deloitte gcc ppt fact sheet

GCC powers of constructionGCC countriesfact sheet

Eighty five years in the Middle East

GCC countriesOverview

U.A.Emacroeconomic data

SWOT analysis

Global competitiveness

K.S.A.macroeconomic data

SWOT analysis


Qatarmacroeconomic data

SWOT analysis


5 6 9 12Contents

Kuwaitmacroeconomic data

SWOT analysis

global competitiveness

Bahrainmacroeconomic data

SWOT analysis

global competitiveness

Omanmacroeconomic data

SWOT analysis

gobal competitiveness

15 18 21

GCC countries fact sheet | 3

GCC construction sectorOverview

CountryKey characteristics

Overview Capital Area (sq km) Currency

UAE • The UAE is a federation of seven emirates, of which Abu Dhabi is the largest.• After gaining FDI to exploit oil and gas, the UAE has diversified into a prosperous economy.

Abu Dhabi 83,600 UAE DirhamPegged to US$= 3.675 dirham

Saudi Arabia • KSA is one the largest economies in the world, accounting for c.55% of total GCC GDP.

• Oil accounts for c.90% of exports and 75% of government revenue, which is being used to facilitate an infrastructure boom.

Riyadh 2,240,000 Saudi RiyalPegged to US$= 3.75 riyal

Qatar • Qatar has one of the highest levels of GDP per capita in the world, driven by oil revenue

• Oxford Business Group reports that the current Emir is initiating liberalizing changes to steer the economy towards diversification.

Doha 11,437 Qatari RiyalPegged to US$= 3.64 riyal

Bahrain • Bahrain is an island country in the Persian Gulf and is relatively highly diversified away from oil.

• There is a major infrastructure overhaul in progress, aiming to cement Bahrain’s place as the gateway to the Northern Gulf.

Manama 716 Bahraini DinarPegged to US$= 0.376 dinar

Kuwait • Kuwait is slowly beginning to diversify its economy, with the hope of reducing dependency on oil revenue.

• However, it remains relatively closed-minded towards new inward investment.

Kuwait City 17,818 Kuwaiti DinarAbandoned $ peg in 2007£= 0.404 dinar

Oman • Oman is regarded as one of the more conservative and traditional GCC states, where the local citizens are still a majority.

• The construction industry is beginning to see returns from the diversification policies instigated under the Vision 2020 plan.

Muscat 309,500 Omani RialPegged to US$= 0.3850 rial


U.A.E.Macroeconomic data

Source | Economist Intelligence Unit

2005Actual

2006Actual

2007Actual

2008Actual

2009Estimate

2010Forecast

2011Forecast

GDPNormal GPD (USDm)Real GDP growth (%)

137,99313.1

175,22213.0

206,40662

254,3947.4

248,925a(2.7)

273,5732.6

311,7143.5

Origin of GDP (%real change)AgricultureIndustryServices

(12.9)18.48.0

(4.8)17.37.9

(0.8)6.06.9

0.28.16.7

2.0(5.6)1.7

2.03.21.8

2.04.03.0

Population and incomePopulationGDP per head (USD at PPP)

4.727,440

5.328,715

5.927,862

6.826,814

6.527,369

6.727,446

7.027,694

Fiscal indicators (%of GDP)Government revenueGoverment expenditureGoverment balanceNetpublic debt

28.420.67.8

32.3

31.219.911.337.2

30.221.19.1

41.2

33.219.014.239.4

24.622.02.6

48.9

24.421.92.4

44.2

22.221.11.0

38.4

Prices and financial indicatorsConsumer prices (av,%)Lending interest rate (av,%)

12.57.2

13.57.9

11.18.0

12.37.8

1.65.9

2.25.2

3.25.5

1 After contracting by an estimated 2.7% in 2009, the economy is expected to recover from 2010 with real GDP growth averaging4.6% in 2010-14.

2 Although oil will remain a core driver of growth,non-oil re-exports will play an increasinglyprominent role in total exports.

3 Inflation is expected to pick up gradually until2012 but is expected to fall after that, as pricesof commodities such as iron ore and steel fall.

4 However, it is not expected to reach the heightsof previous years as slower population growthand increased housing supply will eradicateprevious bottlenecks, bringing down rental costs.

5 A stronger dollar would also help to containimported inflation.

6 The current account is expected to register asurplus through to 2014 as oil prices will remainat comfortable levels.

7 The fiscal account is expected to remain insurplus up to 2013 but a fall in oil prices in 2014 will lead to a small fiscal deficit.


U.A.E.SWOT analysis

Strengths

• The UAE is a member of the GCC which istargeting a common currency by 2012 (althoughthe UAE looks, at present, unlikely to participate).

• The UAE has one of the most liberal traderegimes in the GCC and attracts strong capitalflows from across the region.

• In common with most Gulf states, there are ahigh number of expatriate workers at all levels of the economy, making up for the otherwisesmall workforce.

• The UAE is progressively diversifying its economy,minimizing vulnerability to oil price movements.

Weaknesses

• The UAE's currency is pegged to the dollar,giving it minimal control over monetary policy and reducing its ability to tackleinflationary pressure.

• The UAE’s location in a volatile region meansthat its risk profile is, to some extent, affected by events elsewhere.

• US concerns about regional militant groups and Iranian nuclear programs could affectinvestor perceptions.

Opportunities

• Oil prices are expected to stay high (by historical standards).

• Economic diversification into gas, tourism,financial services and high-tech industries offerssome protection against volatile oil prices.

• Despite the impact of the 2009 downturn, thetourism and financial sectors still have goodgrowth prospects, driven by domestic andforeign investment.

Threats

• Heavy subsidies on utilities and agriculture, andan outdated tax system, have contributed topersistent fiscal deficits in the past, althoughrising oil revenues have masked the problem in recent years.

• Several high-profile construction projects have been delayed and the property marketcrash could threaten future development.

Source | Business Monitor International

0 5 10 15 20 25 30

Access to financing

In Inadequately educated workforce

Restrictive labor regulations

Inflation

Inefficient govermment bureaucracy

Policy instability

Poor work ethic in national labor force

Inadequate supply of infrastructure

Poor public health

Foreign currency regulations

Goverment instability/coups

Corruption

Crime and theft

Tax rates

% responses


UAEGlobal competitiveness

Source | The Global Competitiveness Report 2010-2011

This chart summarizes those factors seen by business executives as the most problematic for doing business in their economy. The information isdrawn from the 2010 edition of theWorld Economic Forum’s ExecutiveOpinion Survey. From a list of 15 factors,respondents were asked to select thefive most problematic and to rank those from 1 (most problematic) to 5.The results were then tabulated andweighted according to the rankingassigned by respondents.

1 EIU forecast that real GDP will grow by anannual average of 3.8% in 2010-14, up from3% in 2005-09.

2 The average is dragged down by a contractionin 2009, but this largely reflects temporary cutsin oil output, aimed at shoring up prices, ratherthan structural problems.

3 The government will play a leading role indriving growth in 2010-11 as private financingwill remain limited, but the non-oil private sectorshould expand further in the medium term.

4 Both private and public investments is expectedto focus on natural gas and refined oil,infrastructure, and energy-intensive industriessuch as petrochemicals, metals, fertilisers,plastics and packaging.

5 Oil will continue to account for the bulk ofexport earnings and of government revenue,leaving the economy vulnerable to externalshocks from the world oil market.

6 Based on EIU oil price assumptions, however,the current account should stay in surplus.


K.S.A.Macroeconomic data

2005Actual

2006Actual

2007Actual

2008Actual

2009Estimate

2010Forecast

2011Forecast


315,6005.6

356,6003.2

384,9002

476,3004.2

375,8000.6

451,7003.4

480,8003.7


1.26.45

1.12

4.4

1.9-0.24.2

0.74.44.3

0.6-2.8

4

0.63.14

03.64.1


23.221,127

2421,817

24.722,195

25.522,906

26.322,606

27.122,906

27.923,468

Fiscal indicators (%of GDP)Goverment revenueGoverment expenditureGoverment balanceNetpublic debt

47.729.318.444

50.429.42131

44.632.312.224.8

61.629.132.518.8

35.842.3-6.522.6

41.438.82.6

16.6

39.237.81.3

15.7


0.63.8

2.35

4.14.8

9.92.9

5.10.6

5.70.5

60.9



K.S.A.SWOT analysis

Strengths

• As the main OPEC swing producer, the KSA is ina strong position within the association.

• The recent oil price boom has boosted growth inthe non-oil sector, and infrastructure is nowmuch improved.

• A large and growing local population means solid domestic demand for goods, services and infrastructure in spite of the global macroeconomic crisis.

Weaknesses

• Dependence on oil means growth, exports andgovernment revenue remain highly vulnerable toshifts in world oil prices.

• The private sector is dependent on expatriatelabor, reflecting a shortage of marketable skillsamong nationals and a high unemployment rateamong Saudi citizens.

Opportunities

• A competitive business environment is expectedto make Saudi Arabia appealing to investors oncerisk appetite returns to global markets.

• Slower growth and lower liquidity should bringinflation down domestically, cushioning theimpact of the consumer slowdown.

Threats

• Any attacks on oil facilities could lead to adisruption of output, which would be extremelydetrimental to the overall economy given thereliance on this sector.

• Perceptions of high security risk deter some investors as well as adding to the costs of insurance.



K.S.A.Global competitiveness

0 5 10 15 20 25 30


Access to financing

Inadequately educated workforce

Inefficient government bureaucracy



Tax rates


Tax regulations

Corruption

Inflation

Policy instability

Crime and theft

Poor public health

Government instability/coups

% responses




QatarMacroeconomic data

1 Real GDP growth in Qatar is expected to remainstrong, averaging 9.5% in 2010-14, but willgrow at a slower pace than the previous fiveyears, as the LNG expansion program tails off.

2 One implication of the recent fall in propertyand energy prices is that inflation, which hadbecome a significant problem, is now notexpected to be substantial, averaging 4% in2010-14, after a brief period of deflation in2009, owing largely to a fall in property pricesand associated rents.

3 However, there is a risk that if construction ofresidential property stalls more than expected,the ongoing influx of foreign workers couldpush inflation slightly higher than forecast.

4 Meanwhile, the coming on stream of the lasttwo LNG trains and rising oil output should keep both the fiscal and the current accountscomfortably in surplus, allowing Qatar to add to its already considerable foreign assets.

2005Actual

2006Actual

2007Actual

2008Actual

2009Estimate

2010Forecast

2011Forecast


43,0406.1

60,49712.2

80,75117.3

100,40711.7

96,8059.5

128,21419.4

159,64915.9


05.28.1

07.223

018.715

2.510

15.4

1.914.9

3

1.727.16.1

1.519.45.4


159,179

1.158,367

1.359,729

1.658,673

1.661,920

1.770,479

1.878,184


39.130.28.9

19.1

40.431.58.9

11.8

40.629.311.47.6

40.426.913.55.1

34.5277.514

33.321.811.510.2

31.818.613.28.1


12.66.7

11.37.2

13.77.4

13.26.8

-1.97

2.75.7

4.76.2



QatarSWOT analysis

Strengths

• A massive endowment of natural gas as well as sizeable oil reserves.

• A small population means per capita GDP is very high.

• Good credit ratings have allowed the country to borrow internationally at low rates.

Weaknesses

• Dependence on oil and gas leaves growth,exports and government revenue vulnerable to shifts in world prices.

• Dependence on immigrant labor means outflows of remittances are high, though the current account remains firmly in surplus.

Opportunities

• Development of natural gas reserves anddistribution deals, especially in the liquefiednatural gas (LNG) industry.

• Development of the non-hydrocarbons sector,principally financial institutions.

• Investments in education are improving the skills base.

• Qatar is a member of the GCC regional tradingbloc and is negotiating a free trade agreement(FTA) with the US.

Threats

• Oil-fueled asset price booms pose an upside riskto inflation.

• Tight credit markets could make financing for large-scale projects hard to come by, or prohibitively expensive.



QatarGlobal competitiveness

0 5 10 15 20 25 30


Acess to financing




Corruption

Inflation


Poor public health

Policy instability


Tax regulations


Tax rates

Crime and theft

% responses




KuwaitMacroeconomic data

1 Economic activity will remain overwhelminglydependent on the oil sector.

2 Real GDP growth is expected to average over 5% a year in 2011-14, supported bygovernment capital spending and a gradualrecovery in oil production.

3 Inflationary pressures are expected to remainunder control as tighter regulation of thefinancial services sector will constrain liquidity in the economy and the government's extensivesystem of subsidies will cushion the populationagainst volatile movements in internationalcommodity prices.

4 The current exchange-rate regime of managingthe dinar against a basket of currencies(dominated by the US dollar) is expected toremain in place.

5 The current and fiscal accounts is expected tostay firmly in surplus, but both will fall as aproportion of GDP.

2005Actual

2006Actual

2007Actual

2008Actual

2009Estimate

2010Forecast

2011Forecast


80,79910.6

101,5505.2

114,6274.4

148,0138.5

109,481-4.6

128,2533.2

136,4834.7

Origin od GDP (%real change)AgricultureIndustryServices

(3.0)11.59.6

(2.0)3.17.9

(8.8)(1.3)11.2

1.08.28.8

-(9.1)

-

1.02.14.2

2.05.04.5


3.036,952

3.237,729

3.437,922

3.441,511

3.539,684

3.640,161

3.740,880


58.121.936.212.1

52.528

24.410.1

58.123

35.111.8

52.937.815.19.7

56.931

25.913.1

52.929.723.212.3

51.830.521.312.2


4.57.5

3.68.6

7.58.5

9.07.6

2.16.0

3.75.2

3.45.3



KuwaitSWOT analysis

Strengths

• Kuwait is the only GCC state with anindependent monetary policy.

• Oil wealth typically enables the state to run a fiscal surplus and this should resume from2010–although the large size of the public sector hampers the development of the non-oil private sector.

Weaknesses

• Oil accounts for almost 50% of GDP, more than80% of government revenues and over 90% oftotal export earnings, with the non-oil economystill relatively underdeveloped.

• This makes Kuwait highly vulnerable to exogenousshocks, especially in relation to world oil prices.

• Attempts to 'Kuwaitize' private sectoremployment have met with limited success.

Opportunities

• Although security risks across the border have sofar minimized the potential for investors in Kuwaitto benefit from reconstruction work in itsneighbor, the situation is now improving andKuwait remains an attractive staging point forcompanies and businessmen with dealings in Iraq.

• Inflation has come down, mitigating the risks toconsumer spending.

• The government has ample assets in sovereignwealth and reserve funds to keep the economyafloat in spite of lower oil prices.

Threats

• Continuing political disagreement with Iraq andother neighbors may threaten regional stability.

• Continued lack of private investment may resultin a period of extended stagnation as investorslook elsewhere for returns.



KuwaitGlobal competitiveness


0 5 10 15 20 25 30


Acess to financing




Corruption

Inflation


Poor public health

Policy instability

Tax regulations


Tax rates

Crime and theft

% responses




BahrainMacroeconomic data

1 Bahrain's real GDP is forecast to grow by anaverage of 4.7% a year in 2010-14, comparedwith an annual average of 6.5% in 2005-09 anda forecast annual average of 4.6% for the regionas a whole.

2 The pace of Bahrain's economic recovery willdepend on global demand for hydrocarbons andregional demand for Bahrain's export of services,particularly financial services.

3 Consumer price inflation is forecast to average3.2% in 2010-14, compared with 2.8% in 2005-09.

4 With oil projected to average US$78.9/barrel in2010-14, the current account should recordsurpluses in most years, but the budget isexpected to only record small surpluses in 2010-12 before moving into deficit.

5 The Central Bank of Bahrain is expected tomaintain the currency peg to the US dollar butwill begin to prepare for monetary union withSaudi Arabia, Kuwait and Qatar.

2005Actual

2006Actual

2007Actual

2008Actual

2009Estimate

2010Forecast

2011Forecast


13,4597.9

15,8526.7

18,4728.4

22,1576.3

19,3193.1

21,3553.9

22,62244


8.41.820

-10.16.47.1

27.66.1

10.9

2.94.58.3

4.6-3.39.9

1.21.56.1

1.12

6.5


0.922,9.5

1.023,344

1.024,051

1.124,528

1.125,588

1.225,821

1.226,043


3325.57.5

79.9

30.926.14.7

32.9

29.326.23.1

28.4

32.125.66.6

26.3

23.529.7-6.140.6

28.427.80.6

41.7

26.726.40.3

39.2


1.87.9

2.71.8

3.48.4

3.28.3

3.18.1

3.38.1

3.28.4



BahrainSWOT analysis

Strengths

• Despite recent strong growth, the domesticmarket remains relatively small, with a populationof just over 1m.

• Although the banking sector is well developed,the local stock market is relatively small and illiquid.

• Fiscal policy has historically been prudent, with thegovernment usually spending below its targets.

Weaknesses

• Oil price movements remain a source of risk, as exports and services are highly vulnerable to changes in demand in the extremely oil-dependent country.

• Public finances are only partially transparent, due to the persistence of opaque 'extrabudgetary transactions‘.

Opportunities

• Bahrain is a leading force in the development ofIslamic finance.

• A package of labor market reforms backed bythe Economic Development Board shouldimprove productivity and so boost growth.

Threats

• As the dinar is pegged to the US dollar, dollarweakness is leading to imported inflation.

• Proposals to limit the duration of expatriate workpermits could lead to labor shortages in theconstruction industry, which is reliant on workersfrom South Asia.

• Despite renewed exploration efforts, oil reservesare dwindling and output is expected to fall bythe end of the decade.



BahrainGlobal competitiveness


0 5 10 15 20 25 30


Acess to financing




Corruption

Inflation


Poor public health

Policy instability

Tax regulations


Tax rates

Crime and theft

% responses




OmanMacroeconomic data

1 Data released by the Central Bank put nominalGDP in 2009 at OR17.7bn, a decline of 23.5%year on year, owing to a sharp drop in oil pricescoupled with a fall in oil and non-oil exports.

2 In spite of the fall in nominal GDP, EIU stillestimates that real GDP growth was positive, at 2%, as oil output rose by 7.4% year on year to 813,000 barrels/day (b/d).

3 The share of hydrocarbons in overall GDPdeclined substantially in 2009 - oil and gasaccounted for just over 40% of GDP in 2009(compared with just over 50% in 2008).

4 Nevertheless, the Omani economy will remainvulnerable to any downturn in domestic oilproduction and to fluctuations in oil and gasexport prices.

5 Consumer price inflation declined to an annualaverage of 3.5% in 2009, owing to a fall in oiland non-oil commodity prices and is forecast to increase to an average of 4% in 2010 and4.5% in 2011, as prices of basic food items and industrial raw materials increase.

2005Actual

2006Actual

2007Actual

2008Actual

2009Estimate

2010Forecast

2011Forecast


30,9.54.0

36,8045.5

41,9.86.8

60,29912.8

46,1152.0

56,2513.6

61,8403.8


-2.95.66.7

-4.6-1.712.2

4.63.69.5

0.511.913

1.50.31.2

1.63.83.4

1.63.93.7


2.520,396

2.621,639

2.722,360

2.924,629

3.222,960

3.323,151

3.423,440

Fiscal indicators (%of GDP)Government revenueGovernment expenditureGovernment balanceNetpublic debt

38.035.42.54.9

35.234.90.33.8

36.736.50.23.1

32.932.60.42.5

38.141.9(3.8)5.5

36.337.1(0.8)4.5

34.035.0(1.0)4.1


n/a7.1

n/a7.4

n/a7.3

n/a7.1

n/a7.4

n/a6.8

n/a6.9



OmanSWOT analysis

Strengths

• As a minnow among Gulf oil producers, Omanhas had to diversify its economy earlier than most.

• A wealth of historical sites–in contrast to someGulf neighbors–provides a good basis fortourism expansion.

• Prudent fiscal policy.

Weaknesses

• At current output levels, known oil reserves willbe exhausted within 20 years.

• Hydrocarbons dependence leaves the economyvulnerable to world price shocks.

Opportunities

• Investments in advanced oil recovery technologycould potentially boost reserves.

• Construction is booming around the industrialport of Sohar, though most services depend on ahealthy oil economy.

• Major tourism investments aim to attract visitsfrom the rising numbers of tourists traveling toand within the GCC.

Threats

• Widening price differential between Oman'ssour-grade crude oil and OPEC producers'grades.

• Oman is not a member of OPEC.

• Lower oil prices will result in less room tomaneuver for the government, and will havenegative repercussions for consumer spendingand investment.



OmanGlobal competitiveness


0 5 10 15 20 25 30


Acess to financing




Corruption

Inflation


Poor public health

Policy instability

Tax regulations


Tax rates

Crime and theft

% responses


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