Economy
Saudi Arabia: Economic development
"Saudi Arabia’s economy looks set for a period of sustained growth, with oil revenues remaining high, non-hydrocarbons exports on the rise and the effects of a massive investment program by the state starting to kick in. Estimates vary as to the rate at which the Saudi economy will expand this year, with the International Monetary Fund (IMF) projecting GDP will rise by 6.5%, while some local experts put the figure at near 7.5%, in part driven by higher earnings from oil exports and increased state spending on housing and infrastructure developments. Oil production has increased in recent months, with Saudi Arabia ramping up output to 8.96 million barrels per day (bpd) in May according to OPEC data, with an average of 6.84 million bpd being exported, up by 1.2% on the April total. At this rate, and with the current price of Brent crude on the international market averaging about $112 per barrel, Saudi Arabia is looking at around $234 billion in oil export revenue this year. Much of this windfall is being ploughed back into the economy, with King Abdullah announcing a series of new spending programs over the past few months, schemes that will see up to $130 billion invested in large-scale housing, infrastructure and economic support projects. Source: Oxford Business Group
"Oman: A competitive edge
"Oman’s economy has become more competitive in the past 12 months, according to a recent report, and is steadily making the transition from having an efficiency-driven economic base to an innovation-powered one, a process that will gain further momentum thanks to increased government budget outlays. In its latest Global Competitiveness Report, issued on September 7, the World Economic Forum (WEF) ranked Oman 32nd out of the 142 countries covered in the annual study, an improvement of two places from last year, and well up on its 41st placing in 2009. The annual report, which assesses strengths and weaknesses of world economies based on 12 criteria, ranked Oman highly in several categories and praised its excellent macroeconomic environment, high-quality infrastructure and liberal tax regime. One area where the Sultanate’s performance was assessed as below its overall average was higher education, with the study underscoring the need to improve research and training services availability and provide more places for students in the system. Both measures are seen as vital if Oman is to develop a more diverse and innovative economy. It seems though that the authorities are well aware of this, with a royal decree earlier this year mandating the creation and funding of 8,500 scholarships for higher education students. To reinforce its own competitiveness, the Omani government has been increasing budgetary outlays to strengthen key economic elements, while also investing in programs aimed at boosting employment. On September 6, the Finance Minister, Darwish al Balushi, announced that government expenditure would come close to $24 billion this year, up from the $21 billion originally projected in December, which in turn was a 13.2% increase on the 2010 total. Source: Oman Daily Observer
"Mideast banks told to boost lending
"The Middle East and North African banks must do more to offer ordinary people and smaller businesses in the region broad, reliable and equal access to financing, the World Bank said. ""Financial systems across the Mena proved resilient during the global financial crisis and subsequent political shocks,"" according to the report, titled ""Financial Access and Stability: A Roadmap for the Middle East and North Africa."" But the report, compiled in consultation with member countries and Arab banks, pointed out that financial institutions failed to provide access to finance, contributing to relatively weak growth performance and inability to generate jobs. ""Large segments of the population and enterprise sector - especially small and medium enterprises - remain deprived from finance due to the limited access to bank lending and other financial services, as well as the lack of suitable alternatives to bank finance,"" it added. According to the report, the Mena financial sectors are dominated by large, well-capitalized banks, but they are undiversified and uncompetitive, lacking in many cases insurance companies, mutual and pension funds, leasing, and factoring. Source: Reuters
"Qatar: Bank balance
"International ratings agencies and analysts have given Qatar’s banking sector a clean bill of health, though the central bank is keeping an eye on non-performing loans (NPLs), as well as monitoring inflationary pressure. In late June, international ratings agency Fitch said Qatar’s banks were set for a strong second half of 2011, with a number of factors in their favor, not least of which was the forecast for GDP to expand by 19% this year and 20% in 2012. Higher government spending, especially on infrastructure, health care, education and tourism projects, will help underpin growth in the banking sector, Fitch said in a report issued on June 26. This could see the ratings of some Qatari lenders upgraded in the medium term, the agency said, so long as their asset quality was not eroded by rapid credit growth. Ratings agency Moody’s agrees, saying in an investor note on July 7 that, “With projected GDP growth of approximately 15% per year and the additional stimulus of infrastructure investment for the 2022 FIFA World Cup, local banks will continue to benefit substantially from government-driven economic activity.” Fitch also cited the fact that most banks will see impairment charges ease later this year, with any downward pressure having been relieved, as another reason for optimism. Though there has been an increase in the number of NPLs held by Qatari banks, overall levels are still assessed as being well within acceptable norms. Lenders have had to make provisions for $2.1 billion for bad and doubtful loans, up from the $2 billion as of the beginning of 2011, according to data released by Qatar Central Bank (QCB) in early July. Qatar is also moving to reduce risk in the sector and build up the strength of its banking industry by fast-tracking plans to implement the Basel III accords, which will require lenders to hold top quality capital totaling 7% of their risk-bearing assets, up from the current 2%. Of that 7%, 4.5% comprises core tier 1 capital, which consists of shares and retained earnings, and the remaining 2.5% should be a capital conservation buffer. Other provisions under the new accords include mandating banks to hold sufficient high-quality liquid assets to cover their total net cash flows over 30 days and be better equipped to deal with extended periods of stress. Source: Oxford Business Group
"Arab Spring: G8 pledging $38bn to Tunisia, Egypt, Morocco and Jordan
"Group of Eight finance chiefs pledged $38 billion in mid-September in financing to Tunisia, Egypt, Morocco and Jordan over 2011-13, widening a deal agreed in May and offering Libya the chance to partake too. The IMF promised a further $35 billion in funding to countries affected by Arab Spring uprisings and formally recognized Libya's ruling interim council as a legitimate power, opening up access to a myriad of international lenders as the country looks to rebuild after a six-month war. The figure agreed at talks in the Mediterranean port of Marseille was roughly double a sum agreed in May, when the eight economic powers met in the northern French seaside town of Deauville. In Marseille, the original Arab Spring partnership was extended to Jordan and Morocco. Finance Minister Francois Baroin said that Libya, whose National Transitional Council was represented at the talks, had also been invited to join the so-called Deauville Partnership. ""The institutions pledged to increase their financial network to $38 billion compared with the $20 billion pledged at Deauville,"" Baroin told a news conference. ""These are not just words, an important step was taken this morning."" Getting IMF recognition is significant for Libya's interim leaders as it means international development banks and donors such as the World Bank can now offer financing. ""Libya attended this meeting as an observer and I'm very pleased to report that the IMF now recognizes the interim governing council as the official government of Libya,"" IMF chief Christine Lagarde told a separate news conference. Source: Global Arab Network
"Egypt: Challenging times for banking
"Although a number of Egypt’s largest banks posted notable growth during the turbulent first half of 2011, the second half may prove more challenging as tourism, investments and fund flows continue to decline. The Central Bank of Egypt (CBE) has played an active role in mitigating the effects of the political turmoil in early 2011 on the banking system. Throughout the summer it has kept overnight deposit and lending rates unchanged at 8.25% and 9.75%, respectively. These levels, the lowest since November 2006, were held steady in an attempt to boost economic growth. With the political unrest having knock-on effects for a number of sectors, Egypt’s GDP saw negative growth of 4.2% in the first quarter of 2011, a rate not seen since the CBE began releasing quarterly GDP data in 2001. Yet in spite of the challenging macro environment and the corresponding 26% decline in investment, some of the country’s banks have actually posted increases in income this year. The National Bank of Egypt, the country’s oldest bank and its largest by assets, saw net income for the year ending June 30 reach LE2.2 billion ($370.4 million), up from LE2 billion ($336.7 million) a year earlier. Net profits also increased 10% to more than LE1 billion ($168.4 million) due to higher foreign exchange transactions, net interest income and increased fees. Still, the bank missed its full-year net income target of LE2.6 billion ($437.7 million). Tarek Amer, the bank’s chairman, attributed this to rising staff wages and benefits after the country’s political transition this year. National Société Générale Bank (NSGB), Egypt’s second-biggest private bank by market capitalization, also fared well. It saw an 8% increase in its net income y-o-y to LE733 million ($123.4 million). The bank’s second-quarter net profit rose 14% y-o-y to LE369.2 million ($62.2 million) from LE323.1 million ($54.4 million) in second-quarter 2010. Likewise, NSGB’s net interest income increased to LE512.4 million ($86.3 million) from LE462.3 million ($77.8 million) the previous year. Not all local banks fared so well, however. Crédit Agricole Egypt’s first-half profits fell 30% from a year earlier, the bank said in late July. The bank, which is 60% owned by France’s Crédit Agricole, also reported a net profit drop to LE140.7 million ($23.7 million) from LE201.6 million ($34 million) in the first half of 2010. Source: Oxford Business Group
"Bahrain’s price index dips during Jan-Aug
"The consumer price index (CPI) decreased by 0.8% during the first eight months of the year compared with the same period of 2010, said Bahrain’s Central Informatics Organisation. The CPI decreased by 0.2% in August compared with same month of 2010, while it has increased by 1.3% in August compared with the record for the month of July. Falls in the cost of housing, water, electricity and gas contributed to the decline in the CPI during the period, which fell by 10.8%, with rents down by 13.7%. Source: TradeArabia News
"UAE economy set to expand 3-3.5%
"The United Arab Emirates economy is expected to grow by 3 to 3.5% this year, the Economy Minister Sultan bin Saeed Al-Mansouri said, reiterating his June comments. 'It (growth) will be between 3 and 3.5% this year. Our GDP depends 30% on oil, it is very important to see how oil prices will be,' he told reporters on the sidelines of a financial forum. Analysts polled by Reuters in June expected the UAE economic output to expand by 3.7% in 2011, up from 1.4% last year. He said the country does not need to boost government budget expenditures. 'There is no need to boost fiscal spending. In the UAE, we have spent a lot on infrastructure and these investments are going on,' he told reporters. Source: Reuters
"Qatar GDP to hit $150bn this year
"Qatar is expected to keep posting budget surpluses in the coming years and the OPEC member's nominal gross domestic product should reach 547 billion riyals ($150 billion) this year, its central bank governor said in late September. 'Despite the huge investments planned ... the government budget is expected to continue to post surpluses in the coming years with a surplus of 5.7% of GDP seen in 2016,' Sheikh Abdullah bin Saud Al-Thani told a meeting of Arab central bank governors in a speech on behalf of the country's prime minister. Qatar's government budget surplus shrank sharply to 2.9% of its economic output in the 2010/11 fiscal year as spending jumped. The fiscal year starts in April. Qatar, the world's top liquefied natural gas exporter and one of the largest global investors through its sovereign wealth fund, plans to spend over $125 billion in the next five years on construction and energy projects according to its plan. Source: Reuters
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