Hydrocarbons accounted for about 30 per cent of Gulf countries' GDP and 60 percent of total exports over 2015-2016. Ali Jarekji / Reuters
Hydrocarbons accounted for about 30 per cent of Gulf countries' GDP and 60 percent of total exports over 2015-2016. Ali Jarekji / Reuters

Gulf nations less reliant on oil but still face obstacles, says S&P



Although they have made strides towards diversifying their economies away from oil, Gulf countries remain dependent on hydrocarbon revenues, making them susceptible to market fluctuations, S&P Global Ratings said.

"Gulf economies' high concentration and dependence on the hydrocarbon sector, which averaged about 30 per cent of GDP and 60 percent of total exports over 2015-16 – even considering subdued oil prices – could become a credit- negative factor when not offset by substantial financial buffers," the agency said. "Despite supporting the economy when hydrocarbon prices are high, we believe a narrowly-based economy tends to be more vulnerable to key sector business cycle swings, amplifying the volatility of its growth, general government revenues, and current account receipts."

Fixed exchange rates, a harsh climate and a lack of local skilled labour will make it difficult for Gulf nations to diversify their economies away from oil, the agency said in a report, adding its recent lowering of long-term currency ratings on Oman, Bahrain and Saudi Arabia was in part because of concerns about economic diversification and the impact low oil prices have had on regional economies.

"These rating actions also reflected our view that GCC sovereigns have made only marginal progress in diversifying their economies away from hydrocarbons, given the still sizeable contribution of the sector to their economies," said analysts led by Trevor Cullinan at S&P Global Ratings in Dubai.

"While non-oil real GDP has picked up in the region since 2000, the growth rate has gradually decelerated over the last three years in tandem with the decline in oil GDP, further highlighting that diversification efforts are yet to pay off, in our view."

GCC nations have made steps to  lessen their reliance on oil in recent years by reducing energy subsidies and mapping out ambitious plans to boost revenues including a value added tax. Still, these plans may take a long time to materialise and there are a number of structural impediments in their way, S&P noted.

Of the serious structural impediments pointed out that the climate of countries in the region, S&P Global Ratings said climate, which averages between 15 degrees Centigrade, was among the biggest constraints preventing the diversification of the economy, especially when it comes to agriculture and manufacturing.

"Development of agriculture, along with other primary sectors, is often the precursor of a shift to manufacturing (secondary sector) and services (tertiary sector)," the report said.

"Given the geographical disadvantages faced by GCC economies, they have not developed in line with this theory."

And when it comes to currencies, the rating agency noted that a pegged currency hampers the ability of GCC countries to be competitive when it comes to non-oil exports.

The UAE was not, however, among the countries to experience a lowering of its long-term currency ratings by S&P last month and has generally been singled out as the one country that has done better than most in the GCC to diversify its economy, especially in the past couple of years and because it has high reserves of cash.

As a result the rating agency earlier this week affirmed the credit ratings of Abu Dhabi, maintaining the Emirate's AA/A-1+ sovereign credit rating while keeping its outlook stable. The agency said that Abu Dhabi would maintain its strong net fiscal asset position above 200 per cent of GDP over 2017 to 2020, one of the highest among government economies that the rating agency reviews.

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Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea

Rating: 2.5/5

COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
Thank You for Banking with Us

Director: Laila Abbas

Starring: Yasmine Al Massri, Clara Khoury, Kamel El Basha, Ashraf Barhoum

Rating: 4/5

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West Asia Premiership

Dubai Hurricanes 58-10 Dubai Knights Eagles

Dubai Tigers 5-39 Bahrain

Jebel Ali Dragons 16-56 Abu Dhabi Harlequins

MATCH INFO

Uefa Champions League semi-final, first leg
Bayern Munich v Real Madrid

When: April 25, 10.45pm kick-off (UAE)
Where: Allianz Arena, Munich
Live: BeIN Sports HD
Second leg: May 1, Santiago Bernabeu, Madrid

Last 10 NBA champions

2017: Golden State bt Cleveland 4-1
2016: Cleveland bt Golden State 4-3
2015: Golden State bt Cleveland 4-2
2014: San Antonio bt Miami 4-1
2013: Miami bt San Antonio 4-3
2012: Miami bt Oklahoma City 4-1
2011: Dallas bt Miami 4-2
2010: Los Angeles Lakers bt Boston 4-3
2009: Los Angeles Lakers bt Orlando 4-1
2008: Boston bt Los Angeles Lakers 4-2

How to wear a kandura

Dos

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  • Wear 100 per cent cotton under the kandura as most fabrics are polyester

Don’ts 

  • Wear hamdania for work, always wear a ghutra and agal 
  • Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
The five pillars of Islam

1. Fasting 

2. Prayer 

3. Hajj 

4. Shahada 

5. Zakat 

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Name: ARDH Collective
Based: Dubai
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
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Number of employees: 4
if you go

The flights

Etihad, Emirates and Singapore Airlines fly direct from the UAE to Singapore from Dh2,265 return including taxes. The flight takes about 7 hours.

The hotel

Rooms at the M Social Singapore cost from SG $179 (Dh488) per night including taxes.

The tour

Makan Makan Walking group tours costs from SG $90 (Dh245) per person for about three hours. Tailor-made tours can be arranged. For details go to www.woknstroll.com.sg

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Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
 
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
 
Round 3: February 7-9, Dubai Autodrome – Dubai
 
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
 
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
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Directors: Avinash Arun, Prosit Roy 

Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong

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Pakistan World Cup squad

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Two additions for England ODIs: Mohammad Amir and Asif Ali

'The Batman'

Stars:Robert Pattinson

Director:Matt Reeves

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UPI facts

More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions

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How to avoid crypto fraud
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