Global Economy to Shrink 5.2%—World Bank
By Adedapo Adesanya
The World Bank in a new projection has said that the global economy will shrink by 5.2 percent this year as a result of the swift and massive shock of the COVID-19 pandemic.
According to the Bretton Wood Institution, the contraction would represent the deepest recession since the World War II, with the largest fraction of economies experiencing declines in per capita output since 1870.
The projection was contained in the bank’s June 2020 Global Economic Prospects, which also said that the swift and massive shock of the coronavirus pandemic and shutdown measures to contain it have plunged the global economy into a severe contraction.
The bank further pointed out that economic activities in advanced economies are anticipated to shrink 7 percent in 2020 as domestic demand and supply, trade, and finance have been severely disrupted.
As for emerging market and developing economies (EMDEs), they are expected to shrink by 2.5 percent this year, their first contraction as a group in at least 60 years.
Per capita incomes are expected to decline by 3.6 percent, which will see millions of people plunge into extreme poverty this year.
The bank further said the blow is hitting hardest on countries where the pandemic has been most severe and where there is heavy reliance on global trade, tourism, commodity exports, and external financing.
The bank noted – “While the magnitude of disruption will vary from region to region, all EMDEs have vulnerabilities that are magnified by external shocks.
“Moreover, interruptions in schooling and primary healthcare access are likely to have lasting impacts on human capital development.”
According to the bank, every region is subject to substantial growth downgrades. East Asia and the Pacific will grow by a scant 0.5 percent. South Asia will contract by 2.7 percent, Sub-Saharan Africa by 2.8 percent, Middle East and North Africa by 4.2 percent, Europe and Central Asia by 4.7 percent, and Latin America by 7.2 percent.
The bank noted that policies to rebuild both in the short and long-term entail strengthening health services and putting in place targeted stimulus measures to help reignite growth, including support for the private sector and getting money directly to people.
Making a recommendation for recovery, the World Bank noted that countries should focus on sustaining economic activity with support for households, firms and essential services.
It added that global coordination and cooperation, including international support will provide the greatest chance of achieving public health goals and enabling a robust global recovery.
Oil Market Grows on Positive Inflation Signal, Supply Factor
By Adedapo Adesanya
The oil market improved by more than 1 per cent on Friday to record its second-straight week of gains, as supplies tightened in some parts of the world and US inflation data indicated price rises were slowing.
Brent futures grew by $1.29 or 1.6 per cent to $79.89 a barrel, as the US West Texas Intermediate crude (WTI) increased by $1.30 or 1.8 per cent to $75.67 a barrel.
Data on Friday showed the US Personal Consumption Expenditure (PCE) index, the Federal Reserve’s preferred inflation gauge, rose 0.3 per cent in February on a monthly basis compared with a 0.6 per cent rise in January.
On a 12-month basis, core PCE increased 4.6 per cent, a slight deceleration from the level in January. Including food and energy, headline PCE rose 0.3 per cent monthly and 5 per cent annually, compared with 0.6 per cent and 5.3 per cent in January.
The softer-than-expected data came with monthly energy prices in the world’s largest economy decreasing by 0.4 per cent while food prices went up by 0.2 per cent, with goods prices climbing 0.2 per cent and services increasing 0.3 per cent.
In other data from the report, personal income rose 0.3 per cent, slightly above the 0.2 per cent estimate. Consumer spending climbed 0.2 per cent, compared with the 0.3 per cent estimate.
This points to the fact that inflation and supported oil prices could point to less aggressive interest rate hikes from the US central bank, lifting investor demand for risk assets like oil.
Oil prices were also buoyed after producers shut in or reduced output at several oilfields in the semi-autonomous Kurdistan region of northern Iraq following a halt to the northern export pipeline.
Since Saturday, Iraq has been forced to halt around 450,000 barrels per day of crude exports, or half a per cent of global oil supply, from the Kurdistan region (KRI) through a pipeline that runs from its northern Kirkuk oil fields to the Turkish port of Ceyhan.
Turkey stopped pumping Iraqi crude from the pipeline after Iraq won an arbitration case in which it said Turkey had violated a joint agreement by allowing the Kurdistan Regional Government (KRG) to export oil to Ceyhan without Iraq’s consent.
The Organisation of the Petroleum Exporting Countries and allies (OPEC+) led by Russia are likely to stick to their existing output deal at a meeting on Monday.
OPEC+ Likely to Keep Output Cut Levels as Group Meets April 3
By Adedapo Adesanya
The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) will likely stick to its existing deal to cut oil output at a meeting on Monday, April 3.
According to Reuters, this was said disclosed by five delegates from the producer group after oil prices recovered following a drop to 15-month lows due to banking fears and demand worries.
Brent crude has recovered towards $80 a barrel after falling to near $70 on March 20 as fears ease about a global banking crisis and as a halt in exports from Iraq’s Kurdistan region curbs supplies.
OPEC+ is due to hold a virtual meeting of its ministerial monitoring panel, which includes Russia and Saudi Arabia, on Monday.
The consensus was that Kurdistan curbs and recent price drops were not sufficiently important to affect the overall OPEC+ policy path for 2023.
Kurdistan’s crude oil exports – around 400,000 barrels per day shipped through an Iraqi-Turkey pipeline to Ceyhan and then on tankers to the international markets – were halted late last week by the federal government of Iraq.
Last week, the International Chamber of Commerce ruled in favour of Iraq against Turkey in a dispute over crude flows from Kurdistan. Iraq had argued that Turkey shouldn’t allow Kurdish oil exports via the Iraq-Turkey pipeline and Ceyhan without approval from the federal government of Iraq.
Talks between officials from Kurdistan and from the Iraq federal government have failed in recent days, but they are set to continue next week.
Three other OPEC+ delegates also told Reuters that any policy changes were unlikely on Monday. After those talks, the next full OPEC+ meeting is not until June.
Last November, OPEC+ reduced its output target by 2 million barrels per day – the largest cut since the early days of the COVID-19 pandemic in 2020. The same reduction applies for the whole of 2023.
Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, has said OPEC+ will stick to the reduced target until the end of the year.
Oando to Quit Nigerian, Johannesburg Stock Exchanges
By Dipo Olowookere
The board of Oando Plc has informed the investing community of its intention to leave the Nigerian and Johannesburg stock exchanges in the coming months.
The reason for exiting the stock market, according to the energy firm, is to become a private company and to achieve this, its core investor, Ocean and Oil Development Partners Limited (OODP), has offered to buy all the shares held by minority shareholders in Oando.
OODP is offering to pay N7.07 in cash or its equivalent in South African Rand (ZAR) for each of the stock, which it said represents a 58 per cent premium to the last traded share price of Oando on Tuesday, March 28, 2023, being the day prior to the date it submitted the scheme application to the Securities and Exchange Commission (SEC).
Oando trades its shares on the floors of the Nigerian Exchange (NGX) Limited and the Johannesburg Stock Exchange (JSE).
This news comes hours after the company announced that it had bounced back into profitability after years of dishing out losses to the frustration of shareholders.
In its unaudited financial results for 2021, Oando reported a profit after tax of N34.7 billion, in contrast to the loss after tax of N140.7 billion of the preceding year.
Before now, Oando has had it rough with regulators in Nigeria, leading to its suspension from the market and a court tussle over allegations that it tampered with its financial statements to deceive investors.
In the notice released this week, Oando said after the acquisition of “the shares of all minority shareholders in Oando,” it would “subsequently be delisted from NGX and JSE and re-registered as a private company.”
At the moment, the energy firm said it has “applied for the SEC’s No Objection to the scheme, noting that the deal is “subject to the approval of the shareholders of Oando at the Court-Ordered Meeting of the company, as well as the sanction of the Federal High Court.”
However, it disclosed that, “The terms and conditions of the transaction will be provided in the scheme document, which will be dispatched to all shareholders following the receipt of an order from the Federal High Court to convene a Court-Ordered Meeting,” promising to update the market “upon receipt of requisite approvals from shareholders and regulators.”
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