Despite sustained efforts to diversify, GCC economies’ dependence on the oil and gas sector remains undiminished. Oil’s share in the economies’ total output may fluctuate in tandem with the oil price, but the underlying dependence has hardly budged.
According to the most recent estimates by the International Monetary Fund, the oil price required to balance the 2018 public accounts has risen in all GCC nations compared to the 2000-2014 average, on average by 31 per cent. The external accounts show a similarly unbroken dependence: for the GCC average, the oil price required to avert a current account deficit grew in the same period to $61 from $47, with only the UAE and Saudi Arabia seeing an improvement. Arguably, Dubai is the regional economy that has been most successful in creating a diversified non-oil economy, with other UAE emirates also showing promising developments. But overall, the regional hydrocarbon dependence looks much unchanged.
One cannot help be reminded of the famous optical illusions of Dutch graphic artist M.C. Escher: no matter where you are going, you always seem to be ending up in the same spot. In a GCC context: despite apparent progress in promoting the non-oil economy, why does hydrocarbon reliance not decline? Why does diversification remain so elusive? And what could be done to make true and lasting progress on making the economies more resilient to the vagaries of the oil market?
The strategies developed by the national authorities often focus on developing world-class infrastructure to underpin a transformation towards a more robust productive capacity in the non-resource sector.
Investment, often public-sector driven, has been buoyant across the region and its share in national output is above the typical level seen for emerging markets globally. That is good. Yet again, it only partly addresses the structural challenges of the region’s economies. To make the infrastructure boom bear plentiful and sustainable fruit two complementing efforts could render the investment strategy more powerful: improvements to the business environment and, most importantly, boosting the skills of citizens.
Judging from the World Bank’s Ease of Doing Business ranking, GCC sovereigns had performed relatively poorly in 2012. But instead of catching up with global peers, the regional economies fell further behind by 2017. Whatever business-friendly reforms were undertaken during the first half of the decade, the jurisdictions outside the region actually progressed faster and further.
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Read more:
Abu Dhabi's third-quarter GDP surges 17%
Abu Dhabi's Taqa to have 10 per cent renewables in portfolio by 2030
Three down, three to go in the GCC as Bahrain set to roll out VAT
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The only positive exception to this unwelcome trend is the UAE, which alone was able to improve its relative ranking, despite already having displayed a strong business environment to begin with. To become more attractive destinations for private sector investments, other GCC countries could do worse than to study the progress made in the UAE. The UAE demonstrates that the ease with which private sector business can be conducted is a result of purposeful policy choices, not of geography.
Upgrading skills is the second crucial ingredient to any lasting diversification success. As mentioned, much of the strategic focus and money has been spent on enhancing infrastructure. But this is actually one of the less pressing issues. On average, the GCC nations are among the top quarter globally when it comes to the quality of infrastructure, with the UAE deemed to be number four worldwide.
The assessment of the quality of training and education is generally less stellar. The results are indisputable: international comparisons of educational achievements in the fields of science and mathematics show GCC pupils performing at the low-end compared to strong global peers like Korea or Singapore.
A new Human Capital Index (HCI), unveiled by the World Bank at its annual meeting in October 2018, underscores the challenge ahead. A child born in Kuwait or Saudi Arabia today will be only 58 per cent as productive when she grows up as she could be if she enjoyed complete education and full health (with most of the weakness stemming from educational attainment). The findings for the UAE are somewhat better (66 per cent), but it, too, has a lot of room for catching up with its income level sovereign peer group.
Knowledge is the critical commodity of the future. Integrating nationals in ever larger numbers into competitive non-oil private sector jobs will be difficult without spreading knowledge, productivity and innovation more widely across the workforce. The subpar educational achievements in many GCC countries exacerbate another bottleneck to development and diversification, namely low labour participation rates among women. The low female participation rate cannot be explained by lower academic achievements. On the contrary: GCC girls outscored boys in the global harmonised tests more than anywhere else in the world. Ongoing initiatives to facilitate the integration of women into the workforce are therefore welcome.
All things considered, the emphasis on modernising infrastructure is appropriate and understandable. But without complementary reforms to enhance the quality of education and training and integrating the female labour force, the transformative effect of world-class physical infrastructure risks falling short of expectations.
Moritz Kraemer is Chief Economic Advisor at Acreditus, which is a member of The Gulf Bond and Sukuk Association.
Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
Torque: 790Nm from 2,000-3,600rpm
Transmission: 10-speed auto
Fuel consumption: 11.7L/100km
On sale: Now
Price: From Dh590,000
Killing of Qassem Suleimani
10 tips for entry-level job seekers
- Have an up-to-date, professional LinkedIn profile. If you don’t have a LinkedIn account, set one up today. Avoid poor-quality profile pictures with distracting backgrounds. Include a professional summary and begin to grow your network.
- Keep track of the job trends in your sector through the news. Apply for job alerts at your dream organisations and the types of jobs you want – LinkedIn uses AI to share similar relevant jobs based on your selections.
- Double check that you’ve highlighted relevant skills on your resume and LinkedIn profile.
- For most entry-level jobs, your resume will first be filtered by an applicant tracking system for keywords. Look closely at the description of the job you are applying for and mirror the language as much as possible (while being honest and accurate about your skills and experience).
- Keep your CV professional and in a simple format – make sure you tailor your cover letter and application to the company and role.
- Go online and look for details on job specifications for your target position. Make a list of skills required and set yourself some learning goals to tick off all the necessary skills one by one.
- Don’t be afraid to reach outside your immediate friends and family to other acquaintances and let them know you are looking for new opportunities.
- Make sure you’ve set your LinkedIn profile to signal that you are “open to opportunities”. Also be sure to use LinkedIn to search for people who are still actively hiring by searching for those that have the headline “I’m hiring” or “We’re hiring” in their profile.
- Prepare for online interviews using mock interview tools. Even before landing interviews, it can be useful to start practising.
- Be professional and patient. Always be professional with whoever you are interacting with throughout your search process, this will be remembered. You need to be patient, dedicated and not give up on your search. Candidates need to make sure they are following up appropriately for roles they have applied.
Arda Atalay, head of Mena private sector at LinkedIn Talent Solutions, Rudy Bier, managing partner of Kinetic Business Solutions and Ben Kinerman Daltrey, co-founder of KinFitz
UAE currency: the story behind the money in your pockets
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ELIO
Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett
Directors: Madeline Sharafian, Domee Shi, Adrian Molina
Rating: 4/5
The specs: 2018 BMW R nineT Scrambler
Price, base / as tested Dh57,000
Engine 1,170cc air/oil-cooled flat twin four-stroke engine
Transmission Six-speed gearbox
Power 110hp) @ 7,750rpm
Torque 116Nm @ 6,000rpm
Fuel economy, combined 5.3L / 100km
MO
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LA LIGA FIXTURES
Friday Valladolid v Osasuna (Kick-off midnight UAE)
Saturday Valencia v Athletic Bilbao (5pm), Getafe v Sevilla (7.15pm), Huesca v Alaves (9.30pm), Real Madrid v Atletico Madrid (midnight)
Sunday Real Sociedad v Eibar (5pm), Real Betis v Villarreal (7.15pm), Elche v Granada (9.30pm), Barcelona v Levante (midnight)
Monday Celta Vigo v Cadiz (midnight)
if you go
The flights
Flydubai offers three daily direct flights to Sarajevo and, from June, a daily flight from Thessaloniki from Dubai. A return flight costs from Dhs1,905 including taxes.
The trip
The Travel Scientists are the organisers of the Balkan Ride and several other rallies around the world. The 2018 running of this particular adventure will take place from August 3-11, once again starting in Sarajevo and ending a week later in Thessaloniki. If you’re driving your own vehicle, then entry start from €880 (Dhs 3,900) per person including all accommodation along the route. Contact the Travel Scientists if you wish to hire one of their vehicles.
The specs
Price: From Dh529,000
Engine: 5-litre V8
Transmission: Eight-speed auto
Power: 520hp
Torque: 625Nm
Fuel economy, combined: 12.8L/100km
Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
UAE currency: the story behind the money in your pockets
UAE currency: the story behind the money in your pockets
The specs
Engine: 5.0-litre supercharged V8
Transmission: Eight-speed auto
Power: 575bhp
Torque: 700Nm
Price: Dh554,000
On sale: now
UAE currency: the story behind the money in your pockets
The Disaster Artist
Director: James Franco
Starring: James Franco, Dave Franco, Seth Rogan
Four stars
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
KILLING OF QASSEM SULEIMANI
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
The biog
Age: 35
Inspiration: Wife and kids
Favourite book: Changes all the time but my new favourite is Thinking, Fast and Slow by Daniel Kahneman
Best Travel Destination: Bora Bora , French Polynesia
Favourite run: Jabel Hafeet, I also enjoy running the 30km loop in Al Wathba cycling track
The specs: 2018 Jeep Compass
Price, base: Dh100,000 (estimate)
Engine: 2.4L four-cylinder
Transmission: Nine-speed automatic
Power: 184bhp at 6,400rpm
Torque: 237Nm at 3,900rpm
Fuel economy, combined: 9.4L / 100km
Messi at the Copa America
2007 – lost 3-0 to Brazil in the final
2011 – lost to Uruguay on penalties in the quarter-finals
2015 – lost to Chile on penalties in the final
2016 – lost to Chile on penalties in the final
PROFILE
Name: Enhance Fitness
Year started: 2018
Based: UAE
Employees: 200
Amount raised: $3m
Investors: Global Ventures and angel investors
Western Region Asia Cup T20 Qualifier
Sun Feb 23 – Thu Feb 27, Al Amerat, Oman
The two finalists advance to the Asia qualifier in Malaysia in August
Group A
Bahrain, Maldives, Oman, Qatar
Group B
UAE, Iran, Kuwait, Saudi Arabia
Game Changer
Director: Shankar
Stars: Ram Charan, Kiara Advani, Anjali, S J Suryah, Jayaram
Rating: 2/5
Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
Available: Now
The Baghdad Clock
Shahad Al Rawi, Oneworld
More from Neighbourhood Watch:
ASHES SCHEDULE
First Test
November 23-27 (The Gabba, Brisbane)
Second Test
December 2-6 (Adelaide Oval, Adelaide)
Third Test
December 14-18 (Waca Ground, Perth)
Fourth Test
December 26-30 (Melbourne Cricket Ground, Melbourne)
Fifth Test
January 4-8, 2018 (Sydney Cricket Ground, Sydney)
Drishyam 2
Directed by: Jeethu Joseph
Starring: Mohanlal, Meena, Ansiba, Murali Gopy
Rating: 4 stars
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills