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Gulf Industry Magazine helps you catch up with the numbers behind economic and industrial developments in the region.

01 September 2013

GCC FDI rises to $26bn
FOREIGN direct investment (FDI) in the GCC in 2012 increased slightly over the previous year to reach $26.4 billion.

This brings to an end three consecutive years of declining FDI flows to the region since the pre-financial crisis peak of $61.7 billion in 2008, said a statement quoting data published by UNCTAD in their annual World Investment Report 2013.

The GCC’s positive performance is further accentuated when placed in the context of developing economy and world FDI flows, both of which declined in 2012, by 4.4 per cent and 18.2 per cent, respectively.

The GCC increased its share of developing economy FDI to 3.8 per cent from 3.6 per cent.

FDI flows within the GCC region increased in 2012, with the exception of Saudi Arabia, since it was more susceptible to the difficulties experienced by investors in accessing capital from retrenching international banks and witnessed a 25 per cent decline in FDI to $12.2 billion.

In the UAE and Kuwait, FDI inflows increased to $9.6 billion and $1.9 billion, respectively.

In Kuwait, the doubling of FDI was primarily the result of Qatar Telecom’s acquisition of additional shares in the mobile operator Wataniya, it said.

Meanwhile, FDI flows from the GCC area to other countries declined last year, by 17.7 per cent to $18.6 billion.

Oman vulnerable to oil prices
OMAN’S A1 rating with stable outlook is based on the economy’s robust growth outlook and the government’s sound fiscal metrics, but both are vulnerable to a downturn in global oil prices, said Moody’s Investors Service in a report.

The rating agency’s report is an update to the markets and does not constitute a rating action.

Moody’s assessment of Oman’s economy strength reflects comparatively high levels of per-capita income and the medium-sized economy’s robust outlook in the long term due to ongoing economic diversification. The rating agency expects growth of 4.6 per cent in 2013 and 4.1 per cent in 2014, supported by the government’s efforts to diversify the economy away from the hydrocarbon sector. These efforts should be supported by Oman’s openness to international trade and its liberal investment regime.

Moody’s also notes that the A1 rating is supported by the government’s persistent budget surpluses (barring a 0.3 per cent deficit in 2009), very low levels of debt (5.2 per cent of GDP at year-end 2012), and its strong net financial asset position. High domestic savings rates and a healthy banking sector complement the government’s sound finances.

Moody’s says that Oman’s major credit challenges stem from its economic and fiscal vulnerabilities arising from the oil and gas sector, which continues to contribute a significant share to GDP (45 per cent of GDP on average between 2000 and 2011). Moreover, Oman’s fiscal breakeven oil price is among the highest in the GCC and showed a very strong increase ($80) between 2003 and 2012.

Qatar spending growth slows
QATAR’S government spending rose 2.2 per cent to a record QR178.2 billion ($48.9 billion) in the last fiscal year, slowing sharply from double-digit increases seen in the previous decade, official data showed.

It was the first time that the government’s annual spending undershot its budget plan since 1990 – a sign of the difficulties which Qatar is having in pushing forward huge and complex infrastructure projects.

Some big projects, such as a new airport, have been delayed by difficulties in planning, coordination and arranging the necessary resources for them, as well as by bureaucratic obstacles. So the government has so far ended up spending less than it aimed to spend.

Total state spending came in slightly below the initial plan of QR178.6 billion for the fiscal year that ended in March, finance ministry data released by the central bank showed.

Development expenditure was QR49.3 billion, well below the QR62.1 billion which the government had originally earmarked for the year.

GCC insurance hits $28bn
BACKED by strong growth opportunities in the GCC, the insurance industry is set to grow and reach approximately $28 billion by the end of 2015 and touch the $40 billion mark by 2017, a report said.

“The GCC enjoys a market size of $16.3 billion in terms of premium volume,” said the report by Kuwait Finance Centre (Markaz), according to the Gulf Daily News.

“As of 2012, the GCC region exhibits an insurance penetration, including life and non-life insurance, of just about 1.14 per cent compared with the global average of 6.5 per cent.”

Oil to drive Bahrain growth
BAHRAIN’S economic growth rate will reach 5.6 per cent this year, driven largely by the expected normalisation in oil production from the Abu Sa’afa offshore oilfield, as well as planned expansion in the onshore Bahrain Field production.

That is one of the key conclusions of the Economic Development Board’s first Year Book which was published recently, reported the Gulf Daily News, our sister publication.

Overall average real growth for 2012 was 3.4 per cent in spite of an 8.5 per cent drop in the oil sector due to maintenance in the Abu Sa’afa oilfield.

The resilience of the Bahraini economy has gone hand in hand with a track record of macroeconomic stability. Recent inflation data indicates the average inflation rate for 2012 stood at 2.8 per cent compared to 0.4 per cent in 2011.

Mena inbound deals hit $10.6bn
THE value of disclosed inbound deals in Mena increased to $10.6 billion in the first half of 2013, up from $5.1 billion during the same period last year, marking a rise of 108 per cent, a report said.

Outbound deal value dropped by 37 per cent from $10.5 billion in H1 2012 to $6.6 billion in H1 2013 and domestic deal value decreased by 13 per cent, according to the Mena M&A update from Ernst & Young (EY), a leading professional services firm.

Phil Gandier, Mena head of Transaction Advisory Services, EY, said: “Seeing the value of inbound deals double since H1 2012 is an interesting trend, as both inbound and outbound deal flows have seen a reversal compared to a year ago, where outbound deal value was nearly double the value of inbound deals.”

“The UAE continues to play a key role in attracting investment to the region being the target country focus of 25 per cent of inbound deal volume for H1 2013.




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