The ongoing economic recovery of the Gulf region is expected to accelerate next year, with fiscal deficits narrowing, as oil income climbs and the number of Covid-19 infections fall amid wide-scale vaccination campaigns, according to the Institute of International Finance.
Growth in the regional countries is forecast to at an average 1.7 per cent this year and 4.2 per cent in 2022, the IIF said.
Hydrocarbon real gross domestic product of the region, which accounts for about a third of the world’s proven oil reserves, is projected at 5 per cent in 2022 “on the assumption that the Opec+ production cuts end by mid-2022", said Garbis Iradian, chief Mena economist and Samuel LaRussa, IIF’s senior research analyst.
“On the upside, faster vaccination rates and further progress in [implementation of economic] reforms could boost non-hydrocarbon growth in 2022.”
Economies in the GCC are bouncing back from Covid-19-induced challenges on the back of monetary and fiscal support provided to minimise the impact of the pandemic. The health crisis severely disrupted economic momentum last year and tipped the global economy into its worst recessions since the 1930s.
Wide-scale vaccinations and a drop in Covid-19 infection rates across the region have boosted investor confidence, accelerating the recovery of private sector businesses.
Regional economies also stand to gain from rising oil prices after Opec+, the group of oil-exporting countries behind recent historic production cuts, reached a deal in July on new production caps.
The IIF said 2021 budgets of the six GCC states envisage a significant fiscal consolidation this year, largely on the basis of improvement in non-hydrocarbon revenues through tax reforms and reprioritisation of spending.
It expects the aggregate current account surplus to increase to $109 billion in 2021, from $20bn in 2020.
“Our calculations show that for every $10 per barrel increase in oil prices, hydrocarbon exports would increase by $40bn in Saudi Arabia and $12bn in the UAE,” IIF economists said.
The IIF revised upward its average price for Brent for 2021 to $67 per barrel and $64 per barrel in 2022
Non-resident capital inflows into the GCC are also expected to rise to $148bn this year from $123bn in 2020. Corporate issuance in the region, including debt issued by the government-related entities, to finance existing loans and bonds that mature in 2021 will also remain sizeable.
The GCC has raised a combined $95bn so far this year from the international debt market. The region’s Eurobond issuance peaked at $111bn in 2020 and was dominated by sovereign and quasi-sovereign issuances, said the IIF.
Banking and financial institutions in region also remain resilient, supported by sound capital and liquidity positions. Non-performing loan ratios (NPLs) remained between 2 per cent and 3 per cent in Saudi Arabia, Qatar and Kuwait. NPLs stayed between 4 per cent and 8 per cent in the rest of the GCC.
Fiscal deficits will narrow in Saudi Arabia, Oman, and Bahrain, and shift to surpluses in the UAE, Qatar, and Kuwait, according to the IIF.
The IIF said regional banking regulators are expected to leave their policy rates unchanged until the end of 2022. Central banks have kept liquidity support measures in place, particularly to help small and medium-sized enterprises to weather the pandemic. This will continue to aid recovery of the private sector and the broader non-oil economy of the region, said the IIF.
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
UAE currency: the story behind the money in your pockets
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, Leon.
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
Killing of Qassem Suleimani
UAE currency: the story behind the money in your pockets
More from Rashmee Roshan Lall
Results
2.15pm: Handicap Dh80,000 1,950m
Winner: Hello, Tadhg O’Shea (jockey), Ali Rashid Al Raihi (trainer).
2.45pm: Handicap Dh90,000 1,800m
Winner: Right Flank, Pat Dobbs, Doug Watson.
3.15pm: Handicap Dh115,000 1,000m
Winner: Leading Spirit, Richard Mullen, Satish Seemar.
3.45pm: Jebel Ali Mile Group 3 Dh575,000 1,600m
Winner: Chiefdom, Royston Ffrench, Salem bin Ghadayer.
4.15pm: Handicap Dh105,000 1,400m
Winner: Ode To Autumn, Patrick Cosgrave, Satish Seemar.
4.45pm: Shadwell Farm Conditions Dh125,000 1,200m
Winner: Last Surprise, James Doyle, Simon Crisford.
5.15pm: Handicap Dh85,000 1,200m
Winner: Daltrey, Sandro Paiva, Ali Rashid Al Raihi.
HAJJAN
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Global state-owned investor ranking by size
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United States
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China
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UAE
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Japan
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Norway
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Canada
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Singapore
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Australia
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South Korea
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The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
Three trading apps to try
Sharad Nair recommends three investment apps for UAE residents:
- For beginners or people who want to start investing with limited capital, Mr Nair suggests eToro. “The low fees and low minimum balance requirements make the platform more accessible,” he says. “The user interface is straightforward to understand and operate, while its social element may help ease beginners into the idea of investing money by looking to a virtual community.”
- If you’re an experienced investor, and have $10,000 or more to invest, consider Saxo Bank. “Saxo Bank offers a more comprehensive trading platform with advanced features and insight for more experienced users. It offers a more personalised approach to opening and operating an account on their platform,” he says.
- Finally, StashAway could work for those who want a hands-off approach to their investing. “It removes one of the biggest challenges for novice traders: picking the securities in their portfolio,” Mr Nair says. “A goal-based approach or view towards investing can help motivate residents who may usually shy away from investment platforms.”
OTHER IPL BOWLING RECORDS
Best bowling figures: 6-14 – Sohail Tanvir (for Rajasthan Royals against Chennai Super Kings in 2008)
Best average: 16.36 – Andrew Tye
Best economy rate: 6.53 – Sunil Narine
Best strike-rate: 12.83 – Andrew Tye
Best strike-rate in an innings: 1.50 – Suresh Raina (for Chennai Super Kings against Rajasthan Royals in 2011)
Most runs conceded in an innings: 70 – Basil Thampi (for Sunrisers Hyderabad against Royal Challengers Bangalore in 2018)
Most hat-tricks: 3 – Amit Mishra
Most dot-balls: 1,128 – Harbhajan Singh
Most maiden overs bowled: 14 – Praveen Kumar
Most four-wicket hauls: 6 – Sunil Narine
The specs
Engine: 2.9-litre twin-turbo V6
Power: 540hp at 6,500rpm
Torque: 600Nm at 2,500rpm
Transmission: Eight-speed auto
Kerb weight: 1580kg
Price: From Dh750k
On sale: via special order
'Cheb%20Khaled'
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Sholto Byrnes on Myanmar politics
