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OECD Outlook: Significant Risks to Global Economy if Hamas-Israel Conflict Expands

OECD expects inflation to gradually decline to 5.3 percent next year in its member countries (dpa)
OECD expects inflation to gradually decline to 5.3 percent next year in its member countries (dpa)
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OECD Outlook: Significant Risks to Global Economy if Hamas-Israel Conflict Expands

OECD expects inflation to gradually decline to 5.3 percent next year in its member countries (dpa)
OECD expects inflation to gradually decline to 5.3 percent next year in its member countries (dpa)

The Organization for Economic Cooperation and Development (OECD) reduced its forecast for global GDP growth to 2.9 percent in 2023 while keeping next year's forecast unchanged.
It warned that the worsening conflict between Israel and Hamas in the Gaza Strip could undermine the economy.
According to the estimates of the Paris-based institution, "If the conflict escalates and spreads to the entire region, the risks of growth slowdown and increased inflation will be much greater than they are now."
The Organization noted that the war has had a relatively limited impact on the global economy, noting that international growth would slow to 2.7 percent in 2024 from an expected 2.9 percent pace this year.
OECD Chief Economist Clare Lombardelli explained in the report that the obstacles holding back the economy are not coming from the Middle East and that tight financial conditions, weak trade, and low confidence all have grave consequences.
"Global growth is set to remain modest, with the impact of the necessary monetary policy tightening, weak trade, and lower business and consumer confidence being increasingly felt."
Consumer price inflation is expected to gradually ease towards central bank targets in most economies to 5.3 percent next year, compared to 7.4 percent this year.
GDP growth in the US is projected at 2.4 percent in 2023 before slowing to 1.5 percent in 2024. In the euro area, GDP growth is projected to be 0.6 percent in 2023 before rising to 0.9 percent in 2024 and 1.5 percent in 2025.
Lombardelli stated that the "pace of growth is uneven."
China is expected to grow at a 5.2 percent rate this year before growth drops to 4.7 percent in 2024 and 4.2 percent in 2025 due to ongoing stresses in the real estate sector and continued high household saving rates.
The Organization pointed out that if the war in the Middle East intensifies and expands, the impact of its transition on the global economy may be mainly through oil and gas prices.
It indicated that a ten percent rise in the price of a gas barrel may lead to an increase in global inflation by 0.2 points in the first year and a decrease in growth by 0.1 points.
Trade may be significantly affected, especially since two international trade routes, the Strait of Hormuz and the Suez Canal, are within the conflict zone.

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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)

Telecommunications companies listed on the Saudi Stock Exchange (Tadawul) achieved a 12.46 percent growth in their net profits, which reached SAR 4.07 billion ($1.09 billion) during the second quarter of 2024, compared to SAR 3.62 billion ($965 million) during the same period last year.

They also recorded a 4.76 percent growth in revenues during the same quarter, after achieving sales worth more than SAR 26.18 billion ($7 billion), compared to SAR 24.99 billion ($6.66 billion) in the same quarter of 2023.

The growth in the revenues and net profitability is the result of several factors, including the increase in sales volume and revenues, especially in the business sector and fifth generation services, as well as the decrease in operating expenses and the focus on improving operational efficiency, controlling costs, and moving towards investment in infrastructure.

The sector comprises four companies, three of which conclude their fiscal year in December: Saudi Telecom Company (STC), Mobily, and Zain Saudi Arabia. The fiscal year of Etihad Atheeb Telecommunications Company (GO) ends on March 31.

According to its financial results announced on Tadawul, Etihad Etisalat Company (Mobily) achieved a 33 percent growth rate of profits, bringing its profits to SAR 661 million by the end of the second quarter of 2024, compared to SAR 497 million during the same period in 2023. The company also achieved a 4.59 percent growth in revenues to reach SAR 4.47 billion, compared to SAR 4.27 billion in the same quarter of last year.

The Saudi Telecom Company achieved the highest net profits among the sector’s companies, at about SAR 3.304 billion in the second quarter of 2024, compared to SAR 3.008 billion in the same quarter of 2023. The company registered a growth of 4.52 percent in revenues.

On the other hand, the revenues of the Saudi Mobile Telecommunications Company (Zain Saudi Arabia) increased by about 6.69 percent, as it recorded SAR 2.55 billion during the second quarter of 2024, compared to SAR 2.39 billion in the same period last year.

Commenting on the quarterly results of the sector’s companies, and the varying net profits, the head of asset management at Rassanah Capital, Thamer Al-Saeed, told Asharq Al-Awsat that the Saudi Telecom Company remains the sector leader in terms of customer base expansion.

He also noted the continued efforts of Mobily and Zain to offer many diverse products and other services.

Financial advisor at the Arab Trader Mohammed Al-Maymouni said the financial results of telecom sector companies have maintained a steady growth, up to 12 percent, adding that Mobily witnessed strong progress compared to the rest of the companies, despite the great competition which affected its revenues.

He added that Zain was moving at a good pace and its revenues have improved during the second quarter of 2024. However, its profits were affected by an increase in the financing cost by SAR 26.5 million riyals and a rise in interest, while net income declined significantly compared to the previous year, during which the company made exceptional returns.