Saudi Arabia raised an estimated $12.2 billion from VAT in 2018, exceeding expectations by nearly one-third.
Oman's state-owned Duqm refinery closes $4.6 billion in financing from domestic and international sources.
Umm Al Quwain, one of the UAE's 7 emirates, issues royal decree increasing government salaries by 100 percent.
The UAE announced several changes to its visa guidelines in a number of categories, including for workers, students, and tourists. The government will allow people escaping or subject to political violence in their home countries to apply for a 1-year visa with the potential for extension, despite not being a signatory of the U.N. refugee convention.
The government of Abu Dhabi announced a $13.6 billion stimulus package aimed at supporting economic development over three years. Crown Prince Mohammed bin Zayed al-Nahyan instructed officials to draw up detailed plans for allocating the funds over the next 90 days. Abu Dhabi's economy has stagnated in recent years as a result of lower oil prices, as well as austerity measures taken by the government to curb the rise in deficits. The new stimulus package includes 10 initiatives designed to streamline bureaucratic regulations and facilitate the ease of doing business in the UAE.
The effects of the VAT are beginning to show in inflation. According to Abu Dhabi Commercial Bank, January UAE inflation data shows a marked strengthening with the introduction of 5% VAT. Headline inflation accelerated by 2.7% m-o-m in January (December: 0.7%) with the y-o-y rate rising to 4.8% rounded (December: 2.7%). The rise in prices was broad based, particularly in categories subject to VAT, including food and clothing.
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.
by Karen E. Young Like the Bin Laden Group and Saudi Oger, Carillion has proved that the construction of megaprojects in the Gulf, however lucrative and central to state-led development plans, is full of pitfalls.
by Karen E. Young Economic liberalization tends to bring with it social, if not always political, openings. By definition, liberalization challenges existing orders; more specifically, liberalization tries to deny the state a dominating role in the economy. State-led capitalism, as practiced in the Gulf states over the last 40 years, has invited foreign investment and migrant human capital, but it has always privileged the state and protected opportunity for citizens, most visibly via commercial agency laws and the kafala system.
by Karen E. Young Qatar has lodged a complaint with the World Trade Organization against the United Arab Emirates, Saudi Arabia, and Bahrain for blocking its air traffic and increasing the costs of basic food and medicine imports. Though intra-Gulf state economic relations continue to suffer as a result of the current crisis, there are long-standing barriers to trade and investment flows that deserve consideration.
by Karen E. Young On the heels of the G-20 summit in Hamburg, Turkish President Recep Tayyip Erdogan announced plans to visit Kuwait, Saudi Arabia, and Qatar. As the Gulf Cooperation Council diplomatic crisis continues, Erdogan’s presence likely will do little to calm regional tensions.
by Karen E. Young While there are professed visions of change away from state-led growth, in which new private sector dynamism and the expansion of Gulf equity markets would employ citizens and wean states from oil and gas revenue, the realities of politics on the ground in the last two weeks demonstrate there are more powerful forces at play.
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.
by Karen E. Young The civil war in Yemen is now approaching its fourth year, and the rising cost of the conflict in its humanitarian disaster and continued investments by the warring parties in military expenditures suggest that cost is not a deterrent or impediment to war. While the immediate costs to the Yemeni people have been clear, the future cost to Gulf neighbors, Saudi Arabia and the United Arab Emirates in particular, may be more than these states have estimated.
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.
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.
by Omar Al-Ubaydli In the last few years, the Bahraini government has launched a multipronged strategy to ensure that the kingdom’s page is more frequently read by the world’s travelers. Can it succeed in a region riddled with security threats?
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.
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.
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.
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.
by Diane Munro Abu Dhabi capped a year of unprecedented change at state oil company Abu Dhabi National Oil Company (ADNOC) with a landmark $2.2 billion share-swap with legacy partner BP. The unique model for a joint venture gives Abu Dhabi a 2 percent stake in BP in exchange for a 10 percent share in the country’s main onshore oil concession.
by Karen E. Young The Saudi budget for 2017 demonstrates that fiscal reform works; at least, it shows that with a reduction in spending will come a decline in deficit.
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.
by Karen E. Young The new Trump administration will likely offer a more transactional view of U.S. foreign policy toward the Middle East, and specifically toward the Gulf states.
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.
by Mai Mahmoud Gulf Arab states face some of the most severe water shortages in the world. The situation emerges from limited availability of renewable water resources and escalating demands that result from the quick pace of economic development, rapid population growth, changing consumption patterns, and management inefficiencies.
by Kristian Coates Ulrichsen By focusing on the practical and political challenges of technocratic and economic reforms, using specific examples to illustrate broader thematic points, this paper analyzes what the current generation of officials need to do differently to secure more favorable and sustainable results.
Market Watch: The Economic War in Yemen: Oil Revenue and Debilitated Financial Institutions Weaken Recovery Hopes
United Arab Emirates Cabinet approves bankruptcy law, expected to come into effect in 2017 pending presidential signature. The law is aimed at safeguarding the rights of creditors and debtors in insolvency situations, including measures that prioritize secured creditor rights, and enable companies to restructure without unanimous creditor approval.
by Karen E. Young The GCC states have drastically reduced fuel subsidies, however have yet benefit from deficit relief.
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.
by Karen E. Young Breaking diplomatic ties with Iran might result in Saudi Arabia missing out on a regional economic success story.