CGI Gulf Insights of the Week (80)

ByCGI Gulf Insights of the Week
Monday, 11 March 2019
Published inMarch 2019

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CRIF GULF WEEKLY INSIGHTS

Country Risk Update - Oman
Risk Indicator - DB4c
Risk Level - Moderate

Ratings Trend - Stable

Fitch is the second rating agency to cut Omani debt to junk status, with public finances remaining highly geared to volatile oil prices. The government is targeting high-end tourism as an area for growth.

Market Overview

Dubai's Non-Oil Foreign Trade Stands At $354 Billion In 2018
Dubai's non-oil foreign trade remained at around $354 billion (AED1.3 trillion) in 2018, compared to AED1.302 trillion in 2017. The UAE, which is leading the region in economic diversification aims to take advantage of its position to become a global trade hub. Dubai’s foreign free zone trade grew 23% to $145 billion in 2018, while direct trade decreases to $206 billion, compared to $225.7 billion in 2017. Also, Dubai’s re-exports grew 12% in 2018 to $109.4 billion, while Dubai’s imports recorded $209.6 billion and exports reached $34.6 billion. Hamdan bin Mohammed, Dubai Crown Prince and Chairman of the Executive Council, said in a tweet on 10 March 2019 that “Today I reviewed Dubai's non-oil foreign trade results for 2018, which hit AED1.3 trillion and continued its strong performance, reflecting the deep-rooted ties to our global trading partners”. China retained its position as Dubai’s largest trading partner with $38 billion (AED139 billion) in 2018, followed by India and the US with $31.58 billion and $22.05 billion respectively. Saudi Arabia is Dubai’s biggest business partner among GCC and Arab countries, and its fourth biggest trading partner, with trade worth $15 billion. HSBC Navigator report expects China to be one of the top three imports and export partners for companies in the UAE between 2017 and 2030.

New members of Abu Dhabi Executive Council sworn in
A set of new members were sworn in to the Abu Dhabi Executive Council before His Highness Shaikh Mohammad Bin Zayed Al Nahyan, Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces and Chairman of the Abu Dhabi Executive Council, in the capital on 10 March 2019. The new members include Shaikh Khalid Bin Mohammad Bin Zayed Al Nahyan, Major-General Faris Khalaf Al Mazrouei, Commander-in-Chief of Abu Dhabi Police; and Sara Awad Eisa Musallam, Chairperson of the Department of Education and Knowledge. Shaikh Hazza Bin Zayed Al Nahyan, Vice-Chairman of the council, was also present. The Abu Dhabi Crown Prince congratulated the newly appointed members, wishing them success in their mission and accomplishment of development goals. He also thanked outgoing members for their service and efforts made during their tenure. Shaikh Mohammad reiterated the continued progress of the government’s work in the emirate and the promotion of institutional values based on outstanding performance, innovation, creativity, flexibility, and team spirit. He said upgrading the performance and systems of government departments and improving them to the highest levels of competitiveness is a priority in line with Abu Dhabi’s vision.

Inflation edges higher to ‘put the brakes’ on Egypt’s rate cuts
Egypt’s annual urban inflation accelerated for a second month, complicating the central bank’s path forward after its first interest-rate cut in almost a year. Paced by food costs, consumer prices in February rose 14.4per cent from a year earlier after a gain of 12.7 per cent in January, the state statistics agency, CAPMAS, said on 10 Marc 2019. The monthly increase of 1.7 per cent was the biggest since October. The figures should “put the brakes on the possibility of further interest-rate cuts by Egypt’s central bank, for now,” Naeem Holding, an investment bank based in Cairo, said in an e-mailed note. The price build-up could test the central bank’s resolve following its surprise rate cut of 100 basis points last month that it said was warranted by “the moderation of underlying inflationary pressures.” Policymakers met their inflation target for last year and set a goal of 9 per cent, plus or minus 3 percentage points, for the last quarter of 2020. The central bank’s next rate meeting is scheduled for March 28. Annual core inflation, the gauge measured by the bank and which strips out volatile and regulated items, came in at 9.2 per cent in February compared to 8.6 per cent the month before. “The sudden increase in prices was driven by a sharp rise in food prices,” Mohammad Abu Basha, head of macro analysis at EFG Hermes in Cairo said in an emailed note. “We think the reading might dim the chances for another rate cut when the Egyptian central bank meets later this month.”

India targets Saudi investment in building strategic oil reserve
India is seeking investment from Saudi Arabia to build emergency crude reserves that will act as a buffer against volatility in oil prices and supply disruptions for the third-largest oil consumer. Saudi’s participation in the Indian Strategic Petroleum Reserve programme was discussed at a meeting between the kingdom’s Energy Minister Khalid Al Falih and his Indian counterpart Dharmendra Pradhan in New Delhi on 10 March 2019, according to a government statement on 10 March 2019. They also discussed expediting a proposed $44 billion (Dh161.5 billion) oil refinery project on India’s west coast with investment from Saudi Arabian National Oil Co., it said. India, which imports four out of every five barrels of oil it consumes, is expanding its strategic reserves to shield from perennial political risk in the Middle East and Africa that account for the bulk of its purchases. Prime Minister Narendra Modi has opened some of the underground caverns for commercial storage to lessen the strain on state finances. It has already leased out tanks to Abu Dhabi National Oil Co. India has already built 5.33 million tons of underground reserves in three locations, which can meet 9.5 days of the country’s oil needs. It now plans two new reserves with a combined capacity of 6.5 million tons, sufficient to cover an additional 12 days. Saudi Arabia is a key oil supplier to India and exported 36.8 million tons of crude to Indian refiners in the year ended March 2018, accounting for 16.7 per cent of their total purchases, according to the statement.

Gulf countries mull regional water grid to boost ties
Gulf countries are considering a regional water grid on the lines of the electricity grid to meet the growing demand for water, a senior official from Kuwait’s ministry of electricity and water said in Abu Dhabi. “The idea is to have all GCC countries connected with a grid. Kuwait is ready, Bahrain is ready and also Saudi Arabia,” said Iqbal Al Tayyar, director of technical supervision department at Kuwait’s ministry of electricity and water. Al Tayyar was speaking to reporters on the sidelines of Mena Desalination Projects Conference in Abu Dhabi on 10 March 2019. She, however, did not give a timeline on the project and said they are waiting for an official agreement on this. “We are successful in the electricity grid and each country is encouraging to connect and they want to connect outside GCC as well as to European countries.” The comments come as member countries in the GCC (Gulf Cooperation Council) boost cooperation in various sectors to strengthen ties. Currently, Saudi Arabia and the UAE are undertaking a number of new projects including in finance, energy, and defense. Saudi Arabia’s energy minister Khalid Al Falih announced earlier this year plans to develop the country’s gas resources and extending a grid to the UAE, Oman, and Kuwait. “I am talking to my colleagues in Oman, Kuwait, UAE, about extending a gas grid in the region and we hope to exchange gas and we also have an excess of gas which we will be exporting,” he said while speaking at the World Future Energy Summit in Abu Dhabi.

Commodity Tracker

Business Events this Week In UAE

Global Financial Forum - Unlocking Growth in a Changing World

@ Madinat Jumeirah
Date: 11 March 2019

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