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UAE Monetary Aggregate Up by 7.8 Percent While Saudi Economy Creates 2 Million Jobs in Last Four Years and Omani Economy Set for 4.6 Percent Expansion This Year

Middle East : 23 August 2013

Bank Notes 7.8 Percent Rise in UAE Monetary Aggregate

UAE’s Central Bank noted a 7.8 percent increase in monetary aggregate M2 over the opening half of this year. Bank advances and loans rose 4.4 percent in the same period, while bank deposits went up 7.5 percent y-o-y, driven by a jump of 9.2 percent in resident deposits.

Economist Dr Abdul Hameed hails from Abu Dhabi and noted that higher deposits and loans indicate greater levels of investor confidence for the UAE’s economy.

A June statement from the UAE’s apex bank indicated that money supply aggregate M0 reached Dh 59.4bn, a 1 percent drop from May’s level of Dh 60bn.

Over the same course of time, the money supply aggregate M1 went up 1.6 percent, moving from Dh 341.4bn to Dh 346.7bn. Quasi-monetary deposits combine with M1 to create the money supply aggregate M2, which rose by 1.3 percent, moving from Dh 917.9bn to Dh 929.8bn between May and June.

Money supply aggregate M3, which includes the M2 and government deposits made into the Central Bank and other banks operating locally, went up by 0.6 percent in June, going from Dh 1,174.9bn to Dh 1,182.5bn by the end of June.

Total deposits in the UAE banks went up 0.7 percent, from Dh 1,255.6bn in May to Dh 1,878.1bn at the end of June and driven by an 0.8 percent rise in resident deposits.

Saudi Arabian Economy Creates 2 Million Jobs Between 2009 and 2012

Two million positions were generated by the economy in Saudi Arabia between 2009 and 2012, with 1.5 million of those jobs awarded to non-Saudis, according to local media sources.

Al-Shall Economic Consultants released the report stating that real GDP growth in Saudi came in at almost 8.6 percent for 2011, substantially higher than 5.1 percent in 2012. Real GDP growth is expected to fall to 4 percent this year before rising to 4.4 percent the following year, roughly half of the figure released for 2011.

In spite of the 7.75 percent annual growth reported in real non-oil GPD from 2008 to 2012, the kingdom failed to manage the surging demand for jobs in Saudi Arabia. The jobless rate rose from 10.5 percent as reported in 2009 to 12 percent at the end of last year, according to the report.

The report also expanded on several unemployment issues, including the fact that the number of male Saudis enrolled in local universities rose by three times over the five-year period from 1996 to 2011. Female enrollment rose by just 54 percent.

The unemployment rate among Saudi Arabian women is reported to be 35 percent, with the labor market rising at 3.5 percent per year. The addition of a further 1.4 million out-of-work Saudis in the coming decade is expected to aggravate the projected scenarios for labor market growth.

Around 12 percent of the overall Saudi Arabia workforce is jobless, or 629,044 according to recent data from the CDSI. Males account for 265,425 of that figure, and make up 80.2 percent of the overall workforce in the kingdom (4,216,680 out of 5,260,161).

Unemployed Saudis numbered 4,631,117, which represents 88 percent of the overall workforce. Males represent 85.3 percent of the 3,951,255-strong labor force.

More Saudis are employed in the private sector after the job nationalization scheme was introduced in June of 2011 and the Nitagat program launched, increasing the rate from 10 percent of the workforce to 13 percent, based on recent Ministry of Labor data.

According to the ministry, around 615,000 citizens work in the private sector, including 180,000 females.

Expansion of 4.6 Percent in Omani Economy This Year

Moody’s reported that the Omani government’s push toward diversification away from hydrocarbon has resulted in economic expansion of 4.6 percent this year and 4.1 percent for next year.

A recent Moody’s report noted that the A1 rating for Oman is supported by healthy growth outlook and the sound fiscal policies of the Omani government. The report also stated that both factors might be affected by declining global oil prices.

According to the IMF, the Omani economy will grow by 5.1 percent this year and a further 3.4 percent next year.

Relatively high levels of per-capita income and a healthy long-term outlook for the nation’s economy are reflected in the assessment and point toward continued economic diversification.

Several things support the positive rating, including diversification efforts by the government, the investment regime and open trade policies, as well as the government’s past performance of low debt levels, a high level of net financial assets and a pattern of budget surplus. A positive banking sector and higher levels of domestic savings complete the government finance profile, according to Moody’s.

Vulnerabilities stemming from the oil and gas sector, which continues to account for a sizeable share of government revenues and GDP, create the major credit challenges for Oman.

Oman holds one of the GCC’s highest levels of breakeven oil prices, estimated near $104 US per barrel. Omani oil prices rose strongly from 2003 to 2012, surging almost $80 per barrel. This pattern plays an important role in the Oman economy, since reserves remain modest and continue to cost a substantial amount to exploit, according to the report.

Moody’s report also noted that growth in the hydrocarbon sector is expected to drop back to around 2 percent for this year and next, as increasing production levels seem unlikely when considering the forecasted oil price declines.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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