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Emerging Markets Daily - Sept 29
Dubai Expo Set to Launch, OPEC Unlikely Winner of Energy Transition, 'Hidden Debt' on Belt and Road, Nigeria's e-Naira, Vietnam Economy Hits Negative Territory
The Top 5 Stories Shaping Emerging Markets from Global Media - Sept 29
Dubai Resets After Covid-Ravaged Year With $7 Billion Expo
“One year after the pandemic forced a delay, Dubai is set to open its $7 billion Expo on a desert site the size of 600 football fields.”
“Having spent years preparing for the event, the city hopes that an exhibition featuring autonomous vehicles, a pavilion shaped like falcons and one with an original Pharaoh coffin will attract enough tourists to help solidify a nascent economic recovery.”
“Starting Friday, diplomats, dealmakers, artists and musicians will fly in from around the world. The city has stuck to its target of 25 million visits -- both virtually and in person -- and at a time when travel restrictions have slowed business across financial centers, the six-month long exhibition may even help to create a template for others to follow.”
“Dubai has shunned lockdowns since emerging from one last year, keeping its economy open and embarking on an ambitious vaccination drive. The United Arab Emirates, of which Dubai is a part, has inoculated more than 80% of its population and infections rates have dropped. The country is now placed sixth on Bloomberg’s Resilience Rankings…”
“An influx of tourists will benefit the city, given that a third of its economy is made up of sectors like hospitality and wholesale and retail trade…For now, employment numbers at least are looking up. The city’s flagship airline is planning to recruit thousands over the next six months and hoteliers are adding jobs.” Ben Bartenstein and Abeer Abu Omar report.
The Unlikely Winner of the Global Energy Transition: OPEC
Wall Street Journal
“OPEC is forecasting an unlikely winner amid an energy shift away from hydrocarbons, predicting the cartel itself will dramatically boost its influence in the global oil market over the next two decades.”
“In its annual report on long-term energy trends, the Organization of the Petroleum Exporting Countries said it expects global oil demand to grow steadily over the next two decades.”
“By 2045, it predicts its members’ oil will constitute 39% of global crude consumption, up from about 33% now. The group said it expects the Middle East—dominated by OPEC members such as Saudi Arabia and the United Arab Emirates—to ship 57% of the world’s crude exports by 2045, up from 48% in 2019.”
“The group’s market-share gains will come as production by other big producers, including the U.S., ebbs amid falling investment in new hydrocarbon development, according to the report.”
“Non-OPEC supply is forecast to ‘plateau and peak’ in the late 2020s, OPEC said. American oil production is expected to fall by 1.5 million barrels a day by 2045 compared with 2019, the report said.”
“The forecast, contained in OPEC’s closely followed World Oil Outlook, underscores what some oil-company executives and energy-market analysts say is an underappreciated dynamic behind many richer economies’ push to transition from fossil fuels to lower-emission energy sources.”
“Despite that shift, demand for oil and natural gas is expected to continue for years to come. In the short term, that holds potential benefits for players who haven’t committed to curtailing their own oil and gas output—like OPEC.”
“‘OPEC will be perhaps more vital to oil markets than at any time in its history,’ said Neil Atkinson, an independent energy consultant and the former head of oil-market research for the International Energy Agency, an energy watchdog that counts rich governments such as the U.S. as members.” Benoit Faucon and David Hodari report.
‘Hidden Debt’ on China’s Belt and Road Tops $385 Billion
“China’s Belt and Road Initiative has left scores of lower- and middle-income countries saddled with ‘hidden debts’ totalling $385bn. New research suggests that many countries’ financial liabilities linked to President Xi Jinping’s hallmark foreign policy initiative have been systematically under-reported for years.”
“This has resulted in mounting ‘hidden debts’, or undisclosed liabilities that governments might be obliged to pay. The findings are part of a new report published by AidData, an international development research lab based at the College of William & Mary in Virginia, which has analysed more than 13,000 aid- and debt-financed projects worth more than $843bn across 165 countries, over 18 years to the end of 2017.”
“The AidData researchers estimated that existing debts stemming from Chinese lending are ‘substantially larger’ than previously understood by credit rating agencies and other intergovernmental organisations with surveillance responsibilities. ‘It really took my breath away when we first discovered that [$385bn figure],’ Brad Parks, executive director of the AidData team, told the Financial Times.” Edward White reports.
Nigeria Gears up for e-Naira
“Nigeria is getting ready for the pilot launch of its new digital currency, the eNaira, on October 1. The new currency is being issued and regulated by the Central Bank of Nigeria (CBN), which launched a new website on 27 September that will act as the new currency’s official platform.”
“The move comes as a surprise to many as the CBN, like other central banks, has been suspicious of cryptocurrencies, such as Bitcoin, since their inception.”
“As recently as February, the Nigerian government issued a directive that prohibited banks taking part in financial transactions involving cryptocurrencies, where many Nigerians have placed their savings as a hedge against naira depreciation.”
“Although it later clarified that individuals were not prohibited from buying and selling, traders were forced to carry out their business on peer-to-peer platforms, an effective black market. However, led by developments in China, central banks are increasingly coming round to the idea of creating their own digital currencies, seeing them as useful tools for promoting cross-border transactions, providing stability to payment systems and extending financial inclusion.” Shoshana Kedem reports.
Vietnam Economy Slides Into Negative Territory
“Vietnam's gross domestic product dropped 6.17% on the year for the July-September period, as stringent lockdowns in key areas including the economic engine of Ho Chi Minh City led to the first decline since 2000 on a quarterly basis.”
“The economy slid into negative territory during the third quarter after 6.57% growth in the previous three months, the country's General Statistics Office said Wednesday. Vietnam's economy grew 2.69% in the third quarter a year ago. The office revised downward the second-quarter figure from 6.61% on Wednesday.”
“The new GDP figure underscores the Southeast Asian country's switch from a pandemic success story to hard-hit victim. The third quarter even underperformed April-June 2020, which was Vietnam's slowest quarter since 2000 at only 0.39% growth.”
“In Ho Chi Minh City, strict social distancing policies to curb COVID-19 continue to hinder corporate production, employment and consumption. The annual growth target of 6.5% set by Hanoi earlier this year looks increasingly out of reach. GDP grew only 1.42% this year through September, with its performance particularly poor in the third quarter. The economy expanded 2.31% in the same period last year.” Tomboy Onishi reports.
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