UAE Reached $74 Billion in Oil Income Last Year
The UAE recorded 30 percent more earnings from crude exports last year as a result of rising oil prices and increased supply. Hitting $74.02 billion in earnings for 2010, the UAE is also part of OPEC whose 12 nations combined to bring in around $160 billion more last year.
The UAE reported $57.5bn in oil income for 2009 and saw the 2010 figures surge to their second highest amount, still significantly below the $102bn reported in 2008.
This increase was mainly due to higher oil prices, surging by almost $15 per barrel over the $60 level recorded in 2009. Production of crude also increased, up from 2.17 million bpd to reach 2.32 million bpd. With these figures the UAE remained the second largest OPEC earner behind Saudi Arabia.
Swollen oil output and prices pushed the income in Saudi Arabia up as well, from $157.4bn in 2009 to $196.2bn last year. This figure represents the second highest earnings recorded for the Kingdom and is still well below the $281bn seen in 2008 as the average annual price of crude peaked at $95 per barrel.
Other OPEC members saw income increases as well, including Kuwait (rising from to $48.6bn to $81.6bn) and Qatar (up from $19.1bn to $29.2bn). Algeria and Libya also saw oil income surges, reaching $38.3bn and $41.8bn respectively.
The increases seen across the board for OPEC members have resulted in massive current account surpluses last year and will likely increase the foreign assets of the member nations.
The UAE current account surplus was at $8.2bn in 2009, but grew to $23.2bn last year. Saudi Arabia, Kuwait and Qatar also saw substantial increases in their current account surplus balances.
Private Sector Business Performance Up in Dubai and Hiring Set for Third Quarter
According to a Department of Economic Development (or DED) survey, the performance of Dubai businesses was stable during Q2 but continues to be positive for Q3. The report stated that expansion and hiring within Dubai businesses could happen in the third quarter.
The DED surveyed 500 companies, both on-shore and within free zones, and examined indicators like revenue, sales, retail and wholesale prices, profits, staffing levels and volume.
The report noted that revenue remained stable during the second quarter and that expectations are strong for a positive third quarter, triggering expansions and recruitment in Dubai.
Specifically the services and manufacturing sectors are expected to begin hiring, while the trading firms are indicating they will maintain the current employment level.
DED’s Director General Sami Al Qamzi stated that perceptions within the community of business are dependable and present a realistic appraisal of the current business climate as well as the outlook for the future.
Al Qamzi noted that, based on the findings of the survey, Dubai will strengthen its status as a competitive hub of business.
Economists also found the results satisfying and remain optimistic regarding growth. Economist Mohammad Al Asoomi noted that the commercial, tourism and financial sectors in Dubai are experiencing exceptional levels of performance. He said that political tensions, increased local demand and price hikes will increase as trade volumes and values do, cementing Dubai’s status as a business hub.
Al Asoomi noted that economic growth in the UAE will continue as long as the price of oil remains about $100 per barrel.
The survey also reported that SMEs and firms involved in exports have experienced stable revenues for this quarter.
Growth in Saudi Arabia Reaches Peak Not Seen Since 2003
The economy of Saudi Arabia grew by about 3.8% in 2010. Expectations are that a sharp increase will see that figure rise to 6.5% growth for 2011, due to higher output of oil and increased public spending, according to the Saudi American Bank (or Samba).
Budget expenditures in the Kingdom are expected to be more than one third higher, mainly as a result of surging crude prices and increasing foreign assets.
Samba expects real growth to hit 6.5 percent for 2011, the highest growth seen since 2003 and on track with the levels experienced in the most vibrant emerging markets.
Next year’s growth is expected to slow down to four percent, mainly due to the crude oil output leveling off. Non-oil businesses are expected to thrive, experiencing 5.2 percent growth next year compared to 5.4 percent growth in 2011.
The Samba report expects 4.5 percent growth in 2013 with a 5 percent expansion rate in non-oil sectors and a slightly higher oil output.
GDP per capita rates are forecasted to hit about $18,300 for 2011 before reaching $19,300 by the year 2013. These figures are almost double the levels seen less than a decade ago.
The oil sector will give the Saudi government the platform required for spending and fiscal stimulus, according to Samba. The bank anticipated the spending announcements made by King Abdullah earlier in 2011 and noted that portions of that spending package will roll out over an extended period of time.
About SR195bn of the government’s pledge will be spent in 2011, pushing total expenditures up to a massive SR840bn or 43 percent of the GDP.
Spending is likely to decrease in the year following, but will continue to remain at historical highs.
The study also noted that the Kingdom can afford to be less concerned over the impact of crude output level changes, since the significant increases in NGL (or natural gas liquids) output are helping. NGLs do not fall under OPEC.
Saudi’s output of NGLs is set to hit 1.7mn bpd this year, which is an eight percent increase over last year’s figures.Paul Holdsworth, Staff Writer, Gulf Jobs Market News