GlobalSource Partners | Country Insights | Gulf Countries

The Gulf has begun to wake up from the long summer and Eid holidays. Notable policy developments over the last week included an extension of customs duties in the UAE (a move other Gulf states are likely to emulate) and further moves towards the Aramco IPO. Tension with Iran and in Yemen continue...

Tighter Iran sanctions should boost oil prices in 2020

GULF COUNTRIES · Forecast · 23 Aug 2019

Iran sanctions will take 1m b/d off the market in 2020 and its response will increase the geopolitical risk premium. The combination of these factors should boost oil prices to an average of $65-70 in 2020. This is a slightly out-of-consensus view, as most forecasters see prices as flat or fallin...

Gulf weekly: Aramco call and regional tensions disturb Eid holidays

GULF COUNTRIES · Report · 18 Aug 2019

Welcome to our first weekly economic and political update for the Gulf. Last week was quiet on the domestic economic front, given the Eid al-Adha holidays, which meant that government departments were closed all week and local markets were also closed for most of the week. However, there were sti...

YEMEN: Conflict in Aden might help end Yemen’s civil war, benefiting the GCC

GULF COUNTRIES · Report · 13 Aug 2019

Counterintuitively, a new axis of conflict in Yemen, which saw southern separatists capture Aden last weekend, might help end the civil war. This is because it could be easier for the separatists than the government to find accommodation with the Houthi rebels, who control the northern highlands....

SAUDI: Aramco H1 results build hype for a likely IPO in H2 2020, but dividend policy remains vague

GULF COUNTRIES · Report · 13 Aug 2019

Net income was down 12% on a 4% fall in oil price and a 7% rise in opex. However, transfers to the government were up 11% to $117bn due to an unexplained special dividend. Many of the initial barriers to an IPO have diminished, and much of the groundwork has been done, so we therefore expect it t...

SAUDI: Latest data show the economy remains firm as fiscal easing increases but global headwinds will continue to weigh on equities

GULF COUNTRIES · In Brief · 09 Aug 2019

July PMI data shows the non-oil economy remains strong, consistent with the latest Q2 fiscal data, which revealed a deficit that had widened to USD9bn.The authorities are pursuing accommodative fiscal policy to prop up growth despite a global oil demand shock weighing on oil prices. However, refo...

Fed cuts are a small but welcome relief for the GCC

GULF COUNTRIES · In Brief · 01 Aug 2019

GCC central banks have mainly followed the Fed lower, in keeping with usual behaviourThe rate cuts come as a small but welcome relief for fiscal policy and to support credit growth, after a number of years of rate hikes amidst slowing economic growthHighly leveraged economies and sectors will be ...

A Neutral Zone restart is coming and means more to Kuwait than Saudi

GULF COUNTRIES · Report · 30 Jul 2019

Kuwait and Saudi Arabia are edging towards restarting shared oil fields suspended for over four years due to bilateral disputes, which overlap with wider tensions with Iran and Qatar. Until OPEC quotas are lifted, a restart would be offset by cuts at other fields, but the spare capacity and expec...

BAHRAIN: Protests after Shia executions unlikely to spark change

GULF COUNTRIES · In Brief · 30 Jul 2019

In the last few days Bahrain has seen the most extensive protests in two years following the executions of three men on saturday, including two young Shia. The anger is likely to lead to further clashes between protestors and police but there are currently no indications of an escalation towards ...

SAUDI: Stimulus will only buy a temporary reprieve

GULF COUNTRIES · Forecast · 29 Jul 2019

Saudi Arabia is pressing ahead with a fiscal stimulus to drive growth after several tough years for both consumers and businesses. This stimulus will not be sustainable, and non-oil growth will slow to around 1.8% by 2021 from 2.6% in 2019. As a result, the fiscal deficit will swell to 9% of GDP ...

OMAN: Fiscal silence ends with lower deficit and a likely issuance

GULF COUNTRIES · In Brief · 25 Jul 2019

After months of disconcerting silence on fiscal data, Oman has announced a surprising improvement in its deficit, Fitch has affirmed its rating and the Sultanate has seized the opportunity to promptly appoint bankers for a new bond issuance. We doubt the fiscal outturn for the rest of 2019 will b...

SAUDI: IMF forecasts are optimistic - we expect slower growth and larger deficits

GULF COUNTRIES · In Brief · 22 Jul 2019

The IMF just completed its annual Article IV consultation in the Kingdom. We have a broadly similar assessment of recent economic performance, but the IMF 2019 forecasts for both non-oil real GDP growth and the fiscal deficit are a little optimistic. In the longer term, we also see slower growth ...

QATAR: Moody's credit opinion hints at an upgrade path

GULF COUNTRIES · Report · 18 Jul 2019

Underlying trends in Moody’s latest credit opinion point towards a potential upgrade path, despite some negative revisions to its economic forecasts. This is because Qatar's “indicative” rating is now at its highest in at least three years, and we expect it will improve further, creating room for...

US Congress shifts against Saudi and UAE, hinting at problems post-Trump

GULF COUNTRIES · In Brief · 17 Jul 2019 · 1 response

Later today, the US House of Representatives will pass resolutions blocking emergency arms sales to Saudi Arabia and UAE, which the Administration had fast-tracked as part of its show of force against Iran. President Trump will veto the resolutions, but they are still indicative of hardening opin...

SAUDI: Government spending supports non-oil economy and requires further debt issuance

GULF COUNTRIES · Report · 16 Jul 2019

The sharp slowdown in GDP growth in Q1 was due to voluntary oil production cuts and is not an immediate cause for concern. More positively, government spending in 2018 fed through into higher private non-oil sector growth in Q1 2019. Leading economic data indicates continued momentum in the non-o...