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Egypt struggles to buy fuel as credit dries up

Tue, 28 Aug 2012 05:33:44 GMT

Egypt is finding it increasingly difficult to import fuel as foreign banks and traders pull the plug on credit and charge high premiums due to concerns over its financial and political stability, trading and banking sources said.

Sporadic international loans have so far helped, and the country requested up to $4.8 billion from the International Monetary Fund (IMF) on Wednesday, but without such ad-hoc interventions, Egypt could quickly end up like debt-stricken Greece, dependent on a narrow pool of traders charging richly for supplies.

That could put a dangerous strain on Egypt's finances, which are already under pressure from high fuel subsidies it can ill afford to maintain but dare not cut in the precarious first months of new Islamist President Mohamed Mursi's tenure.

Since the election of Mursi in June this year following the overthrow of Hosni Mubarak in 2011, the number of suppliers has shrunk as oil traders are struggling to secure letters of credit from banks.

'As soon as they changed the president, banks raised the costs of letters of credit involving EGPC,' one trader involved in supplying Egypt said, referring to Egyptian General Petroleum Corporation.

A spokesman for Egypt's oil ministry declined to comment and asked for queries to be directed to EGPC. No one at EGPC was available for official comment on Wednesday and Thursday.

Mursi took the world aback when he dismissed top generals earlier this month, raising fears that the army, from which all Egypt's presidents had come for six decades after ousting the monarchy, might retaliate, though they have so far raised no challenge.

In the strongest evidence to date of rising fuel import difficulties, traders said Egypt had to cancel a tender to buy crude earlier this month after receiving no bids, and also had to scrap parts of a gasoline import tender because the prices on offer were too high.

'The costs that banks apply to any transaction involving EGPC are now double that of a normal transaction,' another trader said. Some tenders have been relaunched with new terms.

An official at EGPC, who declined to be named because he is not allowed to speak to the press, confirmed that some tenders had been delayed for a few days but declined to discuss reasons and details.

Egypt has already been struggling to maintain its massive oil subsidies since the revolution last year, as oil prices soared. The subsidies ballooned by 40 percent to almost $16 billion for the year ended June 30, about a fifth of its entire budget.

Egypt's economy grew 2 percent in the 2011/12 financial year, down from 5 percent or more in previous years, as the revolution frightened away tourists and foreign investors and sparked a wave of strikes.

Cutting fuel subsidies would be a hard policy to swallow for Egyptians expecting a higher quality of life since the end of the authoritarian Mubarak's 30-year reign.

Risk on your shoulders

While the banks are still financing Egypt, rules are becoming more stringent.

Though EGPC still gets letters of credit from banks, the trader needs to have access to confirmation lines with a first class European bank.

'These are very limited now unless you are taking the Egyptian risk on your own shoulders,' one trader said.

'The complication comes from some offshore banks when they open letters of credit and they reduce the credit period from the usual seven days to three days, and in some cases against cash,' said a source from a Cairo-based global bank.

Traders noted that recent influxes of cash into Egypt have eased some worries.

Saudi-based Islamic Development Bank (IDB) provided $1 billion to finance energy and food imports in July, while Qatar lent $2 billion last week.

The latest version of the revived crude tender offers a letter of credit, but only from Egypt's national bank, which are not acceptable to most traders.

The rest will have to decide whether to take the risk.

'People are just going ahead on gut feeling,' one of the traders said. – Reuters

Egypt receives $500m Qatar deposit

Tue, 28 Aug 2012 05:33:43 GMT

Egypt said on Thursday it had received an initial $500 million loan from Qatar, part of its effort to secure international finance to stave off a financial crisis.

The state news agency Mena quoted Finance Minister Mumtaz El-Saeed as saying it was the first tranche of $2 billion the Gulf emirate had promised to deposit with Egypt's central bank, and that the remainder was expected to arrive next month.

Qatar announced earlier this month it was providing the loan.

Egypt has been rapidly depleting its foreign reserves since the popular uprising that toppled Hosni Mubarak led the central bank to sell dollars to prop up the country's pound.

The economy now faces a balance of payments crisis and is being further undermined by high state borrowing costs.

On Wednesday, Egypt formally requested a $4.8 billion from the International Monetary Fund (IMF) to help it shore up its balance of payments and to help plug a budget deficit expected to reach 7.9 percent of gross domestic product.

The Saudi-based Islamic Development Bank (IDB) agreed last month to provide Egypt with $1 billion to finance energy and food imports, and in May Saudi Arabia provided Egypt's central bank with a $1 billion, eight-year deposit and a $750 million credit line for oil imports.

The latest pledge from Qatar is one of several disbursements by the emirate to help out governments across the Middle East and North Africa since the Arab Spring.

Qatar gave Egypt a one-time grant of $500 million in October 2011, Mena added. - Reuters

Bahrain economy 'on revival path'

Tue, 28 Aug 2012 05:33:42 GMT

Bahrain's economy is seeing a revival with gross domestic product (GDP) posting strong growth this year, according to an international investment bank.

Latest figures from Bank of America Merrill Lynch Global Research show Bahrain's GDP grew 2.4 per cent in the first half of this year and is set to grow further up to 2.9pc for the same period next year.

Bahrain is entering a growth period following last year's disappointing economic indicators and is likely to receive a sovereign ratings boost soon, according to an economist.

'Prior to 2011, Bahrain was close to 5pc growth,' said Amin Al Arrayed. 'Merrill Lynch is confirming the consensus that we're now entering the growth period.'

The positive outlook from the investment bank will improve Bahrain's chances of an upgrade from credit ratings agencies, he added.

'It will give comfort to ratings agencies that are looking for economies that will create jobs,' said Mr Al Arrayed, general manager at real estate firm First Bahrain.

'The positive GDP growth forecast will boost ratings for Bahrain at a sovereign level.'

The country's GDP fell to 2.2pc last year, which was nearly half of its growth for the preceding year.

Bahrain has also come out of its deflationary phase as Merrill Lynch put the consumer price index for the first half at 2pc and predicted it to remain at the same level for the same period next year.

'We saw prices coming down, especially in real estate last year,' said Al Arrayed. 'During inflation, consumption will be on the rise.

'We're starting to see prices coming up. It is indicative of people starting to purchase items and consumer goods.'

The festive season demonstrated a rise in demand for consumer items and showed a revival in business, he added.

'Eid was successful for businesses here,' said Al Arrayed. 'Demand is also fuelled by regional visitors and even hotels reported full occupancy.

'The factors, which hurt economic growth in 2011, have diminished.'

Bahrain, despite lagging behind in growth indicator rankings, has the most diversified economy in the region, added Al Arrayed.

'There is rapid growth in the hydrocarbons sector across the GCC in countries such as Qatar and Kuwait,' he added. 'Bahrain's GDP, however, has been the most diversified across all of the GCC. - TradeArabia News Service

Investors want more from Egypt

Tue, 28 Aug 2012 05:33:40 GMT

International investors see Egypt's request for a loan from the International Monetary Fund as a major step to attracting money back into the country, but may want more progress before they commit their own funds.

Once a darling of frontier market investors, Egypt has lost appeal since the overthrow of President Hosni Mubarak 18 months ago. Worries about instability have combined with concern over a declining currency and dwindling foreign exchange reserves.

But Egypt's official request this week for a $4.8 billion loan from the International Monetary Fund, announced during a visit to Cairo by IMF President Christine Lagarde, may help.

It is likely to avert a currency or debt crisis, investors say.

'An IMF loan will be seen as positive,' said Daniel Broby, chief investment officer at Silk Invest. 'Although a further (currency) depreciation is on the cards, a loan will help shore up the pound against a worse outcome.'

Silk Invest holds Egyptian corporate debt and has recently added to its holdings of bank EFG-Hermes, Broby said, bringing the frontier fund manager's Egyptian exposure to nearly 10 percent of its assets.

The Egyptian pound hit fresh seven-year lows after the loan was announced because investors expect the IMF to encourage the central bank to allow the currency to weaken more rapidly.

Since last year's popular uprising against Mubarak, Egypt has spent well over half its foreign reserves to support its currency, allowing the pound to weaken only by about 5 percent despite a sharp drop in tourism and foreign investment, two of Egypt's main sources of foreign exchange.

But a gradual depreciation of the pound, with financial support from the IMF, will allow the central bank to rebuild reserves. It is also less unpredictable for investors than a sudden one-off devaluation.

'They can't announce one-way bets, but the IMF could say 'we need to have more exchange rate flexibility',' said Gabriel Sterne, economist at frontier markets brokerage Exotix. 'It's about getting the policies in place that restore confidence.'

Reflecting the positive sentiment towards the loan talks, Egyptian stocks are trading at five-month highs, while the country's debt insurance costs have fallen by 50 basis points to around 500 bps in the past week in the five-year credit default swap market, according to Markit.

The yield on Egypt's dollar-denominated bond due 2020 , which avoids the local currency risk, has plunged 75 basis points this week, to 5.4 percent, far lower than the euro-denominated debt of Italy or Spain.

Egyptian stocks were among the world's worst performers last year, sinking 50 percent, but they have made a 43 percent gain this year.

Egypt also has support from other channels. Saudi Arabia transferred $1.5 billion to Egypt as direct budget support in June, along with other aid measures. Qatar also promised $2 billion in support this month.

The loan talks also reflect a more secure political situation, investors say, after Egypt's military-appointed interim government handed power to President Muhamed Mursi on June 30. The military government had been negotiating a $3.2 billion package with the IMF before it handed over, but the deal was not finalised.

Political risk remains, however, with legal challenges to a decree issued by Mursi that removes army-imposed curbs on his powers.

Richard Fox, head of Middle East and Africa sovereign ratings at ratings agency Fitch, said it was too soon to change the country's rating.

Fitch cut Egypt's rating to BB-plus with negative outlook in June, though Standard & Poor's took Egypt off CreditWatch negative on Thursday.

Sterne at Exotix has kept a hold, rather than buy, recommendation on Egypt's 2020 Eurobond, with agreement on the deal not due before the end of the year and the possibility of popular or political reaction to it.

Fox also said it was early days for any deal euphoria. 'There will come a point in the future when we will get a trigger and it brings back lots of portfolio investments, I don't think we are there yet.' - Reuters

Bahrain 'major investment hub'

Tue, 28 Aug 2012 05:33:39 GMT

Bahrain remains a major investment destination despite the unrest, said General Arab Insurance Federation secretary general Abul Khaleq Raouf Khalil.

The crisis did not shake the confidence of regional and international investors thanks to the way Bahrain’s government dealt with the incidents and its ability to manage the security situation to maintain political stability, he said.

Bahrain-based insurance companies continue to achieve satisfactory results as Arab and international insurance companies were hit by global recession and ‘Arab Spring’ movements, stated Raouf Khalil.

While American Insurance Group collapsed and was rescued by a $140 billion loan from the US Federal Reserve, insurance premiums in Bahrain continue to achieve revenue growth on a yearly basis, he said.

Premiums rose to $597 million last year, up from $585 million in 2010, said our sister paper Akhbar Al Khaleej, citing Raouf Khalil.-TradeArabia News Service

'Global Shapers' set up projects worldwide

Tue, 28 Aug 2012 05:33:38 GMT

One year after it was launched, the World Economic Forum’s community of Global Shapers has grown to actively engage more than 1,200 of the world’s most promising leaders under the age of 30 working on grassroots projects that benefit their local communities in more than 160 cities worldwide.

Projects include a national newspaper, radio and TV campaign in Bamako, Mali aimed at inspiring young people to vote; an initiative to address violence and social division among young people in Caracas, Venezuela; a project aimed at closing the education gap in the Philippines by setting up 200 libraries nationwide; a drive to encourage millions of mobile phone subscribers in India into small philanthropic donations with their bill payments; and an earthquake recovery project in the tsunami-hit region of Tohuku, Japan.

The Global Shapers Community was launched in Dalian, China, at the Annual Meeting of the New Champions 2011. The aim is to tap into the potential of the youth generation, providing talented 20- to 30-year-olds with a global platform to shape the future and develop their leadership potential to serve society.

Global Shapers represent all walks of life and share a spirit of entrepreneurship in the global public interest. They include business and social entrepreneurs, academics, musicians, artists and policy-makers. At the time of their selection, they have an entrepreneurial track record having already initiated and delivered a major project or founded a company or organization.

The community is organised into a network of local hubs based in major cities around the world. Shapers undertake activities that generate a positive impact within their local community, while also contributing to dialogues between hubs both regionally and globally. In the last year, more than 200 Shapers have attended World Economic Forum regional meetings to cross-mentor other Forum communities.

“The Global Shapers community is the first truly global youth network that is focussed on improving the state of the world. Recent events have shown the power of young people through technology, information and mobilization to bring change around the world to places where we never even thought change was possible. We see this as an opportunity to bring young people into the World Economic Forum and have them sit at the table with leaders in dialogue to shape the future of this world in a way that reflects the needs of this generation,” said David Aikman, head of the Global Shapers Community at the World Economic Forum. - TradeArabia News Service

RAK IC company formation doubles in H1

Tue, 28 Aug 2012 05:33:36 GMT

Company formation of RAK International Companies (RAK IC), which assists foreign companies to set up presence in the UAE, has doubled in the first half of the year, when compared to the last six months of 2011, a report said.

This makes it the company’s most popular structure for foreign companies looking for an offshore business presence linked to the UAE, said Atlas Corporate Services Group, a leading provider of corporate services, in its findings from internal research conducted to review and establish emerging patterns in company formation.

Established in 2006 and regulated by the RAK Investment Authority, Ras Al-Khaimah IC’s offer attractive features such as 100 per cent foreign ownership, 100 per cent repatriation of capital and profits and zero taxation.

RAK also offers a strategic location as gateway between Asia, Africa and Europe, offering investors easy access to a range of established and emerging markets. Furthermore, RAK IC’s can be incorporated in as little as 72 hours and are cost effective.

The combination of these factors combined with the political stability of the UAE is believed to have contributed to RAK IC’s ongoing popularity, said Atlas.

RAK is located at the northern most tip of the UAE, and has a population of approximately 250,000, which is expected to grow to 400,000 by 2017.

Rapid development of the Emirate, notably driven by the creation of the award-winning RAK FTZ (Free Trade Zone) in 2000 and ongoing expansion of the RAK International airport has contributed to the growth of a robust local and expatriate commercial hub.

Paul Hymers, finance director of Atlas Corporate Services said: “RAK IC's have always been popular with our client base. However, we attribute this spike in formation to the growing credibility and awareness of the strength of Ras Al Khaimah as an international business hub, and the improved infrastructure both within the RAK FTZ, and accessibility with the rest of the Emirates.”

“We expect this figure to grow again for the period Q3/Q4 2012, and will continue to recommend RAK companies strongly to all our international business clients. We at Atlas Corporate Services feel that RAK represents the future of company incorporation in the UAE at this current time.” – TradeArabia News Service

ANALYSIS: Economics, politics underpin Qatar aid

Thu, 23 Aug 2012 08:55:04 GMT

With a plan to deposit $2 billion in Egypt's central bank, Qatar is becoming one of the top financial backers of the struggling country as it signals an intention to play a big role in rebuilding North African economies.

Larger foreign donors have been cautious about lending money to economies hit by the Arab Spring, but Qatar - with a population of just 1.7 million - is using its natural gas wealth to establish itself as an economic force in the region.

The aid appears to have both political and economic motives, diplomats and analysts say. By supporting economies in North Africa, Qatar helps to limit further social unrest that might spread to the Gulf. Meanwhile, some of its aid involves investment that could be very profitable if North African economies eventually resume growing rapidly.

'Qatar is attempting to achieve major political and economic goals with its dynamic foreign policy in reshaping North Africa in the wake of the Arab Spring,' said Theodore Karasik, director of research at the Institute for Near East and Gulf Military Analysis in Dubai.

Analysis of foreign aid to Arab states:

EGYPT: The $2 billion deposit from Qatar would be a significant boost to Egypt's foreign reserves, which have more than halved since the start of last year to $14.4 billion in July. The Egyptian finance minister said on Monday that the first $500 million payment from Qatar was expected within a week.

The announcement followed news in June that state-owned Qatar Petroleum (QP) was involved in a $3.7 billion financing package to build an oil refinery on the outskirts of Cairo, one of the biggest industrial projects announced since Egypt's revolution. QP International committed over $362 million to buy a 27.9 percent stake in the project.

And last October Qatari Diar, the property arm of Qatar's sovereign wealth fund, signed a $544 million contract to develop two real estate projects in Egypt, in Cairo and Sharm el-Sheikh.

Since Egypt's revolution, only Saudi Arabia appears to have made a larger financial commitment to the country. It transferred $500 million to the Egyptian central bank in May last year, and in June this year it provided a further $1.5 billion to support Egyptian government finances, according to officials in Cairo; it has also promised $430 million in project aid and a $750 million line of credit for oil imports.

The International Monetary Fund has been discussing a $3.2 billion loan to Egypt, but agreement has so far been delayed by changes in the Egyptian government and the IMF's concern about the wisdom of the country's economic policies.

TUNISIA: Qatar has also thrown an economic lifeline to Tunisia, which in April raised $500 million at a 2.5 percent interest rate via a private placement of debt to Qatar.

In May the Qatari government said it was reviving plans to build a build a $2 billion oil refinery in Tunisia after years of delays, potentially expanding the North African country's refining capacity more than fourfold.

MOROCCO: Qatar's plans include a 50-50 investment joint venture worth $2 billion, agreed late last year, to help the country fund major development projects.

Qatar's sovereign wealth fund, Kuwait's Al Ajial Investments and Abu Dhabi's sovereign wealth fund Aabar Investments have also agreed with Morocco's Fund for the Development of Tourism to inject 20.8 billion dirhams ($2.5 billion) into a newly created vehicle called Wessal Capital to focus on developing new tourism resorts in Morocco.

MOTIVES

Publicly, Qatar has been noncomittal about the motives for its support of North African economies, beyond saying it wants to spread prosperity and foster good ties with all countries.

'Don't you think this is a good policy for a small country?' Qatar's Emir Sheikh Hamad bin Khalifa Al-Thani said in an interview with US television programme 60 Minutes in January, when asked about its efforts to build bridges in the region.

Its motives appear partly ideological, however. In contrast to Saudi Arabia, which has been suspicious of the Muslim Brotherhood's potential to stir social unrest in the Gulf, Qatar's close ties to the Brotherhood extend over decades; it has provided exile to prominent Brotherhood members, the most prominent of them Egyptian Sheikh Yousef Al-Qaradawi, viewed as the movement's spiritual leader.

The victory of the Brotherhood's Mohamed Mursi in Egypt's June presidential elections finally gave Qatar the chance for a close alliance with Cairo.

'Their brand of Islam is acceptable to the Qataris, and they are powerful: a winning combination,' said a Doha-based source close to the government, who declined to be named because of political sensitivities.

The deposit in Egypt's central bank helps the Qataris 'maintain their alliance structure while at the same time increasing their power', the source said.

A second source in Doha with ties to the government said: 'The Qataris have an interest in securing domestic stability in Egypt. They don't want to see a situation where their own guys are struggling.'

But the motives are also economic. In recent years Qatar, like other Gulf countries, has embarked on a policy of investing around the world to prepare for the eventual depletion of its energy resources.

In North Africa, its investments since last year have focused on energy and banking, two sectors which can be expected to grow because of young populations and relatively high population growth rates, as well as on tourism.

Among Qatar's regional investments since the Arab Spring, Qatari Diar said last October that it would build an $80 million tourism and leisure complex over 40 hectares in Tunisia's southern city of Tozeur, a top tourist destination.

Qatar's state-backed QInvest sealed a deal to hive off the investment banking business of Egypt's EFG Hermes through a joint venture in which QInvest would own 60 percent - a deal which would provide money for EFG, the Middle East's biggest home-grown investment bank, to expand across the region.

And Qatar National Bank, the Gulf country's biggest lender, which is 50 percent government-owned, agreed to buy a majority stake in Morocco's Union Marocaine des Banques.

'Given the amount Qatar has to invest, it is looking for opportunities in the region that offer commercial return and/or political leverage,' said a Doha-based economist.

'The three North African countries that have undergone political transition naturally offer a rare opportunity to increase Qatari engagement, both because these countries have urgent needs for investment and assistance, and because the new governments are more naturally sympathetic to Qatar than the outgoing regimes.' - Reuters

Saudi economy to grow 5.7 per cent in 2012

Thu, 23 Aug 2012 08:55:04 GMT

Backed by a strong oil sector and large government stimulus generating impressive growth figures, Saudi Arabia’s real GDP is expected to grow by 5.7 per cent this year, said a report.

Provisional data show the non-oil sector grew by 7.5 per cent in 2011, one of the stand-out performances of post-financial crisis Mena, said the latest GCC Brief from the National bank of Kuwait (NBK).

Although growth may decelerate somewhat in 2012 as the exceptional stimulus measures of 2011 wear off, various gauges of private sector activity – from surveys to credit growth – suggest that the economy has considerable momentum, the report said.

Sustained growth at a super-strong pace, however, is unlikely without deeper structural reforms.

Crude oil production reached 9.9 million barrels per day (mbpd) in May – its highest of the modern age and up 7 per cent on its average for last year.

According to the GCC Brief, barring a major fall in oil prices, Saudi Arabia is likely to keep production levels high as it seeks to replenish global inventories and support the global economy.

Oil GDP should register a solid 5 per cent or so increase this year and remain flat in 2013. Saudi Arabia’s remaining cushion of spare production capacity now stands at around 2-2.5 mbpd, close to the amount that the authorities like to maintain for contingencies. This limits the scope for further large increases in oil sector GDP.

Non-oil growth

Non-oil GDP growth in 2012 is revised up slightly from 5 per cent to 6 per cent, in light of the economy’s apparent momentum. ATM and point-of-sale figures show that the consumer sector remains buoyant following the boost to incomes in 2011 and improved bank lending conditions.

Meanwhile, the government is only halfway through its massive $386 billion investment program running 2010-2014. Non-oil fixed investment stood at 31 per cent of non-oil GDP in 2011, well above its historic average. These domestic components should hold up well amidst further turbulence in the global economy.

Inflation is expected to remain close to 5 per cent this year and next. Within this total, however, sectors will diverge, the report said.

Food price inflation should remain contained or may dip, while the government’s aggressive house building program could start to ease pressures in the rental market. On the other hand, inflation in other ‘core’ sectors such as clothing, furniture and transport could rise.

Despite the upside risks to inflation from a buoyant economy, we see the authorities leaning towards growth – rather than anti-inflation – policies over the next two years.

Government spending

According to the report, after jumping by an estimated 23 per cent in 2011, government spending growth could slow sharply in 2012 and 2013, to an average of 5 per cent per year.

Nonetheless, fiscal policy will continue to provide key support for the economy. The budget surplus will also remain very solid, at 8-15 per cent of GDP so long as oil prices remain close to $100 per barrel. Higher production has helped lower the oil price needed to balance the budget from $75 in 2011 to $72 in 2012.

Strong oil revenues will also help generate current account surpluses of 15-25 per cent of GDP in 2012 and 2013. This will help the kingdom add to its huge stock of reserve assets, which stood at $541 billion at the end of 2011, the report said. – TradeArabia News Service

Emiratis see better financial climate

Thu, 23 Aug 2012 08:55:03 GMT

More than half (52 per cent) in the UAE believe that their personal financial situation will improve in the years to come, while 45 per cent also expect an improvement in the country’s economy, said a report.

While 49 per cent saw advancement in the country’s business and employment conditions, 35 per cent stated there will be more jobs available, according the latest Mena Consumer Confidence Index Survey, conducted by Bayt.com, the Middle East’s number one job site, and YouGov, a research and consulting organisation.

Respondents from the UAE feel that their current personal financial situation has either remained the same (36 per cent) or become worse (31 per cent). Feelings towards the country’s economy are mostly neutral (36 per cent), and it is considered to be a neutral time to buy according to 50 per cent.

In line with this, 74 per cent of respondents state that business conditions are neutral to bad, and 80 per cent state that there are ‘not many’ or ‘very few’ jobs available.

While a third (30 per cent) of UAE respondents believe that there are more employees in their company now than there were at this time last year; 34 per cent claim that there are fewer. The majority (68 per cent) state that their salary has not kept pace with the cost of living, the survey said.

Job satisfaction in the UAE is considered to be mostly neutral to low, with only 16 per cent believing that the career prospects in their current job are high, while 43 per cent state that the opportunities for career growth are low, according to the survey.

The majority (75 per cent) claim neutral to low satisfaction with their job security, and half (50 per cent) are unhappy with their current compensation.

Over 23 per cent of UAE respondents anticipate a growth in the number of employees at their current company in the coming three months, with 38 per cent being ‘neutral’ with the prospect of keeping up with staffing requirements.

Respondents anticipate a mostly negative impact vis-a-vis the cost of living (according to 35 per cent); they also believe that accommodation costs will rise (stated by 33 per cent).

In the next 12 months, 27 per cent of UAE respondents are considering purchasing a vehicle; of these, 49 per cent will buy new. Within the same time frame, 19 per cent will consider buying property, 66 per cent of whom will purchase a new property.

The three most popular consumer purchases for the next six months will be desktop or laptop computers (24 per cent); furniture (20 per cent) and LCD or plasma televisions (17 per cent).

Regional Sentiment

In general across the Mena region, feelings for respondents’ personal situations at the present time are neutral.

According to the survey, only 28 per cent claim that their financial situation is better than last year, compared to 65 per cent who state that it has either remained the same or declined.

National economies are considered to be worse than last year, according to 33 per cent of respondents. Consumer behaviour (41 per cent of respondents say that now is a ‘bad time to buy’) is likely impacting business conditions which are neutral to bad, as stated by 65 per cent.

In terms of employment, almost half of the respondents (49 per cent) claim that there are ‘very few jobs available’. Six out of ten say that their company has either the same or fewer employees than this time 12 months ago, and two thirds (65 per cent) believe that their salaries have not kept pace with the cost of living.

However, respondents appear to be optimistic for the upcoming year. The majority believe that their personal financial situation (51 per cent), country’s economy (44 per cent), business conditions (49 per cent) and employment conditions (35 per cent) will improve.

“Retaining a positive outlook for the year to come will be pivotal to the region’s success. Conditions may not be considered to be entirely favourable at the present time, but there are plenty of signs that the months to come will prove beneficial for all,” said Suhail Masri, vice president of Sales, Bayt.com.

“Bayt.com gathers vital information from pertinent cross-sections of MENA society, to provide in-depth insights into the feelings, behaviour and trends happening in recruitment and business around the region.”

Satisfaction with career prospects in the region at present is low, according to 39 per cent of respondents, while 38 per cent state that it is ‘neutral’. Three quarters of respondents (74 per cent) also claim that prospect for career growth in their current organisation is neutral to low.

Job security is seen to be an issue by 67 per cent, with only one in four (27 per cent) claiming their job security is ‘high’, and satisfaction with compensation is neutral to low, according to 84 per cent.

With regards to employment, 24 per cent of companies expect to increase employees in the coming 3 months. A further 61 per cent are either neutral or pessimistic about growth potential vis-a-vis the number of employees in their organization. The sentiment towards keeping up with staffing requirements is neutral, according to four out of ten respondents (37 per cent); however 19 per cent cite optimism.

The outlook for inflation is negative, with 38 per cent believing there will be a rise in the cost of living. Similarly, 36 per cent believe the cost of real estate is still creating a feeling of negativity across the region.

In the next 12 months 29 per cent of respondents are planning to purchase a vehicle. Of these, 51 per cent will buy new. Moreover, One in five (21 per cent) are considering investing in property, with 65 per cent of them planning to buy new.

The five most popular consumer purchases in the next six months will be desktop or laptop computers (25 per cent); furniture (20 per cent); LCD or plasma television (18 per cent); air conditioners (16 per cent) and digital cameras (13 per cent).

“Consumer habits have remained somewhat stable in the past year, with the same five product categories continually topping the list. Computers are always a favourite purchase across the board, and technology in general seems to consistently be the best-selling consumer goods category,” said Sundip Chahal, CEO, YouGov. – TradeArabia News Service

UAE non-oil growth seen at 3-4pc in 2012

Thu, 23 Aug 2012 08:55:02 GMT

UAE’s non-oil growth is likely to continue at a below-trend pace of 3 to 4 per cent for the next couple of years, said the latest GCC Brief issued by the National Bank of Kuwait.

Data for the first quarter of 2012 – including on credit, real estate transactions and the PMI survey of private sector firms – were positive, the report added.

But these may overstate the underlying pace of improvement. Activity is typically stronger early in the year before easing back in the summer.

Although gradually recovering, the economy will be held back by concerns over the restructuring and refinancing of Dubai Inc. debt, and ongoing fiscal consolidation. With its strong trade and transport links, the UAE is also more heavily exposed than its neighbors to any global economic turmoil.

IMF estimates suggest that UAE government-related entities (GREs) still have some $185 billion (51 per cent of GDP) of debt outstanding, with repayments and redemptions of $25-30 billion (7-8 per cent of GDP) due in each of the next 3 years.

This heavy financing schedule leaves GREs reliant upon favorable capital market conditions and decent economic growth to shore-up cash flows and asset values. Given the uncertain global outlook, these are not guaranteed. Even if the world economy avoids a big downturn, continued consolidation and deleveraging at GREs is likely to remain a drag on UAE growth for the foreseeable future.

The hydrocarbon sector output is forecast to rise 3 per cent in 2012 and level-off in 2013, as oil prices remain close to $100 per barrel and Gulf Opec members seek to guard against potential supply disruptions elsewhere.

This will leave crude oil output close to its maximum potential of 2.7 million barrels per day (bpd), though capacity is scheduled to rise to 3.5 million bpd over the next few years. Overall real GDP growth is seen at 3.3 per cent this year, down from 4.9 per cent in 2011.

Inflation will likely remain amongst the lowest in the region. Consumer price inflation has been below 1 per cent since mid-2011, and averaged 0.7 per cent in the first 4 months of 2012. Excluding food, inflation would have been negative, at -0.6 per cent, for the same period in 2012.

The rate of decline in housing rents has recently shown signs of bottoming out, but with the oversupply in residential property expected to persist, a rebound in rents looks unlikely. Moderate economic growth, weak credit conditions growth and softer global food prices should see inflation average 2.0 per cent or below this year and next.

Government spending is estimated to have increased 19 per cent in 2011 thanks partly to higher loans and equity outlays – likely linked to the Abu Dhabi government’s assistance to local corporates.

Nevertheless, with oil prices and production high, the budget balance improved, registering its first surplus for 3 years at 3 per cent of GDP. Slightly larger surpluses are seen this year and next, as bailout expenses decline and the authorities seek to rationalize current and project spending where possible.

Meanwhile, the slight dip in oil prices combined with rising imports could see the current account surplus shrink from 7 per cent of GDP this year to 2 per cent of GDP in 2013. – TradeArabia News Service

Bahrain 'a $1trn Gulf business gateway'

Thu, 23 Aug 2012 08:55:01 GMT

Bahrain is looking to become a gateway 'to the wider GCC that is currently estimated to have a combined gross domestic product of $1 trillion', according to a senior government official.

Shaikh Mohammed bin Essa Al Khalifa, adviser to HRH the Crown Prince for political and economic affairs and board member of the Economic Development Board said Bahrain's government has invited Malaysia's business community to invest in the kingdom's infrastructure, Islamic finance and manufacturing sectors.

Shaikh Mohammed said the country is looking to expand its government spending budget and hopes that Malaysian investors will be able to work with the country.

'This expansionary budget is likely to have a strong stimulus effect, with particular investment being made in social housing and infrastructure spending,' he said in an interview with Malaysia's Bernama news agency.

'There are a number of opportunities in Bahrain and, through Bahrain, to the wider GCC, in particular through trade and investment in construction, agriculture, food production, ICT, education, science and technology as well as tourism,' he said. – TradeArabia News Service

Global economic confidence level plummets

Thu, 23 Aug 2012 08:55:00 GMT

Confidence in the state of the world economy over the next 12 months fell to the lowest level in five quarters, according to the Global Confidence Index prepared by the World Economic Forum.

The relative optimism of the previous quarter evaporated against a backdrop of slowing growth in the US and China as well as a lingering eurozone crisis, with 72 per cent of respondents to the poll reporting that they were not confident about the state of the global economy over the next 12 months, up from 37 per cent.

“Despite every effort to ensure economic, social and political stability, we are still just one shock away from everything getting off track again – which points to the need for greater resilience globally,” said Lee Howell, managing director at the World Economic Forum, who is responsible for the Forum’s Global Risks 2012 report.

All three of the main confidence indices measured in the poll of 430 experts reflected a markedly more negative outlook in the third quarter of the year. As well as the gloomy overview, 68 per cent of experts now gauge a significant economic disruption to be likely or very likely in the next 12 months, up from 46 per cent in the second quarter.

The perceived likelihood of a big societal disruption also increased, with 53 per cent of respondents seeing this as likely or very likely over the next year, up from 46 per cent three months previously. Meanwhile, concerns about a major geopolitical disruption remained stable at 55 per cent.

Respondents were increasingly worried about the ability of existing institutions to cope with the multifaceted crisis. Some 61 per cent of the experts surveyed were not confident in global governance, up from 45 per cent in the previous quarter, while those who lacked confidence in global cooperation rose to 48 per cent from 37 per cent.

The Global Confidence Index – a joint initiative of the World Economic Forum’s Risk Response Network and Global Agenda Councils – is the only research initiative of its kind targeting such a large group of international experts who focus on monitoring key trends, identifying global risks and mapping their interlinkages.

The first quarterly report was issued in September 2011, and today’s results are the fifth successive instalment. The next Global Confidence Index results will be available on November 12, 2012, the statement said. - TradeArabia News Service

IMF wants to help Egypt says Lagarde

Thu, 23 Aug 2012 08:54:59 GMT

The head of the International Monetary Fund said on Wednesday the Washington-based institution wanted to support Egypt and said that an IMF team would discuss details on a loan package to help the economy.

Christine Lagarde was speaking to journalists after holding talks with President Mohamed Mursi and other senior Egyptian officials during a visit to Cairo.

She said details and terms for the loan still had to be worked out and the IMF team would hold more talks on Thursday in Cairo before going back to Washington and then returning to Egypt for further discussions.

Egypt said it had formally asked for a loan of $4.8 billion, more than it had previously sought. - Reuters

Mena residents' financial status improves

Thu, 23 Aug 2012 08:54:57 GMT

Majority of the residents in Mena region have either maintained or improved upon their financial status in the past 12 months, with more positive sentiments for the year to come, according to a survey.

As far as 2012 is concerned, the outlook is positive across the Mena region with the respondents consistently believing that their personal financial situation will take a turn for the better, said the latest consumer confidence index conducted by leading job site Bayt.com and research organisation YouGov.

The majority also stated that the same would be true for their country’s economy, business conditions and employment availability.

This positivity however doesn’t extend to the cost of living or real estate; 39 per cent and 36 per cent of respondents, respectively, believe that these will be negatively impacted in the future.

While roughly a third of regional respondents to Bayt.com’s CCI experienced a decrease in their finances compared to 2011, another third (34 per cent) stated that they had not had any change at all.

More than a quarter (27 per cent) claim to have an improved financial situation, the survey revealed.

According to the survey, country economies were considered by most to be either the same or worse than last year, and the majority of respondents believe that this is a neutral or bad time to purchase durable consumer goods and that business conditions are unfavourable.

Only 12 per cent claim that there are jobs readily available. The Mena-wide sentiment (as per 67 per cent respondents) is that remuneration and compensation are not keeping pace with the cost of living, with a majority (40 per cent) stating dissatisfaction with their current job and career prospects along with chances for growth (39 per cent).

Despite this, job security was not much of an issue for professionals in the Mena as a collective 61 per cent claimed their job security to be ‘neutral’ to ‘high’, the survey pointed out.

The overall sentiment is that there will be little growth in terms of number of employees in companies in the coming three months, with 37 per cent stating that they feel ‘neutrally’ about staffing requirements being met, it added.

The survey pointed out that only 27 per cent of respondents considered buying a new vehicle in the next year.

'Those who will are more likely to buy new. The same is true of the 21 per cent who are looking to buy property. In terms of intention to make ‘smaller’ purchases, desktops and laptops continue to be top in popularity, followed by furniture and digital cameras,' it added.

Commenting on the findings, Suhail Masri, the VP of sales, Bayt.com said, 'Feelings towards economy, commerce and employment are relatively consistent across the region, with regional sentiment for the current situation remains relatively low.'

'However, there is always hope for a more positive tomorrow. That employees feel secure in their current job is a welcome find,' he noted.

“At Bayt.com, we gather information that is relevant to both job seekers and employers, combining our knowledge of the industry and region to deliver tools pertinent to the millions of people who use our job site for recruitment purposes,” Masri said.

Sundip Chahal, the CEO of YouGov said, 'With the majority of people stating that their financial situation has either remained the same or improved over the last year, it may be that the positive outlook for the future may be realistic.'

'While the majority say that now is a bad time for business, there are some countries that are clearly experiencing a more positive commercial atmosphere – which, undoubtedly, is a good sign for things to come,' he added.

On the UAE scenario, the survey said majority stated that their financial situation was the same now as it was 12 months ago, though they also believe that the country’s economy has declined.

'On a positive note, however, people in the UAE do believe that this is a good time to buy consumer durable goods, and business conditions are considered to be neutral, as opposed to the perceived bad atmosphere elsewhere in the region,' the survey stated.

The outlook for employment is also slightly better in the UAE than the rest of Mena region with 43 per cent stating that there are very few jobs available as opposed to regional 50 per cent who claim the same is true for their country, it added.

UAE respondents said there were fewer employees working in their companies now than last year. About 69 per cent of them believe that their salary has not kept pace with the cost of living, and 52 per cent say that their compensation is inadequate.

This does not seem to have had too negative an effect on job satisfaction, though. More than half (54 per cent) opted for ‘neutral’ or ‘high’ to describe their satisfaction with their job, career and growth prospects with their current employer.

Despite this, an equally-split 72 per cent stated that they have ‘neutral’ to ‘low’ satisfaction with their perceived job security.

In the next three months, most UAE respondents believe that there will be few additional employees added to their company (38 per cent claim to have a ‘neutral’ sentiment in this regard). Similarly, 41 per cent are neutral as to whether or not their company will keep up with staffing requirements.

On the future outlook, UAE respondents are positive about the year ahead, with the majority believing that both their financial situation (49 per cent) and the country’s economy (46 per cent) will have improved.

Business conditions and the number of jobs available are also expected to be better, according to 48 per cent and 35 per cent of respondents, respectively.

On the other hand, 33 per cent of residents in the UAE believe that the cost of living will have negative impact in the year to come, while 31 per cent believe that cost of real estate for rental or purchase will not be affected.

The data for the survey was collected online from April 18 to May 7 with 10,138 respondents aged over 18 years, covering GCC Arab, North African, Levant, Western expatriate and Asian nationalities.-TradeArabia News Service

Egypt, IMF discuss $4.8bn loan

Thu, 23 Aug 2012 08:54:56 GMT

Egypt requested a $4.8 billion loan from the International Monetary Fund and hopes for a deal by the end of year, officials said during a visit on Wednesday by IMF chief Christine Lagarde to discuss helping the ailing economy.

Egypt said last week it would discuss a bigger-than-expected loan from the fund, whose support could help to stave off a balance of payments crisis and rebuild confidence of investors who fled during 18 months of political turmoil.

Egypt's military-appointed interim government had been negotiating a $3.2 billion package before it handed power to President Mohamed Mursi on June 30. The deal was not finalised.

"We have officially requested a $4.8 billion loan from the IMF," presidential spokesman Yasser Ali told Reuters as Lagarde met the president. An IMF official confirmed the request.

During earlier talks, army officials had voiced some concerns about extending the nation's debts under their watch, while the IMF had insisted that any agreement receive "broad political support".

Mursi's group, the Muslim Brotherhood, at the time declined to support any deal, saying the then government had not given it enough information to show how the money would be used. The Brotherhood at that point had nearly half the seats in parliament.

Lagarde's visit signals a fresh determination on both sides to seal a long-awaited accord after Mursi, who took office on June 30, appointed his first government last month.

"The objective ... is to improve stability, to restore confidence with a view to encouraging investors to invest and create jobs, to reduce the financial burden of very high financing terms," Lagarde said after meeting top officials.

She said the IMF would look at fiscal, monetary and structural issues. "We will be discussing engaging in a dialogue but at the end of the day ... it's an Egyptian journey and the IMF is a partner in that journey," she said.

Speaking at a joint news conference with Egyptian Prime Minister Hisham Kandil, she added that talks would continue on Thursday and an IMF team would make further visits to Egypt.

Kandil said he expected the IMF loan would be for five years with a grace period of 39 months and interest rate of 1.1 percent, but said details were still being discussed.

"God willing there will be an agreement on a map for work extending to November or the beginning of December during which the loan will be signed with the IMF," he said.

During 18 tumultuous months since the overthrow of autocratic leader Hosni Mubarak, successive Egyptian governments negotiated with the IMF to secure emergency funding. An army council took charge after Mubarak fell on Feb. 11, 2011.

Egypt's fiscal and balance of payments problems have worsened. An exodus of foreign investors in the wake of the turmoil left local banks shouldering much of the short-term and other lending to the state.

The government in the 12 months to end-June also borrowed nearly $12 billion, or about 4.5 percent of GDP, directly from the central bank, an unusual measure indicating it was running out of options to finance its budget deficit.

Foreign reserves have fallen to well under half levels seen before last year's popular uprising against Mubarak and investors' reluctance to return is born partly of fears that a sharp currency devaluation could wipe out any returns.

An IMF deal would help Egypt to add credibility to economic reforms needed to restore investor confidence.

Based on government figures, the budget deficit for 2012/2013 will represent 7.9 percent of gross domestic product (GDP), down from 8.2 percent a year earlier. But most economists forecast lower GDP growth than the government's estimate of 4-4.5 percent.

Tax receipts have suffered from a weak economy and the previous government boosted spending to meet popular demands for better living standards after Mubarak's overthrow.

Aid promised by foreign donors last year was largely absent until June, when funds arrived from Saudi Arabia. It transferred $1.5 billion as direct budget support, approved $430 million in project aid and said it would allow Cairo to use a $750 million credit line to import oil products.

Qatar also pledged $2 billion in support this month. - Reuters

Business in Bahrain soars during Eid

Thu, 23 Aug 2012 08:54:55 GMT

Bahrain's malls and restaurants enjoyed roaring trade over the three-day Eid holiday, while almost all the country's four and five-star hotels were full to capacity, according to official figures.

The hotels showed most had occupancy rates of 70 per cent and some were fully booked between Saturday and Tuesday.

Sources said at least two five-star and three four-star hotels were 90 per cent full between Saturday and Tuesday, with some others reporting full occupancy on the last two days of Eid.

Extraordinary

They said while almost all hotels in Manama and Juffair did brisk business, others reported occupancy levels of between 27 per cent and 50 per cent on Saturday and Sunday, which rose to between 60 per cent and 80 per cent on Monday and Tuesday.

'This has been a really fruitful Eid holiday for hotels across the board,' said Bahrain's Four Star Hotel Committee chairman Hameed Al Halwachi.

'The business we have done this season has been quite extraordinary, considering we had been going through a lot of trouble as far as occupancy was concerned in the last many months.'

Al Halwachi confirmed hotels in Juffair and parts of Manama were the busiest as were others located in places far away from the centre of Manama.

'Overall, we have had a good season, with Sunday and Monday being the busiest,' he said. 'This is a welcome relief from where we were.'

However, Al Halwachi said while the signs looked good, there was still a long way to go for the hotel industry to rebound.

'Though we have done well in this season, the real test will be in the coming months when Bahrain's actual tourism season begins,' he said.

'The government is encouraging tourism and taking a lot of steps to ensure the industry does well,' he added.

Five Star Hotels executive committee chairman Abdulnabi Daylami said occupancy levels at hotels across Bahrain had exceeded expectations.

'All hotels had above average occupancy and much better than the last Eid holiday,' he said.

Daylami said the future looked promising since every hotel had 'reasonable levels' of advance bookings. 'Our season begins in October and we expect an influx of tourists into Bahrain,' he said.

The Seef Mall said its visitor numbers also increased significantly during the three-day holiday.

'We estimate we had an increase of 49 per cent over the average mall footfall during the three days,' said a spokeswoman, without disclosing the exact figures.

Tens of thousands of people also flocked to Bahrain City Centre during the holiday, with motorists reportedly queuing all the way from the Burgerland Roundabout in Budaiya to get into its car park.

Several restaurants and fast food outlets also reported bumper trade, including McDonald's, which is one of the biggest, with 17 outlets across the country.

'We had a lot of people visiting out restaurants spread across Bahrain and the numbers were much more than the normal footfall,' said the company's Bahrain operations manager Jamil Badran. 'Overall, we had good business catering to people from all walks of life.” – TradeArabia News Service

Gulf 2012 growth, budget outlooks improve

Tue, 17 Jul 2012 11:34:00 GMT

The immediate economic outlook for most of the Gulf's wealthy Arab oil exporters has improved in the last several months despite a sharp drop in global oil prices over the period, a Reuters poll of analysts showed.

Since the previous poll was conducted in March, the price of Brent crude has plunged by $40 to as low as $88 per barrel because of signs that the global economy is slowing.

But oil has since recovered to around $99, and analysts believe that level, combined with heavy government spending and healthy consumer demand, will be enough for the Gulf states to continue growing strongly this year and next.

The latest Reuters poll of 17 analysts, conducted this month, found them raising their 2012 gross domestic product growth forecasts for three o f the six members of the Gulf Cooperation Council.

Saudi Arabia, the biggest Arab economy and the world's top oil exporter, is now expected to expand at a median rate of 5.2 per cent this year, instead of the 4.5 per cent forecast in the March poll. Last year, the Saudi economy grew 6.8 per cent.

In the United Arab Emirates, GDP growth is now forecast to slow to 3.2 per cent this year from 4.2 per cent in 2011. The latest forecast is slightly more optimistic than 3.1 per cent predicted in the March poll.

Qatar remained the top projected 2012 performer with a 6.3 per cent growth forecast, although that was down from the March poll's prediction of 6.6 per cent.

'Downside risks exist from Europe and the world economy. But this aside, growth in the GCC should hold up reasonably well,' said Daniel Kaye, senior economist at National Bank of Kuwait.

'Despite the recent fall in oil prices, fiscal and external balances will remain very solid.'

For most Gulf economies, however, forecasts for growth in 2013 fell from the last poll in March. Saudi Arabia's outlook for next year was cut to 4.0 per cent from 4.3 per cent, while the UAE was lowered to 3.4 per cent from 3.6 per cent.

Budget surpluses

Oil and gas revenue provides most of the budget income of Gulf states, which boosted spending on pensions and wages last year to ease social tensions such as those that simmer in Bahrain. Nevertheless, most countries are expected to enjoy large fiscal surpluses this year and next, the poll showed.

Saudi Arabia is expected to book a surplus of 13.2 per cent of GDP in 2012, up from 12.4 per cent predicted in March's poll, with the UAE unchanged at 5.9 per cent.

'We expect Saudi oil production to increase a little bit this year and we think the government spending will be trimmed a little bit by around 5 per cent, but that really reflects last year's outsized spending,' said James Reeve, senior economist at Samba Financial Group in London.

'In the short term, they can easily cope with significantly lower oil prices as they did in 2009. But they need to get a handle on domestic oil consumption in the medium- to long term.'

Kuwait is projected to post the largest surplus of 22.3 per cent of GDP for its fiscal year, which started in April - partly because a political standoff between the cabinet and opposition members of parliament is delaying expenditure on big infrastructure projects.

Bahrain, which analysts believe needs an oil price averaging about $115 to balance its budget - by far the highest price in the Gulf - is forecast to be the only GCC country in the red in 2012, with a budget deficit of 2.0 per cent of GDP. However, that would be a smaller deficit than the 3.7 per cent gap forecast by the last poll in March. – Reuters

Saudi inflation eases to 4.9pc

Tue, 17 Jul 2012 11:34:00 GMT

Saudi annual inflation eased to 4.9 per cent in June, its lowest level since last September, despite a big rise in housing prices, official data showed.

Inflation slowed from 5.1 per cent in May. The month-on-month rate in June was unchanged from 0.2 per cent in May, according to the Central Department of Statistics.

'I think it is probably lower commodity prices globally and a reflection of a strong dollar and a weaker euro, because about 28 per cent of Saudi imports are from Europe and that makes a difference,' said James Reeve, senior economist at Samba Financial Group.

Prices of housing, rents and water jumped 8.8 per cent from a year earlier in June.

Saudi suffers a housing shortage that drives up real estate prices. Last year the government promised to build half a million homes and last week passed a mortgage law to stimulate house building, but analysts believe high land prices may prevent any quick resolution to the problem.

Other price categories were relatively subdued; food prices, which account for 26 per cent of consumer expenses, climbed 4.7 per cent in June and clothing gained 2.9 per cent.

Oman budget surplus surges, inflation at new low

Tue, 17 Jul 2012 11:33:59 GMT

Oman's budget surplus rose to RO1.6 billion ($4.2 billion) in the first five months of this year as oil revenue soared, while inflation slowed sharply, data showed on Wednesday.

The budget surplus is equivalent to about 5.7 per cent of the sultanate's 2011 nominal gross domestic product, according to a Reuters calculation.

Oman, which faces a challenge to create tens of thousands of jobs every year for its fast-growing population, has raised its budget by 23 per cent to RO10 billion this year compared to its original projection for 2011.

In January-May, the sultanate's revenue jumped 34 per cent year-on-year to RO6.1 billion, or 69 per cent of the initial full-year projection, the data showed.

In May, large-scale strikes hit oil facilities in Oman, which flanks a key oil shipping lane. But the data showed output increased to 25.3 million barrels from 23.6 million in April.

Spending was up 38 per cent from a year earlier at 4.5 billion rials in the first five months of the year.

Higher oil prices helped public finances improve significantly compared to a year ago when the government posted a mere 184 million-rial surplus for January-May.

A Reuters poll this week forecast the non-Opec oil producer would post a fiscal surplus of 6.5 per cent of GDP in 2012, up from a forecast of 5 per cent by analysts in March, and rising from 3.5 per cent last year.

Prices of crude, which accounts for 77 per cent of Oman's income, fell $40 to as low as $88 per barrel for Brent between March and June but have since stabilized at above $98.

Oman sold its crude at an average $113.5 per barrel in January-May, up 20 percent from a year ago. As a result, net oil revenue jumped 33 percent to 4.5 billion rials.

The sultanate would still post a surplus in 2012 if oil prices stay at current levels, as the poll forecast Oman's budget break-even oil price at $83 per barrel. But that level is expected to rise to $105 by 2016, the IMF said in December.

The central bank has said it and the government have scope to keep pursuing expansionary policies without threatening economic stability, adding the budget may turn out to be in surplus in 2012 given still-robust oil prices.

Social unrest last year prompted Sultan Qaboos bin Said, a U.S. ally who has ruled Oman for 42 years, to pledge an extra $2.6 billion of spending in April 2011.

Oman, which obtained pledges in March 2011 for $10 billion in aid over 10 years from its wealthier Gulf neighbours, forecasts a budget deficit of 1.2 billion rials for 2012, or 4.3 percent of 2011 GDP. The projected oil price is $75 per barrel.

The data also showed that annual consumer price growth in Oman slowed sharply to 2.2 percent in May, the lowest level since February 2010, from 3 percent in April.

On the month, prices in the country, which pegs its rial to the U.S. dollar, fell 0.3 percent helped by a fall in costs of personal care and services, after a 0.1 percent rise in April. Main index components, food, rents and transport, were flat.

The Reuters July poll forecast average inflation in Oman at 3.2 percent in 2012, down from a three-year high of 4 percent last year.-Reuters

Meeting studies business licensing issues

Tue, 17 Jul 2012 11:33:59 GMT

Industry and Commerce Minister Dr Hassan Fakhro yesterday chaired the third co-ordinating committee meeting on developing business licensing systems.

It was attended by representatives of Economic Development Board and eGovernment Authority, as well as those from ministries and government authorities involved in commercial and industrial licensing.

The minister stressed the importance of increasing facilities for investors.

During the meeting, officials from LG Company gave a presentation on a project and the progressive stages of its completion, in addition to plans that can be added to the project which will facilitate registration and licensing.

The company has studied many recommendations to re-engineer procedures and sought proposals from all government agencies on licensing and ways to improve business activity.

The project aims to create a sophisticated electronic system with high efficiency in registering and licensing business in Bahrain.-TradeArabia News Service

Qatar inflation surges on food, transport

Tue, 17 Jul 2012 11:33:58 GMT

Rising food, transport and communications costs pushed annual inflation in Qatar up sharply to 1.6 per cent in June, its highest rate this year, data from the country's statistics authority showed on Thursday.

Inflation rose from 1.1 per cent in May. On a month-on-month basis, consumer prices increased 0.5 per cent in June.

Food prices climbed 0.9 per cent month-on-month in June and although rents and utility costs were flat, transport and communications prices surged 2.9 per cent, mainly because of a 5.9 per cent increase in the cost of airfares.

'It may be the highest inflation reading this year but it's still very low and is unlikely to cause policy makers or the market much concern,' said Simon Williams, chief economist for the Middle East and North Africa at HSBC.

'Inflation is going to pick up as growth remains strong and spare capacity in the real estate sector continues to get taken up. But as June's benign print shows, that's a story for 2013 and beyond, not for 2012.'

Analysts polled by Reuters earlier this month predicted the world's biggest liquefied natural gas exporter would see average inflation of 2.7 percent in 2012 after 1.9 percent last year.

The country's General Secretariat for Development Planning forecast in June that inflation would float between 2 and 3 percent in 2012 and 2013. Before June, it had been hovering just above 1 percent since the start of 2012 because of weakness in the property sector.

The secretariat has predicted that growth of Qatar's oil and gas-reliant economy, which has been in double digits for the past six years, will slow to 6.2 percent in 2012 from 14 per cent last year as the impact of two decades of gas output expansion fades.

Growth is expected to slow further to 4.5 percent in 2013.-Reuters

Bahrain studies new plan to boost SMEs

Tue, 17 Jul 2012 11:33:57 GMT

New plans are being studied to bolster the vital small and medium enterprises (SMEs) sector in Bahrain, according to Industry and Commerce Ministry officials.

The ministry has submitted a report to the Cabinet outlining challenges facing the sector, which is playing a crucial role in boosting the kingdom's economy.

The ministry held several meetings with representatives of the sector to identify, categorise and evaluate problems in order to come up with viable solutions.

This follows directives from His Royal Highness Prime Minister Prince Khalifa bin Salman Al Khalifa.

The ministry has also classified the needs of SMEs and studied the obstacles faced by these companies in various sectors.

These include construction, real estate, foodstuff, communication, information technology, exhibitions and conferences, training, human resources development, transport, banking, health, gold, pearls, jewellery, tourism and retail.-TradeArabia News Service

Tunisia to get $220m Saudi development fund

Tue, 17 Jul 2012 11:33:56 GMT

The Saudi Fund for Development will extend a total of about $220 million to Tunisia in low-interest loans, Tunisia's Investment and International Cooperation Ministry said, as the North African country seeks to recover from last year's revolution.

It said there would be three loans, one to develop a power station at Sousse, one to invest in the transport of gas and one to be spent on vocational and other training.

The loans are repayable over 20 years at 2 percent interest, and loan agreements will be signed in the coming days, it said in a statement on the official TAP news agency.

Tunisia has received several bilateral soft loans this year, aimed at helping it recover from the revolution that overthrew Zine al-Abidine Ben Ali in January 2011.

This is the first loan from Saudi Arabia, which has given shelter to Ben Ali and refused to extradite him to stand trial in Tunisia.-Reuters

UAE June inflation drops to lowest this year

Tue, 17 Jul 2012 11:33:55 GMT

The annual inflation in the UAE fell to 0.4 per cent in June, its lowest rate this year, according to data from the National Bureau of Statistics released on Sunday.

The housing costs, which make up nearly 40 per cent of the consumer basket, fell 0.1 per cent month-on-month in June, said the official data. Food prices too dropped 0.3 per cent and transport costs were flat, it added.

Analysts polled by Reuters earlier this month predicted average inflation of 1.5 per cent in 2012 after 0.9 per cent in 2011.-Reuters