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Saudi Arabia, MENA growth outlook bright despite challenges, ministers say

The future looks bright for Saudi Arabia and other Middle East and North African economies, but governments in the region must be wary of geopolitical instability and inflation to sustain growth, ministers told the World Economic Forum on Thursday.

Saudi Arabia’s Minister of Economy and Planning Faisal Alibrahim took part in a panel discussion on how the MENA region can build an inclusive and sustainable economic future for all of its nations.

He said the Kingdom’s economy was beginning to see results from its Vision 2030 agenda, which led to its economy being one of the fastest growing in the world in 2022.

“Our non-oil activities, the private sector essentially, has grown at a very high rate up until the end of Q3. On a cumulative basis it reached 5.9 percent and before that in Q2 it was even higher. That is one of the highest, if not the highest, rates in 11 years,” he said.

“We will continue our plans to diversify the economy. We were very fortunate that we have seen results of Vision 2030 materialize over the last few years, especially in 2022, and Saudi becoming the global growth story.”

That private sector growth, coupled with an increase in foreign direct investment in new and revived sectors like tourism, culture, sport and entertainment, and mining, were set to deliver long-term prosperity to Saudi Arabia, Alibrahim said.

“We have a very strong fiscal position, a very strong and resilient financial system and a monetary system as well, so we continuously assess if this will impact the private sector, which has been growing consistently and we’ve seen even foreign direct investment grow at 250 percent,” he said.

“The private sector in terms of exports has grown around 20 percent and manufacturing has grown more than 20 percent in the last year.”

Alibrahim said the government’s efforts to make the Kingdom an attractive proposition for foreign direct investment would lead to a “co-creation of value” with its partners.

“We started at 0.7 percent (FDI) and we’re still moving forward. We want to move faster but with the introduction of the National Investment Strategy and with the many trillions that are targeted to be attracted, we’re moving forward,” he said.

“We are trying to build the right business environment in terms of transparency, policy predictability an institutional environment that never existed this well before to attract this FDI.”

Egypt’s Minister of Planning and Economic Development Hala El-Said and Bahrain’s Minister of Sustainable Development Noor Ali Al-Khulaif echoed Alibrahim’s optimism for the region’s economies as they diversify and attract investment, with both highlighting the progress made in their own countries.

But the panelists warned against the threat to growth from looming crises, with geopolitical upheaval and inflation being the most concerning. They also highlighted the need for keeping channels of communication and cooperation open between nations in the region.

“Inflation is one of the things that is a worry not only for Egypt but for all countries … because it is an extra cost on prices to any citizen,” El-Said said.

Al-Khulaif said: “Certainly, the geopolitical situation (is concerning) … but touching on the theme of WEF this year, communication, I’ve seen it a lot this week … this understanding that my own stability and prosperity, really depends on the stability and prosperity of the countries around me.”

“I think there is a huge amount of willingness to communicate and work together toward growth,” she said.

SOurce:https://www.arabnews.com/node/2235626/business-economy

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Saudi Arabian economy ‘to return to growth’ in 2018

The kingdom’s real GDP growth dropped 1 percent in the first half of 2017

The Saudi Arabian economy will remain contracted in 2017 before returning to “modest” growth of 1.3 percent in 2018, a report has claimed.

Oil production cuts as part of the OPEC agreement will see oil sector growth remain in negative territory in the second half of this year, while the private non-oil sector continues to face headwinds, amid government spending cuts to a number of infrastructure projects, according to an analysis from BMI Research.

Real GDP growth in the kingdom stood at -1 percent year on year in the first half of 2017, after having alreadty contracted by 0.5 percent in the first quarter of the year.

This contraction was largely driven by the oil sector, which accounts for over 40 percent of GDP and contracted by 2 percent in the first six months of 2017, BMI said.

Meanwhile, the non-oil sector has also struggled to regain traction, expanding by a sluggish 0.6 percent year-on-year over the same period – up from 0.2 percent throughout 2016.

Based on conservative expectations for growth, BMI said it predicts the economy to recede by 0.5 percent in 2017 before picking up to 1.3 percent in 2018.

Source:http://www.arabianbusiness.com/politics-economics/380392-saudi-arabian-economy-to-return-to-growth-in-2018

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UAE, Saudi ‘Well Positioned for Industrial Revolution 4’

The UAE and Saudi Arabia are well positioned for the Fourth Industrial Revolution, according to American global management consulting firm A T Kearney.

The UAE has the opportunity to take advantage of emerging technologies and changes in production, as it ranks in the top quartile of countries performing well in the areas of technology and innovation, human capital and trade, said the report.

Saudi Arabia has also ranked highly and has huge opportunity along with the plans underway to meet Saudi Vision 2030, according to the new Readiness for the Future of Production Report produced by World Economic Forum, in collaboration with global management consultants, A T Kearney.

The report, which measures how well-positioned 100 countries and economies, across all geographies and stages of development, are to benefit from the changing nature of production. It reveals that only 25 countries are strongly positioned to benefit, as production systems stand on the brink of exponential change.

The UAE, which aims to increase its manufacturing share of gross domestic product (GDP) to 25 per cent by 2025, along with Saudi Arabia, are flagged as ‘high-potential’ countries and are positioned to leapfrog in the emerging production paradigm. These countries have a relatively small current production base, but have the resources and potentially the right combination of other capabilities to capitalise on opportunities.

Johan Aurik, managing partner and chairman of A T Kearney, said: “In a changing production landscape, each country will need to differentiate itself, capitalise on competitive advantages and make wise trade-offs in forming its own unique strategy for the future of production.”

“Given the speed and scale of changes occurring in the environment, the new diagnostic and benchmarking tool can help raise awareness and sharpen a country’s response,” he said.

As the Fourth Industrial Revolution gathers momentum, the report highlights how decision-makers from the public and private sectors are confronted with a new set of uncertainties regarding the future of production.

Rapidly emerging technologies—such as the Internet of Things (IoT), artificial intelligence, wearables, robotics and additive manufacturing—are spurring the development of new production techniques, business models, and value chains that will fundamentally transform global production.

Mauricio Zuazua, partner, A T Kearney, said: “This is just one aspect of a vastly shifting landscape. It is imperative that government and business leaders take a fresh look at how their countries and corporations will contribute to the world’s fast-changing value networks to capitalize on future production opportunities, mitigate risks and challenges, and be resilient and agile in responding to unknown future shocks.”

This report is a key contribution to the World Economic Forum’s initiative on Shaping the Future of Production. The initiative brings together global leaders and decision-makers in seeking to address how the transformation of production systems, from R&D to the consumer, can drive innovation, sustainability and employment, to benefit all people, it stated.

Source:http://www.manufacturingtrade.com/news-detail:9117ad87-516c-5b06-a8ff-5a6f219c0c9c.html

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Iran Proposes Visa-Free Regime with Iraq, Trade in Own Currencies

Iran Proposes Visa-Free Regime with Iraq

Iran’s first vice-president put forward a proposal to lift visa requirements for the Iranian and Iraqi travelers, and also called for trade exchanges between the two countries using their own currencies, namely rial and dinar.

Addressing a meeting of high-ranking delegations from Iran and Iraq, attended by the visiting Iraqi Prime Minister Haider al-Abadi and held in Tehran on Tuesday, Iranian First Vice-President Eshaq Jahangiri called for the expansion of banking cooperation between the two neighbors by removing the trade obstacles.

To that end, he proposed, Iran and Iraq can begin to trade using their national currencies.

Jahangiri then noted that the political, economic and security cooperation between Iran and Iraq has reached such a high level that they need to formulate a “comprehensive document on trade and economic cooperation.”

The vice president also pointed to the huge number of Iranian pilgrims traveling to Iraq every year, suggesting that Tehran and Baghdad should sign an agreement to lift the visa restrictions.

For his part, the visiting Iraqi prime minister voiced Baghdad’s readiness to boost relations with Tehran in all fields.

Iraq and Iran are in the same front in the fight against terrorism, Abadi added, saying the Takfiri terrorist groups in the Arab country are on the brink of destruction.

Heading a delegation, Abadi arrived in Tehran on Tuesday and held meetings with Leader of the Islamic Revolution Ayatollah Seyed Ali Khamenei and with Iranian President Hassan Rouhani.

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OPEC chatroom dead as Qatar crisis hurts Gulf oil cooperation

Qatar crisis hurts Gulf oil cooperation

* For first time, Gulf oil ministers not meeting before OPEC

* Qatar crisis to complicate producer group’s decision-making

* OPEC’s Sunni wing weakens as Iran, Iraq raise game

DUBAI/LONDON, Nov 23 (Reuters) – OPEC’s most powerful internal alliance, bringing together the oil producer group’s Gulf members, is disintegrating fast.

As a six-month-old spat between Saudi Arabia and Qatar deepens, the organisation’s Gulf ministers will have to scrap their tradition of meeting behind closed doors to agree policy before OPEC holds its twice-yearly talks, OPEC sources say.

“We used to have a WhatsApp group for all ministers and delegates from the Gulf. It used to be a very busy chatroom. Now it’s dead,” said a senior source in the Organization of the Petroleum Exporting Countries.

Four other sources said there had been no official contact on oil policy between the Gulf Arab nations, in a grouping known as the Gulf Cooperation Council (GCC).

The GCC includes OPEC members Saudi Arabia, the United Arab Emirates, Kuwait and Qatar and non-OPEC Oman and Bahrain. OPEC meets on Nov. 30 in Vienna to decide whether to extend global output cuts beyond March.

OPEC kingpin Saudi Arabia and the UAE cut ties with Doha in June, saying Qatar backed terrorism and was cosying up to rival Iran. Qatar rejected the accusation.

“The ministers can’t meet,” another OPEC source said. “They may relay the message through the Kuwaiti or the Omani oil ministers, but Saudi and the UAE cannot meet publicly with the Qataris.”

Kuwait and Oman have refrained from taking sides in the dispute, over which Kuwaits Emir Sheikh Sabah has led regional mediation.

SHI’ITE OPEC ALLIANCE

To be sure, OPEC has survived worse crises and operated under even greater strain, including the Iran-Iraq war in the 1980s, Iraq’s invasion of Kuwait in 1990 and proxy wars fought by Saudi Arabia and Iran over the past decade.

None of the OPEC sources suggested the Qatar crisis would derail a widely expected decision by OPEC to extend price-boosting output cuts until the end of 2018, as almost all producers agree on the need to maintain policy.

But dialogue within OPEC is likely to be complicated as the stand-off strikes at the heart of OPEC’s efforts to form a united front to stabilise a fragile oil market. It may also weaken the group’s Sunni faction at a time when predominantly Shi’ite Iran and Iraq are raising their game.

As OPEC president in 2016, Qatar was instrumental in bringing together oil producers – including non-OPEC Russia – to agree the supply-reduction deal.

“If the GCC is dead politically, then it will certainly have implications for OPEC policies. Not that it will necessarily disrupt decision-making, but it is making it more challenging and complicated,” the senior OPEC source said.

“Qatar is not talking to the Saudis or the UAE, so OPEC’s Sunni wing is weaker. On the other hand you have the rapprochement between Iran and Iraq, a Shi’ite alliance long in the making,” the senior source added.

With the world’s fourth- and fifth-largest oil reserves, Iraq and Iran are seen as the OPEC countries with the largest output growth potential and hence together can be the biggest challengers to the leading role Riyadh has played for decades.

Iraq has resisted calls from the United States to lessen its reliance on Tehran after Iran effectively helped Baghdad stifle a Kurdish independence referendum. Iran also plans to import significant volumes of Iraqi oil.

“The Saudis perfectly understand that challenge and are doing their utmost to lessen Iran’s influence on Iraq,” a third OPEC source said.

Relations between Riyadh and Baghdad have been improving in recent months, with the two states joining hands to coordinate their fight against Islamic State and on rebuilding Iraq.

With a thaw in relations, Saudi Energy Minister Khalid al-Falih visited Iraq in October to call for increased economic and energy cooperation, the first Saudi official to make a public speech in Baghdad in decades. (Editing by Dale Hudson)