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Fitch Ratings has forecast an oil price scenario of an average $45 per barrel in 2017 and $55 per barrel in 2018 for both Brent and WTI in the backdrop of high inventories.

Despite significant deficit-reduction efforts under way since 2015 in the backdrop of plunging oil revenues, all GCC countries are projected to record fiscal deficits in 2017 while making substantial budgetary cuts. Analysts expect most GCC states to press ahead with substantial budgetary cuts from 30 per cent upwards in order to maintain balanced budgets regardless of signs of a gradual recovery in oil prices following the recent agreement among oil exporters to cut output.

Across the GCC, government financial assets have been drawn down aspart of the deficit financing programmed over the past two years. After a significant withdrawal of financial assets in 2015, a largerportion of the 2016 fiscal deficits that amounted to about $193billion was covered by issuing debt, analysts pointed out. Bahrain, Oman, Qatar, Saudi Arabia, and the UAE have issued bonds and obtained syndicated loans in international markets this year.

The report forecast that GDP growth in the GCC countries would be at 2.3 per cent in 2017, far from the growth experienced in the past. “Oil price is the main driver of the GCC economy and it is expected toremain around $51 in 2017. However, the forecast may be affected by anumber of factors, including the increasing global oil production, uncertain consumption patterns and investments in the oil industry,” it said. Fitch Ratings has forecast an oil price scenario of an average $45 per barrel in 2017 and $55 per barrel in 2018 for both Brent and WTI in the backdrop of high inventories and the potential for US shale production to respond quickly to any market tightening.

ICAEW’s forecast said that as one of the most diversified economies in the Gulf, the UAE will witness an overall GDP growth of 2.3 per cent this year, rising to 2.7 per cent in 2017 as both oil and non-oil sectors improve.

“Output in the oil and gas sector, which makes up around one-third of the economy, is estimated to have risen by only one per cent in 2016 after growing five per cent in 2015. Non-oil growth is also estimatedto slow a little further to 2.9 per cent as the cumulative impact of low oil prices, tighter fiscal policy and liquidity feeds through.” According to ICAEW, the UAE and Qatar are better-placed than other oilexporting Gulf countries to withstand a persistent oil price slumpamid bleaker outlook with a projected 2016 breakeven prices – at whichoil must sell in order to balance the budget – at $57 and $44 per barrel respectively.

While breakeven prices for Kuwait and Saudi Arabia are projected at $60 and $77 per barrel respectively, Oman and Bahrain will be under the greatest pressure with breakeven prices at $104 and $97 per barrel respectively, ICAEW said while urging GCC countries to substantially raise non-oil government revenues. Analysts at the chartered accountants organisation said businesses in the GCC to brace for long-term efforts by governments to close fiscal deficits and raise much more substantial revenues from the non-oil economy, as well as implement other offsetting populist policies like the drive to increase the national share of the workforce, especially in the private sector.


The UAE along with Saudi Arabia and Qatar accounts for 85 per cent of the $69 billion worth of rail projects under construction in the GCC, where total rail projects, including those in the pipeline, are valuedat $240 billion. “As of January 2017, Saudi Arabia had registered the highest rail construction project value of 50 per cent, followed by the UAE [18 per cent] and Qatar [17 per cent],” said a report by Terrapinn Middle East, organiser of Middle East Rail.

The planned investments of $30 billion in the UAE’s railway networks include that in Abu Dhabi Metro and Light Rail, skyTran Yas Island, the next stages of the Etihad Rail national network, the Dubai Metro extension for Expo 2020 and the new stages of the Al Sufouh Tram, said the report. However, there are a number of obstacles facing new rail projects apart from project finance, such as operational structures, technological expertise and political dynamics of cross-border networks, said the report.

The construction timeline for the 2,117km-long $200 billion GCC Railway Network that will link all six countries had been pushed back to 2021 from 2018 in the aftermath of the oil price plunge. Abu Dhabi is leading the GCC rail network with its Dh40 billion Etihad Rail project that will link major industrial zones, cities and ports in the UAE, and will eventually connect with the GCC railway. In January 2016, Etihad Rail suspended the tendering process for phase two of the UAE portion of the project. Once completed, this section of the network will connect the country’s borders with Saudi Arabia and Oman, in addition to other areas within the UAE.


The mutual trade turnover between Iran and Russia increased by 80percent and amounted to more than $2 billion in 2016, Zamir Kabulov, head of the second Asian department of Russia’s Foreign Ministry said in an interview with TASS.

“The dismantling of anti-Iranian sanctions has opened up new prospects for the development of cooperation between our two countries, especially in trade, economic and financial areas. One of our common important tasks is to create conditions for accelerated growth of bilateral trade and investment ties. Over the past year together we have made significant progress in such important areas as simplification of visa regime, promotion and protection of investments, promotion and expansion of the range of goods deliveries, including reduction of import tariffs and establishment of customs “green corridor” that allows us to simplify the procedures for mutual deliveries of goods,” Kabulov said.

The ministry’s official stresses that Iranian fruit and vegetables have already been sold on the Russian market for a long time. Now the Agriculture Ministry is working with Iranian partners on expansion of range of mutual deliveries of agricultural products.

“Recently a number of Iranian companies interested in selling the irmeat and dairy products, eggs, poultry and seafood in Russia, have been approved,” Kabulov said. According to him, Russian companies also receive similar licenses from Iranian authorities.

Underlining that creation of a free trade zone between Iran and Eurasian Economic Union (EAEU) could give a serious impetus to the development of bilateral economic ties, he added that “there are talkson the parameters of such an agreement. On the level of the Eurasian Economic Commission it has been decided already to lower import duties on a number of agricultural goods from Iran, including pistachio nuts, dates and raisins.”


TEHRAN – Iran’s petrochemical complexes’ output stood above 42.1million tons during the first ten months of the current Iranian calendar year (March 20, 2016- January 19, 2017), Shana reported citing Iran’s National Petrochemical Company (NPC).

According to NIPC office of public relations, the country has producedover 4.05 million tons of petrochemicals in the tenth Iranian calendar month of Dey (December 21, 2016- January 19, 2017) alone.

Iran is producing 65 million tons of petrochemical products annually and the country plans to triple its installed capacity of petrochemical complexes in the next ten years.

“Iran has reached 70 percent self-sufficiency in manufacturing equipment needed in petrochemical industry,” NIPC managing Director Marzieh Shahdaie has stated.

The country needs $20 billion of investment for completion of unfinished petrochemical projects across the country in 5 years, the official said last August.

After the implementation of Iran nuclear deal, NIPC has received high willingness from European companies for cooperation with Iran in the petrochemical sector both in financing and licensing, Farnaz Alavi, the NPC director for planning and development, announced last December.


Dubai’s private sector started 2017 on an upbeat note by recording the sharpest rise in output in almost two years, new data suggests. Travel and tourism continued to drive the upswing supported by wholesale, retail and construction sectors in January signalling the strongest improvement in non-oil private sector business conditions, the Emirates NBD Dubai Economy Tracker Index shows.

Sheikh Ahmed bin Saeed Al Maktoum, Chairman of the Dubai’s Economic Development Committee, President of the Dubai Civil Aviation Authority, and Chairman of Emirates airline and Chief Executive of the Emirates Group, has predicted Dubai’s growth would gain traction by 3.1 per cent in 2017. With a diversified economy that focuses on tourism and international business services, Dubai has been outperforming most of the Gulf Arab oil exporting economies in an eraof low oil prices. Sultan bin Saeed Al Mansouri, Cabinet Member and UAE Minister of Economy, expects the country’s GDP growth this year to remain almost steady compared to 2016 at three per cent.


With real estate and local infrastructure development in full swing, demand for steel is on the rise Conares, the second largest and the only private steel manufacturer in the UAE, is geared for a busy 2017. The company has already earmarked the increase in its manufacturing capacity to 1 million tonnes. The conglomerate based in Jebel Ali FreeZone commenced the installation of its 12” pipe mill at its facility.

Steel manufacturing sector in the UAE is currently witnessing standard trends with improvement in growth by 15 to 20 per cent compared to that of the last year, thanks to the announcement of major infrastructure development projects across the country. From the steel industry standpoint, local manufacturers are in a strong position to cater to each of the upcoming projects.

The state-of-the-art steel plant of Conares spread in an area of over1.5 million square feet at Jafza currently manufactures steel pipes and rebars. The rebars form about 20 per cent of the UAE market share and the pipes cater to 25 per cent of the total market demand in the region. Operational in these two major segments of the steel industry, Conares has carved a niche for itself and grown to be a key manufacturer. Its global and regional presence gives Conares a competitive advantage in sourcing raw materials. Conares has been growing to deliver 1 million tonnes of steel annually. Being a 100 per cent privately owned entity, the company’s assets exceed $300 million of investments in the UAE.

Commenting on Conares’ outlook for 2017, Bharat Bhatia, Founder and CEO of Conares, said, “We have seen major developments in 2016. The extended support from Jafza has been key in helping us achieve major milestones. The overall outlook for the steel sector is mostly positive with 2016 having witnessed steady growth. In the international market; iron ore, coking coal and scrap are in the range of $300. As a prediction, I would say steel would be Dh1,875 to Dh1,900 per tonne – and that is at a minimum. The steel market mostly can be viewed with only a short-term outlook.

Focusing on the current market and ongoing trends we can expect to see a growth of about 12 to 15 per cent in 2017 compared to 2016. With 2020 in the near horizon, we will witness real estate and local infrastructure development in full swing. We foresee no decrease in demand for steel.”

“2016 has been fairly good with a consumption of 3 to 3.2 million tonnes of steel, while in 2017 we expect the market to grow to about 3.5 to 4 million tonnes. Looking further at 2018 and 2019, there will be moderate growth. The steel market in the UAE is very active with the local producers being able to match up to the international prices and the country’s growing demand. We are indeed very thankful to the UAE’s Ministry of Economy for the support extended to us. We actively seek further considerations from the Government to protect the interests of local producers in the Emirates. The competition among the indigenous and international imports is fierce with the UAE manufacturers matching up to the prices at most times.”

“The recent announcements in the construction sector are expected to boost the steel manufacturing sector over the next few years. These projects are the key driver to support the steel industry’s growth, followed by oil and gas, petrochemicals and other projects,” Bhatia added.

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