Gulf GDP to Hit $1.6 Trillion
The GCC’s combined GDP is expected to experience 5.8 percent growth, reaching $1.6 trillion by current rates, according to a recent Gulf Investment Company report. Qatar is projected to drive regional growth, with 8.7 percent expansion, with Kuwait and Saudi Arabia both experiencing 6 percent growth, the UAE expected to expand by 4.5 percent and Oman to see 4.2 percent growth. Bahrain is projected to expand by 3.1 percent.
A recent drop in oil prices should not deter the economic conditions of hydrocarbon exporters in the GCC, with higher levels of public spending and reformation under way in most member nations.
Oil prices have lowered based on recent concerns over China’s economy and a decline in expected crude demand globally.
Recent statements from China reported that exports rose by only 1 percent in that nation, with import growth slowing down to 4.7 percent. Those figures indicate lagging growth in China, the second largest economy in the world.
Forecasts for worldwide crude demand declined from 89.9mn bpd to 89.6mn bpd, according to the International Energy Agency.
In New York the price of benchmark crude dropped by 90 cents to reach $92.47 per barrel. Brent crude fell 97 cents in London, hitting $112.25 per barrel.
The recent GCI report noted that although oil prices may experience further decline, the economies of GCC member states continue to expand based on genuine growth pillars. Higher levels of public spending in many of the GCC members remains the most important growth pillar and accounts for almost 35% of the combined GDP.
Projects valued at almost $1.1 trillion will be implemented in the region, involving nearly one quarter of the globe’s energy and infrastructure investments.
Increase in the Issuance of Trade Licenses for Dubai’s Second Quarter
Dubai’s Department of Economic Development (or DED) reported the issuance of 4,499 trade licenses from April to June of this year, representing a 17 percent increase over the same period in 2011. The DED noted that these figures indicate growth and stabilization in business activity and vital sectors of Dubai’s economy.
The largest rise in trade licenses was found in the tourism sector, with 51 percent more licenses issued from April to June. The issuance of professional licenses jumped by 19 percent and commercial licenses rose by 16 percent over the second quarter, according to the CEO of the DED’s BRL division, Mohammed Shael Al Saadi.
However, an economist out of the UAE, Abdul Hamid Radwan, spoke to local media recently indicating that every aspect should be considered when analyzing the issuance increase.
Radwan noted that although a large number of new trade licenses can be seen as positive growth throughout Dubai’s business sector, the figures indicating how many licenses were cancelled in that same period need to be considered as well.
He also noted that an increase in business licenses issued could be harmful to the local economy. The capital, business activities and productivity of these new companies should be examined, and those factors remain unclear, according to Radwan.
The total number of business licenses and registrations issued by the DED in Q2 reached 158,174, a rise of 22 percent over the previous year.
Official Figures Indicate $1 Billion to be Spent on Job Creation in Oman
Oman is scheduled to use oil proceeds to increase job creation spending by $1 billion over the next year, according to an official in the finance ministry.
The planning department official, who requested anonymity, stated that oil revenues generated impressive income over the opening half of this year.
The nation expects to balance the budget and use $1 billion of the oil windfall for job creation in the 12-month period beginning in September.
The official gave no specifications covering how the funds will be spent, or whether those employment positions would be found in the private or public sectors of Oman’s economy.
Oman is not a member of OPEC and recently reported an incredible 35 percent increase in government earnings over last year’s figures. Government revenue reached $19.1 billion (or 7.37bn rials) in the opening six months of 2012, resulting from higher oil prices and increased production.
These conditions resulted in a budget surplus totalling 1.6bn rials over the period, which is greater than four times the previous year’s surplus.
Oman has a youthful population, and resentment over limited access to employment resulted in protests in the early months of 2011. Oman’s government reported that more than 50,000 jobs have been created from May 2011 to June 2012, thanks to economic policies and increased state spending.
Unemployment statistics have not been released, but according to an official in the ministry of manpower, around 22,000 of Oman’s citizens are currently looking for work. There are almost 2 million Omani citizens in total.
A majority of those 22,000 job hunters were graduates, with around 15,000 grads looking for employment over the summer. The balance are jobless continuing to look for work since January, according to the official.
The most recent IMF estimate noted that, according to census data, unemployment within Omani nationals hit 24.4 percent back in 2010. The IMF also indicated that about 45,000 new positions would need to be created annually within Oman’s private sector to absorb those entering the labour force and reduce the rate of unemployment. It should be noted that the IMF’s unemployment figures may include many Omanis not genuinely searching for work, as acknowledged by the International Monetary Fund.