This 7-10 page report covers the past week of political, security, and economic events that occurred within Libya, comprehensive data/risk collection and maps for country-wide security events, and includes forward looking analysis as to the political and security situation over the next few weeks.
This 25-page report covers the main commercial and economic occurrences that took place over the past month, to include a listing of the main deals announced that past month, key delegations and conferences related to Iraq, major Iraqi tenders let out that month, and oil and gas/energy/other deep dive analyses into important segments of both the Baghdad-based and Kurdish economy.
The World Bank’s latest MENA Economic Monitor Report showed that Kuwait’s GDP contracted by an estimated 1.3% in 2015, following a 1.6% decline in 2014, while oil production dropped by 1.7% in 2015. Growth in the oil sector, which accounts for two-thirds of GDP, was affected by an ongoing dispute with Saudi Arabia over shared resources, leading to the closure of a neutral zone oilfield in mid-2015. Growth in the non-oil sector also moderated further in 2015 as the slump in global oil prices took a toll on sentiment and activity, particularly in real estate and construction. Inflation remains muted, averaging just 3.3 % in 2015.
Fiscal and current account pressures are increasing. Oil revenues, which have contributed to three-quarters of government income in recent years, fell by nearly 50% during 2015 in line with oil prices. With spending adjusting more slowly, Kuwait is expected to record its first fiscal deficit since 1999, at 3.6% of GDP in FY2015. The current account surplus has narrowed significantly from over 30% of GDP in 2014, but remains at 9.6 % of GDP in 2015. With the Kuwaiti dinar pegged to a basket of currencies dominated by the US dollar, the central bank raised its policy rate by 25 basis points to 2.25 % following the rate increase by the US Federal Reserve Bank in December 2015. Otherwise, private sector credit is growing at a moderate pace, mitigating concerns about financial risks.
Oman’s private sector development is heavily reliant upon government expenditures to expand. But like other oil producing countries in the region, Oman’s budget has been impacted by the reduction in worldwide oil prices, hindering its ability to fund major infrastructure projects across the country. Construction accounts for approximately 8 percent of Oman’s GDP, and BMI Research predicts Oman’s construction sector to post this year its slowest growth since 2000.
Moreover, while Oman produces and exports much less oil and gas relative to other GCC countries, the hydrocarbon sector accounted for 47.2 percent of GDP in 2014 and 33.9 percent of GDP in 2015. The sector also accounted for 78.7 percent of government revenues in 2015. Oman does not have significant foreign exchange reserves, which amounted to USD 17.5 billion at the end of 2015, placing it in a relatively weaker position to withstand low oil prices compared to other GCC countries.
The recent OPEC deal to curb oil production is a positive development for Oman. The country has also pledged to cut production by 45,000 bpd effective Jan 1, 2016, which is expected to result in a net increase in revenues. Still, pressure has grown to enact economic reforms, while enhancing private sector investment to fund critical projects. The national deficit in the budget reached USD 11.4 billion during the first eight months of 2016 and expected to remain at a similar level over the coming years.
The World Bank’s latest MENA Economic Monitor Report, expects Iran’s growth to rise to 4.2 % and 4.6 % in 2016 and 2017, as a result of the lifting of the sanctions and a more business-oriented environment.
The lifting of nuclear-related sanctions in January 2016 and the strong electoral wins from moderates and reformers in Parliament and Assembly of Experts helped strengthen the hand of the reform-oriented administration of President Hassan Rouhani. The Joint Comprehensive Plan of Action (JCPOA) between Iran and the P5+1 (United States, United Kingdom, France, Russia, China and Germany), laying out the plan for lifting of sanctions on Iran, was signed in July 2015. As a result, as Iran reached Implementation Day on January 16, 2016, materially all nuclear-related sanctions were lifted.
Meanwhile, the February 2016 elections for Parliament and the Assembly of Experts (whose main task is the selection of the Supreme Leader), moderates and reformers saw major gains as prominent conservatives lost ground. These developments, along with a reform-minded government provide a favorable environment for economic reforms. In addition, the context of a new five-year development plan starting March 21, 2016, which targets a rate of annual real GDP growth of 8 %, provides for an optimistic business environment.
The current MENA Economic Monitor report expects Saudi Arabia to show solid real GDP growth, even as inflation moderates slightly. The country is expected to maintain a fiscal budget deficit in 2016 and 2017, partly because of the expected continued low price of oil, and partly as it works to help the economy move away from oil as its only basis, through the National Transformation Program (NTP) 2020, undertaken to drive the institutional capacity and capabilities needed to achieve Saudi Arabia’s Vision 2030. Under the NTP 2020, the Kingdom will undertake 543 initiatives across 24 government entities, totaling nearly Saudi Riyal (SAR) 270 billion in aggregate funding. Importantly, this funding is expected to highly leverage the private sector, with private company money adding to and driving specific projects beyond the initial government budget. This report focuses on the opportunities for private sector participation in infrastructure projects in NTP 2020, which we estimate totals over SAR 55 billion.
Business opportunities tied to the Qatari World Cup 2022
The FIFA World Cup in Qatar has sparked a profusion of new projects. Not only must new sporting facilities be created to enable the large number of simultaneous matches to be held, but all manner of existing Qatari infrastructure must be upgraded in anticipation of the massive crowds that will come to view the games, eat, drink and sleep in the country and visit local tourist attractions between games. Thus, while many projects are new, other already-planned upgrades have been accelerated and scaled up. We found projects across the board, whether in hospitality, transport into and around the country, or water, electricity, sewerage or other resource infrastructure, and more are being tendered all the time. We have counted at least $80 billion in projects just enumerated in this paper, with the names of the prime and subcontracting entities, and we believe that there are perhaps as many other projects yet to be bid or that we have not specifically enumerated. We do, however, lay out the structure of the governing entities and overall approach so that interested companies in the infrastructure, construction, logistics, architecture and procurement industries will find it easy to insert themselves into the evolving market.
Despite being highly vulnerable to disturbances in Saudi Arabia’s market, Bahrain’s economy is much more diversified than Saudi Arabia’s, and has a relatively solid and resilient financial sector. Bahrain’s economy has continued to demonstrate significant resilience throughout the period of depressed oil prices. The non-oil economy has been at the forefront of economic growth in Bahrain ever since the second half of 2014, while the oil sector either marginally contributed to the growth or even lagged behind (as in 2015). According to Bahrain Economic Development Board (EDB), future growth will be driven by a high level of continuity in the non-oil economy, and the commitment of regional governments and investors to long-term projects. The non-hydrocarbon sector is expected to remain around 3.4% in 2016 and 3% in 2017, underpinned by construction, manufacturing, tourism and social and personal services.
The final battle to retake Mosul from the Islamic State could begin as soon as October, according to authorities in Iraq’s armed forces. In this note, Whispering Bell looks at the current status of the tightening noose around Mosul, the military outlook, the political maneuvering that accompanies the planning for the assault, and some of the near term implications for Iraq’s political and economic future.
This 11-page report has been prepared by Whispering Bell and made available as free to download. To find out more about Whispering Bell business advisory services in Iraq, please visit Iraq Security Services page.
Iraqi Prime Minister Haider Al-Abadi had his first success in attempting to reshuffle his cabinet in mid-August, with the approval of five new ministers by the parliament, including a new Minister of Oil. One Minister, Trade, was rejected by parliament, but overall, this represented a victory after a long convoluted attempt to get a smaller, technocrat-oriented cabinet in place. The objective was to take corruption and political patronage out of the cabinet, and replace it with more qualified leadership. So far, this is a good first step, with the new Ministers generally career technocrats. However, challenges remain, with the rest of his 16 member cabinet yet to be approved, and a lack of full success potentially threatening his premiership. And of course, former Prime Minister Nouri Al-Maliki is waiting in the wings to try to capitalize on any stumble to gain a return to power.”
Iraq commercial activity fell to four deals in the month of July, as detailed in the August Commercial Report. However, this likely reflects the typical summer doldrums, possibly made worse by Ramadan falling in June this year. We expect we won’t se a rebound of activity until September. However, three IOCs agreed to restart investing in Iraq, heralding a possible uptick in activity in the coming 6-18 months. Meantime, progress continues to be made with the government with long-awaited appointment of five new ministers in Abadi’s cabinet, and continued progress in pushing ISIS out of Iraq. Most business activity meantime continues in the same vein as the rest of the year so far - focused on Energy and Defense, and mostly in the south, away from the IS and economic downturn in Kurdistan
A free to Download top level market overview on the UAE water and electricity sector produced by our Market Research analyst, Loubna El Hassan.
Lone Wolf Terror Attacks: Emerging Trends and Analysis - July 2016The growing threat of lone wolf terrorism is posing new challenges to security and intelligence agencies around the world, particularly as terrorist groups such as the Islamic State (IS) utilize social media and technology to recruit new members and inspire new attacks. Media reports have increasingly used the term “lone wolf” in a wide variety of contexts, but this term generally refers to an individual or small cell inspired to execute an attack in the name of an ideology or terrorist group independent of any connection to the organization itself. Without direct links to or communication with a broader network, security and intelligence agencies may fail to detect and prevent plots from lone wolf terrorists, whose plans only become apparent once they are underway. Some plots have included one assailant supported by multiple collaborators sympathetic to the ideology or terrorist group and can be described in similar terms, even though they may not be pure lone wolf events—but are still tellingly lacking any direction or communication with the terrorist hierarchy. Nonetheless, terrorist organizations have encouraged lone wolves and small groups to execute attacks on their own, and recent trends suggest these types of attacks are likely to increase in 2016, as they have proven to be highly effective. While many different ideologies can inspire acts of lone wolf terrorism, this report primarily focuses on lone wolves in the context of IS and Islamist extremism.
The India-Iraq Relationship June 2016 In our most recent report, we examine the bilateral India-Iraq relationship, delving into the history of the political relationship as well as the current trade and investment relationship. We examine the historical India-Iraq relationship, bringing it up to date with recent statistics and a selection of case studies, in order to offer some recommendations to companies looking to profit from that relationship. As might be expected, today the relationship is mostly focused on India’s imports of Iraqi crude oil and Iraq’s imports of food, construction products, and technology from India. And in general, that relationship has been most successful when focused on trade and commerce, rather than investment, as the few examples of cross-border investment flows (Indian investment in the Iraqi energy sector) have not been extremely successful. As a result, this 12 page report concludes in discussing how we expect that India will continue to be a source of Iraqi product and service imports, and Iraq will continue to be a strategic energy supplier for India’s growing energy needs.
Over the course of four weeks during March and April 2016, the author conducted a market survey to gain a better understanding of the pharmaceutical sector in Saudi Arabia. Over 35 interviews were carried out by on-the-ground sources in Saudi in order to gain a general perspective on the pharmaceuticals market and its key players.
The author also met with more than 25 executives within the pharmaceuticals ecosystem and distribution chain in the country, including international suppliers and manufacturers, pharmaceuticals retail outlets, regulators, internal company managers and wholesale distributors in order to generate a multi-dimensional view of the market structure and the competitive landscape in Saudi.
This one page email covers the most important security and political events that occurred the previous 24 hours in country. This is a must have for regional security managers, reconstruction firms, international oil and gas companies, and others with business interests and assets in Libya.
This 15-page report takes a detailed look at the current and future political outcomes in Libya, and most importantly, how they will affect the various fields, and IOC operators of these fields.
This report itemizes all in-country O&G assets, conducts a scenario and impact analysis of 3 main predicted outcomes, and conducts an analysis of the current political/security situation in country.
As Iraqi and Coalition Forces undertake their final assault on West Mosul, Whispering Bell takes a look at the impact on oil production and economic activity in Nineva province post-ISIS, to include the obvious oil and gas, but also agriculture, sulfur, sugar, and other locally produced goods. This report is a must-read for any observer of the Iraqi political economy, and picks up where most security reports leave off.
In the years leading up to Expo 2020, Dubai will be required to upgrade its infrastructure to accommodate the millions of people expected to attend the event. The most recent estimates indicate Dubai will receive approximately 25 million visitors, all of whom will require hotels, transportation, utilities, and entertainment/leisure facilities, in addition to accommodating the already growing Dubai population. Dubai is seeking to enhance its international profile and reputation. By embarking on massive infrastructure projects and tourist sites ahead of Expo 2020, the event will leave its mark on visitors, observers around the world and result in a legacy highlighting Dubai as a major international tourism and business hub focused on the future.
The Gulf Cooperation Council (GCC) – comprising the nations of Bahrain, the Kingdom of Saudi Arabia (KSA), Kuwait, Oman, Qatar, and the UAE – together have a total of 148 gigawatts (GW) of total power generation capacity. The total power need is expected to expand at a pace of 8% per year between 2016 and 2020, driven by population growth, rapid urbanization, higher incomes (which drives overall consumption per capita), industrialization, and continued low energy prices.