GoDubai
  
  
  
  
Citylife > Press Release
  Home Contact us Add to Favourites
Most Recent Postings
More Press Releses
Featured Sections

Event Finder
A daily roundup of exhibitions, promotions and other events in Dubai and the rest of the Emirates.
Submit an Event
Latest Dubai Press Releases >> Banking and Investments

 
  Share
According to ICAEW's latest report, Economic Insight: Middle East Q3, outlook in the Middle East region is expected to remain tough, with several further squeezes on household income in 2018. However, overall GDP is expected to grow by 2.4% next year and rising to 4% in 2019.The accountancy and finance body says any extension of OPEC's production cut deal, which ends on 31st March 2018, would delay the recovery.
 
Dubai, UAE, October 1, 2017:  Economic Insight: Middle East Q3 2017, produced by Oxford Economics, ICAEW's partner and economic forecaster, says governments across the region are unlikely to find any solace in the oil market, which looks likely to require an extension of OPEC's production cut deal merely to stabilise prices around $45-50. In this case governments would come under further pressure to prioritise public spending in growth-enhancing areas and find new revenue sources in order to stop public debt from accelerating.
 
One of the key challenges for the Middle East economies as we move into the final months of 2017 and into 2018 is the ongoing squeeze on household incomes. The upcoming GCC Value-Added Tax is expected to increase the cost of living in impacted economies by around 2.5% in 2018, and 0.5% in each year from 2019-2022. Households in many countries are also feeling the pinch from higher energy costs – fuel prices were raised by 6% in the UAE earlier this year and are expected to rise in Saudi Arabia in early 2018. Together with the impact of a weaker dollar on import costs, these pressures are expected to drive consumer price inflation at the GCC level from just 1.2% in 2017 to 4.7% in 2018, and 3.5% in 2019. Consumer spending is also expected to grow 2.5% in 2018 and 2019 – compared to an average of 4.2% per annum from 2010-2016.
 
More positively, evidence is emerging that the acceleration in world trade has been felt in the Middle East region. Those economies which are the most diversified appear to be seeing the greatest benefits. Growth in the non-oil sector in the UAE accelerated to a two-and-a-half year high in August, according to the survey-based Emirates Bank Purchasing Managers Index. Growth remains well above the long-run average. Meanwhile in less-diversified Saudi Arabia, the same metric has picked up through the year, but remains well below the historical norm.
 
Tom Rogers, ICAEW Economic Advisor and Associate Director of Oxford Economics, said: “GCC countries need to shift focus towards deeper, multi-dimensional fiscal policy and institutional reforms. These will help to secure long term fiscal sustainability, and also support the development of vibrant private sectors. Furthermore, by boosting investor and market confidence, they can also start a virtuous cycle of stronger investments, including FDI, and output growth in the near term.”
 
Oman must tackle its economic challenges 
According to the report, Oman's economy is benefitting from trade diversion, as exporters use Omani ports for transit to and from Qatar. Figures released by Sohar Port and Freezone show the number of vessels docking rose by 16% in 2017 Q2 versus Q1, and by 18% versus 2016 Q2. However, this will be a modest and temporary boost, and does little to address the more fundamental challenges the economy faces. 
 
Oman's government has not been as aggressive in cutting expenditure recently as other GCC economies, and as a result the squeeze on spending is having to last longer – while government spending is up around 3% in cash terms in the GCC as a whole in 2017, it is expected to contract a further 12% in Oman. In conjunction with the implementation of VAT, the impact of austerity on public sector wages and welfare will maintain pressure on household budgets. Household spending is expected to rise by just 3.4% in 2017, and 2.9% in 2018 and 2019 – substantially slower than the 5.6% average rate from 2011-2016.
 
The squeeze on public spending will need to be stuck to rigorously, given Oman's reliance on debt issuance to finance a fiscal deficit expected to top 12% of GDP in 2017, and narrow only modestly to 9.4% in 2018. The consequence of these deficits is that government debt will have risen from just 5% of GDP in 2014 to 57% of GDP in 2018.
 
More positively, the economy is excepted to get a boost from the gas sector in 2018, when the Khazzan gas field comes fully on-stream (boosting gas output by an estimated 25%). Also, Oman is one of non-OPEC countries that agreed to OPEC deal so if oil output reverts to pre-OPEC deal levels in Q1-2018, GDP growth could rebound to 5% in 2018. But if OPEC's production cut deal is to be extended, GDP growth is expected to be substantially slower. 
 
Michael Armstrong, FCA and ICAEW Regional Director for the Middle East, Africa and South Asia (MEASA), said: “Getting the deficit under control soon in Oman is critical, and if the OPEC deal needs to be extended beyond 2018 Q1 this will require yet more difficult policy choices to be made by the Omani government in order to achieve financial stability.” 



Posted by : GoDubai Editorial Team
Viewed 5838 times
Posted on : Sunday, October 1, 2017  
Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of GoDubai.com.
Previous Story : Mashreq Bank Unveils a Brilliant New Digital Bank, Mashreq Neo, in the UAE
Next Story : Sheraa partners with Khalifa Fund to bring Pitch@Palace competition to the UAE
Email this article Print this article

Share this article with your friends and followers
NewsVine

Comments

Back to Top  
Most Viewed Press Release posted in the last 7 days
Meet the FOREO family as they share their top tips for radiant skin during the ...
Three Trends to Try with Palladio Beauty
bebe Launches First Ever Ramadan Capsule Collection
Max Fashion Reveals Latest 2018 Fashion Trends at Exclusive Trunk Show
Lexus sweeps two podium finishes at round two of 2018 AUTOBACS SUPER GT 500 series
Care for your baby's sensitive skin with Corine de Farme
Ramadan-Inspired Sandro SS18 Pieces
New Master Maserati Driving Courses for 2018
Spinneys Puts Local Food Heroes in the Spotlight this Ramadan
Do Explore More with Pandora
‘Tree of Life' Continues to Change Lives at Arabian Center, This Ramadan
Ethereum - Second In A Series Of Exclusive Cryptocurrency Watches Launched
Marchon Eyewear New Collections
Get Voluminous Eyelashes and Eyebrows with Rodial's Lash and Brow Booster Serum
Global Light and Power Celebrates 10 Years with the Opening of their New Showroo...
Mads Mikkelsen Spotted on Red Carpet at Cannes Wearing Ulysse Nardin Masterpiece
RAK Diabetes Center in Jumeirah offering Free Lifestyle wellness checks and Diet...
Charlotte Tilbury, the World's #1 Celebrity Makeup Artist, Announces the Opening...
Caudalie The Cleansing Collection
Pottery Barn Kids Launches Baby Registry Service to Welcome Newborns
Karl Lagerfeld Celebrates Fall / Winter 2018 Collection
Make Ramadan Better With the Gift of Sharing
Aru Impressed with Team Spirit as Italian Champion Secures Top Ten Finish
Hour Choice Presents Coach Perry Collections – Ramadan Exclusive
Breitling's Navitimer 8 Collection Arrives in The Middle East
Facebook Launches Youth Portal, a Central Place for Teens
Stay connected with your loved ones this Ramadan season with the Nokia smartphones
Pick what suits you from essence Spring/Summer 2018 nail polish collection
CND™ Boho Spirit: The Collection Summer 2018 Shades
White Man & Woman Focuses on Innovation and Sustainability With Patagonia at Whi...
Global Rollout of LGG7 Thinq Gets Underway
LG G7 Thinq Offers Deep AI Integration for Maximum User Convenience
1st Edition of Cannes International Film Festival From May 8 to 19, 2018
Elvis Presley's OMEGA Sells for a World Record CHF 1,500,000 at Auction
du Helps You Stay Connected this Ramadan with Exclusive Offers Throughout the Ho...
MAC - Prep + Prime Fix +
Celebrate Father's Day in 'Swiss Style' with Raymond Weil.
Etihad Airways Introduces Ai Robot Sophia to Abu Dhabi
Glambeaute.com's Special Ramadan Beauty Packs
Revel in the all-new Mango Memory Menu – a summer treat by Moombai & Co
Get Your Nails Summer Ready with FC Beauty
Dubai Festival City is the place to be this Ramadan
A Nose for Great Sound
HP and DiSTI Join Forces to Reinvent Enterprise Training Using Virtual Reality
Turkish Airlines Announced its 2018 April Passenger and Cargo Traffic Results
Lufthansa Group and Travix announce NDC partnership
Etisalat Launches First Commercial 5G Network in the MENA
Manero Flyback A Modern Take on a Retro Style
Qualcomm, Nokia and Leading TV Broadcasting Ecosystem Companies in Europe Showca...
Sheikh Juma launches his Asian Games preparations with NAS Run