Economy

Study: Gulf members building 55 new economic cities

A study by Booz Allen Hamilton revealed that Gulf members are presently building and developing 55 new economic cities and zones, their combined costs running in the billions of dollars. The embankment on such mega developments by Gulf states comes under efforts to liberate their economies from oil-dependency.

Free trade agreements mark a major shift in trade policy

Free trade agreements signed by GCC states with countries and economic blocks help reduce inflation and price hikes since they lead to the waiving of customs duties and allow the smooth flow of commodities and services. For example, the GCC countries signed a free trade agreement with European Free Trade Association, which includes countries with global economic and commercial status such as Switzerland, Liechtenstein, Norway and Iceland.

These four countries, despite their small economies, may be more proactive than European Union countries, which are still hesitant in signing a free trade agreement with GCC countries.

IMF warns Gulf inflation could be a long-term problem

Rising inflation is a growing concern among all GCC countries with longer term implications for the regional economies as many of the contributing factors to the rising prices are not strictly short term in nature, according to Mohsin Khan, Regional Director of International Monetary Fund's Middle East and Central Asia Department.

Saudi woos bulk of pan-Arab investments, CAEU report

Saudi Arabia topped the list of countries for pan-Arab investments in 2005 amounting to US$28.8 billion, equivalent to 75.8 percent of all pan-Arab investment permits issued during the year.

A report by the Council of Arab Economic Unity (CAEU) observed that the overall volume of pan-Arab investment projects licensed during 2005 totalled US$38 billion. This comes on a quantum spike of 638 percent over US$5.9 billion in 2004.

Gulf SMEs lure US$11bn investments

The number of small and medium enterprises (SME) in GCC member-states currently stands around 10,000 with most of them focused on the chemical and plastic industry sectors and non-petroleum mining activities. According to a report by the Gulf Organisation for Industrial Consulting (GOIC), SMEs account for 86.3 percent of the total number of factories in the Arabian Gulf region.

News Analysis: Bound to follow - Qatar's dollar peg

Qatar has once again cut its deposit rates in line with the US Federal Reserve, a move that analysts say does little to ease the soaring rate of inflation. The Central Bank lowered deposit rates by 25 basis points (0.25 percent) on May 2, the latest in a string of rate cuts. The increasingly frequent reductions - following US cuts - are a result of the Qatari riyal being pegged to the dollar, but while the US moves to alleviate the 'credit crunch', the policy appears at odds with needs of Qatar's economy.

Daimler to open office in Baghdad

Daimler AG says it plans to open an office in Baghdad after a nearly 20-year absence, according to a report in the Wall Street Journal, marking a small victory for Iraqi and US officials who have pushed hard to attract foreign investment in the war-torn country.

Iran to establish trade centres in Iraq

Iran is ready to establish trade centres in northern, southern and eastern Iraq to introduce domestic capabilities, said the head of Iran-Iraq chamber of commerce, industries and mines. Iran can also support Iraq in building 10 million residential units needed by the country, Hussein Tiz Maghz said. Earlier he called for the establishment of branches of Iranian banks in Iraq.

VAT 'will help strengthen economy'

Dubai Customs said that the implementation of a value added tax (VAT) in the UAE and Gulf region would have a significant positive impact on strengthening the economies and raising the current living standards.

A senior official from Dubai Customs said that the opinion expressed by an International Monetary Fund (IMF) official on the impact of VAT on inflation is a personal view. Recent media reports had quoted Mohsin Khan, regional director of the IMF for the Middle East and Central Asia, as saying that the implementation of VAT would raise inflation in the UAE.

NoozzVIEW; Egypt takes economic action

Any reputation that Egypt may once have had for economic inertia has been completely overturned in recent weeks as President Mubarak's administration has announced an apparently unending list of initiatives to deal with the various economic difficulties now encircling Cairo and other capitals in the region.

The latest in the list has been a jump in the key overnight interest rate set by the Central Bank for the third time this year. The 50 basic points rise was designed to contain inflation expectations provoked by recent government decisions to impose steep increases in fuel and cigarette prices and vehicle licence fees.

Fitch: GCC oil boom/currency pegs bring faster inflation

Fitch Ratings says inflation in the member countries of the Gulf Cooperation Council (GCC) is set to rise further in the absence of effective policy tools to prevent it. However, potential sovereign credit ramifications - mainly fiscal and socio-political - are modest, being outweighed by the impact of continued high oil prices on public finances and sovereign balance sheets.

Iraq to invest US$6 billion in railways to boost trade and tourism

Iraq will spend over US$6 billion over the next few years to develop its railway infrastructure for passenger and freight services, connecting the whole country via a central hub encircling Baghdad, according to the general director of the Iraqi Railroads Company, Alaa ad-Deen Sadiq. The director said that the ministry has approved two giant projects for implementation and that a third is currently being discussed.