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GCC Businesses Generate $55 Billion in Earnings as UAE Economy Moves Up in Asian Rankings and Qatari PM Commits $160 Billion for Infrastructure

Middle East : 19 April 2013

GCC Companies Report $55 Billion in Earnings

Profits rose last year for GCC businesses, climbing 4.5 percent to reach $55.4 billion, based on data from a recent Global Investment House report.

Firms listed on the KSE recorded growth at a steady momentum, as the market in Kuwait drove corporate earnings 12 percent higher.

Performance in the UAE remained healthy, as a recovering real estate sector helped drive profits up by 28.8 percent last year. The UAE banking sector also grew in spite of greater restrictions.

Businesses in Saudi Arabia maintained steady profits, although government spending rose significantly. Petrochemical companies reported an earnings decline of 16.8 percent, which had an effect on general profits across the kingdom.

Oman firms reported higher profits, with 14.3 percent growth. Corporate earnings in Qatar dropped by 34.6 percent in 2012. Bahrain reported a decline in corporate profits of 0.3 percent, and a 34.6 percent drop in accumulated market earnings.

UAE Named the Third Strongest Economy in Asia

According to a recent report from think tank Boao Forum for Asia, improved economic conditions in the UAE have pushed the Emirates above China and South Korea in Asian rankings. The UAE is now considered the third strongest Asian economy, according to the Asian Competitiveness Annual Report 2013.

The report used data gathered over a full year and assessed thirty-seven nations from the Middle East and Asia. The UAE moved from seventh place in 2011, up to third place in the 2012 results, passing other nations like Qatar, Taiwan, South Korea and China.

The economic performance of nations like Saudi Arabia, Kuwait, Bahrain, Kazakhstan, Qatar and the UAE surpassed those of emerging economies across Asia.

The UAE experienced rapid development within the economy, a healthy economic climate, low levels of inflation and unemployment, high levels of national savings above 30 percent and a positive government debt to GDP ratio of 16.9 percent.

Development was more productive in the UAE, compared to other oil exporters in West Asia and in spite of only 5.2 percent economic growth. Inflation remains at 0.88 percent with unemployment at 4 percent. The Boao report made note of the UAE’s steady industrial structure and low levels of risk in the financial climate.

Other resource-export-based economies in the Middle East and Central Asia ranked well, including Bahrain in seventh, Kazakhstan in ninth, Oman in tenth, Kuwait in 12th, Saudi Arabia at 13th and Qatar in 14th. Jordan returned a poor performance, coming in 24th place.

In terms of competitiveness, the UAE held onto sixth place out of 37 nations, beating nations like China, Kuwait, Qatar, Saudi Arabia, Japan, Turkey and Malaysia. The UAE moved from 14th place in the previous report.

Leading nations in the report included Australia, Hong Kong, Taiwan, South Korea and Singapore. Hong Kong came in first, with Singapore nabbing second in repeat performances. Oman, Kazakhstan, Korea, China, Taiwan, Bahrain and Australia rounded out the top ten list.

In terms of Commercial & Administrative Efficiency, the UAE ranked 27th place. The Emirates lost three places in terms of infrastructure development, ranking in 8th place in Asia. Although the UAE pushed construction in infrastructure forward, significant reductions in the power supply drove down the ranking.

The UAE ranked in 17th place for the Human Capital & Innovation Capabilities sub-index.

Oil exporting nations realized benefits from the hike in oil prices last year, pushing their rankings up in the report.

Qatari PM Commits $160 Billion in Infrastructure in Next Few Years

Foreign Minister and P.M. H.E. Sheikh Hamad bin Jassem bin Jabor Al Thani stated that Qatar continues to move forward toward a knowledge-based economy. Four important pillars will help the nation to achieve this goal stated in the Qatar National Vision 2030, including economic development, human development, environmental and social development.

An address from the Qatari premier in Berlin addressed the commitments. Klaus Wowereit, mayor of the German capitol, and Chancellor Angela Merkel also attended the Business & Investment in Qatar Forum.

The Premier noted that Qatar experienced 13 percent economic growth on average between 2008 and 2012. This growth drove Qatar’s leadership to put together the Qatar National Development Strategy for 2011 to 2016, aiming for sustainable growth.

The $160 billion commitment to infrastructure spending is included in the strategy and set for completion by 2019. Growth in the construction sector is projected at 10 percent, with growth in transport set for 15 percent this year, according to the Premier.

Growth patterns exposed in the Qatari budget covering 2013 to 2014 highlight rising investment opportunities and put the focus on economic diversity in the nation. The Premier also noted Qatar’s positive track record, with high levels of growth throughout the global financial crisis and in the time period beyond.

Qatar has become a leader, along with other Gulf nations, in the stabilization of spending and global demand in areas affected by the economic crisis. The Premier noted that Qatar uses foreign investment as a strategic cornerstone in income diversification.

Qatar and Germany have several economic relationships, with Qatar holding a stake in companies such as Porsche, Volkswagen, PSF, Siemens and Hochtief and several firms from Germany working on Qatari infrastructure projects.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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