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February 2015

Gulf Industry Magazine helps you catch up with the numbers behind economic and industrial developments in the region.

 

Mobile internet changing lifestyles

NINETY-seven per cent of consumers in emerging markets using mobile Internet are experiencing fundamental life-changes in key areas of their lives, a report said.

People in emerging and developed markets have different uses of their connections, as well perspectives according to the first Global Bandwidth Index Report, published by Juniper Networks, an industry leader in network innovation.

The survey explores differences between how people use mobile Internet connectivity in their day-to-day lives and what they hope to achieve using their connected devices in the future.

According to the study, 46 per cent of respondents in developing countries use connected devices for professional development versus 27 per cent in developed markets. Furthermore, nearly twice as many people in developing countries regularly use connected devices for educational purposes as those in developed markets.

In the Middle East education is a prime example of how communities are benefiting from the power of connectivity. Countries such as Saudi Arabia and the UAE are utilising mobile connectivity to develop a knowledge-based society, improve quality of learning and develop skills enabled by technology to empower the leaders of tomorrow.

Ninety-seven per cent of people in emerging markets reported fundamental life changes due to connectivity, including a transformation in the way they complete a wide range of essential and everyday tasks, from banking to accessing local information, enjoying entertainment, receiving health care and engaging in civic life.

Compare that to 22 per cent of consumers in developed markets who report that connectivity has not had a significant effect on their lives.

The Global Bandwidth Index also uncovered a corresponding impact on people’s perception of economic opportunity.

Forty per cent of respondents in emerging markets report that connectivity has improved their earning power, compared with just 17 per cent in developed markets.

Sixty per cent of consumers in emerging markets believe that connectivity has transformed their social lives, compared with 38 per cent in the developed countries.

People in developing countries often use connected devices as a tool for personal advancement and self-improvement, while in the developed world, the focus is much more on convenience and efficiency.

In developed nations, on the other hand, people are more likely to use connected devices for practical day-to-day activities like banking (51 per cent), shopping (41 per cent) and searching for local information (42 per cent).

 

GCC braces for $350bn loss on oil plunge

GULF countries could lose at least half their oil revenues or around $350 billion a year as crude prices plunge, according to senior analysts.

The GCC states, which pump about 17.5 million barrels per day, are bracing for tough times after oil prices have dropped by half from their 2014 highs to around $60 a barrel.

 Bahrain has lost $261.9 million over the past 45 days as the price of locally-produced crude dropped below $59.59 per barrel, our sister paper Akhbar Al Khaleej reported Bapco’s official website as saying.

The two-year state budget had endorsed $90 as a forecast benchmark price.

Oil revenues make up around 90 per cent of income for most GCC states and with prices now below budget forecasts, their governments are looking at certain deficits next year. Spending cuts are sure to follow ‘and possibly even the region’s first taxes’ raising fears of an economic slowdown.

The oil price drop has also sent Gulf stock prices plummeting, wiping out billions of dollars of market value across the region and hurting major private firms like developer Emaar Properties and builder Arabtec Holding.

The heart of the problem, leading Kuwaiti economist Jassem Al Saadun said, is that Gulf states failed to seize on surging energy revenues to build a real diversified economy.

“Public spending has soared to new record highs and it was not for vital infrastructure projects,” Al Saadun said.

Economists are warning that even with the huge reserves many have built up, a prolonged drop in oil prices will hit Gulf states hard. Ratings agency Standard & Poor’s says an extended decline in oil prices will likely slow their economies, reducing spending on infrastructure projects and hitting the private sector.

 

Dubai economy ‘coping well’

DUBAI’S economy is coping well with a difficult global environment and is expected to grow about 4.5 per cent this year, with growth rising above that level in coming years, a senior official of the emirate said.

Sheikh Ahmed bin Saeed Al Maktoum, chairman of Dubai’s Supreme Fiscal Committee said the Dubai government was keen to control government spending and avoid budget deficits.

Sheikh Ahmed also said the government would seek to control inflation to keep the emirate competitive in business terms. Inflation has been boosted this year by surging housing rents; annual consumer price inflation was 4.2 per cent in November, down slightly from 4.4 per cent in October, which was the highest since May 2009.

 

Qatar sees economy booming

QATAR predicted its economy would grow 7.7 per cent next year, signalling the world’s top exporter of liquefied natural gas expects very little disruption to its finances from the oil price plunge which is worrying many energy exporters.

The forecast by the Ministry of Development Planning and Statistics was down only marginally from the 7.8 per cent estimate for 2015 which the ministry delivered in June this year.

But Qatar appears almost immune to cheap oil. Although it is a significant oil producer, the prices of its natural gas exports are only weakly correlated with oil. Even at current oil prices, analysts estimate Qatar’s state budget might break even next year; it has huge fiscal reserves to cover any deficits.

Growth of 7.7 per cent in 2015 would be Qatar’s fastest expansion since 2011 and an acceleration from 6.3 per cent estimated for this year. The ministry did not say what average oil price it was assuming in its predictions.

“Solid expansion in non-hydrocarbon activities will continue to drive overall economic momentum, propelled by investment spending, an expansionary fiscal stance and population growth,” the ministry said in its report.

It said oil prices could become a key risk to the economic outlook if their slide continued, but added that the wider economy was likely to be shielded by the strength of state finances.




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