Gulf Economic Barometer

The Gulf Economic Barometer monitors initiatives taken by Gulf states as they seek fiscal, monetary, and labor policy changes to meet the challenge of reduced state revenue from natural resources. The key trend is a major shift in the way the GCC countries have been spending on public sector wages, infrastructure, and social services over the last decade. The GEB documents the policy changes as they are announced and/or implemented by country and by sector and is updated regularly as data becomes available. The information here is neither official nor exhaustive.

Present

The Bridge: Competing Megaprojects in Kuwait and Saudi Arabia.

Kuwait Boubyan Island
by Robert Mogielnicki During the March 25 Kuwait Investment Forum, Kuwaiti government officials reaffirmed the country’s commitment to develop the Silk City (Madinat al-Harir) megaproject and establish an integrated economic zone on five uninhabited Kuwaiti islands.

Market Watch: U.S.-Saudi Economic Ties: Why Saudi Arabia Matters

Donald Trump and Mohammed bin Salman
Saudi Arabia and the United States are linked by investment ties, energy markets, and a shared interest in the stability of the global economy.

Market Watch: Saudi Economic Reform Update: Saudization and Expat Exodus

Oil worker in Khurais by Karen E. Young The experimental nature of Saudization begs many questions of which sectors are targeted and why, and how smaller businesses will be able to assume higher wage costs of hiring nationals.

Market Watch: New Year, New Economic Pain

The new year is likely to bring some serious economic pain to parts of the Gulf, especially Saudi Arabia.

Market Watch: Saudi Arabia’s Neom — State-Led Growth Meets New Global Capitalism

Crown Prince Mohammed bin Salman envisions a new kind of Saudi Arabia, or at least the opening of a space complete with yoga studios, beach resorts, and robots in place of migrant laborers. This is the image of Neom, the $500 billion master project to develop an over 10,000 square mile swath of land in the northwest corner of Saudi Arabia on the shores of the Red Sea, adjacent to Egypt’s Sinai Peninsula and southern Jordan.  

Market Watch: Isolating Qatar Reveals Economic Vulnerabilities of the GCC

by Karen E. Young The Saudi, Bahraini, and Emirati efforts to isolate Qatar diplomatically and logistically from its Gulf Cooperation Council partners highlights structural weaknesses in many of the Gulf states, not just Qatar.

Market Watch: Limited Benefits to U.S. Infrastructure in Saudi PIF Investment

by Karen E. Young Trump may have elicited a deal that serves the interests of Saudi Arabia and the fund managers receiving the investment, but not necessarily filling a funding gap in an already deep pool of U.S.-based investor interest.

Market Watch: As Reform Agenda Waffles, Citizens Take Life to the Streets

by Karen E. Young Despite slowdowns in consumer demand and general economic activity, there is evidence of alternative economic behavior and microenterprise that is thriving in the Gulf.

Market Watch: Economic Nationalism at the Expense of GCC Integration

As a burgeoning global trend, economic nationalism is also surging in the Gulf states. What may be lost is the decade of efforts in economic integration and negotiations to make the GCC work as a common market, with complementary assets.

The Bridge: Restructuring of Saudi Arabia’s Energy Industry Gathers Pace

by Diane Munro Saudi Arabia is powering ahead with ambitious plans to reorganize its massive energy sector. The restructuring is part of its strategic plan to reduce domestic oil dependence and adopt a more commercial approach to its business operations at state oil company Aramco as part of Vision 2030 and ahead of the historic initial public offering set for 2018.

Market Watch: Pricing the Trump Risk in Gulf Economies

by Karen E. Young The beginning of the Trump administration points to, at the least, a heightened period of political and economic risk, which Gulf governments, financial institutions, and businesses will have to price, assess, and manage.

Market Watch: International Trade, Investment, and Finance in the Trump Administration

by Karen E. Young Trump’s pro-growth agenda will need partners, and the GCC states are also looking for investment partners in their diversification efforts and for placements for state-owned investment vehicles. It will be the politicization of these partnerships that will create the most risk.

Market Watch: Easing Labor Market Restrictions in the Gulf

by Karen E. Young In the GCC, there is an effort to recalibrate the relationship between foreign workers and Gulf national economies, in both the reliance on foreign labor and the downward pressure it has on service sector salaries.

Market Watch: Saudi Arabia’s Impeccable Timing in Debt Markets

by Karen E. Young Saudi Arabia's unprecedented bond sale worth $17.5 billion had impeccable timing, given Donald Trump's victory in the U.S. presidential election.

Market Watch: For Saudi Economic Reforms, Timing is Everything

A man walks past a building under construction in Riyadh, Saudi Arabia. (AP Photo/Hasan Jamali) by Karen E. Young

Saudi Arabia has been a feast or famine economy, but that pattern is not suited to today’s global economy and the need to solicit capital from many sources and to make good on commitments to foreign investors.

Market Watch: The Korean Connection

South Korean President Park Geun-hye, left, speaks with media in a joint press conference with Iranian President Hassan Rouhani after their meeting in Tehran, Iran on May 2. (AP Photo/Ebrahim Noroozi) by Karen E. Young South Korea emerges as an important, and unexpected, interlocutor in Saudi-Iranian relations.

Market Watch: GCC Sovereign Debt in a Low Yield World

People walk by an electronic stock board of a securities firm, in Tokyo on February 15. The realization is dawning that growth may continue to underperform, while in Japan the yield on 10-year bonds briefly turned negative. (AP Photo/Koji Sasahara) by Karen E. Young Low yields result in more accessible capital for GCC states, however repayment could be a challenge in the long term.

Market Watch: Smart(er) Money in the Gulf

State-owned funds like Mubadala in the United Arab Emirates are consolidating their operations.

With smarter money, even in a time of diminished fiscal revenue, the GCC states could become formidable investors.

Market Watch: Saudi’s Summer of Anticipation

Khalid al-Falih, Saudi Arabia's newly appointed energy minister, at the World Economic Forum in 2011. (AP Photo/Virginia Mayo)

Economic uncertainty shrouds Saudi’s performance during the summer months.

Market Watch: Understanding Vision 2030: Anticipating Economic Change in Saudi Arabia

Saudi Arabian Deputy Crown Prince Mohammed bin Salman (AP Photo/Hasan Jamali)
Vision 2030 is a first step in a radical attempt to change Saudi Arabia’s dependence on oil, but also its fundamental political economy, the way that the state and the economy interact.

Market Watch: The Debt Roadshow Begins

by Karen E. Young GCC states show significant interest in sovereign debt, in the form of bonds and loans.

Market Watch: Business Politics in the Gulf

A brief look at state-business relations in the Gulf Cooperation Council states.

Market Watch: Gulf Economic Statecraft Hits Lebanon

The GCC states have collectively imposed an informal set of economic sanctions on Lebanon.

Market Watch: Blood in the Water: Speculation on Gulf Currency Pegs Misses First Victims of Downturn

by Karen E. Young The real victims of the oil slump could be in the domestic economies, from local banks to small and medium size enterprises, to those businesses most closely connected to the energy sector, and those contractors servicing infrastructure growth.

Market Watch: The Perfect Storm: Labor Markets and Economic Downturn in the Gulf

Amid fiscal deficits, bloated public sectors, and accelerated efforts to create jobs and diversify economies, there is a perfect storm on the horizon for GCC states.

Market Watch: What Would Russia Do? Why Saudi Arabia’s Break with Iran Makes Bad Economic Sense

by Karen E. Young Breaking diplomatic ties with Iran might result in Saudi Arabia missing out on a regional economic success story.

Market Watch: Regional Politics Impact GCC Economic Reforms

Gulf Cooperation Council states struggle to agree upon a shared tax regime as regional politics come into play.

Market Watch: Gulf States’ Fiscal Situation Accelerates Consensus for Economic Reform

The current fiscal climate, in which all of the GCC states face deficits due to declining oil and gas revenues, is enabling a new consensus for economic reform.

Market Watch: Counting the Cost – Military Expenditure in the GCC

As budget deficits become the new norm for oil-exporting Arab Gulf states, there is no evidence that they are cutting down on defense spending.

Market Watch: Egypt’s Economic Recovery Linked to Gulf Banks and Foreign Investment

The stability of Egypt may depend on regional financial cooperation and intervention.

Market Watch: It’s all in the Financing – Renewable Energy Potential in the GCC and Iran

While both economic and environmental concerns are driving reform processes across the Gulf Cooperation Council states, the real innovation is in how Gulf states harness their business acumen to attract investment and design deals that work for local financial markets, governments, and developers.

Market Watch: “Monetizing Assets” – Has a Great Gulf Sell-Off Begun?

by Karen E. Young Oil and gas producing states in the region have started to sell off their assets in order to offset the declining energy prices.

Market Watch: Volatile Global Markets and the Arab Gulf States

Many investors have long anticipated an economic slowdown, but the timing couldn’t be worse for the Arab Gulf states.