Economy

Syria: Expanding credit

Less than a decade into Syria's financial liberalization efforts, banking is proving to be one of Syria's fastest-growing sectors and an increasingly important pillar in the overall transformation of the economy. Since the government began issuing licenses in 2001, 11 private conventional and three private Islamic banks have set up in the country, with another two planning their initial public offerings (IPOs) and expected to be operational by year-end. Current legislation limits foreign ownership to 49 per cent, and all of the private banks established to date are subsidiaries of either Lebanese, Jordanian or Gulf-backed institutions. While private banks account for just under 20 per cent of the market, they are experiencing impressive growth (86.2 per cent in 2008), and most have been able to turn a profit within their first two years of operation. While the sector has liberalized dramatically in a relatively short period of time, and boasts some of the most advanced legislative frameworks for Islamic banking, microfinance and anti-money laundering in the region, it remains tightly regulated in comparison to neighboring Jordan and Lebanon. Although this strict oversight has been credited with helping to insulate he country from the volatility that has plagued other markets. Further reform is needed to strengthen the sector's maturation and performance. (source: OBG)

IMF sees stronger Middle East growth in 2010

Middle East economies have improved recently as global oil prices have rebounded from previous lows and there are signs of a recovery in the world economy, the International Monetary Fund said. In its latest World Economic Outlook, the IMF raised next year's growth estimate for the region to 4.2 per cent from a July forecast of 3.7 per cent. It maintained this year's projection at 2 per cent. The global recession and the collapse in world oil prices as well as oil production cuts hit the region hard. "The recent improvement in global financial conditions and rise in commodity prices, however, are helping restore the pace of economic activity," the IMF said in the report.

Weak dollar may feed inflation in GCC, peg likely to stay

The sliding dollar may spur inflation in energy-rich Gulf states whose currencies are pegged to the greenback, but the exchange regime peg will survive for now, analysts said. As the dollar continues to lose ground to other world currencies, the six-nation Gulf Cooperation Council (GCC) states are bound to pay a higher price for their imports from Europe and southeast Asia, they added. GCC economies, hard hit by the global economic crisis, are forecast to return to strong growth next year thanks to higher oil revenues, thus feeding higher inflation, but it will not return to last year's levels, the analysts believe.

UAE delays planned US$5.5bn cash injection

The United Arab Emirates has delayed the final 20 billion dirham (US$5.45 billion) tranche of a liquidity injection plan as banks do not currently need it, a newspaper reported, citing unidentified sources. Last year, the UAE Finance Ministry poured US$6.8 billion into bank deposits, the first tranche of a US$19.1 billion rescue facility it set up to help the Gulf Arab state's lenders weather the onslaught of the global credit crisis. It deposited another US$6.8 billion into banks in November, but has not made any statements since regarding the remainder of those funds. This came after the central bank set up a US$13.6 billion emergency bank lending facility to combat the crisis..

Kuwait mulls plan to set up more free trade zones

Kuwait is preparing a strategy to establish new free trade (FTZ) and logistical zones, the country's commerce chief said. Commerce and Industry Minister Ahmad Al-Haroun also said that the current free zone would be developed to help establish Kuwait as a regional trade and finance centre. A committee of experts has been set up to examine the proposals for the new free zones.

Abu Dhabi: Coming out ahead

Abu Dhabi can afford to look forward to a promising year given evidence indicating an increasingly robust economy, despite mixed results for the broader UAE. At a meeting for Gulf Cooperation Council central bankers this month in Abu Dhabi, the governor of the UAE's central bank, Sultan Al Suwaidi, indicated that the government's previous remedies to the global financial crisis may not be enough to lift the economy into positive growth this year. Al Suwaidi told local press, "We don't give [GDP] figures but if there will be any growth it will be very small. It could be slightly negative or slightly positive. It's not going to be a big jump." Not everybody in the government agrees, however. Earlier this month, Sheikha Lubna Al Qasimi, the minister of foreign trade, told local press that the UAE was on course to reach 3 per cent growth by the end of the year. In 2008 the economy grew at a healthy clip of 7.4 per cent. (source: OBG)

Emerging-market economies surge in 3Q new HSBC Index shows

Activity in emerging-market economies surged in the third quarter, suggesting they are at the forefront of the recovery from the global economic downturn, a new index by UK-based bank HSBC Holdings PLC showed. The bank's new Emerging Market Index, which was launched on the sidelines of the International Monetary Fund/World Bank annual meetings, gave a reading of 56.3 in the third quarter of the year, up from 50.7 in the second quarter and 44.3 in the first. The increase was the strongest in more than a year based on equivalent historical figures HSBC has compiled going back to 2005, it said. The EMI, which covers 13 countries including Russia and Singapore, is modeled on existing European purchasing managers indexes. As with PMIs, a reading above 50 indicates expansion from the previous month, and one below 50 indicates contraction.

Iraq, UN sign development deal to boost stability, growth

The United Nations and the Iraqi government have enhanced their partnership, joining forces to promote development in the country, according to a UN statement. "UN Acting Resident Coordinator Naeema Al-Gasseer and Iraqi Minister of Planning Ali Baban signed a statement of intent to cooperate on a major development framework at a ceremony in the capital, Baghdad," said the statement. "That ceremony also marked the end of the first-ever UN Common Country Assessment (CCA) for Iraq, which seeks to identify key challenges in the country’s efforts to consolidate stability and growth," it added. Focusing on the areas of governance, pro-poor economy and ensuring quality essential services such as education and health, the assessment examines the impact of almost three decades of suffering by the Iraqi people and the potential for reform, modernization and socio-economic revival. "This statement of intent now signals a move towards a higher level of partnership with a more present UN working to provide greater strategic support and better value to the Iraqi Government and people," Dr Al-Gasseer noted.