FYI
Nawaf Y. Husein
Faculty Member
Msc, CRP , CLBB
Saudi Training Society Member
Institute of Banking
Saudi Arabian Monetary Agency ( SAMA)
P.O.Box : 10820 Riyadh 11443 Saudi Arabia
Tel : + 966 1 463 3000 Ext. 3825
Fax: + 966 1 466 2368
Mobile : + 966 55 48 44 828
SKYPE : abuhejleh2
Dear Readers,
After a period of exceptional political turmoil in the spring, relative calm has been restored to the GCC economies and financial markets. The key question going forward has to do with the pace and composition of the recovery. Even as the headline growth figures are set to significantly exceed expectations, the momentum will be largely underpinned by the tight oil markets and increased government spending. While confidence levels are going up and signs of increased bank credit suggest that the private sector may finally be about to join in the recovery, global uncertainties remain legion.
· Growth prospects have generally improved. Much of the bout of weakness experienced by the GCC in Q1 was due to the elevated uncertainty caused by the regional political turmoil which swift policy action did a great deal to dispel. The recovery now appears to be back on track, further supported by high oil prices and large-scale government stimulus spending. The GCC region as a whole is well positioned to record a significant acceleration in its growth this year led by Qatar and Saudi Arabia. However, the risk of exogenous shocks remains elevated due to economic uncertainty in the US, the Euro-zone, and key emerging markets.
· Monetary pressures look manageable in the near term. The recent upswing in inflationary pressures seems to be moderating somewhat for now, although the sharp increases in government spending and Dollar weakness are a concern. Signs are multiplying of a pickup in money supply growth and even bank lending, although some of this is still due to exceptional measures, including government handouts.
· Aviation spending will be a key market driver. The aviation sector has been one of the most dynamic growth stories in the region. The region's leading carriers have established an international footprint and massive investments are underway in airport construction, further consolidating the region as a key aviation hub globally. More problematically, the sector remains subject to strict regulation which has made for a challenging market environment for new entrants.
· A number of port projects mirror the aspirations in the sphere of aviation. A number of leading ports are experiencing capacity expansions and large-scale Greenfield investments – led by King Abdullah Economic City, New Doha, and Khalifa Port – are underway almost across the region. Also many existing ports are being upgraded.
Best regards,
NCB Economics Department
PO Box 3555, Jeddah 21481
Telephone: +9662646-3232 FAX: +9662644-9783
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