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More Jobs Projected in Oman, Qatar and Saudi Due to Strong Economic Indicators

Middle East : 30 October 2011

Omani Surplus Will Total 10 Percent of GDP for 2011

Moody’s stated that in spite of the added costs of social welfare, the Omani budget surplus for 2011 will come in at 10 percent of the nation’s gross domestic product. The worldwide credit rating agency noted that recent political reforms are positive for Oman’s rating, which stayed at the A1 level due to a steady outlook.

Moody’s stated that discontent within the population should be reduced due to government implementations and a willingness to work towards political reform, as well as the nation’s ability to afford rising welfare costs.

A rating analyst for the firm in Dubai, Mathias Angonin stated that real GDP growth in Oman is set to reach 4.3 percent this year and a further 3.8 percent next year.

When considering the increasing oil revenues, rising government spending will have minimal effects of the nation’s finances, according to Angonin.

Oman is expected to post a surplus this year equaling about 10 percent of the nation’s GDP. In 2012 that surplus is forecasted to be around six percent of the GDP. Government spending in 2011 continues to rise alongside social spending, with totals nearing RO 10 billion.

Angonin said that revenue increases will surpass growing expenditures and create a greater surplus. The break-even price of oil for the Omani budget now sits at $75 per barrel (US$), according to Angonin. Oman’s opening eight month’s budget surplus reached RO 736.5 million, a rise of 77 percent over the same period in the previous year.

BOI Indicates Buoyant Qatari Economy

Businesses in Qatar have an optimistic outlook for Q4 of this year, in spite of poor global macroeconomic signs, according to the recent BOI (or Business Optimism Index) released by D&B.

D&B Middle East’s GM Manjeet Chhabra presented the survey results stating that the strengthening economy, as well as recent government stimuli and investments, helped create the optimism. The QFCA (or Qatar Financial Centre Authority) were also involved in the publication of this survey.

Non hydrocarbon sectors have a composite index result of 45 for the fourth quarter of this year, an 18-point increase over the third quarter.

The BOI is sitting at the second highest level seen in the last few years, since the first quarter of 2009. These results are in spite of the weak economic conditions around the world.

There are six parameters included in the BOI scores, including Net Profit, Number of New Orders and Current Employees, Stocks Levels, Selling Prices Levels and Sales Volumes. Each of the six parameters were higher in Q4 than the Q3 levels.

Sales Volume scores surged from 35 to 56 points, while New Orders scores in the BOI jumped from 33 to 59 points.

Selling Prices scores increased by 14 points over Q3. This is confirmed by the August 2011 CPI, which hit 108.91, a 2 percent increase over July 2011 results and a 2.1 percent improvement over the August 2010 numbers.

Net Profits scores climbed from 25 in Q3 to 47 in Q4. Scores for the Number of Employees was up from 31 to 38 points. Stocks Levels scores were up from 19 points to 30 points.

Chhabra noted that the hospitality sector and trade are the most bullish, although all sectors are displaying an improved outlook for the fourth quarter.

The hydrocarbon sector composite score was down slightly, coming in at 20 points as opposed to 22 in Q3. Lower scores in Number of Employees and Prices Levels were faulted for this result.

Director for Strategic Developments at QFCA, Akshay Randeva, commented that the recent BOI results indicate a strong Qatari economy. Business confidence is sound.

Non-Oil Sector in Saudi Increases By 12.9 Percent

Recent research reveals that the non-oil sector in Saudi Arabia surged by 12.9 percent over the first six months of 2011.

Increased government spending released in packages throughout February and March triggered a spike in growth for the non-oil public sectors, according to a Jadwa Investment Research Department report.

Manufacturing was marked as the most rapidly growing private sector over the opening half of the year.

The energy sector grew as a result of rising oil revenue, when the average price of export crude rose to $104.6 per barrel.

In nominal terms, the Saudi economy grew by 26.1 percent (year-on-year). This data has not been adjusted for movements in price, meaning that rising oil prices pushed oil sector into the lead for growth, surging by 39.5 percent based on the report’s findings.

Non-oil growth reached 12.9 percent and non-oil private sector growth was 8.4 percent.

Although unrest in the region settled down and the government announced SR 500 bn in spending, non-oil private sector growth recorded only insignificant changes from Q1 to Q2.

Oil sector growth was mainly a result of rising prices.

In 2011 the Kingdom earned 37 percent more per barrel for export crude, with prices rising from $76.4 per barrel in the first half of 2010 to $104.6 in the opening six months of 2011. Oil production also jumped by ten percent in that timeframe.

Manufacturing rose by 22.5 percent in the first half of this year, marking the fastest growth in the private sectors. This is likely due to increases in petroleum refinements.

Construction also recorded strong growth, up 9.2 percent. Retail growth was puzzling, with little improvements on a year-on-year basis although ATM cash withdrawals and point-of-sale transactions reached new highs.

The finance sector recorded weak growth, as did agriculture.

The Jadwa report noted that inflation averaged around 4.8 percent for the first six months of this year, resulting in real growth of 3.5 to 5.0 percent for the non-oil private sector.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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