Aurelia Butler

DUBAI (Reuters) – The International Monetary Fund (IMF) projects Saudi Arabia to swing to a fiscal deficit of 1.2% of GDP in 2023, from a surplus of 2.5% in 2022, it said in its latest assessment report on Wednesday.Saudi Arabia’s economy grew 8.7% last year on the back of high oil prices, allowing it to record its first budget surplus in almost a decade. But cuts to production this year and lower prices are expected to hit oil revenues and weigh on growth. More

ANKARA (Reuters) – President Tayyip Erdogan said on Wednesday Turkey will lower its inflation rate to “single digits” with the support of “tight monetary policy” as he presented new forecasts showing inflation was expected to rise to 65% by year end before dipping in 2024. For years, Erdogan had openly opposed high rates. But he named a new cabinet and central bank governor in June to undertake a turnaround, and the bank has since hiked its policy interest rate to 25% from 8.5%. More

Housebuilding in the UK last month fell at the second-fastest pace since the first Covid-19 lockdown, reflecting the impact of high interest rates on demand, according to a closely watched survey.The S&P Global/Cips UK Construction Purchasing Managers’ house building sub-index, a measure of activity in the sector, fell to 40.7 in August, down from 43 in July and the second-lowest level since May 2020. A reading below 50 indicates a majority of companies reporting a contraction.Outside the pandemic period, this was the lowest reading since spring 2009, and the sharp drop was the main driver in pushing the overall construction PMI down to 50.8 in August from 51.7 the previous month. The sector also registered a decline in new order volumes for the second time in the past three months, the steepest drop since May 2020.Tim Moore, economics director at S&P Global Market Intelligence, which compiles the survey, said: “UK construction companies experienced another slump in house building activity during August as rising interest rates and subdued market conditions resulted in cutbacks to client demand and new build projects in particular.”The Bank of England has raised interest rates from a record low of 0.1 per cent in November 2021 to 5.25 per cent last month. Markets expect a further rate rise later this month.

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The latest PMI suggests the trend in housebuilding seen in official data is likely to accelerate. In the three months to March, new housing starts in England were estimated to be 37,810, down 12 per cent from the same period in 2022 and 27 per cent below their peak in the second quarter of last year, according to government figures published in June.“High mortgage rates have taken the cost of buying a home out of reach for many, causing demand for new builds to slump,” said Giulia Bellicoso, economist at Capital Economics. Housebuilders also signalled prospective buyers were holding back because of concerns about the near-term economic outlook, according to the survey. PMI data for the eurozone also showed housebuilding contracting at the fastest pace since April 2020 when the market was largely shut because of Covid-19 restrictions. In contrast to housebuilding, commercial building activity in the UK continued to expand in August with the index reading 54.2 — largely unchanged from the previous month. Similarly, the civil engineering sector also registered growth although below July’s levels.“Corporates seem willing to push ahead with capital projects now that the economic uncertainty is lower than in the Covid and Brexit years, and are able to do so because their balance sheets are in pretty good shape,” said Gabriella Dickens, economist at Pantheon Macroeconomics. More

FRANKFURT/PARIS (Reuters) -European Central Bank policymakers warned investors who are overwhelmingly betting against an ECB interest rate hike next week that the decision was still up in the air and a rise in borrowing costs was among the options on the table.With economic activity deteriorating across the 20 countries that use the euro and inflation easing, investors are betting the ECB will end its streak of nine consecutive rate increases on Sept. 14, even if it keeps the door open to further moves.But speaking on Wednesday, the last day before the ECB’s self-imposed quiet period, the Dutch, French, German and Slovak central bank chiefs all said the Governing Council’s decision was still open. France’s Francois Villeroy de Galhau hinted that a fresh rate hike could still come at a later date and argued that the slowdown is not a recession and that the ECB needed to persevere in its fight with inflation. “Our options are open at this Council as at the following meetings,” he told reporters. “We are close, very close to the peak in our interest rates. We are however still far from the point where we could consider cutting them.”Slovakia’s Peter Kazimir, an outspoken policy hawk, was more explicit, arguing that another hike was still needed to tame inflation. He said the ECB could delay a rate rise to one of its autumn meetings or pull the trigger next week. “The second option seems preferable, reasonable, to me,” Kazimir said in an opinion piece. “It is to deliver another 25 basis points next week and take a breather thereafter.” Dutch central bank governor Klaas Knot, another staunch advocate of policy tightening in the past, said investors may be underestimating the chances of a rate hike next Thursday, and that the decision would be “a close call”. Markets now see a one in three chance of a hike next week, with a move in October or December viewed as more likely. “I continue to think that hitting our inflation target of 2% at the end of 2025 is the bare minimum we have to deliver,” Knot told Bloomberg. “I would clearly be uncomfortable with any development that would shift that deadline even further out. And I wouldn’t mind so much if it shifted forward a little bit.”Bundesbank chief Joachim Nagel, also a past advocate of rapid hikes, took a similarly measured view, saying next week’s decision would depend, among other factors, on the ECB’s new economic projections. Rate cuts were not imminent in any case, he added. “It would be wrong to bet on a rapid decrease in interest rates after the peak,” Nagel told German business daily Handelsblatt.Speaking to the Reuters Global Markets Forum last week, Austria’s central bank chief Robert Holzmann said the ECB may still do another “hike or two” while Portugal’s Mario Centeno said it needed to be very cautious about any further tightening. More

ANKARA (Reuters) – Turkey’s government raised its annual inflation forecast to 65% for this year and 33% next year, while also trimming economic growth forecasts to 4.4% this year and 4% next year, according to its medium-term programme published on Wednesday. Vice President Cevdet Yilmaz said at the presentation that “single-digit” inflation would be achieved in the medium term and that, as economic policies are adjusted, Ankara would not sacrifice jobs nor economic growth. More