBITA was at a flat US$ 707 million  (US$ 703 million in the same quarter in 2021), and well ahead of market expectations of US$ 465 million. This year, it will be aiming for a low-teen margin on EBITA, rising mid to high-teens by 2025. Profitability will be improved by investing in safety, with innovations targeted at “fewer, better resourced, and more impactful projects”. Sales will show a low single digit growth this year, after nudging up 3% last year.

By Monday, embattled Adani Group had managed to lose a massive US$ 70 billion in market cap, (in the three previous days), despite rebutting Hindenburg’s previous week’s criticism that questioned the veracity of its debt levels and the use of tax havens. Later in the week, the Group’s losses topped US$ 100 billion. Hindenburg claimed that Adani companies had “substantial debt” and that shares in seven Adani listed companies have an 85% downside due to what it called “sky-high valuations”. The company’s founder, Gautam Adani, had confirmed that the Group complied with all local laws and had made the necessary regulatory disclosures – but the market appeared to have different ideas. All his seven companies – Adani Transmission, Adani Total Gas, Adani Green Energy, Adani Power, Adani Wilmar and Adani Ports and Special Economic Zone – posted losses of between 4.2% and 20.0% in Monday’s trading. His Adani Trading’s US$ 2.5 billion secondary share sale was trading at US4 32.96, someway off its offer price range of US$ 38.18 – US$ 40.20. On Monday it was estimated that the offer had received only 688k of the 45.5 million shares on offer – equating to 1.5% of the total – with no bids from foreign and domestic institutional investors, as well as mutual funds. State-run insurance giant, Life Insurance Corporation, holds 5.0% of the anchor portion, worth around US$ 734 million, as well as holding a 4.23% stake in the flagship Adani firm, a 9.14% stake in Adani Ports and 5.96% in Adani Total Gas.

To nobody’s surprise, Adani Enterprises called off its US$ 2.5 billion share sale due to prevailing market conditions, following days of its share value tanking, after scathing criticism by Hindenburg Enterprise, a U.S. short seller. Its report spared no punches and accused Adani of “pulling the largest con in corporate history” and had engaged in decades of “brazen” stock manipulation and accounting fraud, claiming that its companies had “substantial debt” which put the entire group on a “precarious financial footing”. Mr Adani said the company’s balance sheet was “very healthy with strong cashflows and secure assets”. The Indian conglomerate confirmed that “given the unprecedented situation and the current market volatility the Company aims to protect the interest of its investing community by returning the FPO proceeds and withdraws the completed transaction.” Also on Wednesday, shares in Adani Enterprises and Adani Ports and Special Economic Zone sank by 28% and 19% respectively – both companies’ worst ever trading day; in five trading days, the Group had lost more than US$ 100 billion in market cap.

Despite high inflation, which peaked at 10.1% in October, Portugal’s state budget deficit contracted 58% to US$ 3.9 billion, as the country’s total public revenue grew by 11% to US$ 111 billion in 2022, and spending increased by just 5.1% to around US$ 114 billion. Tax revenues increased by 14% to US$ 28.2 billion last year, as VAT revenue jumped 19% to almost US$ 23.0 billion. The country’s economy is expected to have grown by 6.7% in 2022, following a 4.9% increase a year earlier, whilst the public deficit could be below 1.5% of GDP in 2022. The improvement was led by a sharp rise in tax revenues due to robust economic growth, because of strong demand and improving tourism numbers, amid high inflation.

As inflation takes hold again in Argentina, nearing 95% last year, (and at its fastest pace in over thirty years), the country’s central bank has issued a new 2k peso note, officially worth US$ 11.00. The largest current 1k peso note is worth U$S 2.70, but when introduced in 1992 was pegged at US$ 1; ten years later the fixed exchange rate was abandoned in the face of a major financial crisis. The country has been battered by several financial crises and has been badly impacted by soaring cost of living expenses, rising energy prices, the war in Ukraine and the main rate of interest set at 75% last September. Two months ago, the IMF approved a further US$ 6.0 billion bailout payment – its latest of a US$ 44.0 billion, thirty-month pay-out programme.

House prices are tanking in Australia, with two states, Brisbane, (down 10.9%) and Hobart, (9.3% lower), posting record falls over the eight-month period to 28 January 2023; other states recorded falls with NSW slumping 14.0% (which was not a record decline, as it posted a 15% decline in 2018). Nationally, the average decline has been 8.6% since the RBA first started rising rates nine months ago. Greater Brisbane saw house prices climb 43.0% after a pandemic population surge – and so is still 28% higher compared to pre-Covid levels – with Hobart coming off after a five-year upswing. Both states saw interstate migration swing higher because of the pandemic impact.

According to Nationwide Building Society, UK house prices have dipped lower every month since last August, with average January prices at US$ 311.4k, as annual growth slowed to 1.1% from 2.8% a month earlier; it is all but inevitable that the market will not improve in the coming months, and will dip into negative territory in Q2, with mortgage rates set to rise – albeit not quickly. The BoE noted that the 35k mortgages posted last month were 24.0% down on those recorded on the month – its lowest number, excluding the Covid period, since 2009, and attributable to the marked slowdown in mortgage applications, following the Truss government’s mini-budget in September, (when rates topped 6.0%); other drivers included declining consumer confidence and falling real incomes.

Today, the FTSE 100 closed at an almost five-year record high of 7,902 points, with the market boosted by the possibility of a weaker sterling, that will make exports cheaper, and by a feeling that the worst of the cost-of-living crisis has passed. The FTSE 100 includes many firms, with big footprints overseas, which would inevitably benefit from a weaker pound making their products cheaper. Furthermore, as the economy improves and inflation heads lower, interest rates will move lower, making borrowing cheaper and helping money flow more freely through the economy. However, sterling is trading at US$ 1.21 – over 11.0% lower on the year – and is 6.0% lower versus the euro. Most of the bad economic news currently doing the rounds has probably already been priced in by the markets by late last year so there are distinct signs that the bad days may be behind as inflation steadily moves lower and interest rates are unlikely to rise much higher. Even the BoE Governor, Andrew Bailey, is of the opinion that the current recession will be shorter and less severe than previously anticipated.

January saw US employers add an extra 517k jobs to the economy – a sign seen by many to be in contrast to the fears that the US Economy is heading for a downturn; these latest figures, which surprised the market, resulted in the country’s unemployment rate dipping to 3.4% – its

lowest rate since 1969. Some economists are banging their heads to explain how this can happen in an environment of rising interest rates, high cost of living expenses and a cutback in consumer spending. However, the Fed has cautioned that that the job market is too strong to allow price growth to stabilise around the bank’s 2% target, with wages having risen 4.4% over the past twelve months. However, the latest 0.25% rate increase this week coincided with a softening of price increases, with fears that the economy could witness a severe contraction, bringing economic activity to an abrupt slowdown that leads to firms to cutting jobs. It seems that the Fed will have a fine balancing act to avoid such an occurrence.

The US Federal Reserve lifted its benchmark rate by the expected 0.25% to a range of 4.5%-4.75% – its highest since 2007, and the smallest increase since last March. Officials warned that, despite indicators that inflation levels are heading lower, further rate hikes are on the horizon in a bid to cool the economy and ease the pressures pushing up prices.

Whenever the IMF releases a report, this blog generally adds the caveat that the organisation has not a good track record and any information should be treated with a degree of caution. So is the case this week when it comes out with a report that the UK economy will be the worst performer of the G20 nations this year. Now it has upgraded its eurozone 2023 forecast indicating that 2023 growth will rise from 0.5% to 0.7 % and by 1.6% in 2024.  In October, it estimated that the German economy would contract by 0.3% and now the revised forecast three months later comes in with a growth figure of 0.1%, with France and Italy recording growth levels of 0.7% and 0.6%; it points to the resilience and adaptation of the European economy for the improvement. It notes that the balance of risks remains tilted to the downside, but adverse risks have moderated since the October 2022.

Meanwhile, the world body expects the UK economy will contract by 0.6% in 2023, rather than grow slightly as previously predicted in October, and perform worse than other advanced economies, including Russia, as the cost of living continues to hit households. It is expected to be the only country to shrink next year across all the advanced and emerging economies.  The report did concede that the UK is now “on the right track”, but that the downgrade arose because of high energy prices, rising mortgage costs, increased taxes, and persistent worker shortages – all the same factors dogging other world economies. Strangely, the UK had “one of the strongest growth numbers in Europe”, having expanded by 4.1%, ahead of the EU’s 3.6% and Eurozone’s 3.5%.  Time will tell whether the IMF has got their forecasts Right or Wrong.

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