Saudi Arabia - Monthly Business Insight, May 2016

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1. May 2016 Issue 5 . Vol. 2 FINANCE OIL AND GAS CURRENCY MANUFACTURING COMMODITY Once the backbone of the kingdom’s economy, crude’s role in fiscal development will gradually be negligible. The Middle East economic giant flexes its financial muscles, as it seeks to nurture a more promising business environment. Pressure starts to ease on crude oil, with hopes of it crossing the USD50-per-barrel mark after more than a year of decline. The Federal Reserve’s ambiguity about imposing further rate hikes has contributed to the greenback losing its steam. Multi-billion riyals of credit have been showered on the sector, as the market realised its importance in building the non-oil economy. A weakening dollar lifted prices of gold and industrial commodities, but experts advise investors to tread with caution. Read More... Read More... Read More... Read More... Read More... Read More... In This Edition ... ECONOMIC TRENDS Vision 2030 outlines the kingdom’s strategy in strengthening its fiscal health in a new era of lower crude prices. Saudi Arabia’s goal to become the 15th largest economy in the world is a bold ambition, but it remains determined to raise its economic profile, as it sets a challenging, yet rewarding, path to progress. The kingdom will have to leapfrog economies such as South Korea, Indonesia, Turkey and The Netherlands to secure its global position, but it is within reach. Saudi Arabia’s major advantage over most of its peers is that it has the natural resources, business infrastructure and capital to unleash growth. Combined, these components can play a meaningful role in doubling the country’s GDP over the next 15 years. The kingdom boasts well-run public sector entities, with strong managerial skills, anchored by well-established and capitalised banks and financial institutions. It already has the Middle East’s largest capital market, which can help fuel foreign and private sector investment in the country. Clearly, it will require the entire Saudi infrastructure to be fine-tuned and geared up to rise to the challenge. Apart from building out the physical infrastructure, it will also require economic reforms and streamlining of various government entities to ensure that all agencies are heading in the same direction. It is an exciting prospect. Shedding its dependence from the ebbs and flows of crude oil prices, the Saudi economy is moving in a new direction that promises even more prosperity and well-being for the kingdom and its people. Mohammed Bin Salman Bin Abdulaziz Al-Saud, the Deputy Crown Prince and Chairman of the Council of Economic and Development Affairs said it best when he outlined King Salman bin Abdulaziz Al Saud’s vision: “We are confident about the kingdom’s future. With all the blessings Allah has bestowed on our nation, we cannot help but be optimistic about the decades ahead. We ponder what lies over the horizon rather than worrying about what could be lost.”
2. ECONOMIC TRENDS EXECUTIVE PROGRAMMES SAUDI ARABIA SETS SIGHTS ON POST-OIL FUTURE The plan will be underpinned by a series of executive programmes that will ensure the kingdom ’s Vision 2030 is executed robustly and quickly. A key executive programme will involve transforming state-owned oil giant Saudi Aramco, “from an oil-producing company into a global industrial conglomerate.” Aramco will also be partially listed on the stock market, while the rest of the government’s stake in the company will be transferred to the Public Investment Fund. Saudi Arabia’s Council of Ministers endorsed a fresh bold plan aimed at propelling the kingdom’s economy as a major powerhouse by 2030, without depending on crude oil revenues. healthier employment opportunities for citizens and long-term prosperity for all. This promise is built on cooperation and on mutual responsibility,” the document stated. Saudi Vision 2030 is underpinned by three key themes: a vibrant society, a thriving economy and an ambitious nation with a transparent, accountable and high-performing government. While Saudi Arabia’s economic prosperity has been driven by state-owned public companies, the next chapter of growth will be spearheaded by the private sector. The plan envisions non-oil government revenue increasing more than six-fold to reach SAR 1 trillion by 2030, non-oil exports to contribute 50% to non-oil GDP, compared to 16% currently and increasing the private sector’s share of GDP to 65%, from its current level of 40%. “We intend to provide better opportunities for partnerships with the private sector through the three pillars: Our position as the heart of the Arab and Islamic worlds, our leading investment capabilities, and our strategic geographical position,” Mohammed Bin Salman Bin Abdulaziz Al-Saud, Deputy Crown Prince and Chairman of the Council of Economic and Development Affairs, said in a foreword to the 2030 document, drafted following instructions from King Salman bin Abdulaziz Al Saud. “To increase the private sector’s long-term contribution to our economy, we will open up new investment opportunities, facilitate investment, encourage innovation and competition and remove all obstacles preventing the private sector from playing a larger role in development,” the document suggested. “We will continue to improve and reform our regulations, paving the way for investors and the private sector to acquire and deliver services – such as health care and education – that are currently provided by the public sector.” “We will improve the business environment, so that our economy grows and flourishes, driving QUICK LINKS HOME ECONOMIC TRENDS The PIF will be propelled into a giant entity managing SAR 7 trillion in assets, from their current level of SAR 600 billion. “We aim to transform it into the largest sovereign wealth fund in the world and will announce a comprehensive plan to achieve this goal,” the Deputy Crown Prince said. Other key executive initiatives will be the Human Capital Programme, focused on nurturing Saudi Arabia’s talent pool, and a National Transformative Programme identifying opportunities for partnering with the private sector, as well as innovative administrative and funding approaches. A privatisation programme will also jumpstart the process of offloading state companies. will streamline government processes and policies, and create a strong business environment wherein the private sector could thrive. ECONOMIC PROGRESS The transformative plan for Saudi Arabia comes just as the economy is feeling the bite of low oil prices. The International Monetary Fund’s latest forecast in April expects the kingdom’s economy to grow at 1.2% this year and 1.9% in 2017, less than half of its emerging market peers during the period. The World Bank notes that its average oil price forecast for 2016 stands at USD 37 per barrels, which means current fiscal measures taken by the Saudi authorities may be insufficient to have a large impact on the fiscal deficit, which is projected at 16.3% of GDP. “Efforts to raise non-oil revenues will remain modest and expenditure cuts will occur gradually, focusing primarily on the capital budget,” the World Bank said in its report. Other economic indicators also point to a slowdown. The latest purchasing managers’ index (PMI) by Markit shows sentiment slipped to a three-month low. “Growth of Saudi Arabia’s non-oil private sector stalled in April, with business conditions improving at the slowest pace in three months,” PMI noted. “We are in the process of determining additional sectors suitable for privatisation,” according to the kingdom’s Vision 2030. “Our goal is to create a comprehensive privatisation programme.” Finally, a public sector governance programme FINANCE OIL AND GAS CURRENCY MANUFACTURING COMMODITY DISCLAIMER
3. FINANCE Saudi Arabia ’s Public Investment Fund (PIF) is set to be transformed into a USD 2-3 trillion sovereign wealth fund (SWF), shaking up the global financial services industry and ushering in the arrival of the world’s largest investment house. The changes provide massive opportunities for the financial services industry, including banks. The Saudi authorities are planning to spur the private sector with incentives and new development plans that would require financing, especially in real estate. The financial services sector will be called upon to boost the small and medium enterprises’ (SMEs) contribution to the economy to 70%, from its current level of 20%. The initiative will give SMEs fresh impetus because despite past efforts to improve the business environment in the kingdom, SMEs still endure unnecessarily slow and complex legal and administrative procedures, the document stated. The PIF currently has USD 160 billion under management, or 25% of Saudi’s GDP, but the new changes outlined in Saudi Vision 2030 should raise its profile in global capital markets. Saudi Aramco, the state-owned oil company, as well as other public sector real estate and industrial areas are also expected to form part of PIF's portfolio. “We will enable banks and other financial institutions to adapt their financial products and services to the needs of each sector, ranging from large project capital funding to short-term working capital for small businesses,” the Saudi Vision document states. We will also facilitate and expedite licensing procedures based on our national economic priorities.” “They also struggle to attract the necessary skills, capabilities and funding with financial institutions providing no more than 5% of the overall funding – a far lower percentage than the global average,” the Vision 2030 document notes. “We will strive to facilitate enhanced access to funding and to encourage our financial institutions to allocate up to 20% of overall funding to SMEs by 2030.” The government has pledged to support national companies, including banks, to help achieve its ambitious targets of diversifying the economy away from oil. The changes are coming quickly. Tadawul, the Saudi stock market, announced that it is working to finalise the rules for a new exchange dedicated to small- and medium-sized businesses, which is expected to be launched by early 2017. SAUDI TO CREATE WORLD’S LARGEST WEALTH FUND In addition, 50-70% of the official reserves managed by the Saudi Arabian Monetary Agency (SAMA) could be transferred to PIF, with the remainder continuing to be held by the agency for monetary and exchange-rate policy purposes. The King Abdullah Financial District project is also expected to be transferred to the Public Investment Fund, according to Reuters. The project being developed in Riyadh is to be transformed into "a special zone that has competitive regulations and procedures, with visa exemptions,” according to the 2030 document. STABILITY IN THE MEDIUM TERM well-positioned to ride out the downturn. “The combined profits of listed banks in 2015 were 5.3% higher compared to 2014, mainly driven by higher net interest income, despite margin compression,” said KPMG in a new report. However, the management consultancy notes that margins are under pressure across the listed banks, mainly due to the tightening liquidity that led to a rise in funding costs. Lower-cost government deposits declined as a result of the fall in oil revenue, which compelled government agencies to access cash reserves to settle immediate overheads, KPMG said. “An increase in the Saudi inter-bank rate offer has further pushed up the cost of funds, which coupled with stiff competition and tightening liquidity, put additional pressure on margins.” However, the consultancy believes the retail sector will remain the area of focus and any significant reforms in consumer financing and mortgage financing will give banks the opportunity to grow their assets. Despite the challenging environment, Saudi banks collectively grew 3% in the first quarter, with an aggregated net profit of SAR11.54 billion – a commendable effort given the economic slowdown. The resilience should help Saudi banks head into the slower summer period from a place of strength. Changes are coming to all parts of the Saudi economy at a time when low crude oil prices have impacted business and investor sentiment. However, Saudi Arabian banks are QUICK LINKS HOME ECONOMIC TRENDS FINANCE OIL AND GAS CURRENCY MANUFACTURING COMMODITY DISCLAIMER
4. OIL AND GAS OIL SHRUGS OFF SLUMP AS PRICES REBOUND Brent crude prices are edging closer to USD 50 per barrel , as non-OPEC supplies decline and global demand continues to grow at a reasonable pace. “Oil prices continued to rise in April, but the rally seems to have run out of steam, with prices falling back a little over the past few days,” according to Capital Economics. “World oil demand is forecast to average 95.9 million barrels per day (bpd) in 2016, a potential increase of 1.2 million bpd versus 2015,” according to the International Energy Agency (IEA). “Reasonably robust gains in non-OECD countries lead the projected expansion while OECD deliveries will be flat.” “In recent months, oil prices have been driven primarily by changes in sentiment towards commodities and movements in the dollar. However, oil prices have underperformed slightly given the weakness in the US dollar, reflecting concerns that higher prices now may prevent the market rebalancing later this year.” However first quarter growth in consumption remains well below the near five-year peak of 2.3 million bpd seen in the third quarter of 2015, the IEA noted. In its latest monthly report, OPEC also points to price uncertainty this year, suggesting that sharp changes in oil prices tend to create a high degree of volatility, “as they not only affect requirements by end consumers – depending on to what degree the price impact is passed on to consumers – but also the overall economic activity of producing nations.” While demand for oil was tepid in Europe, United States and Latin America, consumption in India continues its impressive performance in 2016, with significant growth recorded in February. “It accelerated by more than 0.48 million bpd, or around 12%, year on year, recording the fourth-highest level of growth, resulting in total consumption reaching historical figures of around 4.59 million bpd,” according to OPEC’s latest report. Meanwhile, oil consumption in China grew for a second month in February, especially for gasoline and liquid petroleum gas, keeping at bay concerns that the world’s largest consumer of energy is experiencing lacklustre growth. The improving fundamentals has boosted sentiment, helping Brent crude rise to USD 45 per barrel, or 64% higher since a 13-year low in January. But the rapid rise in prices has given analysts pause for concern. QUICK LINKS HOME ECONOMIC TRENDS production in the federal Gulf of Mexico.” SUPPLY SIDE The supply side is showing signs of waning, which should help markets find equilibrium. US shale producers are going bankrupt and output is declining fast as many producers can no longer sustain their businesses, with oil prices remaining below USD 50 per barrel. Most shale basins require USD 60-70 per barrel to turn a profit. “US crude oil production is projected to decrease from an average of 9.4 million bpd in 2015 to 8.6 million bpd in 2016 and to 8.0 million bpd in 2017,” said the US Department of Energy, in its latest short-term outlook. “The forecast reflects a decline in Lower 48 onshore production driven by persistently low oil prices that is partially offset by growing FINANCE OIL AND GAS CURRENCY 30,000 bpd, but remains well above 10 million bpd. The kingdom may raise production during the summer months when domestic demand is at its peak. Saudi crude oil exports reached 7.48 million bpd in January, its highest level since March 2015. In addition, wildfires in Canada’s oil province of Alberta should curtail output at least in the short-term. The IEA expects total non-OPEC production to decline 710,000 bpd this year. OPEC production is also not immune, with Venezuela expected to see output decline to 2.35 million bpd this year, according to IPD Latin America, and energy consultancy. However, Iran has ramped up output to 3.3 million bpd, an 80,000 bpd increase in March. Iraq saw a small decline of 30,000 bpd after the federal North Oil Co (NOC) halted supplies to the Kurdistan Regional Government’s (KRG’s) export pipeline to Turkey in March. Meanwhile, the kingdom has struck a strategic partnership with Egypt’s SUMED pipeline to house Saudi oil. The SUMED pipeline connects the Ain Sukhna terminal on Egypt’s Red Sea coast to the Mediterranean port of Sidi Kerir, and is half owned by Egyptian General Petroleum Corp, with Saudi Arabia, Kuwait and the UAE each having a 15% share and Qatar 5%. Saudi production fell slightly in March by MANUFACTURING COMMODITY DISCLAIMER
5. CURRENCY US DOLLAR WEAKENS AMID LETHARGIC GLOBAL ECONOMY In terms of data , almost all of the monthly US data released were disappointing, later affirmed by the broad-based nature of the first quarter GDP slowdown, which grew 0.5%, compared to consensus estimate of 0.7%. Market expectations and the FOMC's dot plot continue to show an unwavering divergence in assessing the path of US monetary policy, with the market pricing only a 15% probability of a June rate hike, said Standard & Poor’s. “If the FOMC wants to prepare the financial markets about raising rates in June, members have to move in that direction rhetorically in their speaking circuit in the next several weeks to avoid a disruptive surprise,” S&P explained. The American dollar’s softness against major currencies has been a major theme this year. After a 27% trough-to-peak increase last year, the USD’s decline in 2016 has left it trading at its lowest level against major currencies since August 2015. A number of factors have played a role, including US economic data turning soft with manufacturing, household spending plateauing, while global risks have all weighed on the economy. The US Federal Reserve’s commentary has also been mostly dovish in the past few weeks, a sea change from the more forceful language it had adopted earlier. The Federal Open Market Committee (FOMC) was subdued at its April meeting, and it’s QUICK LINKS HOME ECONOMIC TRENDS anybody’s guess whether there will be a rate hike at its next meeting in June. The cautious tone of the FOMC statement, which left markets still pricing in barely one US rate hike this year and one in 2017, did little to provide direction, according to the Institute of International Finance (IIF). “Would the FOMC keep the door open for a rate hike in June or not? The statement did not shut the door, but given the next meeting is only six weeks out, the small movement in the language made a June hike less likely,” the IIF said. With concerns on China and other global risks taking a breather, the Fed omitted “global development pose risks” from its April policy statement, though global events will continue to be monitored by the Fed. FINANCE OIL AND GAS CURRENCY PMI has fallen below the 50-point mark, suggesting that sentiment is turning bearish. The UK pound has now erased all its 2016 gains against the US dollar and is trading at 1.45 against the greenback, after climbing to 1.47 earlier in the year. “Leaving the single market would be catastrophic for our businesses and our families who would be paying more and suffering from a weaker economy,” former Chancellor of the Exchequer Alistair Darling has warned. “Those wanting to leave the EU want to pull Britain out of the Single Market, which would mean introducing tariffs and barriers to our trade and putting billions of vital trade at risk.” Meanwhile, the euro is also gaining ground against the US dollar after the Eurozone’s GDP for the first quarter showed a positive surprise. The economic bloc’s economy grew 0.6%, against a forecast of 0.4%, thanks to Spain’s 0.8% growth and France’s 0.5% expansion. “There are two more job reports before the meeting in June that could confirm the moderate growth path. However, the probability is increasing that the FOMC pushes out the next rate hike with uncertainty surrounding the Brexit referendum adding to the mix.” This is the fastest growth rate in the European Union since the first quarter of 2008, helping GDP to surpass its pre-crisis level. The euro is trading 6.37% higher against the USD this year to 1.1545. BREXIT BRINGS UNCERTAINTIES Brexit, referring to fears of the United Kingdom leaving the Euro economic bloc in June, have also roiled markets and the British pound. To add to the uncertain environment, the UK’s manufacturing sector suffered its worst performance in three years after the Purchasing Managers’ Index (PMI) fell to 49.2 points in April, from 50.7 points in March. The fall below 50 is a key inflection point in the PMI, which suggests a pessimistic view of economic outlook. The Bank of Japan also surprised in April by keeping interest rates unchanged. The bank indicated it is still assessing the impact of its negative interest rates implemented in January. The move pushed the American dollar against the yen to 11.72% to 105.959 since the start of the year. It’s the first time since March 2013 that the UK MANUFACTURING COMMODITY DISCLAIMER
6. MANUFACTURING SAUDI MANUFACTURING GAINS BANKS ’ CONFIDENCE Saudi Arabia’s manufacturing and processing sector attracted the largest share of banking private sector credit in the first quarter of 2016, in a sign of its growing importance to the economy. Credit from Saudi banks to the sector in the first quarter stood at SAR 170.4 billion, compared to SAR 161.9 billion during the same period last year. Credit to the manufacturing sector has increased steadily over the past five years, from SAR 111.6 billion in 2011 to SAR 172.5 billion last year, according to the Saudi Arabian Monetary Agency. The sector is set to gain more momentum after Saudi Aramco received a new mandate to leverage its oil powerhouse status in emerging as an industrial giant, in accordance with Saudi Arabia’s Vision 2030. Aramco is expected to become the largest company in the world with a valuation of around USD 2 trillion when it is partially listed by 2018 and is best positioned to lead the country’s industrial drive. aluminium smelter plants, refinery, dry dock, silicon processing, tech and agritech parks, textiles, pharmaceuticals, chemicals and plastics, agriculture repackaging and distribution clusters. MINING SECTOR The kingdom also plans to leverage its natural resources to build a strong mining sector. “We have been blessed with rich mineral resources such as aluminium, phosphate, gold, copper, uranium and other raw materials. Although the mining sector has already undergone improvements to cater to the needs of our industries, its contribution to GDP has yet to meet expectations,” according to the Saudi Vision 2030 programme. “As such, we are determined to ensure it reaches SR 97 billion by 2020, creating 90,000 job opportunities in the process.” To realise this, the authorities are planning a number of structural reforms, including stimulating private sector investments by intensifying exploration; building a comprehensive database of the kingdom’s resources; reviewing the licensing procedures for extraction; investing in infrastructure; and developing funding methods. "We are now about to establish a holding company for the military industries 100% owned by the government that will be listed later in the Saudi market," Deputy Crown Prince Mohammed bin Salman said during a television interview. "We expect it to be launched by end of 2017 with more details." “We will also form strategic international partnerships and raise the competitiveness and productivity of our national companies. This will boost their contribution to the sector’s growth, as well as to the localisation of knowledge and expertise.” As part of that development, the country’s Public Investment Fund (PIF) appointed Saudi Aramco chairman Khalid Al-Falih as chairman of its subsidiary Saudi Arabian Mining Company, also known as Ma’aden. INDUSTRIAL DEFENCE COMPLEX Saudi Arabia’s industrial drive will also extend to its defence industry, which will not only cut military spending, but also stimulate high-tech sectors such as industrial equipment, communications and information technology. The Vision 2030 document notes that while Saudi Arabia is the world’s third biggest military spender, only 2% of its defence spending is within the kingdom, while the national defence industrial sector comprises only seven companies and two research centres. The authorities are aiming to localise 50% of military equipment spending by 2030 and create an industrial complex focused on developing spare parts, armoured vehicles and basic ammunition. “We will expand this initiative to higher value and more complex equipment such as military aircraft. We will build an integrated national network of services and supporting industries that will improve our self-sufficiency and strengthen our defence exports, both regionally and internationally,” the document outlines. The move will not only create high-paying jobs, but it will also improve the country’s expertise in modern defence systems and create a self-sufficient deterrent safeguarding the country. “Going forward, we will continue to build on our accelerated transformation and serve as a pillar, role model and champion of transformation in the kingdom,” Aramco president and CEO Amin Nasser, said in an in-house Aramco publication. The spate of new industrial projects that are planned and under way, as well as the strong investment in infrastructure will ensure Saudi Arabia emerges as a major manufacturing hub in the Middle East. Part of Aramco’s mandate would be to revitalise the Jazan Economic City, a hub for energy and manufacturing. Located on the Red Sea, the 40,000-square-metre project will be built at a cost of USD 27 billion and employ around half a million people. The project will feature industrial parks that will make up two-thirds of the city, a sea port, QUICK LINKS HOME ECONOMIC TRENDS FINANCE OIL AND GAS CURRENCY MANUFACTURING COMMODITY DISCLAIMER
7. COMMODITY COMMODITIES MARKET ENJOYS REVERSAL OF FORTUNE we are wary that the current rally in commodity prices may run out of steam .” The S&P GSCI commodity price index rose by over 11% in April – the largest calendar month-on-month increase since 2009 – with substantial gains across all sub-indices, before losing some steam at the start of May. China’s aluminium production picked up slightly in March after having slumped in February in a response to strengthening prices. Production outside China has also been expanding, which should cap the rise in aluminium prices. WORLD BANK FORECAST The energy sub-index led the way with a 17% surge, reflecting the spot price of Brent crude approaching USD 50 per barrel. As such, commodity prices outperformed other assets including emerging market equities, which were virtually unchanged during the period. Crude oil prices have also jumped to above USD 45 per barrel by the end of April, after falling below USD 30 in early January. IRON ORE’S TURN Despite the optimism around the asset class, the World Bank has tampered expectation for commodity prices this year in its latest forecast in April. The bank noted that all main commodity indices are expected to decline in 2016 from the year before due to persistently high inventories, and weak growth prospects in emerging economies, which would hit industrial commodities, including energy, metals, and agricultural raw materials. Gold prices have raced towards USD 1,300 per ounce in a matter of months, spearheading an all-round improvement in the prospects of the wider commodity complex. support to emerge for base metals in the second half of 2016 because of dovish outcome from the US Federal Reserve and a stable Chinese economy. Iron ore prices surged again in April, despite efforts by the Chinese authorities to curb speculative activity in iron ore as well as a number of other commodities. “Energy prices, including oil, natural gas and coal, are due to fall 19.3% in 2016 from the previous year, a more gradual drop than the 24.7% slide forecast in January,” the World Bank said in its Commodity Markets Outlook published in April. A number of events have combined to accelerate improving sentiment towards commodity assets. The American dollar, which often trades inversely to most metals, has been falling. In addition, supplies of many commodities have been decreasing, even as demand rises. The prices of most commodities have benefitted from an improvement in investor sentiment towards riskier assets and the relative weakness in the US dollar. But metals may face a pullback as they have run ahead of fundamentals. April saw further chunky increases in the prices of US steel and iron ore, by 35% and 45%, respectively, since the start of the year. While the outlook for China’s property sector has recovered somewhat in recent months, analysts believe the surge may be overdone. “Non-energy commodities, such as metals and minerals, agriculture, and fertilisers, are due to decline 5.1% this year, a downward revision from the 3.7% drop forecast in January.” “The dollar has fallen as markets have scaled back expectations of the timing of US interest rate rises,” according to Caroline Bain, senior commodities economist at Capital Economics. The price of nickel has benefitted from some improvement in investor sentiment, but high stocks are likely to act as a constraint on prices for some time to come. “However, if we are right that the Fed is going to tighten rates more aggressively than the market expects, we could see the dollar strengthen again, which would put commodity prices under pressure. This is one reason why However, aluminium prices remain low as production continues to expand, with Capital Economics expecting the metal to drop to USD 1,600 per tonne in the second quarter, from its current level of USD 1,629. Above all, China’s economic performance has been more robust than expected, supported by the apparent initial phases of a recovery in the property sector. The durability of this revival is uncertain and concern remains that it has been fuelled by aggressive credit easing, which cannot be sustained. But analysts expect better price QUICK LINKS HOME ECONOMIC TRENDS FINANCE OIL AND GAS CURRENCY MANUFACTURING COMMODITY Metal prices may fall less than earlier estimated as demand growth in China remains strong, the bank said. Agriculture prices will also fall on reduced transportation costs, lower inflation and lacklustre growth in much of the global economy, the World Bank predicted. DISCLAIMER
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