Russian gas supplies to European countries via the Turkish Stream pipeline increased by 40.5% in the first 7 months of 2024. (Source: The Moscow Times)

World economy

Huge investment capital flows into "black gold mine"

According to data recently released by the Arab Investment and Export Credit Guarantee Corp. (Dhaman), Arab countries have attracted $406 billion in investment from 356 foreign and regional companies in the oil and gas sector over the past 22 years.

Dhaman data shows that during the period from January 2003 to May 2024, the Arab region witnessed the implementation of 610 oil and gas projects. The US emerged as the leading investor with 85 projects, accounting for about 14% of the total oil and gas projects in the Arab region. In terms of investment capital, Russia led the period with $61.5 billion, accounting for about 15.2% of the total investment capital in the Arab oil and gas industry.

The Middle East remains the world’s largest holder of proven oil reserves. According to global statistics platform Statista, the region accounted for about 55.5% of the world’s total proven oil reserves as of 2023, but its share has declined from nearly 63% in 1960 to below 56% in 2020.

Forecasts show that the Arab region’s proven oil reserves will continue to decline. By the end of 2024, the region’s proven oil reserves will have fallen to 704 billion barrels, or about 41.3% of the world’s total proven crude oil reserves. This figure is forecast to decline by a further 7% to 654.5 billion barrels by 2030.

In addition, the Middle East’s proven natural gas reserves are estimated to be around 58 trillion cubic meters, accounting for 26.8% of the global total. This figure is expected to decline by 7.5% to 53.53 trillion cubic meters by 2030.

Despite planned cuts, Arab crude oil, compressed gas and other liquids production is forecast to increase. In particular, Arab crude oil production is expected to increase by 6.4% to 28.7 million barrels per day in 2024, before rising to around 33 million barrels per day in 2030.

America

* According to data released by the Institute for Supply Management (ISM) on August 5 , the US service sector recovered in July 2024 thanks to a recovery in new orders and the first increase in jobs in six months, helping to ease concerns about the possibility of the economy falling into recession after the unemployment rate rose sharply last month.

The services sector purchasing managers' index (PMI) rose to 51.4 in July 2024, from 48.8 in June, the lowest level since May 2020. A PMI above 50 indicates growth in the services sector, which accounts for more than 66% of the US economy.

Services inflation picked up slightly but is unlikely to be enough to change the picture of easing price pressures. The services input price index rose to 57.0 in July from 56.3 in June.

* The US Commerce Department will propose banning Chinese-linked software in autonomous and connected cars in the coming weeks.

Accordingly, the US government plans to issue a regulation banning Chinese software in US vehicles with level 3 automation or higher and prohibiting testing of self-driving cars made by Chinese companies on US roads. The White House also plans to ban vehicles using advanced wireless connectivity technology developed by Beijing from US roads.

China

* Customs data released on August 7 showed that China's exports grew 7% year-on-year in July 2024, down from 8.6% in June and below the forecast of 9.7% growth. The data added to concerns about the outlook for the manufacturing sector.

Analysts say factories in China are likely to face major pressure in the coming months due to tariffs from other countries and falling demand.

* According to statistics from the National Bureau of Statistics of China, in the first half of 2024, retail sales of beverage products reached 156.4 billion yuan (about 21.87 billion US dollars), up 5.6% year-on-year, 3.7% higher than the growth rate of total retail sales of social consumer goods.

40 years ago, China had only one type of beverage, and soda was synonymous with soft drinks. After more than 40 years, the beverage categories have grown to 11 major categories and 65 minor categories.

Europe

* Tariffs on electric vehicles imported from China into the European Union (EU) could come into effect in November following a vote by member states at the end of October this year.

EU Trade Commissioner Valdis Dombrovskis said EU member states understand the need to protect the domestic automotive industry because of the trade risks. He pointed out that China's market share of battery-powered electric vehicles is growing rapidly in Europe. As of June 2024, Chinese electric car brands accounted for 11% of the European electric car market.

* Statistics released by the German statistical office (Destatis) on August 6 showed that, while the main economic figures were not positive, industrial orders in June rose for the first time by 3.9% compared to the previous month. Analysts had previously predicted a much lower increase of 0.5%. However, overall in the second quarter, orders fell by 1.4% compared to the previous quarter.

“Unfortunately, there is no reason to say that the increase in orders in June indicates a stabilizing situation,” said Jupp Zenzen, an economist at the German Chambers of Commerce and Industry. He called the first half of 2024 “disappointing” overall.

* The Ministry of Agriculture of the Russian Federation has just summarized the domestic agricultural situation after 10 years of implementing the ban on agricultural imports from countries that imposed sanctions related to the annexation of Crimea. These countries are Norway, Canada, Australia, the US, the EU, Albania, Montenegro, Iceland, Liechtenstein, Ukraine and the UK.

Accordingly, in the 10 years from 2014-2024, Russian agriculture grew by 33.2%, with the food sector alone growing by 42.9%. Currently, the country exports agricultural products to 160 countries and leads the world in exporting wheat, beans, barley, linseed oil, and frozen fish.

* Russia's liquefied natural gas (LNG) exports to France are set to double in the first half of 2024, according to new analysis of trade data, as Europe tries to pull out of energy purchases from the country.

Europe has restricted oil imports from Russia, but natural gas is still allowed. And while companies in France import the most, analysis shows that EU member states imported 7% more Russian LNG in the first half of this year than in the same period last year.

* Vedomosti newspaper cited data from the European Gas Transmission System Operators Network as saying that in the period from January to July 2024, Russian gas supplies to European countries via the Turkish Stream pipeline increased by 40.5% compared to the same period in 2023 and reached 9.26 billion m3.

In July 2024, gas exports from Russia to EU member states via this pipeline increased by 29% compared to June 2024. Compared to the same period last year, the increase was 9%.

Japan and Korea

* Sales at Japan's specialty stores in fiscal 2023 hit a record high of 27.24 trillion yen ($188 billion), up 5.2% from the previous year.

Visitors to Japan bought expensive items and souvenirs, boosting industries such as jewelry, which grew 15.7% on the year; pharmaceuticals, which rose 8.1%; and watches and glasses, which rose 7.2%. Nikkei used the survey results to compile sales data for 313 specialty store companies with comparable data from fiscal 2022 and fiscal 2023.

* Data released by the Ministry of Health, Labor, Welfare and Wages on August 6 showed that Japan's real wages in June 2024 increased 1.2% compared to the same period last year, marking the first increase in 26 months.

Average total cash earnings per worker in June, or nominal wages, rose 4.5 percent to 498,884 yen ($3,453.67), the 30th straight monthly increase. Meanwhile, consumer inflation rose 3.3 percent.

* Korea's food exports in the January-July 2024 period increased by 9.2% compared to the same period in 2023.

According to the Ministry of Agriculture, Food and Rural Affairs of South Korea, the country's total food exports from January to July 2024 reached $5.67 billion, up significantly from $5.18 billion in the same period last year. Instant noodle exports recorded a breakthrough growth of 34% over the same period last year, reaching $699 million. In addition, snack products also had positive growth of 14.7%, reaching $424 million.

* The biggest K-pop stars like global phenomenon BTS are shaping consumer spending and influencing stock markets.

BTS’s economic impact is huge. In 2019, the Hyundai Research Institute estimated an average of 5.56 trillion won (about $4 billion at current exchange rates) per year. This includes not only concert tickets and merchandise sales, but also increased exports of cosmetics and apparel and increased foreign visitors to Korea.

For example, sales of the ice cream-flavored soft drink Milkis, which BTS members drink, have surged both domestically and internationally, reaching a record high in 2023.

Hybe, South Korea's largest entertainment company and home to BTS, saw its stock price surge after listing in October 2020, peaking at 2.5 times its offering price.

ASEAN and emerging economies

* ASEAN Economic Community (AEC) Deputy Secretary-General Satvinder Singh said that ASEAN is on track to become the world’s fourth largest economy by 2030 from the current fifth position, with an improved and critical macroeconomic environment. Its gross domestic product (GDP) has jumped 51% to US$3.8 trillion by 2023 from US$2.5 trillion in 2015.

Mr. Singh said that the above assessment is further reinforced by the increase in regional trade to 3.5 trillion USD by 2023 from 2.3 trillion USD in 2015, helping to significantly increase per capita income.

* Indonesian Minister of Energy and Mineral Resources Arifin Tasrif said on August 2 that Indonesia is cooperating with China to increase oil production through technological cooperation between China's Sinopec and Indonesia's Pertamina EP.

According to Mr. Tasrif, Pertamina EP is currently exploring and exploiting five oil and gas fields, namely Rantau, Tanjung, Pamusian, Jirak and Zulu.

Mr. Tasrif emphasized that Chinese technology has the ability to increase recovery capacity by over 50%. Therefore, the goal of increasing mining output in the coming time is feasible.

* Malaysia's Second Finance Minister Amir Hamzah Azizan said the country's economy is on track despite facing the risk of a recession in the United States.

Speaking to the press on August 6, Minister Amir said that the economy is really the most important and that is why Malaysia considers the GDP factor and currently the Malaysian economy is strong.

Mr. Amir added that the Department of Statistics Malaysia (DoSM) forecast that Malaysia's economy will grow by 5% in the first half of 2024, the highest level compared to the Ministry of Finance's expectation of 4-5%.