Expert on recent economic development in the GCC: Oil income, stocks performance and banking sector
The Arab rich oil countries' (KSA, Kuwait, UAE and Qatar) income from exporting oil and gas reached $669 billion in 2012, according to assessment done by Dr. Gilles Feiler, Director MENA for Bank of Georgia (LSE: BGEO). According to Feiler, apart from Qatar which slightly reduced its export in 2012 compared to 2011, the other three exporters, Saudi Arabia, Kuwait and the UAE increased their production and export in 2012.
Saudi Arabia's oil export earnings amounted to $360 billion last year, and the United Arab Emirate's income reached $129 billion. As a result of these record export incomes, the rich countries registered huge current account surplus. Qatar, for example registered $26 billion budget surplus in Q2 of fiscal year 2012-2013 alone. Feiler estimates the total surplus of the 4 countries mentioned at around $339 billion for 2012 although final figures are yet to be published.
Feiler also mentioned that while KSA was the biggest contributor to the total earnings (around 50%), the UAE companies registered the highest growth rate of their companies earnings in 2012 compare to 2011. The total corporate earnings in the GCC public companies during 2012 reached to circa $57 billion. On the negative side, Dr. Feiler mentioned Bahrain that confronted with social unrest and registered a decrease of over third of its corporate earnings in 2012 compared to 2011.
The real estate sector in the UAE was the main reason for boosting the profits of the UAE public companies, with over 100% increase in their earnings in 2012. Moreover, the growing demand for both private and commercial property, as well as growing property prices will encourage entrepreneurs to restart projects.
The banking sector also registered a growth in 2012, nevertheless, while the GCC banking sector profits grew by around 10%in 2012, they were down by around 15% in the last QoQ. Moreover, Dr. Feiler emphasized the high provisions of the banking sector in the last Q that soared by almost 60% QoQ. The Saudi banking system was the only one that registered decline in the level of provisions.