World Bank: War in Ukraine Raising Risks for MENA

The World Bank Group building is viewed on an empty street in Washington, D.C., US, April 13, 2020. (AFP Photo)
The World Bank Group building is viewed on an empty street in Washington, D.C., US, April 13, 2020. (AFP Photo)
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World Bank: War in Ukraine Raising Risks for MENA

The World Bank Group building is viewed on an empty street in Washington, D.C., US, April 13, 2020. (AFP Photo)
The World Bank Group building is viewed on an empty street in Washington, D.C., US, April 13, 2020. (AFP Photo)

The war in Ukraine has "multiplied risks" for the Middle East and North Africa's poorer countries by raising food and energy prices, the World Bank said Thursday, warning of potential social unrest.

In its latest update to its MENA growth forecast, the development lender said inflationary pressures set off by Covid-19 "are likely to be exacerbated" by Russia's invasion.

"The threat of Covid-19 variants remains and the war in Ukraine has multiplied risks, particularly for the poor," the World Bank's MENA vice president, Ferid Belhaj, said in the report, titled "Reality Check".

World Bank president David Malpass said this week that the Russian war on Ukraine has started a chain reaction in the global economy, pushing energy and food prices higher, exacerbating debt concerns and potentially worsening poverty and hunger.

"Rising food prices may have far-reaching effects beyond increasing food insecurity," said the report, adding: "Historically in MENA, increases in bread prices have... contributed to increased social unrest and conflict.

"This link between food prices, conflict and low growth poses a serious concern for the humanitarian crisis in fragile, conflict and violence-affected states in MENA," it said.

Ukraine is a key source of grain, while Russia is a major producer of energy and fertilizer needed for agriculture. The MENA region is heavily dependent on wheat supplies from both countries.

According to the report, inflation in Gulf countries is expected to reach 3.0 percent this year compared to 1.2 percent in 2021, and will rise to 3.7 percent in oil-importing countries from 1.4 percent last year.

"For some oil importers, food subsidies would be hard to maintain due to limited resources," while "rising oil prices could delay reforms", the report said.

Despite that, the World Bank forecasts that economic growth in the region will be 5.2 percent in 2022, the fastest rate since 2016.

"The region as a whole is buoyed by oil" and is doing "much better" than any other in the world, lead economist for the MENA region Daniel Lederman told AFP in an interview.

However, the expected growth is "insufficient and uneven".

"Insufficient because a large number of economies in the MENA region will still be poor in terms of their GDP per capita relative to where they were in 2019 in the eve of the pandemic," he said.

And "uneven because the faster (recovering) economies for 2022 are expected to be oil exporters, but oil importers are expected to suffer".

Lederman urged greater transparency from MENA governments regarding their economic data, citing this as a factor behind previously overoptimistic forecasts.

"Published research in leading economic journals in the world indicate that overly optimistic and imprecise forecasts are associated with debt and financial vulnerabilities, higher probability of financial crises and even economic contractions in the near future," he said.



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.