DUBAI: The Middle East economy is expected to grow by 2.4 percent in 2018, after modest contraction this year, and would further expand at a faster 4 percent in 2019, a report from accountancy and finance body ICAEW said.
The economic outlook is however weighed by a possible extension of OPEC’s output cut deal, which ends on March 2018, and could further dent the public finances of the region’s major oil producers that belong to the group, ICAEW said.
“Governments across the region are unlikely to find any solace in the oil market, which looks likely to require an extension of OPEC’s production cut deal merely to stabilize prices around $45-50. In this case governments would come under further pressure to prioritize public spending in growth-enhancing areas and find new revenue sources in order to stop public debt from accelerating,” the report, produced in partnership with Oxford Economics, noted.
The Gulf Cooperation Council’s decision to implement value-added tax (VAT), as one way to generate non-oil revenue, by January 1, 2018 could dim the Middle East economic horizon as it translates to higher cost of living in households affected by the new levy.
“Together with the impact of a weaker dollar on import costs, these pressures are expected to drive consumer price inflation at the GCC level from just 1.2 percent in 2017 to 4.7 percent in 2018, and 3.5 percent in 2019,” the report said.
The IMF however said the introduction of VAT across the GCC would boost the region’s GDP by about 1.5 percent. The UAE on Sunday implemented a federal tax on tobacco products and energy and fizzy drinks, following Saudi Arabia’s lead which introduced excise taxes on the same items earlier this year.
“GCC countries need to shift focus toward deeper, multi-dimensional fiscal policy and institutional reforms. These will help to secure long-term fiscal sustainability, and also support the development of vibrant private sectors,” Tom Rogers, ICAEW Economic Adviser and Associate Director of Oxford Economics, said.
“Furthermore, by boosting investor and market confidence, they can also start a virtuous cycle of stronger investments, including FDI, and output growth in the near term.”
The report also mentioned that while Oman is benefiting from trade diversion, due to the trade blockade against Qatar by Gulf neighbors, the windfall would be modest and temporary “and does little to address the more fundamental challenges the economy faces.”
“Oman’s government has not been as aggressive in cutting expenditure recently as other GCC economies, and as a result the squeeze on spending is having to last longer,” the report said.
“Getting the deficit under control soon in Oman is critical, and if the OPEC deal needs to be extended beyond 2018 Q1 this will require yet more difficult policy choices to be made by the Omani government in order to achieve financial stability,” Michael Armstrong, FCA and ICAEW Regional Director for the Middle East, Africa and South Asia, said.
Middle East GDP to grow by 2.4 percent in 2018, but outlook weighed by OPEC oil deal
Middle East GDP to grow by 2.4 percent in 2018, but outlook weighed by OPEC oil deal
Oil extends gains on reports Iran preparing to strike at Israel
- Israeli intelligence suggest Iran is preparing to attack Israel from Iraqi territory in the coming days, possibly before the US presidential election on Nov. 5
SINGAPORE: Oil prices extended gains in early Asian trade on Friday, following reports that Iran was preparing a retaliatory strike on Israel from Iraqi territory in the coming days.
US West Texas Intermediate crude futures rose $1.24, or 1.8 percent, to $70.50 a barrel by 2229 GMT after settling up 0.95 percent in the previous session.
Brent crude, which will roll to the January contract, has yet to start trading. The December contract which expired on Thursday closed 0.85 percent higher at $73.17.
Israeli intelligence suggests Iran is preparing to attack Israel from Iraqi territory in the coming days, possibly before the US presidential election on Nov. 5, Axios reported on Thursday, citing two unidentified Israeli sources.
The attack is expected to be carried out from Iraq using a large number of drones and ballistic missiles, the Axios report added. The report said that carrying out the attack through pro-Iran militias in Iraq could be an attempt by Tehran to avoid another Israeli attack against strategic targets in Iran.
Oil prices were also supported by expectations that OPEC+ could delay December’s planned increase to oil production by a month or more, four sources close to the matter told Reuters on Wednesday, citing concern about soft oil demand and rising supply.
Red Sea Global secures $1.5bn for AMAALA infrastructure project
JEDDAH: Red Sea Global has announced the financial closing of a multi-utility infrastructure development project for the AMAALA destination, totaling around $1.5 billion.
The initiative, led by a consortium including Electricite de France or the EDF Group and Abu Dhabi Future Energy Co., or Masdar, alongside their partners Korea East-West Power Co., or EWP, and SUEZ, is set to position AMAALA as a luxury wellness destination on the Red Sea coast of Saudi Arabia. It is expected to welcome its first guests in 2025.
The financial close was achieved with the support of local and international financial institutions, including First Abu Dhabi Bank, Emirates NBD, and Riyad Bank, as well as Saudi National Bank and Alinma Bank, according to a statement from RSG, adding that the milestone highlights the consortium’s dedication to realizing AMAALA’s promise of unparalleled luxury, sustainability, and cultural enrichment.
Group CEO of RSG, John Pagano, said that they have demonstrated that large-scale tourism destinations can be powered using 100 percent renewable energy while providing luxury experiences for guests and strong financial returns for partners.
“This agreement with EDF, Masdar, EWP, and SUEZ means that we are on track to making AMAALA our second destination powered by sunlight, day and night.”
This achievement comes after the awarding of a 25-year multi-utility concession agreement with RSG in September 2023, which includes an option for extension. The deal encompasses the financing, engineering, and development, as well as construction, operation, maintenance, and eventual transfer of a multi-utilities infrastructure facility to support the AMAALA destination, RSG clarified.
The facility includes a fully optimized and decarbonized off-grid renewable energy system designed to generate electricity from a 250-megawatt solar photovoltaic park, 700MWh battery energy storage, and transmission and distribution lines. Additionally, it features a desalination plant with a capacity of 37 million liters of drinking water per day and wastewater treatment plants to secure the necessary base load.
The project is expected to prevent nearly 350,000 tonnes of CO2e emissions annually compared to typical infrastructures of this nature. It will also serve as a pioneering infrastructure initiative, ushering in a new era of eco-friendly luxury tourism.
Masdar CEO Mohamed Jameel Al-Ramahi highlighted the project’s innovative solutions, including solar power, energy storage, and desalination systems.
Beatrice Buffon, vice president, international division, and chairwoman and CEO of EDF Renewables, described the financial close as a significant achievement enabled by RSG’s support and the dedication of their team and partners.
She added that this initiative sets new standards for the EDF Group and should be replicable in other geographies. She also highlighted that the off-grid project will supply 65,000 people with carbon-free electricity and uninterrupted water access.
Commenting on the announcement, Kim Young-Moon, CEO of EWP said: “We are excited to announce the financial close of our renewable energy project in Saudi Arabia, a significant step in our commitment to a sustainable future.”
Young-Moon added that the project will reduce carbon emissions, improve air quality, and create jobs, boosting local economic growth.
“As we aim to lead the global energy transition, this project is a key milestone, driving innovation in the renewable energy sector and advancing our ambitious goals,” the executive said.
Pierre Pauliac, chief operating officer and executive vice president at SUEZ, said: “We are delighted to contribute to this strategic project for the development of Saudi Arabia. SUEZ will be part of the construction of all the water utilities equipment. In addition, the group will operate during the 25 years the state-of-the-art desalination plant to secure AMALAA’s access to drinking water, as well as the water networks.”
AMAALA will go beyond sustainability to have a regenerative impact on the environment. By 2040, the project plans to achieve a 30 percent net conservation benefit for local ecosystems.
This will be accomplished by enhancing biologically diverse habitats such as mangroves, seagrass, corals, and land vegetation, promoting biodiversity while contributing to carbon sequestration, according to the statement.
Upon completion, the luxury destination will feature over 4,000 hotel rooms across 30 hotels, and 1,200 high-end residential villas, apartments, and estate homes. It will also host a vibrant community of more than 15,000 residents and workers, creating a dynamic and sustainable living environment.
Saudi-US bilateral accords ‘not that connected’ to Israel normalization
- Saudi FM rejects possibility of Kingdom recognizing Israel without establishment of Palestinian state
- Region's security as a whole is at risk if we do not address the rights of Palestinians, says Saudi FM
RIYADH: Saudi Arabia’s foreign minister said on Thursday that some of the bilateral agreements the kingdom has been negotiating with Washington are “not that tied” to the normalization of Saudi relations with Israel and are “moving ahead.”
He noted that potential US-Saudi agreements on trade and artificial intelligence are “not tied to any third parties” and “can progress probably quite quickly.”
“Some of the more significant defense cooperation agreements are much more complicated. We would certainly welcome the opportunity to finalize them before the end of the Biden administration's term, but that’s reliant on factors outside of our control,” he said.
“The other work streams are not that connected, and some of them are progressing quite quickly, and we hope to see movement forward.”
Ruling out the possibility of Saudi Arabia recognizing Israel without the establishment of a Palestinian state, Prince Faisal stated that this remains the only viable solution, regardless of Israel’s acceptance.
Speaking at the Future Investment Initiative summit in Riyadh, he emphasized that the creation of a Palestinian state is rooted in international law and UN resolutions.
“In reality, the establishment of a Palestinian state is not tied to whether or not Israel accepts it; it’s tied to the principles of international law,” he said. “The UN resolutions that led to the establishment of the state of Israel clearly envisioned a Palestinian state as well, so we need to make that happen.”
Prince Faisal asserted that normalization of Saudi-Israeli ties is “off the table” until there is a resolution regarding Palestinian statehood. He further highlighted the broader implications, stating, “The security of the region as a whole is at risk if we do not address the rights of the Palestinians.”
Addressing the ongoing crisis in Gaza, he called for a cease-fire, emphasizing the dangers of an Israeli overreaction following the events of October 7th. “We have seen the reality that Israel’s reaction and its continuing military assault have led to a humanitarian catastrophe,” he remarked. He described the situation in northern Gaza as dire, with blockades and no safe zones for civilians, stating, “That can only be described as a form of genocide. It is certainly against humanitarian law, and that is feeding a continuing cycle of violence.”
On the prospects of an immediate cease-fire, Prince Faisal expressed caution, saying, “I hope it’s the case that we can see a cease-fire in the immediate hours, in the immediate short term. I’m not sure that that’s the case. I don’t have the details.”
He acknowledged US efforts to facilitate negotiations, adding, “We are not part of the direct negotiations, but we certainly support the efforts that the US has undertaken to find a pathway to a ceasefire. I hope it comes to fruition.”
He noted that previous attempts at cease-fire negotiations had failed due to new demands from Israel. “In most of those instances where the talks collapsed, it has been because new requirements or demands were added on the part of Israel,” he explained.
Prince Faisal also addressed Saudi Arabia’s position on Lebanon, emphasizing a hands-off approach. “We have never fully disengaged. But we believe it’s up to the Lebanese politicians to seek a direction that puts Lebanon on the right track,” he stated.
He added: “It’s not up to any outside influence, any outside countries, or any outside powers to tell the Lebanese what to do or to influence the political process in Lebanon. That is our opinion.”
Regarding relations with Iran, Prince Faisal indicated that recent discussions focused on regional de-escalation. “I hope that Iran, like us, is working toward regional de-escalation on all fronts, not just in Lebanon. That’s very much the focus of my conversations with my Iranian counterpart,” he said. While he could not be “confident of anything that is in the control of other parties,” he emphasized the importance of avoiding further escalation.
“I have made it clear to our Iranian counterparts that it is important to avoid any further escalation. My sense is that they realize the risks of escalation and would prefer to avoid it. But, of course, they have their own strategic calculations.”
‘Blue tech’ needs private sector boost, says RSG official
RIYADH: Private sector firms need to lead the way and invest in so-called blue tech in order to protect the world’s oceans, according to a leading official at Red Sea Global.
Speaking to Arab News during the Future Investment Initiative in Riyadh, Raed Al-Basseet, environment and sustainability officer at the company, called on businesses to adopt innovative approaches that contribute to environmental preservation.
This includes blue tech — which refers to refers to any innovation made for the sea.
Al-Basseet also reaffirmed RSG’s commitment to sustainability — and how this reflects on the project’s return on investment.
He called on the private sector to take “the first steps” and invest in “cutting edge approaches to preserving the environment,” adding: “Enhancing the environment and … conservation is the right thing to do for the private sector, but also when we realize the first benefits out of that, and out of these initiatives, we will also have real return on investment as a developer, as a private sector, from that investment.”
Al-Basseet was keen to emphasis RSG’s focus on environmentalism, saying the company has “sustainability at its DNA.”
He added: “And that actually, from a practical sense, means that (in) all of our activities, master planning and development, design, construction, delivering on these projects, as well as operating these projects, sustainability is at the core of everything that we do.”
He emphasized that the long-term success of the projects relies on preserving natural assets, making sustainability integral to achieving favorable outcomes.
Highlighting key initiatives, Al-Basseet pointed out the company’s significant investment in blue tech, adding: “The investment in technology does require the support of a multitude of stakeholders. Private sector does have a role. Red Sea Global is very proud that they have in the
Al-Basseet also spoke about the company’s efforts in coral conservation, including supporting research that is happening now within the Red Sea.
Saudi-US bilateral accords ‘not that connected’ to Israel normalization
- Noted potential US-Saudi agreements on trade and AI ‘not tied to any third parties’
- Prince Faisal asserted normalization of Saudi-Israeli ties ‘off the table’ until there is a Palestinian state
RIYADH: Saudi Arabia’s foreign minister said on Thursday that some of the bilateral agreements the kingdom has been negotiating with Washington are “not that tied” to the normalization of Saudi relations with Israel and are “moving ahead.”
He noted that potential US-Saudi agreements on trade and artificial intelligence are “not tied to any third parties” and “can progress probably quite quickly.”
“Some of the more significant defense cooperation agreements are much more complicated. We would certainly welcome the opportunity to finalize them before the end of the Biden administration's term, but that’s reliant on factors outside of our control,” he said.
“The other work streams are not that connected, and some of them are progressing quite quickly, and we hope to see movement forward.”
Ruling out the possibility of Saudi Arabia recognizing Israel without the establishment of a Palestinian state, Prince Faisal stated that this remains the only viable solution, regardless of Israel’s acceptance.
Speaking at the Future Investment Initiative summit in Riyadh, he emphasized that the creation of a Palestinian state is rooted in international law and UN resolutions.
“In reality, the establishment of a Palestinian state is not tied to whether or not Israel accepts it; it’s tied to the principles of international law,” he said. “The UN resolutions that led to the establishment of the state of Israel clearly envisioned a Palestinian state as well, so we need to make that happen.”
Prince Faisal asserted that normalization of Saudi-Israeli ties is “off the table” until there is a resolution regarding Palestinian statehood. He further highlighted the broader implications, stating, “The security of the region as a whole is at risk if we do not address the rights of the Palestinians.”
Addressing the ongoing crisis in Gaza, he called for a cease-fire, emphasizing the dangers of an Israeli overreaction following the events of October 7th. “We have seen the reality that Israel’s reaction and its continuing military assault have led to a humanitarian catastrophe,” he remarked. He described the situation in northern Gaza as dire, with blockades and no safe zones for civilians, stating, “That can only be described as a form of genocide. It is certainly against humanitarian law, and that is feeding a continuing cycle of violence.”
On the prospects of an immediate cease-fire, Prince Faisal expressed caution, saying, “I hope it’s the case that we can see a cease-fire in the immediate hours, in the immediate short term. I’m not sure that that’s the case. I don’t have the details.”
He acknowledged US efforts to facilitate negotiations, adding, “We are not part of the direct negotiations, but we certainly support the efforts that the US has undertaken to find a pathway to a ceasefire. I hope it comes to fruition.”
He noted that previous attempts at cease-fire negotiations had failed due to new demands from Israel. “In most of those instances where the talks collapsed, it has been because new requirements or demands were added on the part of Israel,” he explained.
Prince Faisal also addressed Saudi Arabia’s position on Lebanon, emphasizing a hands-off approach. “We have never fully disengaged. But we believe it’s up to the Lebanese politicians to seek a direction that puts Lebanon on the right track,” he stated.
He added: “It’s not up to any outside influence, any outside countries, or any outside powers to tell the Lebanese what to do or to influence the political process in Lebanon. That is our opinion.”
Regarding relations with Iran, Prince Faisal indicated that recent discussions focused on regional de-escalation. “I hope that Iran, like us, is working toward regional de-escalation on all fronts, not just in Lebanon. That’s very much the focus of my conversations with my Iranian counterpart,” he said. While he could not be “confident of anything that is in the control of other parties,” he emphasized the importance of avoiding further escalation.
“I have made it clear to our Iranian counterparts that it is important to avoid any further escalation. My sense is that they realize the risks of escalation and would prefer to avoid it. But, of course, they have their own strategic calculations.”
