UAE ranked 47th on innovation index

The UAE has been ranked 47th on the Global Innovation Index (GII) 2015, according to a report co-published by Cornell University, Insead and the World Intellectual Property Organisation.

The country’s ranking dropped from 36th last year.

Saudi Arabia, meanwhile, topped the charts in the GCC countries index at 43rd position (from 38th in 2014), followed by the UAE, Qatar (50), Bahrain (59), Oman (69) and Kuwait (77). Qatar and Kuwait dropped from 47 and 69 a year ago respectively, while Bahrain and Oman rose from 62 and 75, respectively.

“Although the scaling by GDP of a few indicators – required for comparability across countries – penalises the relatively wealthy, resource-rich countries of the GCC, they often exhibit relative shortcomings in important areas in which this effect does not prevail, such as institutions, market sophistication and business sophistication,” the authors said in the report.

The UAE, Saudi Arabia, Bahrain, Oman, Kuwait, Qatar, Lebanon, Azerbaijan, Yemen and Algeria show below-par performances when compared to their income levels, according to the report.

However, the authors expect the GCC countries to do better in the coming years as many of them have been diversifying towards innovation-rich sectors.

The GII report surveys 141 economies around the world using 79 indicators.

Oman’s growth may slow to 3 per cent

Oman's economic growth is projected to slow to around 3 per cent over 2015-2016 period, down from the 4.9 per cent average between 2005 and 2014, international rating agency Moody’s Investor Service has said in a report.

The decline in economic growth projection is mainly due to pressure on revenue amid multi-year low oil price scenario. Crude oil revenue accounted for 48 per cent of nominal gross domestic product (GDP) on average between 2005 and 2014.

Moody's also projected that Oman would report substantial fiscal deficits in 2015 and 2016 at around 12 per cent of GDP as government revenues will be negatively impacted by lower oil prices.

“We expect Oman›s fiscal deficits to widen from 2015 onwards as hydrocarbon-related government revenues drop by more than 40 per cent this year. However, Oman›s low government indebtedness – at around 5 per cent of GDP in 2014 – gives it room to increase debt issuance to finance budget deficits,” said Steffen Dyck, a senior analyst at Moody›s.

While solid economic growth continues to support Oman (A1 negative), its very high economic and fiscal reliance on the oil and gas sector and limited scope for fiscal reforms will add pressure to public finances in 2015-16, noted Moody’s Investors Service.

However, Moody’s notes that Oman has sizeable financial buffers which the rating agency estimates at 82 per cent of 2014 gross domestic product.

In addition, Oman’s high domestic savings and healthy banking sector will continue to provide stable funding for the government, added Moody's. As a result, liquidity risk is unlikely to significantly affect government debt sustainability.

Kuwait’s fiscal strength to boost banks

Kuwait's exceptional fiscal strength provides insulation from the fall in oil prices and allows the government to press ahead with increasing capital spending which is likely to improve operating conditions for banks, according to analysts.

The Kuwaiti banking sector reported double-digit asset growth in 2014 – reaching its highest rate in the last seven years – and momentum is set to continue this year, despite uncertainty surrounding the broader economy.

The total assets of banks in Kuwait rose 12.2 per cent year-on-year (y-o-y) to 66.4 billion Kuwaiti dinars ($220 billion) in 2014, according to a July report from the Central Bank of Kuwait (CBK).

The implementation of projects in Kuwait has been slow in the past. But with a relatively better fiscal health in the region, Kuwait is better positioned to increase its public sector spending, which in turn can boost credit demand across a wide range of sectors, thus stimulating private sector growth and consumer spending, according to Fitch Ratings.

“We forecast Kuwaiti non-oil GDP growth of 4.5 per cent in 2015 and expect banking sector loan growth to be stable at 10 per cent for the year, as in 2014,” said Mahin Dissanayake, director, Financial Institutions, in a recent note.

Kuwaiti banks focus almost exclusively on the domestic market, although the largest banks, National Bank of Kuwait and Kuwait Finance House both have international banking subsidiaries.

Kuwait’s banking sector recorded a solid growth of 13 per cent during the first half (H1) of the year, benefiting from an improving operating environment and healthy growth in credit, said a recent report from NBK.

Internet is first port of call in UAE

IN a clear message to businesses in UAE, a recent research concluded that the Internet is increasingly influencing the behaviour of UAE residents. Besides, it’s keeping them entertained thanks to digital videos and, above all, online shopping.

Conducted by Google and Ipsos (a research agency), and based on the responses of 1,000 people in the UAE over the age of 18, the research concluded that “75 per cent of consumers in the UAE who researched products on their smart phones have thought about purchasing a brand they would not normally consider because of relevant information available on their device at that time”.

And even when they are in stores, “72 per cent of UAE shoppers admitted to using their smart phones in-store to find additional information on a product or service”, reveals the research which was fielded between June 17 and July 8, 2015.

Moreover, 68 per cent of online consumers agree that the relevance of a company’s message influences their opinion of a brand, and 84 per cent of smart phone users have used their phones to gather information for the purchases of a product.

“What we are trying to say here is that businesses should be present (online) because people are making decisions online,” said Joyce Baz, communication manager at Google.

Apart from buying online, the research showed that YouTube is also a source of “show-how” to the majority of people under the age of 35.

“Eighty three per cent of people under 35 years of age agree that they can find a YouTube video on anything they want to learn,” as per the research.

At the same time, 77 per cent of smartphone users in the UAE use the Internet as the first port of call when they need to find information, and 92 per cent of respondents are prompted by both online and offline content or ads to look for information immediately, on a connected device.

YouTube is also a source of entertainment, with 85 per cent of online consumers in the UAE saying they turn to YouTube to be entertained or inspired, and 38 per cent saying they had discovered new products or brands while watching online videos.