Some economies in the Gulf Co-operation Council region are set to outperform the rest of the emerging market world this year, according to new research.
Capital Economics (CE), the London consultancy, says in its latest analysis of the Middle East that, despite falling oil production as a result of weakening in the global economy, domestic demand in the GCC will more than compensate.
"While hydrocarbon sectors may be a drag on growth, it looks like this is being offset by the strength of domestic demand, buoyed by strong credit growth and fiscal stimulus packages.
"Indeed, we expect the Gulf economies to be outperformers in the emerging world this year," said Neil Shearing, CE's chief emerging markets economist.
The two biggest economies in the region - Saudi Arabia and the UAE - will benefit from "robust" domestic conditions, especially in the non-oil sector.
Mr Shearing found that Saudi oil production, the biggest in the world, fell to a 14-month low last December and is now contracting in annual terms.
However, the Saudi non-oil sector is on a continuing growth path, boosted by high government spending as a result of post-Arab Spring fiscal stimulus.
"The government has budgeted a 20 per cent rise in spending this year while credit to the private sector continues to accelerate," he says.
The latest data from the UAE also suggests the non-oil sector is performing strongly, backed by a recovery in Dubai property prices and increasing tourist arrivals, despite the fact that private sector credit growth is contracting in annual terms.
"Bank lending to the private sector is falling. It appears that banks are still rebuilding their capital buffers, possibly to absorb losses if loans to government related enterprises need further restructuring. But in the meantime, this is starving companies of the funding for investment," Mr Shearing says.
Oil output has stabilised recently, but he expects further falls in coming months due to the weakness of global demand.
In Qatar, Mr Shearing says, the rapid pace of credit growth suggests that its non-hydrocarbon sector is the strongest in the Arabian Gulf.
"However, much of the strength in Qatar's bank lending can be attributed to lending to public sector companies. By contrast, lending for consumption and real estate purposes is relatively muted," he adds.
"Bahrain's economy is in an altogether worse state. Political tensions remain high, which is holding back key service sectors - notably tourism. The banking sector is fragile too. Assets are falling in annual terms," Mr Shearing says.
fkane@thenational.ae
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Company%20Profile
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The%20Specs
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Company%20Profile
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RESULTS
2pm: Handicap (PA) Dh40,000 (Dirt) 1,200m
Winner: Najem Al Rwasi, Fabrice Veron (jockey), Ahmed Al Shemaili (trainer)
2.30pm: Handicap (PA) Dh40,000 (D) 2,000m
Winner: Fandim, Fernando Jara, Majed Al Jahouri
3pm: Maiden (PA) Dh40,000 (D) 1,700m
Winner: Harbh, Pat Cosgrave, Ahmed Al Mehairbi
3.30pm: Maiden (PA) Dh40,000 (D) 1,700m
Winner: Wakeel W’Rsan, Richard Mullen, Jaci Wickham
4pm: Crown Prince of Sharjah Cup Prestige (PA) Dh200,000 (D) 1,200m
Winner: Jawaal, Fernando Jara, Majed Al Jahouri
4.30pm: Sheikh Ahmed bin Rashid Al Maktoum Cup (TB) Dh200,000 (D) 2,000m
Winner: Tailor’s Row, Royston Ffrench, Salem bin Ghadayer
BEETLEJUICE BEETLEJUICE
Starring: Winona Ryder, Michael Keaton, Jenny Ortega
Director: Tim Burton
Rating: 3/5
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MATCH INFO
Inter Milan v Juventus
Saturday, 10.45pm (UAE)
Watch the match on BeIN Sports
The specs
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now
COMPANY%20PROFILE
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SPEC%20SHEET%3A%20SAMSUNG%20GALAXY%20Z%20FLIP5
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Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
SPECS
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Afro%20salons
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UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions