howesdubai.com

Let The Good Times Roll!                                                                  29 April 2021

It was a mega week for Dubai realty, with a total of 1,791 real estate and properties registered transactions, valued at US$ 2.32 billion, during the week ending Thursday, 29 April. The Dubai Land Department confirmed that 1,121 villas/apartments were sold for US$ 599 million and 121 plots for US$ 143 million. The three most expensive residential units sold were a Marsa Dubai villa for US$ 88 million, a Palm Jumeirah villa for US$ 64 million and a Burj Khalifa apartment for US$ 54 million. The most popular locations were in Al Hebiah Third, with 25 sales transactions worth US$ 14 million, Nad Al Shiba Third with 18 sales, at US$ 13 million, and Nad Al Shiba First with 15 sales for US$ 10 million. The top two land transactions were in Palm Jumeirah, sold for US$ 19 million, and a US$ 3 million sale in Hadaeq Sheikh Mohammed Bin Rashid. Mortgaged properties for the week totalled US$ 1.63 billion, including a plot for US$ 1.09 billion in Palm Jumeirah. 171 properties were granted between first-degree relatives, worth US$ 73 million.

In Q1, the sales of ready villas and townhouses in Dubai jumped more than three-fold, from 673 to 2,273 units, as residents made a move to more spacious homes amid the coronavirus pandemic. Property Finder estimated that Dubai Hills recorded a 145% jump in villa sales to 203, compared to Q1 2020, Palm Jumeirah a fourfold rise to 65, Town Square nine times higher at 99 and Arabian Ranches saw sales rise to 100. Other areas including The Meadows, The Springs, Dubailand and Jumeirah Golf Estates all recorded higher sales. Ready apartment sales also increased by 40% during the period.

As indicated in a recent blog, Dubai’s property market saw its first annual price increase since 2015, as the average March property price nudged 1.3% higher to US$ 238 per sq ft; this time last year, the market recorded a 9.8% contraction. With the market growth picking up, March also witnessed transactions at a ten-year high, according to Property Monitor. However, not all locations are basking in the glory of rising prices for the fifth consecutive month but certain villa and townhouse communities have particularly emerged as hot spots, with prices heading north for at least the next eighteen months – notwithstanding another “covid attack”. Another sign of the times is that completed property sales now outweigh off plan sales by roughly 2:1 – not long ago, this ratio was the other way round.

Tellimer Research’s conclusion is in line with other consultancies’ recent findings that Dubai’s real estate sector has stabilised for the first time in five years, driven by a successful vaccination programme. Other factors, including the government’s economic support measures and initiatives, such as visas for expatriate retirees and the expansion of the ten-year golden visa scheme, have also pushed the sector forward. Tellimer noted that the rate of price decline has slowed markedly but are still 4% lower, year on year. However, the upcoming Expo will boost demand for properties, whilst the supply pipeline has indeed slowed over the past eighteen months after major developers pulled the plug on new projects.

Gulf Islamic Investments will invest up to US$ 400 million to acquire property in the Gulf, Europe and the US, and a further US$ 200 million in India and Saudi Arabia. The Dubai-based financial services company, which is regulated by the Securities and Commodities Authority, aims to increase its assets under management by 50% to reach US$ 3 billion by the end of 2021. Since 2014, GII has invested US$ 1.2 billion in the property sector, acquiring residential, commercial and industrial buildings in Dubai, the UK, France and the US. Apart from being the largest investor in Dubai’s e-commerce company Mumzworld, it owns logistics centres and staff accommodation in DIP. The firm is evaluating an IPO but will decide on it when the “time is correct”.

In October, Dubai will host the 72nd edition of the International Astronautical Congress – the world’s largest space conference, organised by the International Astronautical Federation, in collaboration with the Mohammed Bin Rashid Space Centre. The Congress, being held for the first time in an Arab country, will feature plenary events, keynote lectures, in-depth technical and special sessions and interactive workshops. It will be the first such event that high-level stakeholders, from space agencies and global institutions, will have gathered under one roof since the onset of Covid-19.

As tomorrow, 30 April, is the last day for registering, the federal Ministry of Economy has begun to implement inspection campaigns to ensure targeted firms’ compliance with the registration procedures, in line with the anti-money laundering regulations. The UAE passed an anti-money laundering and terrorism financing law in 2018 and in February, the Ministry of Foreign Affairs and International Cooperation announced the launch of the ‘Executive Office to Combat Money Laundering and Terrorist Financing’ to implement the law. The inspection campaign targets all categories of DNFBPs (“Designated Non-Financial Business and Professions), including brokers, real estate agents, auditors, dealers of precious metals and gemstones, and corporate service providers. The fines for violations start from US$ 13.6k and go up to US$ 1.36 million and could even lead to the revocation of the licence or the closure of the facility itself, with enforcing penalties commencing 01 May.

The UAE is planning to update and enlarge its companies’ law by adding ten new sectors which will allow for 100% ownership of onshore entities, in a bid to encourage more foreign direct investment into the country. They will include “chemical, petrochemical, pharmaceutical, defence and heavy industries; the national food and healthcare security industries; and industries of the future, including space and renewable energy among others.” Such industries will be prioritised with the aim of helping the industrial sector increase its contribution to the economy by US$ 45.5 billion to US$ 81.7 billion (AED 300 billion) over the next decade. The Ministry of Industry and Advanced Technology will be responsible for rolling out programmes and initiatives that will support 13.5k local industrial SMEs.

DP World has launched an e-commerce platform, initially in Rwanda, to increase trade with Africa and enhance the business interests of UAE and other global companies with the continent. The aim of the business-to-business online marketplace, known as Dubuy.com, is to create digital trading corridors to the physical corridors DP World has built across the African continent, with its investment in ports, terminals and logistics operations. At the beginning, it will assist Rwandan SMEs find regional and global businesses but then will spread to other physical corridors DP World has built across the African continent. Online marketplaces in Africa account for just 0.5% of global e-commerce and the introduction of Dubuy.com will undoubtedly help with growing this sector in the continent.

Despite the pandemic, Dubai Silicon Oasis Authority posted a 2.7% hike in 2020 revenue to US$ 148 million. The regulatory body for Dubai Silicon Oasis attracted 1.7k new companies last year, a 54% increase, raising the number of companies registered there to 4.9k. It also inaugurated its US$ 409 million Dubai Digital Park project, spanning an area of 150k sq mt, which now boasts a number of MNCs and has an 80% occupancy rate.. With a US$ 27 million investment, it also provides sixty smart city services, in line with the vision of making Dubai the smartest and happiest city in the world. Its Dubai Technology Entrepreneur Campus (Dtec) has more than 900 start-ups from 72 countries – 7% higher on the year – with several involved in blockchain and AI technologies. DSOA has 17 sq mt of retail units, 47k sq mt of office space, 235 apartments and 5k sq mt of ready-made. and plug and play offices.

Petrol prices will nudge a little higher in May, as the UAE Fuel Price Follow-up Committee announced new monthly prices, effective from 01 May. Special 95 will retail US$ 0.003 higher at US$ 0.594, whilst diesel will be US$ 0.013 cheaper at US$ 0.591 per litre.

The RTA estimates that its marine transport network will undergo a 188% expansion to span 158 km, with a 400% increase in the number of scheduled passenger lines under a master plan running up to 2030. The fleet will be 32% higher, at 258, whilst the number of stations would jump 65% to 79 by the end of the decade. Dubai’s marine transport ferried over 14 million passengers last year, with the sector expected to see a sustained growth as the Water Canal and other waterfront developments make their expected demand; during the year, the marine transport network increased 24 km to reach 79 km. In 2021, the RTA will open four water transport lines, extending 10 km.

Having acquired a 16.3% stake in 2016, and a year later a further 5.4%, Amanat has divested itself of its stake in UAE education provider Taaleem for US$ 95 million to an unnamed buyer. This deal made the Dubai-listed company a total cash return of US$ 61 million, including dividends – a very tidy return on its investment. The money made will be used “as an avenue to recycle the cash for other investment opportunities that are more strategically aligned as an influential shareholder.” It already has financial interests in Abu Dhabi University Holding and Middlesex University Dubai, as well as owning the property assets of the North London Collegiate School in Dubai. Earlier in the year, Amanat paid US$ 232 million for Cambridge Medical and Rehabilitation Centre.

There was some good news for Drake & Scull, announcing three new contracts, (totalling US$ 102 million), including two new wastewater treatment plants – for US$ 49 million in Tunisia and another one for US$ 9 million in India. The Dubai-based contractor also reported that it was bidding for projects worth US$ 477 million in Iraq and Kuwait. After several years of losses, Drake & Scull had already posted a 2020 profit of US$ 30 million. The contractor noted that its restructuring process was at an advanced stage, with discussions about a capital reorganisation, as its liabilities outweighed its assets by over US$ 1 billion at 31 December 2020.

Q1 Etisalat results saw the telecom giant increasing Q1 profit by 7.9% to US$ 627 million, with consolidated revenues at US$ 3.6 billion; there was a 0.7% hike in EBITDA to US$ 1.85 billion, with an increased 51% margin. Its aggregate subscriber base also climbed 4% to reach the 156 million mark, of which 12.4 million are in the UAE. The Abu Dhabi listed company’s shares were 0.14% lower, with a value of US$ 5.80.

Emirates Integrated Telecommunications Co posted a 27.6% decline in Q1 profit to US$ 70 million, as revenue dipped 3.7% to US$ 785 million. EITC, also known as du, noted that revenues grew for a third consecutive quarter-over-quarter, as economic activity continued to improve, but that on a year-on-year comparison, mobile revenues declined 12.7% due to the impact of Covid-19. Its mobile subscriber base  was 1.9% higher at 6.8 million, mobile revenues stabilised at US$ 257 million, whilst its fixed revenues reached an all-time high of US$ 181 million; capex was 83% higher at US$ 155 million, with much of the expenditure on the core network, 5G roll-out, as well as improving mobile coverage and capacity.

The bourse opened on Sunday 25 April and, having shed 8 points (0.3%) the previous week, lost 20 points (0.8%), to close on 2,625 by Thursday 29 April. Emaar Properties, US$ 0.01 lower the previous week, lost a further US$ 0.03 to close at US$ 1.02. Emirates NBD and Damac started the week on US$ 3.27 and US$ 0.32 and closed on US$ 3.39 and US$ 0.33. Thursday 29 April saw typical Ramadan market trading at 134 million shares, worth US$ 40 million, (compared to 92 million shares, at a value of US$ 47 million, on 22 April).

For the month of April, the bourse had opened on 2,550 and, having closed the month on 2,625, was 75 points to the good. Emaar traded higher from its 01 April 2021 opening figure of US$ 0.96 – up US$ 0.06 – to close April on US$ 1.02. Two other bellwether stocks, Emirates NBD and Damac, started April on US$ 3.13 and US$ 0.33 and closed on 30 April on US$ 3.27 and US$ 0.32 respectively.

By Thursday, 29 April, Brent, US$ 2.23 (3.4%) higher the previous week, was up US$ 5.18 (8.2%) to close on US$ 68.56. Gold, up US$ 51 (2.9%) the previous four weeks, was US$ 8 (0.4%) lower, by Thursday 29 April, to close on US$ 1,770. Although Opec recognised that a resurgence of Covid-19 cases “could hamper economic and oil demand recovery”, it has maintained production curbs at current levels, as it balanced “the continuing recovery in the global economy” with a sharp rise in cases in some countries. It expects that demand will pick up in H2 and it was noted that overall conformity among its members to existing supply restrictions reached 115% in March. There are some member countries that have not reached their production quotas and have been given until September to rectify this. It also raised its growth forecast by 400k bpd to six million bpd. Gold prices will move higher in the coming days, with news that Joe Biden has proposed raising CGT in the world’s largest economy, at a time when a weak greenback and subdued US yields keep the metal price high. However, if it does not breakthrough to US$ 1,800 by mid-May expect a decline to around US$ 1,720.

There is no doubt that commodities are in the middle of a rare supercycle, as many countries’ economies have started to show marked signs of improvement. The knock-on effect is that industry starts moving quicker to meet pent-up demand and one of their most important needs are base metals. Global demand, led initially by China and more latterly the US, has moved quicker than expected and that is why copper and iron ore have climbed to a decade high, with aluminium prices also moving higher. By mid-week, copper was trading at US$ 9.75k per ton and the bets are on that it will continue this upward movement and could top US$ 15k in the coming years. However, there is always the possibility of Covid returning which would then put a dampener on any further economic progress, with another possible drag factor being that Chinese demand has faltered. Another risk factor concerns reports that Chinese authorities have already implemented a swathe of production curbs across industries. In a bid to stabilise raw material prices. Last year Chile, the world’s largest copper producer, mined 5.7 million metric tons, equating to 25% of the global production. The other four leading producers are the US, Australia, the Democratic Republic of the Congo and Zambia, Some of these producers have a history of strikes and could also be subject to another Covid wave which would also cause supply problems – indeed, there are reports that Chile’s ports may go out on strike next Monday.

Covid almost brought the diamond industry to a standstill, with billions of dollars of uncut gems stashed away in safes, as production was cut and retail outlets in lockdown. There was concern that the huge stockpile would skew the market when business restarted – now it seems that, in a matter of months, they have suddenly found buyers, being the middlemen who cut, polish and trade stones. On top of that, leading miners, such as De Beers and Alrosa, managed to raise prices, as pent-up demand saw more money, that would normally have been expended on overseas holidays etc, being spent on luxury goods including diamonds. In Q1, De Beers sold 13.5 million carats of diamonds, almost double the amount it mined in the period, and it is reported that stockpiles have returned to normal levels. It has been hiking prices since the end of last year, with business back to pre-coronavirus levels, selling more than US$ 1.6 billion in rough gems – the most since 2018. Meanwhile, Russian miner Alrosa’s inventories tumbled about 60% to 12.8 million carats – its lowest level in almost three years.

It was a good Q1 for Porsche which reported a 36% hike in global numbers, to 72k, compared to the same period in 2020. In the first three months of 2021. The two leading models were the Macan and the Cayenne, with sales of 22.5k and 19.5k, as the iconic 911 and its first ever electric car, the Taycan, saw deliveries of over 9k. All global areas witnessed double digit growth, as China remains the carmaker’s largest market, with Q1 sales of 22k – 56% higher on the year, with US seeing numbers up by 56% to 17.4k and Europe to 6k by 16%. The outlook for the remainder of the year is bullish.

Tesla posted a major increase in Q1 net profit from US$ 16 million to US$ 438 million, with revenue 74% higher at US$ 10.3 billion, driven by record deliveries and strong environmental credit sales. The company’s 31 March cash and cash equivalents decreased by US$ 2.1 billion to US$ 17.1 billion in the first three months of the year. A company spokesman commented that “we have sufficient liquidity to fund our product roadmap, long-term capacity expansion plans and other expenses.“ Even as it transited its two new S and X models, the world’s biggest EV maker achieved its highest ever vehicle production and deliveries. The company delivered 184k vehicles in Q1 despite a shortage of chips that has hit the global automotive industry.; its latest forecast sees a 50% annual growth in vehicle deliveries, dependent on “equipment capacity, operational efficiency and capacity and stability of the supply chain”. Interestingly, in 2017, when Tesla began production of the Model 3, its average cost for each vehicle across the fleet was about US$ 84k – now down 55% to US$ 38k. Its shares have climbed 362% over the past twelve months.

Heathrow Airport failed in their bid to increase tariffs on passengers and airlines, so as to recoup losses incurred because of the pandemic. UK’s Civil Aviation Authority has rejected their request and allowed the UK’s biggest airport to raise just US$ 300 million (10% of their original request). From next year, the airport will be able to charge an additional US$ 0.42 (1.4%) per passenger for landing fees to its new figure of US$ 41.76. It also rightly concluded that risks to Heathrow’s financing should be a matter for shareholders, not consumers.

After spending US$ 677 million to carry on trading during the pandemic, there was no surprise to see UK’s second-largest grocery chain post a US$ 364 million loss last year. Sainsbury’s recorded bumper food and Argos sales during the pandemic, with like for like sales 8.1% higher, and is confident of profits returning to some form of normality this year: Argos sales were 11% to the good, as digital sales boomed and, not to be outdone, Sainsbury’s online grocery shopping more than doubled to 17% of revenue for the year. The retailer has already embarked on a restructuring, (and recently announced that 1.2k jobs were at risk) but is going ahead with plans to open 25 to 30 convenience stores per year until the end of 2023. It already has more than 800 convenience stores, where sales were up 13%.

HSBC surprised the market, (and probably themselves), when posting an 81.2% jump in Q1 profit to US$ 5.8 billion, with more than 65% of profits emanating from Asia and 17.2% from the UK; revenue slipped 5% to US$ 13 billion due to the impact of interest rate reductions. With “an improvement in the economic outlook, notably in the UK”, the bank was able to “release” US$ 400 million from its previous US$ 3 billion bad debts provision. Europe’s biggest bank by assets, with its restructuring plan, including cutting 35k jobs, on track, noted that solid growth in its mortgage business in the UK and Hong Kong also helped to boost profits. Although the bank expects better economic conditions this year, it warned of continued uncertainty, as countries recover from the pandemic at different rates and as governments pare back support measures. It will also have to face continuing low rates until at least the end of 2021 which will have a drag on revenue.

Microsoft posted a 47.3% hike in fiscal Q3 profit at US$ 15.5 billion, driven by strong cloud, gaming and personal computing businesses, as well as a net US$ 620 million income-tax benefit; revenue was up 19.0% to US$ 41.7 billion. The March quarter recorded its 15^th straight double-digit revenue growth. Over the quarter, its operating income was 31% higher at US$ 17 billion, sales in its PC business were up 19% to US$ 13 billion and revenue in the company’s intelligent cloud business revenue rose 23% year-on-year to US$ 15.1 billion. Although no figures were available, LinkedIn annual revenue was almost 25% higher, its productivity and business processes division, which includes both its Microsoft Office business and revenue from LinkedIn, increased 15% to US$ 13.6 billion. Quarterly R&D investment was at US$ 5.2 billion. Over the year, its market cap has risen by more than 50% and is currently a tad under US$ 2.0 trillion.

Alphabet, the owner of Google, posted impressive Q1 figures, with net profits up 162% at US$ 17.9 billion, as revenue advertising came in 33% higher. With global economies slowly opening up, and restrictions being lifted, the commercial world has started spending more on online advertising, the main reason why Google’s search business jumped 30% to US$ 31.9 billion, with sales at YouTube climbing 49% to US$ 6 billion. Although business will still track its current upward mobility, US and European regulators continue to discuss tightening oversight of Google and other tech giants but have yet to agree on any legislation. When they do, this could prove to be a major problem for Alphabet and a hit on its margins.

One major beneficiary of the pandemic was the UK book market which rose 7% to US$ 2.92 billion last year, with the Publishers Association commenting that people had “rediscovered their love of reading” in lockdown. Whilst demand for fiction and non-fiction did improve, by 16% and 4% respectively, audio-book sales were the big winners – up 37% – whilst educational book sales slumped, down 20%, with schools being shut for months. According to the association, total UK publishing sales – including consumer, educational and academic titles – rose 2% in 2020 to US$ 8.9 billion.

Late last week, Turkish authorities confirmed that the country-based cryptocurrency exchange, and the Thodex website, had been closed, amidst reports that its founder had fled the country and flown either to Albania. They have now opened investigations into Thodex’s founder, 27-yeqr old Faruk Fatih Ozer, who has absconded with more than US$ 2 billion of the firm’s 391k investors’ assets. Prosecutors have launched an investigation into Ozer on charges of “aggravated fraud and founding a criminal organisation”. The country has little regulation into the running of the country’s crypto market, as the Turkish central bank having decided to ban the use of cryptocurrencies in payments for goods and services starting from 01 May. A second Turkish cryptocurrency platform Vebitcoin folded at the weekend after having abruptly announced it had ceased operations, citing financial strains. Subsequently, Turkish authorities launched an investigation, blocked the firm’s accounts and arrested four people, accused of fraud. Increasing numbers of Turks are opting to use cryptocurrencies in an attempt to protect their savings from a sharp decline in the value of the lira.

After abandoning discussions, about a takeover bid for Ares Management, Australia’s AMP has instead decided to split off AMP Capital’s private markets investment management business. This move would see the end of Boe Pahari as AMP Capital’s global head of infrastructure equity, who was only appointed last year; he was subsequently demoted, following the publication of sexual harassment revelations. The demerger will create two focused businesses, AMP Limited and Private Markets, the latter operating in growing, global markets. Michael Sammells, who is currently the non-executive director of AMP Limited and current chairman of AMP Capital, will be the interim chairman of the offshoot. Last week, the wealth management division reported US$ 1.2 billion in net cash outflows, while the AMP Capital division posted a US$ 2.2 billion funds outflow. Its future is not looking bright.

Cisco chief, Chuck Robbins, reckons it will take a further six months for the supply of computer chips to return to some form of normalcy. Many industries have experienced serious supply delays because of a lack of semiconductors, triggered by the Covid pandemic and exacerbated by other factors such as increased demand from the white goods and home appliances consumer sector, with major advances in technology including 5G, AI, IoT and cloud computing demanding enhanced computer chips. Some analysts estimate that current demand is at least 25% higher than what would have been expected twelve months ago. However, supply is being ramped up, with more capacity being built; for example, Intel is investing US$ 20 billion to significantly expand production, including two new plants in Arizona. Indeed shortages, have been made worse by companies overordering and not wanting to get caught short again. The US-based Semiconductor Industry Association reckons 75% of global manufacturing capacity is in East Asia; Taiwan’s TSMC, (which is planning a US$ 100 billion investment to expand capacity), and South Korea’s Samsung are the dominant players.

A lower-than-expected rise in Australian consumer prices in March sees quarterly and annual figures at 0.6% and 1.1% will make it easier for the Reserve Bank to maintain current stimulus measures longer. However, it seems that the public may not benefit, as commercial banks have already started to raise interest rates on longer-term fixed mortgages. On top of that, building costs are nudging higher with demand on the rise, driven by low rates and government subsidies, whilst material prices are higher along with labour charges caused by a shortage of skilled labour. For example, it was estimated that to lay a brick in Perth last year cost US$ 1.04, now US$ 2.30. In Q2, the impact of increases in housing rent – and rising building costs – will also impact the inflation figures. The RBA is highly unlikely to make any move to push rates higher until inflation moves into the 2% – 3% bracket and unemployment settles to under 5%.

Because of the pandemic, and the ensuing printing of money to support their various economies, the EU public deficit and debt have soared, over the past twelve months, with government debt, in the euro area and the EU, reaching 98.0% and 90.7% of GDP, compared to 83.9% and 77.5% a year earlier; the government debt to GDP jumped to 7.2% and 6.9% from the previous levels of 0.6% and 0.5%. On a country basis, the nations with the highest debt, compared to the size of its economy, were Greece (205.6%), Italy (155.8%), Portugal, (133.6%), Spain (120.0%), Cyprus (118.2%), France (115.7%) and Belgium (114.1%), All the EU countries, except for Denmark, had deficits higher than 3% of GDP, contrary to EU rules known as the Stability and Growth Pact, with Spain, Malta, Greece and Italy posting the highest deficits.  However, ECB President Christine Lagarde confirmed that its US$ 2.23 trillion emergency bond buying will not be curtailed in the near future, as indicators point to Q1 economic activity having contracted.

Trials have been running for over a year in cities across China for the new “Digital Currency Electronic Payment” (DC/EP) system – a digital yuan controlled by the central bank. Eighteen months ago, Mark Zuckerberg had warned the US House of Representatives Financial Services committee that “we can’t sit here and assume that because America is today the leader that it will always get to be the leader if we don’t innovate.” That enquiry had concerned Facebook’s proposed Libra new digital currency which deeply worried the committee that it might upend the bank-dominated financial system. Consequently, Libra has stalled, whilst China has the world’s most robust central bank digital currency (CBDC). The digital yuan is the complete opposite of Bitcoin, as it is more concerned with control and regulation and has become a new tool for the ruling Communist Party to monitor and hegemonize its people, as well as being used to try to loosen America’s grip on the global financial order. An all-seeing currency will also allow the government to track how citizens are spending their money in real time and give them more control over their citizens. The new currency will permit users to pay for goods and services, via a smartphone app, in much the same way as its competitors, WeChat and Alipay, and it appears that its speedy roll-out has been prompted by the current duopoly. If it were a success, the new digital currency could upset the US and become the future global financial leader.

Following a creditable 4.3% growth in Q4 2020, the US economy expanded 6.4% on an annual basis in Q1, driven by increased consumer spending that had been pent up since the onset of Covid. Personal consumption, the most important part of the US economy, leapt an annualised 10.7% – the second-fastest since the 1960s. In February 2020, the inflation-adjusted value of domestically produced goods and services was at an annualised $19.3 trillion, and with the latest figure of US$ 19.1 trillion, it  indicates that the economy has returned to almost normal levels quicker than many analysts had forecast. What is happening is that unprecedented demand has not be readily met by producers, experiencing material shortages and supply-chain challenges. This, at least in the short-term, will lead to higher prices and the possibility of inflation levels rising too quickly. To make matters worse, the Federal Reserve, and the Biden administration, are continuing to print money that will take inflation higher and result in the inevitability of raised interest rates.

To no surprise to anyone, President Joe Biden is reportedly looking at almost doubling the country’s capital gains tax from 20% to 39.6%, in a bid to recoup some of the massive social spending, exacerbated by pandemic; the capital gains increase would raise an estimated US$ 370 billion over a decade, The Democratic incumbent is also discussing hitting those, earning US$ 1 million or more, by raising the existing top tax rate from 39.6% to 43.4%. Accordingly, the markets’ rection surprised no analyst, as the S&P 500 dipped 0.9% on the news, with the ten-year treasury yields falling to 1.5% The Biden administration has already warned that there would be hikes in corporation tax, that would help fund the US$ 2.3 trillion infrastructure-focused ‘American Jobs Plan’, and that those earning more than US$ 400k can expect to be paying more tax in the future.

By the day, it seems that the former prime minister, David Cameron, sinks deeper into trouble for his cavalier approach, when representing the now disgraced and bankrupt Greensill as a special advisor, a role he took on in 2018. The Treasury has released more than forty pages of messages, relating to its contact with David Cameron and Greensill Capital, with the ex-PM communicating with all his old cronies, including Rishi Sunak, two other ministers, former Cabinet Secretary, Sir Marc Sedwell, and other top Treasury officials. Even the Bank of England said Mr Cameron had contacted it multiple times last year, as the finance firm sought access to a Covid loan scheme. The two questions that need answering is why Greensill Capital was given so much time and access to the Treasury, and why so much public money was put at risk. Other emails point to the desperation of the former PM, seeing a possible US$ 700 million commission payment slipping away. One, to the BoE’s deputy governor, Sir Jon Cunliffe, included reference to the fact that Greensill had “failed to get anywhere” with its proposals, despite “numerous conversations” and a later one to him bemoaning the fact that Greensill’s inability to access the scheme had proved “incredibly frustrating”.

Following bilateral discussions last Friday, led by UK International Trade Secretary Liz Truss and Australian Trade Minister Dan Tehan, it seems that the UK and Australia agreed “the vast majority” of a free trade deal, with an agreement set to be signed in June. If the outstanding details are ironed out, the deal could add US$ 700 million to the UK’s GDP over the long term; it will also be one of the first post-Brexit trade deals negotiated by the UK that is not a “rollover deal”, a replica of a trading arrangement earlier negotiated on the UK’s behalf by the EU.

All the doomsayers will be spilling their coffee, with news that the EY Item Club has amended its earlier 5.0% 2021 growth forecast for the UK to 6.8% which would be the highest ever rate since records began; it also expects that the country will return to pre-pandemic levels by Q2 next year. The three main drivers behind this have been the impressive vaccination programme, the relaxing of lockdown procedures and the high levels of “enforced” savings which are now ready to be spent. which in turn has lifted consumer confidence to high levels. It also expects unemployment figures to be better than expected as its new forecast is 5.8%, rather than its January 7.0% figure. Even Deloitte considers that the UK is on track for a faster economic recovery than previously thought and that “the UK is primed for a sharp snap back in consumer activity”. Furthermore, the IHS Markit/CIPS Purchasing Managers’ Index was 3.3 higher on the month to 60.0 in April, with any figure above 50 indicating expansion. With the April opening of non-essential shops, it was no surprise to see the service sector growing faster than manufacturing for the first time since the Covid crisis began last March. Let The Good Times Roll!

Another Day In Paradise?                                                                 08 April 2021

How could all the property experts get it so wrong predicting further doom and gloom for the Dubai property sector in 2021?  March saw a marked uptick in sales transactions which totalled 4,643, valued at US$ 3.0 billion, and undoubtedly the 22% month on month growth in transactions, and 47% in value, will continue the same trend into Q2 and for the rest of 2021. 101 Economics teaches that prices will head north when there is lack of supply and high demand – this is exactly what is happening in areas like The Meadows and other established locations in the emirate for villas, and in Palm Jumeirah for prime apartments. Interestingly, last month had the highest number of secondary/ready properties transacted in a single month since June 2015.

The DLD weekly real estate report ending 01 April noted that the value of real estate and properties transactions was US$ 1.93 billion, including 1,116 apartments/villas selling for a total of US$ 559 million, along with 103 plots for US$ 197 million. The total amount of mortgaged properties came to US$ 1.09 billion, half of which was for land mortgaged in Marsa Dubai; there were 83 properties granted between first-degree relatives, valued at US$ 53 million. Three apartments were the top-priced for the week – US$ 55 million in Palm Jumeirah, US$ 52 million in Marsa Dubai, and U Madinat Dubai Almelaheyah, US$ 51 million, in Burj Khalifa. The highest land value sold this week was for US$ 58 million in Hadaeq Sheikh Mohammed Bin Rashid. Most transactions were carried out at Hadaeq Sheikh Mohammed bin Rashid, (28 sales valued at US$ 61 million), followed by Nad Al Shiba Third, with 22 sales transactions worth US$ 15 million, and Al Hebiah Third, with 8 sales transactions worth US$ 7 million.

Colliers’ latest report indicates that Dubai’s property market is running low on inventory, as buyers currently outnumber sellers in popular areas of the emirate, resulting in Dubai property fast becoming a sellers’ market. Since the advent of Covid, the trend is for many stakeholders moving to bigger spaces or better communities, or both. Covid was a catalyst for some property owners having to sell their property, (either through losing their job or having their pay cut). Now many sellers are in a position to wait and see, waiting for the right price to be offered.

Since the September 2019 launch of the Dubai Supreme Committee for Real Estate Planning, new project launches have slowed down substantially, so that, according to Asteco, only 34k residential units were handed over last year. Most of this number were already work-in progress, in September 2019, but with time the pipeline will become more manageable as actual new launches slow. There is no doubt that equilibrium is returning to the market and as supply slows, property prices will inevitably move higher, also driven by historically low mortgage rates, enticing buyers to pay more as the lack of good property available becomes apparent; maybe gazumping is returning to the local market.

Binghatti Developers launched a US$ 55 million project in JVC, comprising 160 apartments, covering 300k sq ft. The Binghatti Mirage – its third development in that location – is scheduled for completion within twelve months. One 722 sq ft B/R apartment will be priced at US$ 132k, after a 30% discount in advance, while a 2 B/R apartment, with an area of ​​856 sq ft, will cost US$ 188k. According to Cavendish Maxwell, JVC saw 2020 rental declines for both apartments (down 16.1%) and villas by 3.1%.

Dubai Economy has joined forces with Amazon in a new initiative to assist  local start-ups and SMEs, who are DED Trader licence holders and interested in expanding their online footprint. The Amazon Sale University will provide new e-learning courses and also host a dedicated store front on Amazon.ae to showcase products offered by local traders. One of DED’s main aims is to accelerate the “growth of e-commerce initiatives and promote technology integration” within the local business community.

Having met all safety requirements issued by the General Civil Aviation Authority (GCAA), flydubai will resume 737 Max passenger service with the first flight today to Pakistan’s Sialkot. The Dubai carrier has fourteen Max aircraft currently grounded, of which  four  Max 8s and one Max 9 have got the go-ahead to fly, following a comprehensive twenty-month review. The remaining nine Max aircraft are expected to return to passenger service over the next two months, following extensive work to reactivate planes that have been grounded for two years. The carrier noted that the Max aircraft “will operate to a number of flydubai’s destinations over the coming weeks” and that passengers will be notified in advance of travel if their itinerary now includes a flight that is scheduled to be operated by a Max plane. Twelve countries, within the carrier’s network, have yet to clear the narrow-body jet’s return, including Russia and India. The Dubai-based airline has over 750 pilots, of which over 30% have completed the required additional training on the 737 Max, with the remaining 520 expected to complete the additional training by the end of the year.

Dubai’s largest fuel retailer, Emirates National Oil Company, is planning to invest US$ 68 million of its capex budget on digital technology to optimise operations and identify synergies within its businesses. Enoc has more than 11k employees in sixty markets and it expects to grow the number of its service stations by 41.9% to 193 this year. In 2019, it had launched Enoc Link, an on-demand fuel service initially only for commercial customers, and now expects to add new revenue streams from the launch of on-demand fuel retail. In February, it introduced its first sustainable service station at the Expo 2020 site – and the first in the region equipped with a wind turbine for generating power. Enoc has launched its Masar project, as part of its digital transformation plans, with the aim of integrating all of its divisions and providing a more focused service to customers.

Earlier in the week, HH Sheikh Mohammed bin Rashid Al Maktoum launched the Dubai Creative Economy Strategy, with the aim of doubling the emirate’s creative industries’ contribution to GDP to 5.0%, company numbers to 15k and the number of creators to 140k by 2025. The Ruler noted that design, content, culture and arts will be major drivers for Dubai’s future, but the concept also covers a wide range including the likes of publishing, writing, cinema, video, cultural heritage and artistic industries. To speed up the process, the legal and investment environment will be upgraded to spur growth of creative industries in Dubai and to enhance its attractiveness to international creators, investors and entrepreneurs.

The Dubai Ruler also approved the Emirates Development Bank (EDB) Strategy to provide a sizeable US$ 8.2 billion financial support to businesses and start-ups in a major step to drive the national economy, as a support mechanism for the recently launched US$ 82 billion “Operation 300bn”. This was introduced last month as a ten-year comprehensive strategy to more than double the industrial sector’s contribution to the country’s GDP, and to finance more than 13.5k SMEs and to create 25k jobs. The Dubai Ruler also noted that “we must adopt a distinctive vision that meets global trends and sustains development to maximise the industrial sector’s revenue and boost the broader economy”, as well as “The Emirates Development Bank Strategy presents a giant leap that will leverage the bank’s role as a key driver of the national economy. Providing effective financial solutions will support the role of SMEs as main players in shaping our national economy.”

This week saw the appointment of Khaled Mohamed Balama Al Tameemi as governor of the Central Bank of the UAE who takes over the role from Abdulhamid Saeed Alahmadi. At the same time, the central bank also decided to extend the Targeted Economic Support Scheme (Tess), the US$ 13.61 billion zero-cost funding programme, set up a year ago to help lenders maintain funding flows through the economy, following the onset of Covid-19, until year end.

Moving up four places, the UAE is now ranked 15^th in the world (and the leader in the Arab region) in Kearney’s 2021 Foreign Direct Investment (FDI) Confidence Index. Not surprisingly, the report indicated a marked decline in overall optimism about the global economy over the year but noted that the UAE business environment demonstrated continued strengths, including government incentives for investors. It also pointed to the fact that investors are more cautious regarding FDI as they gear up for a long-haul economic recovery Only 57% of investors were optimistic about the three-year global economic outlook – compared to 72% in last year’s survey. China, the UAE and Brazil are the only three emerging markets on this year’s Index, with China remaining the highest-ranked emerging market, as has been the case all this century.

The International Monetary Fund revised upward the UAE economic growth forecast for 2021, thanks to massive vaccination efforts which will strengthen recovery in H2. The UAE is now the second most vaccinated country in the world after Israel. The world body more than doubled its previous forecast of 1.3% to 3.1%, with growth softening to 2.6% in 2022. (However, the IMF often seem to get their forecast so wrong and no doubt the UAE economy will grow at an even faster rate next year). For the MENA region, the Fund revised its 2021 growth outlook from 3.2% to 4.0%.

The Ministry of Economy announced a price reduction on 30k food items during Ramadan. Discounts on items such as rice, flour, sugar, meat, fish and juices will range from 25% – 75%, across 900 national outlets. The ministry will also clamp down on unfair price increases during the holy month and will carry out 420 inspections to ensure grocery stores and businesses follow the rule. Government officials have met with representatives of fruit and vegetable markets in Abu Dhabi and Dubai to ensure enough food will be available during the Holy Month. It is estimated that on a daily basis, Dubai imports around 17k tonnes of fruit and vegetables, whilst the Abu Dhabi total is nearly 5k tonnes.

Dubai Internet City will be the regional headquarters for a company rated as the most valuable start-up in the US. Stripe, the online payments company, will help all its internet-based customers accept payments, make pay-outs and manage the money-side of the business. The UAE digital payment transactions have doubled over the past two years to US$ 18.5 billion, with a further 54% increase to US$ 28.5 billion expected by the end of 2022.

Two DFM entities were in the news this week. With Meraas now owning over 90% of the shares in the theme park operator, DXB Entertainments, the company will buy out the remaining equity holders by paying them US$ 0.022 per share, so that the government-owned entity can assume 100% ownership. Meanwhile, Deyaar has decided not to pursue a capital reduction to cancel US$ 417 million of accumulated losses; no reason has been given for this change. The DFM also announced a plan to launch new equity futures contracts on individual stocks of three leading listed companies – Aramex, Air Arabia and Emirates Integrated Telecommunications Company (DU) – in line with its strategy to diversify investment opportunities. It is like the inaugural equity futures contracts launched last October on stocks of five listed companies – Emaar Properties, Dubai Islamic Bank, Emirates NBD, Emaar Development and Emaar Malls.

Later in the month, the DFM will see its first IPO for some time, as Tristar will be offering shares at between US$ 0.60 to US$ 0.74 which would value the Dubai-based fuel distributor at up to US$ 880 million. It is expected that 20% of the shares will be offered to the public, through the sale of new shares, while the current shareholders could divest a further 4% onto the market, through a secondary offering. The business currently has three shareholders – Kuwait-based logistics group Agility, (65%), Gulf Investment Corporation (20%) and an investment vehicle owned by chief executive, Eugene Mayne (15%). Last year, Trisatr, with a fleet of more than 2k lorries and 35 maritime vehicles, posted a US$ 103 million EBITDA on revenue of US$ 453 million.

The bourse opened on Sunday 04 April and, having gained 62 points (2.5%) the previous week, was up 25 points (1.0%) to close on 2,583 by Thursday 08 April. Emaar Properties, US$ 0.03 higher the previous week, moved up another US$ 0.03 to close at US$ 1.00. Emirates NBD and Damac started the week on US$ 3.12 and US$ 0.32 and closed on US$ 3.17 and US$ 0.33. Thursday 08 April saw the market trading at 172 million shares, worth US$ 45 million, (compared to 69 million shares, at a value of US$ 36 million, on 01 April).

By Thursday, 08 April, Brent, US$ 6.83 (8.6%) lower the previous fortnight, lost a little more ground, shedding US$ 1.23 (1.9%) in this week’s trading, to close on US$ 63.42. Gold, up US$ 3 (0.1%) the previous week, was US$ 26 (1.5%) higher, by Thursday 08 April, to close on US$ 1,756.

IATA estimates that ME passenger demand has fallen back to levels last seen in 1998, noting that last year was the worst in the industry’s history. The global body indicated that, in 2020, passenger demand slumped by 72%, allied with a 63% fall in capacity, with cargo only declining 10%. It once again warned that some carriers may face bankruptcy and that to date losses registered total more than US$ 7 billion and that there must be more collaboration between the industry and various governments to best facilitate global economic recovery.

Despite a shortage of chips, Tesla delivered a record 184.8k electric vehicles in Q1, beating analysts’ expectations of 168k; this is well on its way to meet Elon Musk’s target of 750k for the year. Tesla announced that it would be progressing to full capacity at its Chinese plant. Despite this positive news, Tesla’s shares, which have skyrocketed by more than  540% over the past twelve months, were 1% lower on the day. Q1 sales were dominated by its cheaper models ‘3’ (from US$ 33.7k) and ‘Y’ (from US$ 45.7k), with its two more expensive models, ‘S’ and ‘Y’, (from US$ 75k), accounting for just 1% of Q1 turnover. The company confirmed it was still in the “early stages” of ramping up production of updated versions of both the more expensive models. Tesla was the biggest electric car manufacturer in 2020, accounting for 15.6% of the global production of 3.2 million. However, Monday was another day and, after digesting the news of record quarterly production, investors pushed Tesla shares 8% higher in pre-market trading on Monday.

LG Electronics is to close its loss-making smartphone business following six years of continual losses, totalling US$ 4.5 billion. Only eight years ago, it was the world’s third largest smartphone maker but has trailed the leading two players, Samsung and Apple, not helped by its own hardware and software issues; last year it shipped 28 million phones, compared with Samsung’s 256 million; it is estimated that it has a 2% global market share. Noting that the mobile phone market had become “incredibly competitive”, the South Korean conglomerate has said that its “strategic decision to exit the incredibly competitive mobile phone sector will enable the company to focus resources in growth areas such as electric vehicle components”. The smartphone business is the smallest of LG’s five divisions, accounting for just 7.4% of revenue.

The UK High Street cannot wait for next Monday – the day when lockdown restrictions are finally lifted and, driven by pent up demand, analysts are expecting that there will be a massive 48% hike in “bricks and mortar” sales. A study by Springboard noted that between the first and last weeks of March, the decline in shopping centre footfall moved up from -69% to -62.5%, compared with March 2020, whilst a -29.8% annual drop in footfall at retail parks shrank to -14.8% just before the Easter weekend. Over that four-day holiday period, footfall in. the country’s major cities was three times greater than for the same period a year earlier, and for UK retail destinations, footfall has increased from week to week for ten of the past eleven weeks, despite all but non-essential stores being closed. A more telling statistic from the latest data from the PwC’s Consumer Sentiment Index is that consumer confidence is now at its highest level since the tracking of the data began in 2008, with figures showing there are consumers with more disposable income and “a pent up demand to spend after a year of lockdown restrictions”.

It is estimated that Penguin Random House has claimed US$ 1.4 million under the UK government’s furlough scheme and now it has commented that it will not be repaying any of this back to the government despite strong sales in lockdown; revenues rose by 4.6% to US$ 5.3 million last year but UK’s biggest publisher, owned by German firm Bertelsmann, does not publish its UK profits separately, but they are thought to have soared. A spokesperson said: “We have used the government’s furlough scheme for its intended purpose: to protect jobs during this extraordinary time.” To date, the furlough scheme has cost the UK taxpayer US$ 78 billion.

The collapsed fashion chain Peacocks, previously owned by Edinburgh Woollen Mills, has been bought out of administration, by an international consortium, led by Peacocks’ former chief operating officer, Steve Simpson. It is being supported by EWM, a private investment group controlled by the Day family, which is owed money by Peacocks. If they receive the support of stakeholders, including partners, suppliers and landlords, the Peacocks’ management team is hoping to reopen 200 of its 400 shops, and retain all 1.85k store staff, along with more than 150 in head office and support. Last year, a similar deal was agreed with EWM and Bonmarche brands; as well as EWM also selling its Jaeger brand to M&S which will be run as an online-only business.

CVC Capital Partners, a UK private equity fund, has placed a buyout offer for troubled embattled Japanese conglomerate Toshiba, in a deal that could be as high as US$ 20 billion. Shares jumped almost 20% on Toshiba’s US-listed shares. The company has been involved in several scandals in recent years, including false accounting, (by overstating its profits for six years to 2015), and huge losses linked to its US nuclear unit, which resulted in an enforced sale of its profit-making chip sector to cover the deficit. Last year, it sold its final stake in the personal computer maker Dynabook, but if the deal goes through – it still needs the green light from regulators, including the Japanese government – it will allow the company to focus on renewable energy and other core businesses.

It took Credit Suisse little time to dismiss two key executives, chief risk officer, Lara Warner and its investment banking chief, Brian Chin, and to decide to cut bonuses in the fallout from two major business relationships. The first involved Greensill Capital, which filed for insolvency last week, and was a key financial backer of Liberty Steel owner, GFG Alliance. The other casualty was hedge fund Archegos which also imploded with major losses. Credit Suisse said it expects to make a Q1 US$ 960 million loss.  The Swiss bank also warned of a US$ 4.7 billion Archegos’ loss but noted that it had yet to calculate the cost of its involvement with Greensill Capital, but that could easily run into billions as well. It had acted as one of several lenders as prime broker for Archegos which collapsed after “bets” made on stocks unravelled including entertainment giant Viacom. The bank was one of the last to exit when these shares crashed from US$ 100, (earlier in March), to just over US$ 40. Credit Suisse confirmed it had launched investigations into both matters, with chief executive, Thomas Gottstein noting that “serious lessons will be learned.”

The recent rally in digital assets appears to have no ending and is no longer the domain of just Bitcoin. Ethereum, the world’s second largest cryptocurrency and rising 6.2% last Friday is now worth US$ 2.144k, having already tripled in the first three months of 2021. Ethereum was trading at US$ 150 in April 2020. The market has been boosted by major institutional investment, as well as increased adoption by retailers and payment platforms, including Visa which recently started using its network to settle cryptocurrency transactions.

The Australian Securities and Investments Commission is suing Westpac over its sale of consumer credit insurance in 2015 to almost 400 customers. ASIC alleges that the bank mis-sold CCI with credit cards and other credit lines to almost 400 customers “who had not agreed to buy the policies” for several months back in 2015. This insurance is usually optional and provides cover for consumers if they are unable to meet their minimum loan repayments due to unemployment, sickness or injury. A 2019 report by ASIC, covering eleven banks, found CCI was giving consumers “extremely poor value for money” and that they were only receiving 11 cents for every dollar they spent on CCI premiums linked with their credit cards – and only 19 cents for every dollar on all CCI products.

The Consumer Action Law Centre noted that the practice of selling people insurance, that they did not need, had been “widespread” and targeted consumers at the vulnerable “pressure dynamic” point of sale. It concluded that “the salesperson effectively adds on junk,” and “the problems with junk insurance were industry wide. It was a rort and everyone was in on it”. To date, ASIC has “recovered” US$ 191 million for 580k consumers from eleven banks, equating to an average of US$ 185 for each consumer. If any company had been found stealing so much money, there would be executives serving time but it seems that the law does not apply to the Australian banking sector.

One positive sign for the Australian economy is that job vacancies are rising, indicating there is a growing demand for labour and positions are not being filled. February job vacancies surgied, with 289k vacancies – 13% higher than three months earlier and 90% of the total in the private sector. With such figures, some analysts are looking at a 5% unemployment rate by July, particularly since the government is scaling back on JobSeeker unemployment payments so that it may encourage those at the lower end pf the payment schedule to seek full-time paid work, as opposed to living on a relatively comfortable JobSeeker pay-out.  There is no doubt that there are clear labour shortages in some industries, and with job vacancies rising, there is an obvious growing demand for labour for positions that are not being filled. The construction sector is an obvious example – in February 2020, there were 16.6k job vacancies but that number halved to 8.3k in May 2020 when the lockdowns were put in place. One obstacle to the favourable employment prospects is vaccine and the disappointing figures – at the beginning of the year, Prime Minister Scott Morrison hoped to have four million doses of the vaccine administered by the end of March; his woeful forecast was well out, with only 670k doses administered by the end of last month. Other potential drag factors include ongoing trade tensions with China, further possible disruptions to global trade and the booming Australian property market that could see regulators stepping in to curb bank lending.

With the biggest gains seen since August, March witnessed a surge in US hiring, with 900k jobs being added in the month, as the vaccination program gained traction and restrictions easing led to the mass opening of restaurants, bars, construction sites and schools. Accordingly, although the unemployment rate eased 0.2% to 6.0%, it is only a year ago that the country lost more than twenty million jobs, at the onset of the pandemic; full employment will return within eighteen months The current estimate sees a 6.0% growth rate, driven by a strong rebound later this year, as families emerge from lockdowns with pent-up demand and in many cases, savings put away during the pandemic. Despite the number of Americans claiming unemployment benefits unexpectedly rising by 16k to a seasonally adjusted 744k for the week ending 03 April, there is no doubt that labour market conditions are rapidly improving, as the country’s economy reopens, vaccination programs increase, and the various stimulus packages take effect.  However, there is still some way to go as the US employment figures are still 8.4 million shy of the February 2020 peak.

As restrictions eased, Chancellor Rishi Sunak has announced a government-backed loan scheme to help companies, as the economy reopens. The loans, ranging from US$ 35k to US$ 13.9 million, (GBP 10 million), will be 80% guaranteed by the government and will aim to help companies restart trading. Administered by the British Business Bank, it will run until the end of the year and interest rates will be capped at what seems to a rather high 14.99%. To date, it is estimated that its emergency loans had supported about US$ 105 billion of financing.

US Treasury Secretary Janet Yellen confirmed that the US is working with G20 countries to agree on a global corporate minimum tax rate to end a “30-year race to the bottom on corporate tax rates”. In the absence of a global minimum, the US will always be struggling against other economies with lower rates so that is probably why the Biden administration is leading the negotiations to level ‘the tax playing field.’ It appears that the US would use its own tax legislation to prevent companies from shifting profits or residency to tax-haven countries and would encourage other major economies to do the same. Ms Yellen’s take on the problem is not shared by the World Bank supremo, David Malpass who was against such a high tax rate of 21% for companies and indicated that such high rates would hinder poor countries’ ability to attract investment. Whilst the EC supported the idea, it did not comment on the rate, whilst some countries, including Ireland, expressed reservations about the US proposal. Recently, the OECD held discussions that focused on a minimum corporate tax rate of 12.5%, whilst the average corporate tax rate globally is about 24%, with Europe having the lowest regional rate at around 20%.

Every three months, the IMF seems always to amend previous quarters and this month is no exception. This time it is forecasting a stronger economic recovery this year and next and has marginally upped the UK’s growth to 5.3% and 5.1% in 2022, after a 9.9% contraction last year. Despite this, the UK remains ahead of just one of the G7 countries, Italy, and will only return to pre-pandemic levels only by the end of 2022. On a global scale, two year forecasts are at 6.0% (up from October’s 5.2%) and 4.4%, with the caveat that recoveries are diverging dangerously within and between countries. The global body notes that countries likely to perform less than the global average are those with slower vaccine rollouts, more limited support from economic policy, and those more reliant on tourism. Many emerging and developing economies are forecast not to return to pre 2020 economic levels, although China has already returned to pre-pandemic levels of economic activity. Over the period 2020 – 2022, cumulative losses in income per person are forecast at 11% for the developed world and 20% for other countries. The report notes that people counted as extremely poor are likely to have increased by 95 million in 2020, with a rise of 80 million in the number who are undernourished. Another Day In Paradise?