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Job Market Improving – Healthy Economy Evident in Qatar and Saudi

Middle East : 24 July 2011

Qatar Set To Experience 33.8 Percent Growth

Forecasts state that Qatar will experience an unbelievable 33.8 percent growth this year, pushing the overall economy over the QR 618 billion mark.

Due to the high GDP growth expectations, both the QCB (Qatar Central Bank) and the nation’s government are promoting bonds to soak up excess liquidity and contain inflation.

Yusuf Al Kahloot, a well-known columnist from Qatar, reported that the average price of oil in worldwide markets hit $106 per barrel during the first six months of the year.

Qatar oil exports reached 800,000 bpd in that time period. The LNG (liquefied natural gas) production also approached 77 million tonnes – the annual maximum.

Al Kahloot stated that oil prices for the second half of this year are expected to stay above $100 per barrel.

Global demand for crude remains high, especially with Tripoli staying out of the market and creating a supply shortfall. This demand, as well as the high price of crude, will push Qatar’s already healthy oil and gas sector up by around 60 percent and stimulate the entire economy.

Approximately seven percent growth is expected in the nation’s nonoil sector, mainly made up of banking, financial and manufacturing.

Al Kahloot noted that the IMF recently reported QR 584 billion GDP for Qatar. The nation is actively issuing bonds and reducing interest rates to combat the threat of inflation. Al Kahloot noted that these moves would dampen price escalations in property prices as well.

Saudi Arabian Prince Turki Al-Faisal Comments on the Kingdom’s Economic Health

Turki, chairman for the King Faisal Center of Islamic Research and Studies, noted that Saudi Arabia holds a healthy position in the economies of the Middle East.

He forecasted a growth of 7.5 percent for the Kingdom’s economy in 2011.

Turki spoke at the wrap up of a development and investment forum in Saudi Arabia that was attended by 500 officials and businessmen from the Kingdom and France. He noted that Saudi continues to seek ways of improving productivity and is dedicated to revenue reinvestment to drive development.

Parisian Arab and French Chambers of Commerce put together the forum.

The participants agreed on the attractive state of the Saudi investment climate, stating it remains in the leading group of competitive economies.

Saudi Arabia has the largest economy in the Arab world, is 16th place around the world and third place in terms of bringing in foreign capital. Approximately one quarter of the globe’s oil reserves are in the Kingdom and the nation is the fourth largest gas exporter.

France holds the key to entering the markets of Europe and Saudi is a gateway into Asian, African and Arab markets. These positions have caused businessmen from both nations to seek and develop improved methods of trade between the nations.

Joint investments between France and the Kingdom are beyond $38 billion and trade between them totals $7 billion.

Nonoil Exports in Saudi Climb By 14 Percent

The Kingdom reported SR 37.13bn in nonoil exports for Q1 of 2011, a 14 percent increase over the same timeframe last year when the nation reported SR 32.45bn in exports.

According to the Central Department of Statistics, imports have not grown as much, showing an increase of only 7 percent and reaching SR 98.11bn, up from SR 91.58bn in Q1 of last year.

National Commercial Bank’s chief economist Jarmo T Kotilaine stated that these figures are evidence that global trade flow has recovered and that the emerging Asian markets are continuing to develop.

John Sfakianakis of Banque Saudi Fransi noted that high demand for plastics and petrochemical products across the globe has pushed export growth. He also stated that these increases are positive for the Kingdom’s current account balance.

Shipping data noted that Asian relationships are deepening within Saudi Arabia, especially relations with the Chinese. The overall data does not show how many goods shipped to Singapore and the UAE are actually rerouted to the growing Asian economies, notably India.

Large petrochemical investments made by the Kingdom are supported by massive Asian demand, although this demand is placing new challenges on the supply of hydrocarbons in Saudi Arabia. Kotilaine noted that development efforts are needed in nonoil exports to sustain this diversification.

He also noted that these numbers do not reflect the massive spending recently announced. With higher disposable income in Q2, the import numbers should rise to meet the growing export numbers.

Non-crude exports were led by petrochemical exports that reached SR 12.35bn or 31 percent of the overall exports. Plastics followed with SR 12.29bn or 26 percent. Food accounted for SR 2.91bn or 9 percent.

Paul Gamble of Jadwa Investments noted that the price of nonoil exports such as plastics and petrochemicals are tightly linked with the price of oil. As oil prices increase, the nonoil export value also increases. Imports, on the other hand, are driven by the strengthening economy. Gamble noted that similar trends likely occurred in Q2.

China led the Saudi export list with SR 4.85bn or 26 percent, while the UAE came in at SR 3.66bn. Singapore drew SR 2.41bn in Saudi exports and Jordan received SR 1.6bn. Other nations received SR 24.6bn in total.

Electrical products and home appliances led the imports, valued at SR 27.1bn or 10 percent. Automobiles totaled SR 16.1bn and food imports were valued at SR 14.45bn. Imported metal products reached SR 13.45bn and SR 27.03bn in other goods were imported.

The US, China, Japan and Germany were the leading originators in terms of imported goods. The Kingdom remains an economy that is largely dependent on imports, including machines, automobiles and food.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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