Deutsche Bank projected global real GDP to contract by 5.9% in 2020, compared to its March 2020 forecast of a 3.2% contraction, due to a steeper-than-anticipated deterioration in economic activity so far in the second quarter of the year amid the coronavirus outbreak. It also expected global real GDP to shrink by 10% annually in the second quarter of 2020. It indicated that its baseline scenario assumes that efforts by countries across the world to mitigate the impact of the virus will allow for a gradual and moderate economic recovery in coming quarters, and that an effective cure or a vaccine are unlikely to be available before 18 months. Under these conditions, it forecast the global economy to grow by 5.3% in 2021.

However, it considered that the forecasts under the baseline scenario are subject to downside and upside risks. It anticipated that real GDP could contract by 8.7% in 2020 and may grow by 2% in 2021 under its worse-case or "protracted" scenario, whereby social distancing proves to be less effective in containing the pandemic and more disruptive to the global economy. In contrast, it expected real GDP to retreat by around 3% this year under its "optimistic" scenario, which assumes that social distancing will be significantly more effective in containing the virus and less disruptive to economic activity than under other scenarios. It added that developing an effective antiviral drug in the near term will lead to an even more positive economic outcome.

Further, it anticipated the impact of the virus on advanced economies to be greater than on emerging markets (EMs), and expected real GDP to contract by 12% in the Eurozone and by 7.1% in the United States this year. In contrast, it projected China's economic activity to retreat by only 1.1% in 2020, reflecting the country's ability to better manage the virus, as well as the ability of the Chinese economy to rebound more quickly. It also considered that some EMs that have limited healthcare resources to combat the virus, like Brazil, will be more inclined to accept a higher mortality rate in exchange for less disruption to their economies. It added that many cities in EMs, such as in Asia and Africa, are supported by more favorable demographics, as they are less urbanized and have younger populations.
Source: Deutsche Bank

Figures released by fDi Markets show that there were 15,558 greenfield foreign direct investment (FDI) projects in 2019 worldwide compared to 15,561 projects in 2018. The amount of greenfield FDI reached $795.7bn in 2019, constituting a decline of 15% from 2018. The Asia Pacific region attracted $256bn, and accounted for 32.2% of greenfield FDI in 2019. Europe followed with $214.1bn (27%), then the Middle East & Africa (ME&A) region with $115.2bn (14.5%), Latin America & the Caribbean with $108bn (13.6%), and North America with $102.4bn (13%). In parallel, Europe was the largest source of greenfield FDI with $325.5bn, or 41% of the total, followed by Asia Pacific with $228.5bn (28.7%), North America with $150.2bn (19%), ME&A with $71.6bn (9%), and Latin America & the Caribbean with $20bn (2.5%). On a sectoral basis, the coal, oil & gas sector attracted $123bn in greenfield FDI, or 15% of the total in 2019, followed by the renewable energy industry with $92.2bn (12%), and the real estate sector with $71.6bn (9%). fDi Markets indicated that the number of greenfield FDI projects decreased by 15% year-on-year in the first two months of 2020 and by 50% in March 2020 from the same month of 2019 due to the coronavirus pandemic. As such, it projected the number of greenfield FDI projects to drop by 40% in 2020. It said that sectors such as tourism, airlines, leisure and entertainment, luxury goods, and oil & gas have been hit the hardest due to a significant collapse in demand in these sectors. However, it noted that demand increased in sectors such as e-commerce, e-health, medical products, video conferencing and basic consumer goods and food & beverage products.
Source: fDi Markets, Byblos Research

Moody's Investors Service affirmed the long-term deposit ratings of National Commercial Bank (NCB), Al Rajhi Bank (Al Rajhi), Samba Financial Group (SAMBA), Banque Saudi Fransi (BSF), and Saudi British Bank (SABB) at 'A1'; the ratings of Riyad Bank and Arab National Bank (ANB) at 'A2'; those of the Saudi Investment Bank (SAIB) and Bank AlBilad at 'A3'; and the ratings of Bank Al-Jazira and Gulf International Bank (GIB KSA) at 'Baa1'. It also revised from 'stable' to 'negative' the outlook on the ratings of 10 banks, while it maintained the 'negative' outlook on the rating of BSF. The agency indicated that its affirmation reflects its view that the banks' financial performance continues to be resilient, due to their strong capital buffers, favorable funding profiles and ample liquidity buffers. Further, it pointed out that the outlook revision follows its recent similar action on the sovereign, and is driven by a combination of factors. First, it said that the 'negative' outlook captures the potential weakening capacity of the government to support banks in case of need. Second, it noted that the outlook reflects the deteriorating operating environment for Saudi banks, given the sharp drop in global oil prices, reduced government spending and the outbreak of the coronavirus. Third, it added that the outlook captures idiosyncratic challenges, or existing pressures on the standalone credit profiles of SABB, Bank AlBilad, SAIB and BSF, such as weakening asset quality.
Source: Moody's Investors Service