Weekly GCC news to 9 Feb

• Tourism hit new records in 2023, particularly in Saudi Arabia, and total GCC visitor numbers were about a quarter above pre-Covid levels. [see (1) below and graph]
• PMIs eased in UAE and Saudi Arabia, but remained strong, while Qatar’s narrowly returned to expansion.
• There were more reports of a pending Aramco follow-on share sale, potentially of about 1% of its equity.
• PIF launched a new investment firm, Alat, intended to develop high-tech manufacturing in Saudi Arabia.
• The UAE’s Q2 GDP was belated released, showing 7.3% non-oil growth led by finance, construction and transport.
• Sharjah’s deficit was flat at -6% of GDP in 2023 and is budgeted to be similar in 2024 with 7.5% spending growth. [see (2) below]
• Abu Dhabi is reportedly considering a $22bn development project on Egypt’s Mediterranean coast.
• The IMF Article IV report for Qatar expects the North Field LNG expansion to hit full capacity around end-2027.
• Qatar signed a 20-year 7.5m t/yr LNG contract with India’s Petronet and may sell more to other Indian firms.
• Kuwait’s new government announced a 100-day program, including a law for the delayed selective excise tax.
• Kuwait’s Amir visited Oman to formally inaugurate the Duqm refinery that Kuwait has part-financed.
• OQ is advancing plans for IPOs of its upstream and LPG units.
• Bahrain issued $2bn, split across a 7yr sukuk and 12-year bond.
• Netanyahu called Hamas ceasefire proposal “delusional” as is preparing to assault Rafah; this helped push oil back up to $82.
• The US launched major air strikes against Shia militias in Iraq and Syria and continued to clash with the Houthis in Yemen.

These headlines are taken from a 4,300-word report from my economic research service with GlobalSource Partners, Inc. , which is a leading source of independent emerging market intelligence. Click on any report to get guest access to it and a few other samples and message me for more information about subscribing to the service, which also includes an extensive GCC Databank, updated weekly.

Here are two brief snippets from the report:

(1) Tourism surges beyond pre-Covid levels

• Excluding Kuwait and the UAE ex-Dubai, for which regular data is not available, visitor numbers rose by 39% y/y and were 26% above the pre-Covid peaks.
• Saudi Arabia saw the strongest growth, up about 62% y/y to 27m, due to both pent-up demand for pilgrimage and new secular tourist opportunities (my family had a good experience visiting Al-Ula last week, for example). This result is already near its original Vision 2030 goal of 30m, so it has hiked the target to 70m (AA).
• There was also strong growth in Qatar, Bahrain and Oman.
• Although Dubai's y/y growth was the lowest in the region and it only just exceeded pre-Covid levels, this was because 2019 was already an extremely strong year for Dubai. Detailed data from Dubai Tourism shows that visitors are staying longer and spending more than in 2019.
• December 2023 was a record month for Oman, Dubai and Qatar (excluding the World Cup).

(2) Sharjah's budget remains deep in deficit

• Moody’s published its bi-annual credit opinion on Sharjah which provided updated forecasts as well as new data that has not yet been published directly by the emirate's Department of Finance.
• The 2023 deficit was flat at around -AED8.7bn ($2.4bn or 6% of GDP), with interest costs soaring by 60% to AED4bn. This is based on cash accounts and headline expenditure and revenue figures are not yet available. The (unpublished) central government budget for 2024 envisages a deficit of around -AED8.4bn.
• The budget assumes a 7.5% increase in expenditure compared with the 2023 budget. This is less than the announced 16% hike for the wider public sector budget (which includes GREs) but is still triple the 2.6% increase that had been projected in the Medium-Term Fiscal Outlook (MTFO) published a year ago.
• Revenue is budgeted to increase by about a 12% increase compared with the 2023 budget, slightly more than the 11% projected in the MTFO.
• Debt reached AED75bn (52% of GDP) at end-2023, higher than the government had projected due partly to pre-financing of some of the 2024 maturities and spending AED0.8bn to recapitalize a bank. Moody’s sees debt rising to 65% of GDP by 2027, well above of the MTFO target of 55%.