- Oil prices declined for a second week, but the premium of Gulf crude over Brent is at a record $2.
- Rystad forecasts the share of renewables in GCC electricity to surge from 3% to 70% by 2050.
- The Q4 flash Saudi GDP reading was strong, including 4.6% for non-oil private sector activities. [see (1) below and graph]
- Foreigners will be permitted to own shares in real estate firms and REITs active in Makkah.
- Etihad Rail announced plans for high-speed trains linking Dubai and Abu Dhabi in 30 mins.
- Lunate bought another 6% of Adnoc gas pipelines, effectively reversing the 2020 privatization.
- ADQ made a $2.3bn investment in Greek hospitals and set up a $1.2bn mining fund JV.
- There is growing talk of the long-awaited debt and mortgage laws finally passing in Kuwait soon. [see (2) below]
- Oman’s parliament proposed raising the threshold and lowering the rate of personal income tax.
- Bahrain omitted key tables from its central bank bulletin, which might imply weak FX reserves.
- A new law should at least double the revenue transfers to Bahrain’s Future Generations Reserve.
- Bahraini MPs backed a remittance tax proposal but opposed the privatization of Gulf Air.
- Egypt issued its first dollar bond in two years and also raised a syndicated loan for a total of $4bn.
- The Gaza ceasefire held; Trump controversially proposed relocating Gazans to Egypt and Jordan.
- The Lebanon ceasefire was extended for three weeks, as Israeli forces killed 22 returning south.
- Ahmed al-Sharaa declared himself transitional Syrian president and was visited by Qatar’s Emir.
These headlines are taken from a 4,200-word report from my economic research service with GlobalSource Partners, a leading source of independent emerging market intelligence. Click on any report to get guest access and contact me or GlobalSource’s sales team for more information about the service, which also includes the most extensive comparative Databank of GCC economic data available (updated weekly) and direct analytical support. Clients include banks, asset managers and governments spanning the GCC, Asia, Europe and the Americas.
Here are two brief samples from the report:
(1) Strong Saudi GDP reading for Q4
- The flash reading for Q4 GDP showed growth of 4.4% y/y, the strongest since 2022 (GAS).
- Oil activities GDP grew for the first time in two years, up 3.4%. As crude production was flat (as in Q3), this must reflect higher gas output and refining.
- Non-oil private activities growth accelerated to 4.6%, but government activities slowed to 2.2%. The chain GDP methodology, introduced last year, makes it difficult to estimate overall non-oil GDP on a comparable basis to other Gulf states. Still, our rough estimates (see the Databank GDP page) suggest this may also have been the strongest since 2022.
- As a result, full-year 2024 GDP growth was 1.3% (4.3% non-oil private sector, -4.5% oil).
(2) Kuwait debt and mortgage laws pending
- The Amir’s suspension of parliament last year offered the prospect of progress in key legislation, following more than a decade of dysfunctional government that was in part the result of an inability to achieve compromise between the executive and the legislature. Not much happened in the first seven months after the suspension, but there have been signs of progress this year, including on tax reform.
- Now there are reports that the cabinet will soon finally approve a debt law, 8 years after the old one expired. The first Issuance could come soon, given that Kuwait is likely running a deficit at the current oil price (BB).
- Another long-awaited piece of legislation, the mortgage law, which has been in development since 2018, is also understood to be nearly ready. Currently, only the state-owned Kuwait Credit Bank (KCB) can provide mortgages, and its limited capital means that there is a huge backlog of requests, totaling 97,671 at the end of 2024, many outstanding for 15 years or more.
- The new law is expected to permit private mortgages of up to $649,000, partly guaranteed by the state, with durations of up to 25 years, a floating interest rate of up to 200bp above the central bank’s discount rate (which is currently 4%) and maximum borrowing based on 50% of salary going to monthly mortgage payments. Assuming average mortgages of KD150,000, this could equate to about KD15bn ($49bn) in credit demand, providing a significant growth in low-risk bank lending (AGBI).
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