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Global economy will stick to 6% growth this year, says IMF in new outlook

Banking|: Dubai: The International Monetary Fund (IMF) retained its global growth forecast at 6 per cent for 2021 in its latest Global Economic Outlook update. The Washington-based organisation said prospects have diverged further across countries since its April’s forecasts. Vaccine access is emerging as the principal fault-line along which global recovery splits into two blocs: those that can look forward to further normalization of activity later this year (almost all advanced economies) and those that will still face resurgent infections and rising COVID-19 death tolls. Universal recovery not assured The institution has warned that recovery is not assured even in countries where infections are currently very low so long as the virus circulates elsewhere. “While more widespread vaccine access could improve the outlook, risks on balance are tilted to the downside,” said Gita Gopinath, Economic Counsellor and Director of the Research Department at IMF. “The emergence of highly infectious virus variants could derail the recovery and wipe out $4.5 trillion cumulatively from global GDP by 2025.” While the latest 2021 global forecast is unchanged from the April 2021 estimates, there have been some offsetting revisions. Prospects for emerging market and developing economies have been marked down for 2021, especially for Emerging Asia. By contrast, the forecast for advanced economies is revised upwards. These reflect pandemic developments and changes in policy support. The 0.5 percentage point upgrade for 2022 derives largely from the forecast upgrade for advanced economies, particularly the US, reflecting the anticipated legislation of additional fiscal support in the second-half of 2021 and improved health metrics more broadly across the group. Regional prospects The Middle East and North Africa region growth is forecast at 4.1 per cent for 2021 and 3.7 per cent for 2022, respectively. Saudi Arabia, the largest economy in the region, is projected to grow 2.4 per cent in 2021 and 4.8 per cent in 2022. The April REO had forecast the UAE and Saudi Arabia to grow 3.1 per cent and 2.9 per cent in 2021, respectively. Revised projections for the UAE’s growth outlook was not available in the IMF report. Higher oil prices and early vaccine rollouts support the outlook for many GCC economies. The recent increase in oil prices will boost confidence, supporting non-oil GDP, which is projected to expand by 3.3 per cent in 2021. With improved oil prices, fiscal conditions of GCC countries are projected to improve this year and the next. The overall fiscal deficits of MENA region are projected to shrink from 9.7 per cent in 2020 to 5.7 per cent in 2021. In Saudi Arabia, the fiscal deficits are projected to decline from 11.3 per cent of GDP last year to 3.5 per cent this year. Inflation outlook The IMF said recent price pressures for the most part reflect unusual pandemic-related developments and transitory supply-demand mismatches. Inflation is expected to return to its pre-pandemic range in most countries in 2022 once these disturbances work their way through prices - and yet uncertainty remains high. Commodity prices are expected to increase at a significantly faster pace than assumed in the April 2021 WEO. Amid the strengthening global recovery, oil prices could rise close to 60 per cent above their low base in 2020. Non-oil commodity prices are set to rise close to 30 per cent above 2020 levels, reflecting particularly strong increases in the price of metals and food. Elevated inflation is also expected in some emerging market and developing economies, related in part to high food prices. Central banks should generally look through transitory inflation pressures and avoid tightening until there is more clarity on underlying price dynamics, the IMF said. Clear communication from central banks on the outlook for monetary policy will be key to shaping inflation expectations and safeguarding against premature tightening of financial conditions. “Central banks should avoid prematurely tightening policies when faced with transitory inflation pressures, but should be prepared to move quickly if inflation expectations show signs of de-anchoring,” said Gopinath. Policy easing must continue The IMF said fiscal policy should continue to prioritise health spending, including on vaccine production and distribution infrastructure, personnel, and public health campaigns to boost take-up. Fiscal policy space to accomplish this varies across countries. On monetary policy, the IMF called on central banks to generally look through transitory inflation pressures and avoid tightening until there is more clarity on underlying price dynamics. There is a risk that transitory pressures could become persistent and central banks may have to take pre-emptive action. Financial sector policies, the IMF said, have to execute a difficult balancing act to avoid a sudden increase in bankruptcies by unwinding support too soon. But these should refrain from extending the life of low productivity “zombie” firms if support is maintained for too long. The extraordinary measures from 2020 (including credit guarantees, debt moratoriums, relaxed classification and provisioning guidelines on delinquent loans) should increasingly become more targeted.

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UAE's RAKBank has its best quarter since COVID-19 struck, with net profit of Dh192m for Q2-21

Banking|: Dubai: In line with other leading UAE banks, RAKBank delivered a strong run in the second quarter, with net profit at Dh192.1 million and a 25.4 per cent increase on last year. For the first six months, the Ras Al Khaimah headquartered bank had total income at Dh1.6 billion. “This is a crucial turning point for us as we see growth in our loan book and customer deposit, and that is a very positive sign,” said Peter England, CEO. “Additionally, our provisions for this quarter are the lowest they have been for many years as we see the re-balancing of our portfolio, which we have undertaken over the years, bear very positive results. “It also demonstrates the significant rebound in the UAE economy and a strong return of consumer confidence that we have witnessed during the first half of this year.” As of June 30, total assets were Dh54.3 billion, up by 2.9 per cent year-to-date and an increase of 2 per cent compared to the first quarter of 2021. The numbers show the bank putting some distance between the disruptions of 2020, when the outbreak of the pandemic injected multiple uncertainties for the sector and the wider economy. “We have seen total income commence growth again after a number of quarters of decline since the beginning of the pandemic,” the CEO added. A decline Total income for the first-half of 2021 dropped by 14.2 per cent to Dh1.632 billion. “This is mainly due to a decrease in net interest income and net income from Islamic products by Dh287.9 million, that was partially offset by an increase of Dh16.7 million in non-interest income,” the bank said in a statement. “Non-interest income increased 3.1 per cent to Dh557.9 million because of the year-on-year increase of Dh20.0 million in net fees and commission income and Dh28million in investment income.” But the forex and derivative income declined Dh23.1 million as well as a Dh10 million drop in gross insurance underwriting profit.

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Those black-and-white QR codes are becoming part of consumer experience – but at a cost

Analysis|Technology|: New York: When people enter Teeth in San Francisco's Mission neighborhood, the bouncer gives them options. They can order food and drinks at the bar, he says, or they can order via a QR code. Each table at Teeth has a card emblazoned with the code, a pixelated black-and-white square. Customers simply scan it with their phone camera to open a website for the online menu. Then they can input their credit card information to pay, all without touching a paper menu or interacting with a server. A scene like this was a rarity 18 months ago, but not anymore. "In 13 years, I've never seen a sea change like this that brought the majority of customers into a new behavior so quickly," said Ben Bleiman, Teeth's owner. But retailers now have access to user patterns, which some argue, gives them ample power over consumer data. Image Credit: Pixabay QR codes - essentially a kind of bar code that allows transactions to be touchless - have emerged as a permanent tech fixture from the coronavirus pandemic. Restaurants have adopted them en masse, retailers including CVS and Foot Locker have added them to checkout registers, and marketers have splashed them all over retail packaging, direct mail, billboards and TV advertisements. But the spread of the codes has also let businesses integrate more tools for tracking, targeting and analytics, raising red flags for privacy experts. That's because QR codes can store digital information such as when, where and how often a scan occurs. They can also open an app or a website that then tracks people's personal information or requires them to input it. Building up info As a result, QR codes have allowed some restaurants to build a database of their customers' order histories and contact information. At retail chains, people may soon be confronted by personalized offers and incentives marketed within QR code payment systems. "People don't understand that when you use a QR code, it inserts the entire apparatus of online tracking between you and your meal," said Jay Stanley, a senior policy analyst at the American Civil Liberties Union. "Suddenly your offline activity of sitting down for a meal has become part of the online advertising empire." But sheer utility should convince consumers that they should not be too finicky about retailers getting to know them better. Image Credit: Shutterstock QR codes may be new to many American shoppers, but they have been popular internationally for years. Invented in 1994 to streamline car manufacturing at a Japanese company, QR codes became widely used in China in recent years after being integrated into the AliPay and WeChat Pay digital payment apps. In the US, the technology was hampered by clumsy marketing, a lack of consumer understanding and the hassle of needing a special app to scan the codes, said Scott Stratten, who wrote the 2013 business book ‘QR Codes Kill Kittens’ with his wife, Alison Stratten. First the iPhone and… That has changed for two reasons, Scott Stratten said. In 2017, he said, Apple made it possible for the cameras in iPhones to recognize QR codes, spreading the technology more widely. Then came the "pandemic, and it's amazing what a pandemic can make us do," he said. Half of all full-service restaurant operators in the US have added QR code menus since the start of the pandemic, according to the National Restaurant Association. In May 2020, PayPal introduced QR code payments and has since added them at CVS, Nike, Foot Locker and around 1 million small businesses. Square, another digital payments firm, rolled out a QR code ordering system for restaurants and retailers in September. A habit they want to keep Businesses don't want to give up the benefits that QR codes have brought to their bottom-line, said Sharat Potharaju, CEO of the digital marketing company MobStac. Deals and special offers can be bundled with QR code systems and are easy to get in front of people when they look at their phones, he said. Businesses also can gather data on consumer spending patterns through QR codes. "With traditional media, like a billboard or TV, you can estimate how many people may have seen it, but you don't know how people actually interacted with it," said Sarah Cucchiara, a senior vice-president at BrandMuscle, a marketing firm that introduced a QR code menu product last year. "With QR codes, we can get reporting on those scans." Digital menus also make it easier to persuade people to spend more with offers to add fries or substitute more expensive spirits in a cocktail. Image Credit: Shutterstock Cheqout and Mr. Yum, two startups that sell technology for creating QR code menus at restaurants, also said the codes had brought advantages to businesses. Restaurants that use QR code menus can save 30% to 50% on labor costs by reducing or eliminating the need for servers to take orders and collect payments, said Tom Sharon, a co-founder of Cheqout. Digital menus also make it easier to persuade people to spend more with offers to add fries or substitute more expensive spirits in a cocktail, with photographs of menu items to make them more appealing, said Kim Teo, a Mr. Yum co-founder. Orders placed through the QR code menu also let Mr. Yum inform restaurants what items are selling, so they can add a menu section with the most popular items or highlight dishes they want to sell. These increased digital abilities are what worry privacy experts. Mr. Yum, for instance, uses cookies in the digital menu to track a customer's purchase history and gives restaurants access to that information, tied to the customer's phone number and credit cards. It is piloting software in Australia so restaurants can offer people a "recommended to you" section based on their previous orders, Teo said. Just like Google QR codes "are an important first step toward making your experience in physical space outside of your home feel just like being tracked by Google on your screen," said Lucy Bernholz, director of Stanford University's Digital Civil Society Lab. Teo said that each restaurant's customer data was available only to that establishment and that Mr. Yum did not use the information to reach out to customers. It also does not sell the data to any third-party brokers, she said. Cheqout collects only customers' names, phone numbers and protected payment information, which it does not sell to third-parties, Sharon said. Regardless of customers' feelings, Bleiman said Cheqout's data showed that about half of Teeth's orders - and as much as 65 per cent during televised sports games - were coming through the QR code system. "They may not like it," he said in a text message. "But they're doing it!"

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Middle East construction trade show Big 5 makes in-person return to Dubai

Business|: Dubai: The region’s most prominent construction industry event, the Big 5, is all set to return to the Dubai World Trade Centre (DWTC) from the September 12 to 15. It will be the only live in-person event to connect the global construction industry this year and will play a crucial role in driving economic recovery in the post-COVID-19 era. The event has so far confirmed more than 1,000 exhibitors from 45 countries and with 20 national pavilions. There will also be online networking and meeting facilitations as add-ons, which will help organisations kick-start their businesses irrespective of their location. In a recent report released by MEED Projects, there were a $163 billion worth of contracts awarded in 2020 in the Middle East and Africa despite COVID-19. And $1.9 billion worth of projects are currently in execution stages in the region. “With $5.06 trillion worth of projects planned across all sectors in the Middle East and Africa construction market, it is more important than ever to offer a safe environment for the regional and international community to come together where they can boost business activities and discuss vital lessons learnt all in one place,” said Josine Heijmans, Vice-President at dmg events, the event organizer. The Big 5 will welcome exhibitors across nine specialised events this year. High-level events this year include the Global Construction Leaders’ Summit, the Future of Facades Summit, and the FutureTech Construction Summit, all designed to shed light on crucial developments in the construction sector. The popular free and CPD-certified talks series will continue at the event, with 70 sessions set to cover vital industry topics.

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Dubai Free Zones all set to speed up startup accelerator initiatives

Markets|: Dubai: The Dubai Free Zones Council (DFZ Council) aims to put its collective weight behind fast-tracking startup development. The ‘business accelerator initiative’ will coordinate meetings with relevant entities, companies and investors, to evaluate challenges and propose solutions that can support a diversified economy. The ‘promising startups platform initiative’ aims to attract newly formed business to Dubai, especially those developing sustainable economy concepts. Sheikh Ahmed bin Saeed Al Maktoum, Chairman of Dubai Free Zones Council, lauded the role of Dubai’s free zones in creating a new trade corridor with global markets and attracting foreign direct investments during uncertain times. DFZ registered Dh135 billion in foreign trade in Q1-2021, which is around 38 per cent of Dubai’s total foreign trade. Positive list The UAE Cabinet recently allowed 100 per cent ownership for foreign owned businesses across sector, and that too will accelerate the turnaround for the economy. “The decision coincides with Dubai’s preparations to host Expo 2020, as it will have a strong positive impact on attracting foreign direct investment,” said Sheikh Ahmed. “Our economy presents a real example in boosting the global business community’s confidence to invest due to its flexible and secure environment, the advanced and world-class infrastructure, and high quality of life that allows global talents and investors to consider it home.” Unified records During the meeting, DFZ council members also reviewed the development of a unified record to integrate open data in offering government services. They also reviewed an initiative to link free zone employees with the unified registry of Dubai government employees, which was recently created to be the sole official source of such information.