tradeflow21.com » Economy

IMF upbeat on GCC’s prospects

admin — Fri, 23 Jul 2010 16:37:29 +0000

The International Monetary Fund (IMF) said on Wednesday that the GCC member states should plan to exit their high fiscal spending policies in light of their US dollar pegs and exposure to oil cycle volatility, as they have successfully weathered the financial crisis and are poised to continue to grow their economies despite ongoing economic uncertainty. See clip from RTTNews below.

clipped from www.rttnews.com

(RTTNews) - The six-member Gulf Cooperation Council should prepare an exit strategy from current high spending levels, to ensure long term fiscal sustainability, which would be implemented once conditions allow, the International Monetary Fund said Wednesday.

According to IMF, the impact of spillovers from financial developments in Dubai and Greece should continue to have a limited effect on the GCC nations and substantial foreign assets are available to mitigate the impact of new shocks. GCC states include Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates.

Banks’ capital adequacy ratios remain strong and there are positive indications on profitability.

Further, the IMF said supported by strong fiscal spending and the global recovery, growth is projected to strengthen in 2010. Non-oil growth is estimated to strengthen to around 4.3%. In line with global recovery, oil output is projected to rebound by approximately 4.8% this year.

The complexity of Afghanistan’s $1T untapped mineral deposits discovery

admin — Mon, 14 Jun 2010 12:12:28 +0000

The New York Times (see image and clips below) reported Sunday that US geologists have discovered nearly $1 trillion of untapped mineral deposits, including iron, copper, cobalt, gold, and lithium. While this is potentially much needed positive game-changing news for the Afghan economy, the NYT cites the cognizance of American officials fearing a ‘double-edged impact’ of the find, referring, for instance, to (1) the possibility of exacerbated instability as the Taliban may elevate its efforts to try and take control of the country, (2) a possible run-in with resource-hungry China, and (3) a lack of mining and basic overall infrastructure (including human capital in both government and industry) in Afghanistan necessary to exploit the deposits — creating the likelihood that meaningful proceeds from any finds are years, if not a decade or two, out. Nevertheless, should Afghanistan somehow manage to arrive at even a modest level of sustained stability, the wheels of commerce will begin to roll and hopefully bring days of ever more peace and prosperity to an impoverished, war-torn country.

clipped from www.nytimes.com

WASHINGTON — The United States has discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, far beyond any previously known reserves and enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself, according to senior American government officials.

An internal Pentagon memo, for example, states that Afghanistan could become the “Saudi Arabia of lithium,” a key raw material in the manufacture of batteries for laptops and BlackBerrys.

While it could take many years to develop a mining industry, the potential is so great that officials and executives in the industry believe it could attract heavy investment even before mines are profitable, providing the possibility of jobs that could distract from generations of war.

“This will become the backbone of the Afghan economy,” said Jalil Jumriany, an adviser to the Afghan minister of mines.

GCC poised for strong 2010 fiscal position

admin — Tue, 11 May 2010 01:41:37 +0000

Emirates Business 24|7 reports that strong crude oil prices, currently at around $75/bbl and exceeding Gulf Cooperation Council (GCC) forecasts, will greatly improve members’ fiscal and current accounts. It is debatable whether surpluses will reach the levels of the boom years of the recent past, but it seems certain the situation will be a solid improvement over 2009. Although Saudi Arabia is expected to run a small deficit, this is in fact due to its heavy capital investments, which TradeFlow21 has long recognized as critical to the Kingdom’s economic sustainability and at the same time offering an unprecedented opportunity for U.S. businesses. See clip from Emirates Business below and for more detailed information see hyperlink.

clipped from www.business24-7.ae

Record budget surplus likely for the bloc. Manageable deficit for some members due to public spending. (AFP)

Strong crude prices will bolster the fiscal position in Gulf oil producers in 2010, but some of them could still record a manageable budget deficit because of counter-crisis high public spending, according to analysts.

While the combined budgets of the six-nation Gulf Co-operation Council (GCC) would likely record a surplus, as was the case in the previous nine years, some of them could suffer a relatively small shortfall despite an upsurge in their hydrocarbon earnings, they said. The experts believe four GCC members – the UAE, Kuwait, Qatar and Oman – would record surpluses while the budgets of Saudi Arabia, the largest Arab economy, and Bahrain would remain in a deficit.

GE-Saudi renewed partnership overshadowed by Wall Street folly

admin — Mon, 10 May 2010 03:38:49 +0000

Less than two weeks ago, General Electric and Saudi Arabia’s Ministry of Commerce and Industry announced that they signed a memorandum of understanding (MoU), effectively reinvigorating their 70-year relationship. It should come as no surprise that GE’s areas of core competence and drivers of future growth — energy, healthcare, transportation, and water — are the same areas targeted as key growth sectors for Saudi Arabia. TradeFlow21 views GE and Saudi Arabia as economic juggernauts: longstanding excellence in industrial know-how and manufacturing in the case of the former, and an agglomeration of capital and capital-intensive investment projects for economic sustainability for the latter. While news of such an MoU bodes very well both for GE and Saudi Arabia, and the global economy at large, unfortunately it was easily overshadowed by ongoing fears of the Greek debt crisis and most recently, the specter of panic selling on Wall Street last Thursday. Nevertheless, the founders of TradeFlow21 remain convinced that the Middle East, and Saudi Arabia in particular, represents both an opportunity and a model for real economic investment.

Exports a bright, blind spot for the U.S.

admin — Fri, 05 Feb 2010 13:34:35 +0000

The MarketWatch clip below details some of Commerce Secretary Gary Locke’s key points from his speech at the National Press Club. The partners of TradeFlow21 couldn’t agree more on the importance of rejuvenating exports. Our stance is that we are less interested in debating about whether exports can be doubled in five years (why waste time over a number) and more interested in getting to work.

clipped from www.marketwatch.com

WASHINGTON (MarketWatch) — Exports have been “an economic blind spot” for the United States government, allowing other countries to chip away at America’s international competitiveness, said Commerce Secretary Gary Locke on Thursday.

In a speech at the National Press Club, Locke said expanding exports is now “front and center” for the Obama administration, echoing the president who called for a doubling of American exports over the next five years in the State of the Union speech last week.

Locke said less than one-percent of America’s 30 million companies export at the moment.

The commerce secretary said the White House would not focus on one sector at the expense of others. Doubling exports is “an aggregate goal,” he said.

Four reasons why Dubai will survive

LN — Wed, 09 Dec 2009 23:37:26 +0000

1) Actual (Strategic) Value of “Distressed” Real Estate: Dubai World, the government-affiliated parent company under scrutiny, is strapped with an estimated $24B in debt,including $7.3B in deteriorating real estate assets held by their Nakheel subsidiary. On paper, these assets are distressed. In brick-and-mortar reality, they include new-to-market commercial and residential units that help define the Dubai skyline. Vacancy rates are transitory, but quality real estate will return value if strategically positioned as part of a larger initiative or economic plan. A shift, for example, in the commercial focus from financial services and tourism to energy, such as the creation of a solar-powered city, could restart investment and development.

2) Primacy of DP World: Dubai World’s marine and port subsidiary, DP World, maintains deep-water terminals in over 30 countries from the Americas to Asia. It is simply too valuable a commodity (commercially and politically) for the government to abandon to creditors in courts. DP World’s port presence across the globe is central to the UAE’s identity and prestige.

3) Capitalism 2.0: The Dubai crisis was an inevitable and necessary step in the maturation process of an emerging free-market economy. Sheik Mohammed bin Rashid Al Maktoum’s undisciplined approach to development, coupled with investors who naively assumed their bets were covered by state revenues derived from oil, created conditions that plunged the Emirate $80B in debt. Despite the poor timing of Dubai World’s announcement of a standstill just prior to the Muslim holiday of Eid al-Adha, Dubai and its flagship company should emerge from the crisis with a new sense of purpose and propriety. Abu Dhabi will likely take the lead in helping Dubai restructure its financial institutions and reshape its strategic thinking as part of a wider effort to regain a measure of market integrity and public trust.

4) Human Capital: Dubai’s “oil reserves” are its people. They are educated (77.9% literacy rate), able, and multi-lingual with commands of Arabic, Persian, English, Hindi, and Urdu. The serious, sophisticated investor recognizes this as a key attribute in any successful venture. Human capital is the critical “X factor” on a balance sheet.

Qatar wasting no time deploying capital, linking people and goods

admin — Mon, 23 Nov 2009 03:58:01 +0000

A $25B joint venture was announced earlier today between Qatari Diar Real Estate Investment Co. and Deutsche Bahn AG, to build a railway system in the very liquid Gulf state of Qatar — the world’s largest producer of liquefied natural gas and the issuer of $7B of 4x oversubscribed bonds last week. Qatari Diar is a real estate company owned by the state’s sovereign wealth fund. It owns 51% of Qatar Railways Development Co., while Deutsche Bahn owns the remaining stake. The three phase project has an expected completion date of 2026, but Reuters reports that a major section will be done by 2022, when Qatar hopes to host the FIFA World Cup. The project includes passenger and freight trains, as well as connections to Saudi Arabia and Bahrain.

As Gulf states continue to spend tens (make that hundreds) of billions of dollars on infrastructure and other domestic projects, TradeFlow21 believes that it is a terrible mistake, for whatever reason, for American businesses and politicians to miss opportunities to do business and deepen ties with the Gulf. Qatar’s GDP is expected to grow over 9% this year and upwards of 35% next year, both clips by far the fastest among the GCC.

Growing sense of optimism in Dubai — FT

admin — Wed, 04 Nov 2009 16:00:36 +0000

clipped from www.ft.com

Signs of revival for Dubai property

Dubai property prices have risen for the first time since the market crashed last year , up 7 per cent in the third quarter as demand revived and lending conditions eased, consultancy Colliers International said.

The figures reflect a growing sense of optimism in Dubai, which was badly hit by the credit crunch as its vast debts combined with the puncturing of the real estate bubble a year ago.

However, Colliers warned that an upcoming surge in completed properties would drag down average prices next year, although not across the board.

“Well-planned mature developments in good locations, supported by facilities and community infrastructure, will receive relatively higher demand,” said Mr Albert.

IIF forecasts solid growth for GCC in 2010

admin — Sat, 03 Oct 2009 14:55:58 +0000

The Institute of International Finance (IIF) is forecasting a return to solid growth for Gulf Cooperation Council (GCC) states in 2010. The IIF expects current account and fiscal surpluses to remain “sizable,” driven by a recovery in oil prices. The partners of TradeFlow21 believe that while oil of around $70/bbl is less than half of last year’s peak, its more than doubling since the trough, not to mention the sizable domestic investments made by the GCC, make the soundness of their economies and finances all the more laudable. In fact, according the IIF, the Gulf’s non-hydrocarbon sector, which employs 95% of the labor force, avoided a recession in 2009 (with a growth forecast of 2% this year and 4% next year).

IIF GDP forecasts for the GCC:

Qatar — ’09: 9.3% and ’10: 35.5% (fueled by LNG exports and capacity expansion)
Oman — ’09: 5.2% and ’10: 9.7%
Bahrain — ’09: 1.9% and ’10: 4.1%
Kuwait — ’09: -1.9% and ’10: 4.0%
Saudi Arabia – ’09: -1.2% and ’10: 3.5%
United Arab Emirates — ’09: -1.5% and ’10: 3.4%

IMF signs off on Saudi Arabian economy, outlook

admin — Wed, 26 Aug 2009 13:07:09 +0000

The IMF issued a very positive report on Saudi Arabia last week, especially in light of the recency of the global financial crisis and ongoing global economic uncertainties. All systems are a go in the Kingdom, even as lower oil production is expected to pull down GDP to -1% this year. More importantly, the financial sector is “solid” and non-oil GDP growth is forecast at 3.3%, a solid figure in its own right.

clipped from www.google.com

Saudi economy, banking system solid: IMF

RIYADH — Saudi Arabia’s economy remains solid and its banks have weathered the global crisis, the IMF said in a report on Tuesday which also commended the world’s leading oil exporter for helping stabilise oil prices.”The outlook remains broadly positive” despite a projected one percent contraction in GDP this year due to lower oil production, the International Monetary Fund executive board said in the report.

It noted that non-oil GDP, which points to the ability of the economy to create jobs, is expected to grow 3.3 percent this year on the back of a massive government capital spending programme.

The IMF also said the country’s banking system remains on firm ground.

“The banking system has weathered the global crisis. It remains profitable and well-capitalised with low non-performing loans.”