The reopening of China’s economy and a full recovery in the country's domestic demand may raise global output by around one per cent in 2023 and lead to a rally in oil prices, according to a report by Goldman Sachs.
Regional Asian economies and oil exporters are likely to be the biggest winners from China’s reopening, but it also should provide a healthy boost to gross domestic product levels in most economies, the global investment banking and securities firm said.
China’s reopening should "provide a boost to commodities demand and prices, particularly for oil”, Joseph Briggs and Devesh Kodnani, the authors of the report, said.
“A recovery to trend should boost Brent oil prices by roughly $15 per barrel. In a more aggressive reopening scenario in which international travel recovers more rapidly, prices could rise further, for a cumulative increase in oil prices of up to $21 per barrel, or more than 20 per cent of the current level.”
China, the world’s second-biggest economy, is forecast to expand 5.2 per cent this year after beating expectations with a 3 per cent acceleration in 2022, according to the International Monetary Fund. Growth rebounded to 8.4 per cent in 2021 following a deceleration after the Covid-19 pandemic in 2020.
India and China will account for half of global growth this year, compared with only a tenth for the US and euro area combined, according to the IMF, which raised its global economic growth estimate for this year by 0.2 percentage points to 2.9 per cent in its World Economic Outlook report.
China’s growth outlook faces "significant risks", stemming from the uncertain trajectory of the Covid-19 pandemic, how policies evolve in response to the Covid-19 situation and the responses of households and businesses, the World Bank said in a December report.
Additionally, "persistent stress" in the real estate sector could have wider macroeconomic and financial spillovers, while risks related to climate change are growing, the Washington-based lender said.
External risks to China's growth outlook include highly uncertain global growth prospects, greater-than-expected tightening in financial conditions and heightened geopolitical tensions, according to the World Bank report.
Goldman Sachs said that oil price increases caused by the reopening of China’s economy will add 0.1 per cent to 0.3 per cent to Canada and Latin America GDP levels, but lead to declines of 0.1 per cent to 0.6 per cent from the output in other economies.
“For most economies, higher oil prices will weigh on real incomes and growth, thereby offsetting the boost from the recovery in goods and services trade. However, net oil exporters such as Canada and some Latin American economies should benefit from higher prices and demand,” the New York-based company said.
Increased domestic demand in China — to the tune of a 5 per cent increase — should boost goods exports from other economies, although this growth boost should prove modest outside of Asia-Pacific economies, according to the report.
Reopening-led goods demand will provide a moderate boost of 0.3 per cent to 0.4 per cent to GDP in most Asia-Pacific economies and roughly half that in Latin America, but relatively small positive effects elsewhere, it added.
Meanwhile, a recovery in Chinese demand for foreign services — particularly for international travel — should also provide a modest boost to global growth, Goldman Sachs said.
A full normalisation of international travel will provide a sizeable GDP boost to Asian emerging markets and other regional economies but a more modest boost elsewhere, although there could be somewhat larger effects if there is significant pent-up demand for international travel from China, according to the report.
China’s reopening is also expected to boost global inflation.
Reopening-led oil price increases will contribute 0.5 to 0.6 percentage points to headline inflation in most emerging markets and roughly half that in the US, though effects could be roughly 40 per cent larger in the event of a faster reopening pace, Goldman Sachs estimated.
“The clear risk from reopening is that stronger growth could lead inflation to surprise to the upside later this year,” the report said.
“As a string of mostly downside inflation surprises have driven an easing in global financial conditions and enabled central banks to slow the pace of rate hikes in recent months, a larger inflation impulse from reopening may force central banks to hike rates further than markets currently expect to keep growth below potential and remain on track to tame inflation.”
After hitting 8.8 per cent in 2022, global inflation is expected to fall to 6.6 per cent in 2023 and 4.3 per cent in 2024, still above pre-pandemic levels of about 3.5 per cent, the IMF said last month. About 84 per cent of countries are expected to have lower headline inflation in 2023 than in 2022.
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Like a Fading Shadow
Antonio Muñoz Molina
Translated from the Spanish by Camilo A. Ramirez
Tuskar Rock Press (pp. 310)
match info
Southampton 2 (Ings 32' & pen 89') Tottenham Hotspur 5 (Son 45', 47', 64', & 73', Kane 82')
Man of the match Son Heung-min (Tottenham)
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Navdeep Suri, India's Ambassador to the UAE
There has been a longstanding need from the Indian community to have a religious premises where they can practise their beliefs. Currently there is a very, very small temple in Bur Dubai and the community has outgrown this. So this will be a major temple and open to all denominations and a place should reflect India’s diversity.
It fits so well into the UAE’s own commitment to tolerance and pluralism and coming in the year of tolerance gives it that extra dimension.
What we will see on April 20 is the foundation ceremony and we expect a pretty broad cross section of the Indian community to be present, both from the UAE and abroad. The Hindu group that is building the temple will have their holiest leader attending – and we expect very senior representation from the leadership of the UAE.
When the designs were taken to the leadership, there were two clear options. There was a New Jersey model with a rectangular structure with the temple recessed inside so it was not too visible from the outside and another was the Neasden temple in London with the spires in its classical shape. And they said: look we said we wanted a temple so it should look like a temple. So this should be a classical style temple in all its glory.
It is beautifully located - 30 minutes outside of Abu Dhabi and barely 45 minutes to Dubai so it serves the needs of both communities.
This is going to be the big temple where I expect people to come from across the country at major festivals and occasions.
It is hugely important – it will take a couple of years to complete given the scale. It is going to be remarkable and will contribute something not just to the landscape in terms of visual architecture but also to the ethos. Here will be a real representation of UAE’s pluralism.
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
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Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
US households add $601bn of debt in 2019
American households borrowed another $601 billion (Dh2.2bn) in 2019, the largest yearly gain since 2007, just before the global financial crisis, according to February data from the New York Federal Reserve Bank.
Fuelled by rising mortgage debt as homebuyers continued to take advantage of low interest rates, the increase last year brought total household debt to a record high, surpassing the previous peak reached in 2008 just before the market crash, according to the report.
Following the 22nd straight quarter of growth, American household debt swelled to $14.15 trillion by the end of 2019, the New York Fed said in its quarterly report.
In the final three months of the year, new home loans jumped to their highest volume since the fourth quarter of 2005, while credit cards and auto loans also added to the increase.
The bad debt load is taking its toll on some households, and the New York Fed warned that more and more credit card borrowers — particularly young people — were falling behind on their payments.
"Younger borrowers, who are disproportionately likely to have credit cards and student loans as their primary form of debt, struggle more than others with on-time repayment," New York Fed researchers said.
FIXTURES
Fixtures for Round 15 (all times UAE)
Friday
Inter Milan v AS Roma (11.45pm)
Saturday
Atalanta v Verona (6pm)
Udinese v Napoli (9pm)
Lazio v Juventus (11.45pm)
Sunday
Lecce v Genoa (3.30pm)
Sassuolo v Cagliari (6pm)
SPAL v Brescia (6pm)
Torino v Fiorentina (6pm)
Sampdoria v Parma (9pm)
Bologna v AC Milan (11.45pm)
Scoreline
Syria 1-1 Australia
Syria Al Somah 85'
Australia Kruse 40'
if you go
Getting there
Etihad (Etihad.com), Emirates (emirates.com) and Air France (www.airfrance.com) fly to Paris’ Charles de Gaulle Airport, from Abu Dhabi and Dubai respectively. Return flights cost from around Dh3,785. It takes about 40 minutes to get from Paris to Compiègne by train, with return tickets costing €19. The Glade of the Armistice is 6.6km east of the railway station.
Staying there
On a handsome, tree-lined street near the Chateau’s park, La Parenthèse du Rond Royal (laparenthesedurondroyal.com) offers spacious b&b accommodation with thoughtful design touches. Lots of natural woods, old fashioned travelling trunks as decoration and multi-nozzle showers are part of the look, while there are free bikes for those who want to cycle to the glade. Prices start at €120 a night.
More information: musee-armistice-14-18.fr ; compiegne-tourisme.fr; uk.france.fr
SPECS
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NBA FINALS SO FAR
(Toronto lead 3-2 in best-of-seven series)
Game 1 Raptors 118 Warriors 109
Game 2 Raptors 104 Warriors 109
Game 3 Warriors 109 Raptors 123
Game 4 Warriors 92 Raptors 105
Game 5 Raptors 105 Warriors 106
Game 6 Thursday, at Oakland
Game 7 Sunday, at Toronto (if needed)
