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MENA Rail Network Expands and UAE Banks Report Positive Performance as Dubai GDP Soars in Q2

Middle East : 26 July 2013

Value of Rail Projects in MENA Continues to Rise

The value of contracts awarded for rail projects in the MENA region hit $434 million during the opening quarter of this year, approximately 17 percent of the overall funds awarded for projects in the entire transport sector.

More rail investment is expected this year as contracts involving the planned 33,712 km of rail mainline routes and more than 3,000 km of tram and monorails are scheduled for awarding by the end of 2013.

Developments of this magnitude push the MENA region ahead as one of the fastest growing regions in terms of rail projects around the world. Population growth, further urbanization, swelling traffic congestion and economic developments have driven MENA’s rail market forward, according to MEED Events chairman Edmund O’Sulllivan. MEED Events have organized the MENA Rail & Metro Summit, taking place in Abu Dhabi this October.

This ninth installment of the summit includes a “definitive review” of current projects within the industry, as well as those scheduled for the near future. Key stakeholders can expect to gain insight into rail operations and delivery, best technical practices and solutions in rail engineering.

A comprehensive review of North African rail projects will be included in the summit, looking at the tram system expansion in Algiers, awards involving signaling packages on the Egyptian national rail network, and rail expansions in Tunisia, among others.

Three consortiums have been placed on the shortlist by the ADA of Saudi Arabia, regarding the light-rail metro project in Riyadh, considered the most advanced metro development in Saudi Arabia. After the awarding of packages, other cities are forecasted to increase efforts to develop light-rail systems.

Formal awards should occur this month.

Positive News From UAE Banks

Many experts gauge the economic health of a nation by its financial services sector. Banks allocate funds from those with capital and savings and direct it to others investing in business growth. The level of financing demand in the nation indicates expansion and hints that greater activity exists. The level of mortgage demand indicates stronger property values, while the level of consumer financing demand exposes positive news for retailers and companies in the services sector.

Positive Q2 results from Emirates NBD indicate a strong economy in the UAE, although some analysts caution against putting too much stock into those relationships, at least for the moment. NBAD (the National Bank of Abu Dhabi) and Rakbank have reported positive results for the opening six months of 2013, and forecasts state other financial institutions in the UAE will do the same. If this happens, the trend signifies that the UAE economy continues to weather volatility in the global economy.

Stock markets in the UAE have performed well in spite of volatility, reporting some of the world’s leading results partially due to the market being included in the MSCI Emerging Market Index. The UAE is considered a pillar for economic and political stability across the MENA region. Property and retail sectors, as well as tourism and services sectors have felt the benefits of higher confidence levels from both investors and consumers.

Conditions in the global economy are expected to remain volatile and weak, mainly due to continued debt issues in Europe and reductions in the economic stimulus of the US Federal Reserve. The Emerging Market Index and currencies associated with other emerging markets have felt the effects of global conditions.

The UAE does face challenges as a major oil exporting and trading nation, but the positive results coming from many UAE banks and companies indicate a surviving, thriving economy.

Dubai GDP Surges By 4.7 Percent in Second Quarter

The economy of Dubai continued to recover and expand, rising by about 4.7 percent during the second quarter of this year. Official data credits the rise to robust trade and the healthy performance of most sectors in the non-hydrocarbon industry.

Real GDP rose by 4.1 percent in the emirate’s first quarter and continued to rise during Q2, according to a recent government report. This steady recovery follows the slower performance in the period beyond 2008, when financial distress spread across the globe.

Many sectors expanded to create overall growth, including financial institutions, trade, communications, transport, manufacturing, real estate and construction, according to the report.

Dubai continues its steady progress to reduce the reliance on oil exports, as forecasts place the hydrocarbon sector’s contribution to the 2013 budget at just 12 percent.

Non-hydrocarbon sectors now account for a majority of Dubai’s GDP, with trade accounting for 28 percent, manufacturing at 16 percent, financial institutions at 14 percent, real estate contributing 12 percent and construction accounting for 8 percent.

This performance has affected finance as well, with Dubai reducing the fiscal deficit to Dh 1.5 billion this year, down from Dh 1.8 billion last year. This reduction comes in spite of expenditures rising 5.8 percent.

The report credits this deficit reduction to revenue growth of 7.2 percent, moving from Dh 30.6 billion last year to Dh 32.6 billion this year. Oil revenues account for 12 percent of total earnings, and are estimated at around Dh 3.9bn for 2013.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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