UAE’S NEW PROJECTS
After weathering the turbulence caused by low oil prices, the UAE has managed a soft landing with non-oil real gross domestic product growth bottoming out as the fiscal drag eased and infrastructure activity picked up, analysts at Bank of America Merrill Lynch said.
“We expect overall UAE real GDP growth of 0.9 per cent in 2017, from 2.2 per cent likely in 2016. The headline figure masks a likely contraction in the oil sector due to the Opec deal, but we see non-hydrocarbon real GDP growth picking up to 2.7 per cent in 2017 from 2.3 per cent in 2016,” said Jean Michel-Saliba, economist at Bank of America Merrill Lynch.
Over the medium-term, BofAML expects UAE non-oil growth to increase to three to 3.5 per cent on the back of greater Expo 2020 projects. After averaging 10 per cent annual growth from 2000-10 and a slump in 2009, Dubai real GDP growth was 4.1 per cent in 2015, slowing to 2.5 per cent in first three quarters of 2016, BofAML said in its Macro Monthly report. The Washington-based Institute of International Finance (IIF) expects the UAE’s non-oil activity to pick up modestly in 2017 as fiscal drag eases and consumption spending rises in the second half of 2017, ahead of the introduction of value-added tax in 2018.
Garbis Iradian, chief economist, for Africa and the Middle East at the IIF, said after a challenging year, “we expect the drag from fiscal consolidation to ease and non-hydrocarbon growth to pick up slightly to 2.9 per cent, from 2.3 per cent in 2016”. The BofAML report noted that the supportive external financing backdrop and improved domestic liquidity support refinancing of Dubai government-related entities. Aggregate Dubai public sector debt appears to have stabilised in nominal terms, although it remains at elevated levels, said the report.
“Over time, we expect greater market differentiation for Abu Dhabiversus other GCC credits as its high-grade high-quality value is cemented. Scarcity value, the ability to post budget surpluses at $50/bbl and the lack of external issuance going forward should support and tighten spreads, especially versus GCC peers such as Qatar,” said Michel-Saliba. According to BofAML, the Dubai government is likely to record a small budget surplus in 2016. “Still, we expect the fiscal balance to shift to modest deficits [one to two per cent GDP] from 2017 onwards as capex associated with the new airport, new Metro lines and Expo 2020 come on line.”
The report observed that Dubai’s 2017 budget projects a deficit of $0.6 billion (0.6 per cent of GDP) but “we think the presentation excludes interest payments on the Emirates NBD loan. We thus expect external debt issuance to pick up consequently”. Growth remains broad based although the construction sector is the laggard. The fastest growing sectors are restaurants and hotels, electricity, gas and water, transport and real estate.
The key sectors in real GDP are whole and retail trade (30 per cent of real GDP), real estate and construction (a combined 22 per cent), transport and communication (15 per cent), finance (12 per cent) and manufacturing (12 per cent), the report noted.
IRAN OIL SHOW
TEHRAN – The 22nd Iran International Oil, Gas, Refining and Petrochemical Exhibition (Iran Oil Show 2017) kicked off at Tehran Permanent International Fairgrounds
A handful of high-ranking officials including Oil Minister Bijan Namdar Zanganeh, Majlis Speaker Ali Larijani, some parliament members as well as foreign ambassadors attended the opening ceremony, Shana reported.
During the four-day event some 2500 domestic companies and 1500 foreign participants from 37 countries including China, Germany, South Korea, Austria, Australia, Italy, the Netherlands, France, Britain, the U.S. and Canada are showcasing their latest products and achievements in oil, gas, refining and petrochemical sectors.
In the opening ceremony, Kasra Nouri, the Oil Ministry’s public relations director, said the number of companies which applied to participate in the this year’s exhibition was four times the figure which could be accommodated.
Iran Oil Show is among the most significant oil and gas events in the world in terms of the number of participants and its diversity. The presence of famous foreign companies as well as domestic producers and industrialists provides a good chance for mutual cooperation in view of signature of contracts
IRANIAN DELEGATION TO MOSCOW
TEHRAN- The Trade Promotion Organization of Iran (TPO) is to send a trade, marketing and investing delegation to Russia from September 15 to 18 to explore avenues of exporting Iranian products to the country, the official website of TPO announced.
The delegation will travel to Moscow simultaneous with the International Food Exhibition in the Russian capital (WolrdFood
Moscow), which is going to be held on September 11-14. WolrdFood Moscow is divided into 12 sectors and above 1,500 companies will congregate to get in touch with over 30,000 representatives across the globe.
DUBAI GOVT. REPAYS $600 MILLION SUKUK
Dubai The Government of Dubai, acting through the Department of Finance (DOF), announced that the $600 million Sukuk Trust
Certificates issued on 2 May 2012 under its $5 billion Trust Certificate Issuance Programme, reached maturity on 2 May 2017.
Upon maturity, all the certificates were redeemed in full by making the required payment through the paying agent to the holders of the certificates, along with accrued profit.
Abdulrahman Saleh Al Saleh, DOF Director General, said, “This settlement reaffirms Dubai Government’s commitment to deal with its repayment obligations in a proactive manner, in line with the vision of Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, the ongoing support from Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and the close follow-up from Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai. It also strengthens the government’s resolve to honour all its financial obligations on time”.
The digital economy is “the single most important driver of innovation, competitiveness and growth”. We need to give people the tools to help them thrive in the digital economy. Financial institutions worldwide are realising that they need focus on a different sort of innovation, better technology, modernise infrastructure and improve customer experience. Banking business models are changing globally from being old traditional branch business to highly-advanced automated customer-centric experience for performing day-to-day banking activities. The forces of digitisation and the rapid adoption of advanced Internet technologies are increasingly resulting in the international establishment of a flexible and proven corporate architecture that is increasingly being referred to as a “digital ecosystem”.
When it comes to banking, the open business model enabled by APIs (application programming interface) promises much. Open business is going to be the new channel through which banks engage with the digital world, and API-based open banking is a development on par with the emergence of the online channel. Open banking refers to evolution of banking, leading to more transparency, customer choice and customer control over personal data. Various industries are getting redefined, robotics and artificial intelligence are going to play important roles and the customer will be more empowered in the digital environment. These developments will encourage open banking. FinTech, the Internet of Things, blockchain and artificial intelligence are some of the major technological developments that will support open banking.
Exploring and uncovering multiple channels of communication to customers and other banking partners will be critical for GCC banking industry growth. GCC banks should invest wisely to understand customer analytics, as this can help derive efficient channels. As digitisation of all industries continues, consumers will expect banking experiences to replicate those in other industries. The banks should focus on innovation, core modernisation, being asset light and analytics heavy, scalable, simple and safe. The adoption reduces cost of compliance, fines, penalties and time. Regulators are encouraging banks and corporates to be innovative in technology and helping them to identify ways to integrate new technologies into their business models. Service differentiation and customer experience will increasingly become the major deciding factors, with the ability to deliver real-time insights and offers, transparency and integrated commerce opportunities becoming more important. However, banks and financial regulators should address the trade-off between convenience and security when it comes to digital banking.
From compliance perspective banks and the regulators have to deal with questions arising from digital banking and also address challenges from digital security. Significant global FinTech investments targeted new ventures catering to personal and SME banking. Advanced and emerging economies are witnessing a trend in embedding FinTech’s role in banking. Leading non-financial services are looking to exploit financial services. Customers are also comfortable banking with retailers and telecommunication providers.
There has been little investment in the GCC FinTech industry, but this is expected to change in the coming years. GCC governments can play the role of a facilitator in terms of policy and regulation, and in providing the right environment for innovation to flourish to enable private sector to come up with solutions. On account of the increase in Internet and smartphone penetration, digital payment systems are gaining prominence in the region. GCC banks are allocating resources to adapt their business models to the FinTech revolution as they run the risk of losing market shares to technology innovators. The GCC population are the fastest-growing globally with increasingly consumer expectations. There are leading signs to adoption for digital banking – high smartphone usage and growing mobile data usage. Regional banks are keen to respond to disruption. The regional banks see significant opportunities from FinTech innovations and fund transfers/payments tobe most likely disrupted and the open banking and FinTech developments will contribute to the development of digital ecosystem and promote growth across industries in the GCC.
FINANCIAL INCLUSION DEVELOPMENT HAS A SOCIO-ECONOMIC AND ENVIRONMENTAL IMPACT
Dubai: April 27th was declared the Arab Day of Financial Inclusion by the Council of Arab Central Banks in 2016. This day is important for the financial industry and the governments of all the Arab countries, as it confirms their commitment with the financial inclusion.
The financial inclusion ensures the access to proper financial services to the population, “proper” in this context means that the services are affordable for the users and fulfill their needs. To understand more in deep this concept, it is necessary to identify why it is important for the Arab countries and for all the societies around the globe, and the main reason is that the financial inclusion development has a socio-economic and environmental impact:
Social impact: It can improve social variables like equality, employment and GDP per capita. Also, as the financial inclusion is related with the reduction of cash usage, it can potentially decrease the criminality and the inconvenience of cash for the society. Economic impact: The financial inclusion can benefit the economy by reducing the informality and the tax evasion. Also, the migration from cash to digital money reduces the cost for the government of producing notes and coins, as well as it reduces the private sector costs for managing and transporting cash. Environmental impact: Increasing the usage of emoney instead of cash has an important impact on the environment, since the emission of notes and coins require consumption of natural resources, manufacturing processes and transportation.
GOLD CONTINUES TO GLITTER
Dubai: Total Middle East consumer demand, including bars, coins and jewellery, rose five per cent to 64.5 tonnes, the highest since the third quarter of 2015. Demand across the rest of the region remained weak in the face of low oil prices and subdued tourist numbers, the impact of which was exaggerated by rising gold prices.
The UAE showed the most usage in the first quarter at 17.2 tonnes, albeit down two per cent from a year earlier. In Saudi Arabia, the total dropped 13 per cent to 14.2 tonnes while Egypt’s consumption declined 14 per cent to 6.2 tonnes, the WGC said. Although the UAE has imposed a five per cent import duty, demand in that market was relatively robust as consumers rushed to buy before the full effect of the tax fed through to end-user prices, the WGC said.
Tawhid Abdullah, chairman of the Dubai Gold and Jewellery Group, said despite the downward demand trend predictions by experts, consumer demand for gold jewellery in the UAE has been steadily increasing.
Overall the jewellery industry is looking forward to a well-performing year.
“A declining trend in price in December 2016 until the first 10 days of January 2017 led to a steep rise in the jewellery sales which was further intensified due to the enticing jewellery retail campaign for Dubai Shopping Festival. The jewellery sector managed to pull in greater footfall into the jewellery stores during the festival and this translated into incremental business. The industry further leaped into another sale season for Valentine’s Day and is now riding the waves of Akshaya Tritiya, which is considered as an auspicious occasion to purchase gold for various Indian communities. Comfortable pricing of gold has also been a major positive factor for incremental business during these sale seasons,” said Abdullah. “Gold and jewellery is a cultural thing for Asians including local Arabs, Arab expats and expats from Indian subcontinent. Hence the demand is consistent in the region,” said Abdullah.