GCC Economic MENA Economic Outlook - GulfBase · Solid growth in GCC as MENA ‘transition’ countries struggle OPEC cuts output to keep oil prices close to $100 Egyptian growth

Solid growth in GCC as MENA ‘transition’ countries struggleOPEC cuts output to keep oil prices close to $100Egyptian growth improves, though fiscal challenges loom

GCC Economic Outlook

January 2014

MENA Economic Outlook

MENA Economic Outlook January 2014

Contents

MENA outlook 2

Bahrain 4 Macro and finance: Growth to remain modest 4 Kuwait 6 Macro forecasts: Better project activity in 2014 6 Money and finance: Signs of a pick-up in credit growth 8

Oman 10 Macro and finance: Non-oil investments to drive growth 10 Qatar 12 Macro forecasts: State spearheads non-oil investments 12 Money and finance: MSCI upgrade to boost fund inflows 14

Saudi Arabia 16 Macro forecasts: Private sector activity moderates 16 Money and finance: Lending growth eases, but still solid 18

UAE 20 Macro forecasts: Growth improves as confidence returns 20 Money and finance: Equity markets outperform 22

Egypt 24 Macro forecasts: Slow recovery seen in 2014 24 Money and finance: GCC support helps stabilize pound 26

Regional data and forecasts 28

MENA Economic Outlook - January 2014

NBK Economic ResearchAbdullah Al-Ahmed Street, P.O. Box 95, Safat 13001Kuwait City, KuwaitTel: +965 2259 5500 Fax: +965 2224 6973www.nbk.com


2

MENA outlookSolid growth in GCC as MENA ‘transition’ countries struggle; GCC to pay greater attention to fiscal reforms…

• Ongoing challenges in countries undergoing

transition – including Egypt, Jordan, Libya,

Morocco, Syria, Tunisia and Yemen – will continue

to affect economic performance in the MENA

region. Although growth could rise to 4% in

2014 from 3% in 2013, growth in most transition

countries will remain below par, averaging closer to

3%. While regional and international aid has helped

to stabilize transition economies and reduce short-

term external funding pressures, better medium-

term prospects depend upon achieving the political

consensus needed to bolster economic reforms and

the return of foreign capital. For many countries,

this still seems some way off.

• In the resource-rich GCC region, by

contrast, growth prospects remain favorable,

supported by high oil prices, a steady flow of

government development spending and – in some

cases – an increasingly buoyant private sector.

Real GCC non-oil GDP growth is forecast at

around 5.5% per year in 2014 and 2015, 0.5%

points higher than in 2013. (Chart 1.) Qatar will

remain the best performer, but the UAE economy

– boosted by returning confidence and renewed

impetus from infrastructure investment – appears

to be improving the quickest. (Chart 2.)

• We maintain our forecast for oil prices at

$100 per barrel (pb), on average, for 2014, a fall of

8% from 2013. Although oil prices held up well last

year, continued strong growth in non-OPEC supplies

GCC forecast summary2014f 2015f

Real GDP % y/y 3.1 4.2- Non-Oil % y/y 5.4 5.7

Inflation (yr avg) % 2.7 3.4Budget balance % GDP 7.2 6.1

and a potential rise in output from OPEC members

Iran, Iraq and Libya are expected to loosen oil

market fundamentals in 1H 2014. Key GCC OPEC

members – led by Saudi Arabia – are forecast to cut

oil output from current elevated levels early in 2014

in order to balance the market. (Chart 3.) Real oil

sector GDP is therefore seen declining 2% in 2014,

pushing overall GDP growth down to 3%.

• Inflation across the GCC region could be

pushed higher by a combination of solid growth

and rising pressures on housing rents. But at around

3% on a weighted basis, it is unlikely to concern

policymakers very much. (Chart 4.) Meanwhile,

the decline in oil revenues will reduce the GCC’s

aggregate fiscal surplus to 7% of GDP, from 10% in

2013. (Chart 5.) Although this is still very strong by

international standards, we expect GCC countries

to pay growing attention to the sustainability of

their fiscal positions going forward. This could

translate into slower growth in overall spending

than before, and tighter curbs on current spending

in particular. This, in turn, will have implications for

macroeconomic performance in the years ahead.

• In Egypt – a pivotal economy for the

MENA region – a combination of capital controls,

a managed depreciation of the pound and financial

support from the GCC helped ease pressures on

the external position in 2013. Along with a slight

improvement in the political climate, this has set the

stage for a modest acceleration in growth to 3% in

FY14/15. (Chart 6.) But major challenges remain.

As well as sustaining progress with the political

transition, the government must navigate the need

to protect living standards and social stability on the

one hand, and enact major deficit-reducing fiscal

reforms (particularly on subsidies) on the other.


3

Source: Official sources / NBK estimates and forecasts1 Includes condensate output in Oman and estimates for Bahrain2 Includes NBK estimates of off-balance sheet revenues in the UAE and Oman

MENA outlook charts

Chart 1. GCC real GDP Chart 2. Real non-oil GDP by GCC country

Chart 3. GCC crude oil output 1 Chart 4. GCC consumer price inflation

Chart 5. GCC budget balance 2 Chart 6. Egypt real GDP(% y/y) (% GDP)

(mn barrels per day) (% y/y, year average)

(% y/y) (% y/y)

-8-6-4-202468101214

-8-6-4-202468

101214

2002 2004 2006 2008 2010 2012 2014F

Oil Non-oil Total

NBK f'cast

3.0

4.5 4.0

9.7

4.5 5.0

5.4

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10.5

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0

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Bhn Kwt Oma Qat KSA UAE GCC

2014 2015

14.0

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NBK f'cast

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NBK f'cast

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8

FY02/03 FY05/06 FY08/09 FY11/12 FY14/15

NBK f'cast


4

Bahrain: macro and financeGrowth to remain modest; reform required to put budget on a more stable long-term footing…

• A strong recovery in oil production pushed

Bahrain’s economic growth to 4% in 2013,

following output disruptions in the previous

year. (Chart 7.) This came despite a significant

slowdown in non-oil sector growth (from 7% to

an estimated 3%), partly related to a base effect.

The execution of large infrastructure projects –

funded by GCC peers – may provide some support

to non-oil sector growth over the medium-term.

However, this is expected to be offset by sluggish

private sector activity, which continues to be

undermined by weak confidence levels. With oil

output gradually stabilizing, we expect real GDP

growth to trend lower, averaging under 3% over

the next two years.

• Consumer price inflation edged higher in

2013, averaging 3.1% in the first ten months.

Housing rents have been a large source of upward

pressure on prices, with inflation in this segment

climbing to as high as 11% y/y during 2013. The

government has progressed with several schemes

aimed at addressing the shortage of housing,

through GCC assistance and private sector

involvement. Coupled with modest growth and

softer food prices, we expect inflation to remain

at a moderate rate of 3% over the forecast period.

(Chart 8.)

• Additional expenditures for the 2013/2014

budget were approved in June, increasing

allocations for subsidies and pensions – despite

the existence of a budget deficit. While current

expenditures continue to rise, capital spending

is budgeted to decline, although various social

infrastructure projects should be financed off-

budget through GCC grants. As oil prices soften

and revenues dip, Bahrain’s fiscal position is likely

to weaken further. The budget deficit is expected

to widen from an estimated 3% in 2013 to around

5% over the next two years. (Chart 9.)

• Private sector credit growth remained

relatively flat through 2013, averaging a modest

5% y/y in the first nine months. (Chart 10.) This is

significantly down from the 14% average recorded

in the previous year. Growth in personal loans has

been robust, picking-up to 15% y/y in September

2013, from 10% at the start of the year. But this

has been more than offset by a deceleration in

business loans, which make up around two-thirds of

total retail bank lending.

• Bahrain’s banking sector continues to face

challenges. Commercial bank assets fell by some

5% y/y in September, dragged down by continued

deleveraging in the wholesale banking segment.

Domestically-focused retail banks – who have fared

far better in recent years – saw growth in assets

slow from 13% y/y at the start of the year to just

2%. Bahrain’s financial sector, the second largest

contributor to GDP, has yet to see a sustained

recovery from the effects of the financial crisis and

subsequent social unrest.

• A brief rally in the Bahrain stock market

subsided in mid-2013, with the index remaining

relatively flat during the remainder of the year.

Despite this, the index was still up by some 18% in

the year to November. (Chart 12.)

Bahrain forecast summary2014f 2015f


Inflation (yr avg) % 3.0 3.0Budget balance % GDP -5.0 -5.0


5

Source: Official sources / NBK estimates and forecasts

Bahrain: macro and finance charts

Chart 7. Real GDP Chart 8. Consumer price inflation

Chart 9. Budget balance Chart 10. Bank claims on private sector

Chart 11. Policy interest rates Chart 12. Stock market indices (%)

(% GDP) (% y/y)

(% y/y)

-15

-10

-5

0

5

10

15

-15

-10

-5

0

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2002 2004 2006 2008 2010 2012 2014F

OilNon-oilTotal

NBK f'cast

-1

0

1

2

3

4

-1

0

1

2

3

4

2002 2004 2006 2008 2010 2012 2014F

NBK f'cast

-6

-4

-2

0

2

4

6

8

-6

-4

-2

0

2

4

6

8

2002 2004 2006 2008 2010 2012 2014F

NBK f'cast

-10

0

10

20

30

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60

-10

0

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60

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

0

1

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US Fed Funds target

CBB one week deposit rate

80

100

120

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80

100

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Dow Jones Bahrain Index

(% y/y, year average)


6

Kuwait: macro forecastsNon-oil growth solid despite sluggish project implementation; budget surplus to decline, though remain huge...

• High oil prices, large fiscal and trade

surpluses, and the government’s vast financial

reserves continue to provide a positive near-term

backdrop for the Kuwaiti economy. Although the

headline rate of economic growth will look weak in

2014, this is entirely driven by cuts in oil output;

non-oil growth, while far from firing on all cylinders,

is forecast to improve slightly to 4.5% thanks to

better project execution and continued strength

in the consumer sector. (Chart 13.) Both of these

factors could disappoint, however, resulting in

softer economic growth than forecast. We expect

gradual progress on much-needed economic reforms

to boost private investment levels and improve the

economy’s longer-term performance.

• The consumer sector remains an important

growth driver, but there are signs that growth

may be softening a little. Consumer credit growth

has come off its peak (though remains strong),

employment growth has eased, and the impact

of earlier increases in wages and benefits may be

fading. Early figures also suggest that take-up of

debt relief under the Family Fund law implemented

in 4Q 2013 has been much lower than the KD 0.8

billion in loans applicable under the scheme. The

boost to disposable incomes and additional lending

will therefore be smaller than initially assumed.

• Following a brief cut in 1Q 2013, crude oil

output rebounded to around 3.0 mbpd in mid-year,

close to its full capacity. (Chart 14.) As demand

Kuwait forecast summary2014f 2015f

Real GDP % y/y -0.6 3.1- Non-Oil % y/y 4.5 4.5


weakens and non-OPEC supply continues to rise,

we expect OPEC – including Kuwait – to cut output

significantly in 1H 2014 in order to balance the

market and keep prices close to $100 pb. Real

hydrocarbon GDP is seen falling by 4% in 2014

before registering a small rise in 2015.

• Despite continued strength in the consumer

sector, inflation remained low through 2013,

averaging 2.7% in the first 10 months. (Chart

15.) This was in spite of a pick-up in housing

rent pressures, which were more or less offset by

decelerating inflation in the food segment. Inflation

in the remaining segments – sometimes thought

of as ‘core’ – reached just 0.7% y/y in August, its

lowest for years. Some upward drift in inflation is

seen in 2014, as core pressures rise and food price

inflation stabilizes. But inflation should remain in the

3-4% range over the next two years. (Chart 16.)

• The budget is set to record another huge

surplus in FY2013/14, at 22% of GDP. (Chart

17.) This is slightly down from the 25% of GDP

recorded a year earlier. Oil revenues are expected

to dip slightly on softer oil prices while spending

posts a small rise of 4%. Comments from senior

government ministers in late 2013 about the need

to control growth in subsidy payments suggest

that the government will maintain tighter control of

spending in future, compared to the 15% average

annual increase seen over the past decade. So long

as oil prices remain high, this will limit the decline

in the surplus going forward.

• A similar moderation is likely in Kuwait’s

giant current account surplus, due to a combination

of peaking oil receipts and rising imports. But the

surplus will remain above 30% of GDP. (Chart 18.)


7

Source: Official sources / NBK estimates

Kuwait: macro forecast charts

Chart 13. Real GDP Chart 14. Crude oil output

Chart 15. Consumer price inflation by sector Chart 16. Consumer price inflation

Chart 17. Budget balance Chart 18. Current account balance

(% y/y, year average)

(% y/y) (mn barrels per day)

-15

-10

-5

0

5

10

15

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25

-15

-10

-5

0

5

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25

2002 2004 2006 2008 2010 2012 2014f

Oil Non-oil Total

NBK f'cast

2.12.22.32.42.52.62.72.82.93.03.1

2.12.22.32.42.52.62.72.82.93.03.1


012345678910

0123456789

10

Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

Food (18%)

Housing (27%)

Total CPI

0

1

2

3

4

5

6

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0

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2002 2004 2006 2008 2010 2012 2014f

NBK f'cast

0

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2002 2004 2006 2008 2010 2012 2014f

NBK f'cast

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2002 2004 2006 2008 2010 2012 2014f

$ billions

% of GDP

NBK f'cast

(% y/y)

(% GDP, fiscal year)


8

Kuwait: money and financeSigns of credit growth shifting gear; stock market holds on to gains made in 1H 2013…

• Improvements in the broader economic

climate have been reflected in financial conditions.

Deposit and credit growth have generally

accelerated, spurred on by low interest rates,

comfortable liquidity conditions, a buoyant

consumer sector and better business confidence.

Meanwhile, corporate profitability has improved

and the stock market has held on to the advances

made in 1H 2013. We expect further steady

improvements in the financial climate in 2014,

though acknowledge the uncertainties for global

markets of the US Fed easing the pace of monetary

stimulus early in the year.

• Annual growth in broad money (M2)

averaged 10% in the first 10 months of 2013, up

from a 7% average in 2012 and consistent with

decent growth in the broader economy. (Chart 19.)

Growth in the more volatile short-term measure,

M1, has been much stronger – helped by the low

interest rate environment. Private sector deposit

growth has provided further evidence of improved

economic activity, accelerating to 10% y/y in the

first 10 months of 2013, up from 6% through

2012. Overall liquidity conditions would have been

stronger still were it not for government deposits,

which have dipped following a surge in 2012.

• Growth in private credit accelerated to 8%

in October 2013, its fastest for more than four

years. (Chart 20.) The improvement has been driven

by a pick-up in lending to industry, particularly the

real estate and oil sectors. Although this may

partly reflect some one-off factors, we see it as

supportive of our view of a pick-up in business

sentiment more generally. Moreover, stronger

lending growth has come despite a slight easing in

consumer sector borrowing. The latter, although

still very strong at 17% y/y, may soon be affected

by implementation of the Family Fund law, which

could see around KD 0.4 billion in household debt

– 4% of the total – acquired by the government.

• Growth in commercial bank assets has also

improved slightly, reaching 10% y/y in October,

supported by stronger credit conditions. (Chart 21.)

Private sector credit accounts for the majority of

all bank assets. The rise in foreign assets – which

had been a driving force behind bank balance

sheet expansion since 2011 – abated in 1H 2013.

This could suggest that banks were utilizing funds

overseas in the absence of better domestic lending

opportunities, which are now materializing.

• The Central Bank of Kuwait (CBK) has

maintained its main lending rate, the discount rate,

at 2.0% since October 2012. (Chart 22.) The

benchmark deposit rate – the one-week repo rate –

has remained at 1.5%. Banks’ weighted commercial

lending rates drifted 20 bps lower to 4.6% through

2013 as the impact of the CBK discount rate cut

filtered through the system. Meanwhile, the Kuwaiti

dinar remained more or less unchanged against the

US dollar in 2013, and by extension fell by around

3% against the strengthening euro. (Chart 23.)

• The 7-month rally in the Kuwait stock

market subsided in mid-2013, but equities managed

to hold onto most of their earlier gains. Despite the

leveling off, the main price-weighted KSE index was

still up by 31% in the year to mid-December, while

the value-weighted index was up a more modest

10%. (Chart 24.) The quieter domestic political

environment, optimism on project implementation

and the Syrian crisis were among the key factors

affecting the market during 2013.


9


N.B. Real exchange rate uses Jan 2008 as base period. Calculation based upon Kwt/US/Euro area CPIs.

(% y/y)

Kuwait: money and finance charts

Chart 19. Money supply Chart 20. Total bank credit

Chart 21. Commercial bank assets Chart 22. Policy interest rates

Chart 23. Exchange rate Chart 24. Stock market indices

(%)

(% y/y)

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M1

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Bank assets (KD bn, LHS)Bank assets (% y/y, RHS)

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US Fed funds targetKD discountKD repo

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KD/USD KD/USD (real)KD/Euro KD/Euro (real)

KD stronger

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Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

KSE General Index (LHS)Value Weighted Index (RHS)


10

Oman: macro and financeNon-oil economy to drive growth going forward; fiscal situation remains vulnerable…

• Oman’s economy should maintain

considerable momentum as the government

sustains its investment expenditures and oil prices

remain favorable. Some $50 billion of investments

– split between the public and private sectors – are

planned over the coming years, of which $33 billion

will be targeted towards the non-hydrocarbon

sector. The real economy is expected to expand

by 4.5% in 2013, slowing to 3.5% in 2014 due to

softer growth in the hydrocarbon sector. Growth

could pick up again in 2015, supported by the

aforementioned investment spending. (Chart 25.)

• Consumer price inflation continued to

decelerate through 2013, owing largely to declining

global food prices. Inflation stood at just 0.3% y/y

in October, its lowest rate in recent years, and

is expected to have averaged 1.5% in 2013 as

a whole. Strong consumer demand coupled with

decreased power subsidies for some industries may

lead to a modest pick-up in price pressures. Inflation

is expected to average 2.5% over the next two

years. (Chart 26.)

• After a rapid build-up in recent years, the

Omani government is expected to contain future

growth in current spending with an eye on fiscal

sustainability. We project spending growth of

around 5% per year in 2014 and 2015. Even so,

the budget could move from a 2% surplus in 2013

to a 2% deficit by 2015, as oil revenues dip and

investment expenditures rise in order to fulfill the

Oman forecast summary2014f 2015f


Inflation (yr avg) % 2.0 3.0Budget balance % GDP 0.0 -2.0

Sultanate’s diversification ambitions. (Chart 27.)

Any deficit can be comfortably financed through

reserves or sovereign debt financing. But further

measures to reform spending and boost non-oil

revenues are likely in the medium-term.

• Monetary growth eased to its slowest

pace for three years in September, at 4.8% y/y

and 4.6% y/y for M1 and M2, respectively. Credit

growth, on the other hand, remained weaker than

in 2012, but has begun to recover, rising to 9.3%

y/y in September. (Chart 28.) Given the solid

economic backdrop, credit growth is expected to

remain healthy going forward. New regulations

by the Central Bank of Oman reduced the share

of personal loans in banks’ portfolios in favor of

mortgages, as it moved to limit exposure to risky

loans. The interest rate cap on new loans has also

been decreased to 6% in order to further support

growth. Meanwhile, policy rates remain at record

lows, with the last change in the benchmark repo

rate a 1% cut in early 2012. (Chart 29.)

• Decent economic growth and relative

domestic stability helped the Muscat Securities

Market recover from a disappointing 2012. The

main price index rose 17% in the year to mid-

December, edging close to a post-financial crisis

high. (Chart 30.) But the gains, although decent,

still lagged some other GCC markets, which were

up 13-86%. The industrial segment continued to

lead the way, up 38% by of the end of November.

The sector may continue to drive the market’s

resurgence as newly tendered projects begin to be

executed.


11


N.B. Headline figure is not forecast, since it includes discretionary government transfers to the state reserve funds

Oman: macro and finance charts

Chart 25. Real GDP Chart 26. Consumer price inflation

Chart 27. Budget balance Chart 28. Bank credit to private sector

Chart 29. Policy interest rates Chart 30. Stock market indices (%)

(% GDP) (% y/y)

(% y/y) (% y/y, year average)

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-5

0

5

10

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20

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0

5

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2002 2004 2006 2008 2010 2012 2014f

Oil Non-oil Total NBK f'cast

-2

0

2

4

6

8

10

12

14

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2

4

6

8

10

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14

2002 2004 2006 2008 2010 2012 2014f

NBK f'cast

-3

0

3

6

9

12

15

18

-3

0

3

6

9

12

15

18

2002 2004 2006 2008 2010 2012 2014f

Headline figureBefore transfers to state reserve funds

NBK f'cast

N/A

N/A

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US Fed funds targetOman repoOman CDs

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Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

(MSM 30 index)


12

Qatar: macro forecastsGovernment spending to drive non-hydrocarbon and private sector activity; rising rents causing moderate inflation; fiscal space to narrow…

• Economic growth has been slowing since

maximum LNG production capacity was reached in

2011; a moratorium on further projects in Qatar’s

giant North Field and conservative management

of Qatar’s aging oil fields have effectively capped

the country’s hydrocarbon output. The focus has

now shifted to the non-hydrocarbon sector, with

the government spearheading activities through its

ambitious $225 billion infrastructure development

plan. As public investment increases, private sector

growth is also likely to be stimulated through

positive spill-over effects.

• Real GDP growth is forecast to continue to

slow, to 5.8% y/y in 2014, before increasing by

6.6% y/y in 2015 as activity in the manufacturing,

financial services, tourism and construction

sectors accelerates. (Chart 31.) In addition, the

full commissioning of the Barzan gas production

facility in 2015 will bring additional volumes

of hydrocarbon products such as condensates

and natural gas liquids to the market, boosting

hydrocarbon GDP. Crude oil production, however,

is not expected to increase substantially above its

current band of 0.72-0.74 mbpd. (Chart 32.)

• Rising rental prices and costs in the

entertainment, recreation and culture category were

the dominant drivers of inflation in Qatar in 2013.

Food price inflation, meanwhile, was relatively

restrained compared to previous years. (Chart 33.)

Over the next two years, burgeoning consumer

Qatar forecast summary2014f 2015f



demand, underpinned by population growth of

above 7% y/y, should push headline inflation to 4%

y/y and 4.5% y/y in 2014 and 2015, respectively.

(Chart 34.) Moreover, tight conditions in the

residential market will exert upward pressure on

rents in the medium-term. Rent carries the most

weight in the CPI basket.

• Qatar’s budget and current account

surpluses are forecast to narrow over the next

two years, to 3% and 23% of GDP, respectively.

(Charts 35 and 36.) On the fiscal side, expenditure

growth will outpace revenue growth due to the

impact of lower projected oil prices on hydrocarbon

revenues. Note that exports of manufactured

products, receipts from corporate taxes and

income from investments are, however, expected

to rise and boost the state coffers during the

forecast period. Capital spending is also expected

to increase substantially in order to catch up

with the development plan’s ambitious spending

targets.

• Qatar faces challenges both unique and

common to regional oil exporters as a whole. In the

former, the authorities will need to be cognisant of

inflationary impulses associated with double-digit

growth (non-hydrocarbon sector), mounting public

debt (35% of GDP) – largely due to the issuance of

bonds – and capacity constraints that have delayed

the rollout of the development plan. Sensitivity to

oil and gas prices remains a key issue among GCC

hydrocarbon exporters, especially in the context

of fiscal sustainability. The Qatari authorities are,

however, committed to balance the budget entirely

through non-oil revenues by 2020.


13


Qatar: macro forecast charts



Chart 35. Budget balance Chart 36. Current account balance



05101520253035404550

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101520253035404550

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HydrocarbonNon-hydrocarbonTotal

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0.700.720.740.760.780.800.820.840.860.880.90

0.700.720.740.760.780.800.820.840.860.880.90


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14

Qatar: money and financeQCB focusing on financial stability and liquidity management; government projects drive credit growth; MSCI upgrade to stimulate portfolio inflows…

• The Qatar Central Bank (QCB) is committed

to preserving financial stability and managing

liquidity and inflation through a mix of macro-

prudential and monetary measures. The authorities

have launched a strategic plan for the regulation of

the financial sector, extended their QR4 billion a

month program of domestic debt issuance to bonds

and sukuk with longer maturities and established

the QIBOR in 2012 to develop a more liquid and

transparent interbank market.

• The broad money supply (M2) continued

to expand in 2013, albeit at a slower rate than in

2012, increasing by 15% y/y in October. (Chart

37.) Foreign currency deposits continue to play

an important part in the broader monetary picture.

Among the drivers, net foreign assets of the

banking system increased significantly in 2013,

largely on account of overseas investments and

credit by commercial banks as well as an increase

in the QCB’s holdings with foreign banks.

• Credit growth was a robust 18% y/y as of

October 2013, with lending to the public sector

outpacing the private sector (Chart 38.) Within the

private sector, while lending to the real estate and

construction sectors slowed in 2013, credit to the

consumer sector picked up. Overall credit growth

should accelerate further as more development

projects are tendered.

• Commercial banks’ assets topped QR900

billion in October, increasing by 14% y/y. (Chart

39.) While credit growth has been the primary

driver of the increase in banks’ assets, domestic

investments have also played an important part;

banks have been increasingly active in the bond

markets, purchasing government-issued domestic

debt.

• Given that deposit growth had outpaced

credit growth as of October, helped in large part

by government deposits in the banking system,

concerns over domestic liquidity have receded.

The sector’s loan-to-deposit ratio fell from 111%

at the end of 2012 to 106% by October 2013.

Average interbank rates for the year were also down

compared to 2012, by 10 bps in the case of the

1-month facility.

• Qatar’s key lending and deposit rates are

unlikely to change from their current levels of

4.5% and 0.75%, respectively, given the need for

broad alignment with the US Federal Funds rate

in the context of the fixed exchange rate regime.

The Fed Funds rate is currently at a historic low

of 0.25%. (Chart 40.) However, over the medium-

term, inflation associated with surging credit and

consumer demand as well as continued monetary

expansion, may need to be addressed by the

authorities.

• Recently, the Qatari riyal, in tandem with

the US dollar, has been depreciating against the

euro on both a nominal and real basis. If sustained,

domestic prices of imports from the eurozone may

rise, adding to inflationary pressures. (Chart 41.)

• The Qatar Exchange (QE) Index performed

strongly in 2013, increasing by 24% YTD as of

November. (Chart 42.) Investor sentiment was also

given a boost by the inclusion of Qatar in the MSCI

and S&P Dow Jones Emerging Markets Indices

starting in May and September 2014, respectively.

Markets anticipate greater portfolio inflows. This

has been one factor in lifting Qatari business

optimism to its highest level in almost three years.


15


N.B. Real exchange rate uses Jan 2008 as base period. Calculation based upon Qatar/US/Euro area CPIs.

Qatar: money and finance charts

Chart 37. Money supply Chart 38. Bank credit


Chart 41. Exchange rate Chart 42. Stock market

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16

Saudi Arabia: macro forecastsNon-oil growth moderates on weaker private-sector activity; budget surplus to shrink despite slowing pace of government spending…

• Economic growth in Saudi Arabia slowed

in 2013 on the back of a small contraction in oil

GDP and a moderation in non-oil sector growth.

Recent labor market disruptions are believed to

have impacted activity in the latter. Over the

medium-term, growth should remain relatively solid,

supported by high oil prices and implementation of

large government projects. Nevertheless, an easing

in private sector activity and a moderation in the

pace of overall government spending – as well as

heavy downward revisions to official data – have

seen us lower our growth forecasts; we now expect

non-oil growth of 4-5% in both 2014 and 2015,

compared to up to 6% before. (Chart 43.)

• Recent data point to softening in the pace

of non-oil private sector activity. The Purchasing

Managers’ Index trended lower through 2013, credit

growth has eased slightly (though remains strong),

and ATM and point-of-sale figures are off their highs.

This may be partly linked to recent labor market

initiatives and Saudization efforts which have led

to a crackdown on illegal foreign workers. The full

impact of these policies on private sector activity

has yet to manifest, but there are downside risks

in the near-term: increased labor costs, disruptions

to labor-intensive sectors (especially construction

and retail), and weaker domestic consumption

levels. Government infrastructure projects and rapid

population growth should nevertheless continue to

provide underlying support for steady growth in

non-oil GDP.

KSA forecast summary2014f 2015f



• Saudi Arabian oil production rebounded by

more than 1 mbpd in the 10 months to September

2013 to a peak of 10.2 mbpd, partly to compensate

for output disruptions in Libya and Iraq. (Chart 44.)

Since then, output has once again fallen back. As

demand weakens and non-OPEC supply continues

to rise, Saudi Arabia – given its unofficial role as

OPEC’s swing producer – is seen making more

significant cuts in 1H 2014 in order to keep prices

close to $100 pb. We expect real oil GDP to fall in

2014 by some 2%, before stabilizing in 2015.

• Inflation edged higher in 2013, averaging

3.6% in the first 10 months. (Chart 45.) This was

driven by higher inflation in the food and housing

segments, both of which have eased of late. While

food price inflation is expected to remain contained,

pressures from residential rents could rise amid a

shortage in affordable housing – a challenge that

the government is trying to address through a

house building program and new mortgage law.

However, steady economic growth and softer food

prices should keep inflation at a moderate rate of

around 3-4% over the forecast period. (Chart 46.)

• The budget is estimated to have registered

a lower, but still large, surplus of 11% of GDP

in 2013. (Chart 47.) As oil prices slip further

and revenues decline, the surplus is projected to

continue to shrink to around 6-7% of GDP in 2014

and 2015 – despite moderating expenditure growth.

Further fiscal consolidation could conceivably affect

capital spending allocations. Nevertheless, a large

number of infrastructure projects – including major

transportation and power projects – will be financed

off-budget, thereby mitigating the impact of any

curb in spending.


17


Saudi Arabia: macro forecast charts



Chart 47. Budget balance Chart 48. Current account balance (% GDP)



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Oil Non-oil TotalNBK

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18

Saudi Arabia: money and financePrivate sector credit growth eases, but remains strong; stock market hits post-financial crisis peak…

• Some financial indicators have shown a

slight softening in market conditions: both credit

and monetary growth have slowed from their

peaks. But overall, the Saudi financial sector still

looks in robust shape: banks are profitable and

well-capitalized, lending growth is still strong and

the stock market staged a significant rally in 2013.

Solid economic growth and implementation of large

government projects should provide continued

support for the financial sector in 2014. Downside

risks stem from a prolonging of the recent softening

in private sector activity and possible instability in

global markets.

• Growth in liquidity has eased somewhat

in recent months. Annual growth in the broad

money supply (M3) decelerated from a 2-year high

of 16% in May 2013 to 10% in October. (Chart

49.) Growth in the short-term measure M1 also

slowed from 19% in mid-2013 to an 11-month low

of 15%, as a result of weaker growth in demand

deposits – which make up more than 60% of total

banking system deposits.

• Growth in private credit eased back slightly

in 2H 2013, though is still very firm. Lending

growth edged down from its 4-year high of 17%

in May 2013 to 13% in October. (Chart 50.) The

latest softening could be partly explained by the

recent slowdown in private sector activity. But the

slowdown may also be reducing credit growth to

healthier, more sustainable levels.

• While corporate loans have traditionally

accounted for the bulk of lending, banks have

increasingly focused their attention on the smaller

retail lending segment. The latter has offered

higher margins in a low interest-rate environment.

In 2Q13, consumer loans grew by some 22% y/y

compared with 13% for corporate loans. The new

mortgage law should also help lift demand for home

loans, although its impact will likely be gradual.

• The continuing flow of major infrastructure

projects is expected to provide Saudi banks with

new lending opportunities going forward. Given the

low interest rate environment and reliance on short-

term deposit-based funding, Saudi banks have

increasingly tapped the Islamic bond market as an

alternative source of funds. This should support

loan growth, and provide longer-term funding for

large-scale projects and mortgages.

• Saudi banks’ balance sheets have continued

to make significant gains. Commercial bank assets

increased by 11% y/y in the first ten months

of 2013, driven by the continued rise in private

sector claims. (Chart 51.) However, purchases of

government securities have recently been growing

at a much faster pace, and now account for 12% of

all bank assets, up from 10% at the end of 2012.

• SAMA has maintained its key policy rates –

the repo and reverse repo rates – at 2% and 0.25%

respectively. (Chart 52.) The three-month interbank

rate (SAIBOR) was more or less unchanged through

2013, at 1%. This could suggest that – despite

slower monetary growth – liquidity levels in the

system remain comfortable.

• The Saudi stock market made significant

gains in 2013, with the index reaching its highest

level since the financial crisis. (Chart 54.) The

market was up 22% in the eleven months to

November, led by strong growth in the tourism,

retail, real estate and transportation sectors.


19


N.B. Real exchange rate uses Jan 2008 as base period. Calculation based upon KSA/US/Euro area CPIs.

Saudi Arabia: money and finance charts

Chart 49. Money supply Chart 50. Bank credit to the private sector


Chart 53. Exchange rate Chart 54. Stock market indices(All share index)

(%)

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20

UAE: macro forecastsNon-oil growth strengthens as confidence returns… Inflation edges higher on rising rents…

• UAE real non-oil GDP is expected to grow

by 4% in 2013 and 5% in 2014 and 2015. (Chart

55.) A wide range of indicators show that economic

activity has gained momentum. The Purchasing

Managers’ Index has risen to an all-time high,

activity and prices in the real estate sector have

rebounded, mothballed projects have been revived

and equity markets have seen a major rally. Indeed,

while economic growth remains well below the

annual average of 9% seen between 2001 and

2008, the buoyancy of asset markets has led to

concerns that optimism has gone too far, and that

preventative policy measures may be needed to

prevent another cycle of boom and bust.

• Fundamentally, the combination of

government-led infrastructure investment in Abu

Dhabi and Dubai’s ever-building status as a trading

hub remain supportive of the growth outlook.

Dubai’s recent win to host the Expo 2020 will give

the trade, tourism and business services sectors a

further boost: some estimates suggest it will add

0.5% per year to growth in the run-up to the event.

Aside from over-exuberance and a global downturn

to which Dubai in particular would be exposed, the

main economic risk concerns debt restructuring and

repayment issues at government related entities.

However, strong growth and rising asset prices

boost the prospects that debt can be serviced

through revenues and/or asset sales.

• UAE crude oil output – having risen strongly

over the past 2 years to above 2.8 mbpd – is

UAE forecast summary2014f 2015f



expected to fall in early 2014 as OPEC’s leadership

looks to maintain oil prices at around $100 pb in

light of moderate demand and increased supplies

elsewhere. (Chart 56.) However, some recovery in

output could be seen later on in the year, limiting

the average decline for 2014 overall. Overall real

GDP is expected to grow by 2.4% in 2014 and

3.7% in 2015.

• Inflation has picked-up from extremely low

2012 levels, but remained modest at 1.3% y/y

in October 2013. (Chart 57.) The recovery in the

real estate sector has been evident in the housing

component, where y/y inflation turned positive in

mid-2013 after falling for the previous three years.

However, given the low starting point for inflation,

lower global food prices, and modest inflation

elsewhere in the region, overall price pressures

should remain contained. We expect an average

inflation rate of 1% in 2013, rising to 2% 2014 and

around 3% in 2015. (Chart 58.)

• Consolidated government spending is

expected to have fallen in 2013, led by a reduction

in government bailout spending. Despite the billions

of dollars’ worth of projects that the Abu Dhabi

government has proposed to spend on industry,

tourism and infrastructure between 2013 and

2017, aggregate government spending may grow at

a moderate pace in the short-term, especially as the

Dubai government pays off a bulk of its maturing

debt. This will help the budget remain in surplus at

around 4-5% of GDP (including investment income

and oil profits), despite a dip in oil revenues. (Chart

59.) Meanwhile, the current account surplus is

expected to remain buoyant on strong growth in

non-oil exports, which are now worth nearly double

hydrocarbon exports. (Chart 60.)


21


UAE: macro forecast charts






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22

UAE: money and financeFinancial sector recovery continues, though debt burden remains large… Equity markets rally on improved confidence levels…

• Financial conditions continue to gradually

recover, commensurate with the improvement in the

broader economy. Corporate debt restructuring has

progressed, liquidity conditions have improved, and

asset prices have risen, benefiting both confidence

and bank balance sheets. However, the recovery

is far from complete. Credit growth – although

showing some signs of recovery of late – remains

modest, non-performing loans remain high and –

despite the restructurings – the debt overhang from

the financial crisis remains large, and could drag on

growth for some time. Meanwhile, concerns over

the strong rebound in real estate prices have led to

calls for new regulations to prevent future financial

sector instability.

• Annual growth in the broad M2 money

supply measure climbed to 13% y/y in September,

after being subdued for much of 2012. (Chart 61.)

The narrower money supply measure, M1, is also

on the rise, logging in a growth rate of 22% y/y in

September. The acceleration in monetary growth

is one indication of an improvement in liquidity

conditions in the system.

• Growth in bank credit has shown some signs

of improvement, rising to 7% y/y in September.

(Chart 62.) This was its fastest rate of the post-

financial crisis period. Bank provisions remain on

the rise, but at a declining pace: overall provisions

rose by 14% y/y in September, down from

19% at end-2012. The financial and economic

outlook will be affected by whether or not the

debt of ‘Dubai Inc.’ and the Dubai government

can be successfully serviced or repaid. Their

combined debt is estimated to stand at $131

billion (according to the IMF), with $30 billion due

to mature in 2014.

• The main policy interest rate (the repo rate)

has remained unchanged at 1% since the start

of 2009. (Chart 64.) Commercial interest rates,

however, have generally eased, reflecting improved

liquidity conditions. The three-month interbank rate,

for example, fell 0.5% points to 0.8% in the year

to mid-December, falling below the equivalent rate

in Saudi Arabia for the first time since the financial

crisis. CDS spreads on 5-year Dubai government

debt looked set to end 2013 at around 225 points,

around one-third lower than their average in 2012.

• While the recent recovery in real estate

prices will benefit lenders, the authorities are

striving to strengthen lending regulations to

mitigate the effects of or prevent future crises.

The measures that have already been announced

include a tightening of lending limits on large

exposures, new liquidity requirements and caps on

mortgage lending. However, they have yet to come

into effect. So far, only the proposed increase in

real estate transaction fees was implemented, last

October.

• UAE equities enjoyed a stellar 2013, once

again outperforming their GCC peers. (Chart 66.)

The main Abu Dhabi index rose by 52% between

January and mid-December, while the Dubai index

surged an even more impressive 91%. The rally

was driven by an improvement in the corporate

debt environment, signs of a stronger real estate

market and the announcement of the UAE’s upgrade

to ‘emerging’ status by MSCI. Dubai in particular

managed to sustain its run in 2H 2013, benefitting

from its successful bid to host the Expo 2020.


23


N.B. Real exchange rate uses Jan 2008 as base period. Calculation based upon UAE/US/Euro area CPIs. Not available before 2008.

UAE: money and finance charts

Chart 61. Money supply Chart 62. Bank lending



(%)

(% y/y) (% y/y)

N.B. Claims data exclude official entities & non-bank financial institutions. Private sector accounts for around 75% of all domestic claims.

N.B. UAE repo rate was established in November 2007.

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24

Egypt: macro forecastsSlow recovery expected later in 2014, as risks moderate…

• Egypt’s economic recovery came to a halt

in 2013 following the political impasse reached

months into the presidency of Muhammad Mursi

and his removal from office in July this year. The

economy has yet to show signs of a return to

accelerating growth, though the political outlook

has improved. We expect this fiscal year ending

June 2014 (FY13/14) to show real growth steady

at around 2.2%, with the pace accelerating

somewhat next year to 3%. (Chart 67.)

• The tourism sector was the hardest hit as

visitors stayed away. The number of tourist nights

during the first eight months of 2013 was down

by 5.5% compared to the previous year. As a

result, the restaurants & hotels and transportation

sectors have been negatively affected. Other

sectors also saw slower growth, including oil &

gas, manufacturing and construction. We expect

all these sectors to improve in the coming months

as political risk diminishes and investor sentiment

improves.

• The country has seen its external position

stabilize in part as new capital controls were

imposed at the start of 2013 and the currency was

allowed to depreciate. Pressures eased further with

the GCC pledging substantial financial support in the

form of deposits and grants (at least $12 billion),

which have shored up Egypt’s official reserves.

The current account deficit also improved notably

in FY12/13, narrowing nearly by half to 2.1% of

GDP. (Chart 72.) While reserves remain relatively

Egypt forecast summary (fiscal year)2014f 2015f

Real GDP % y/y 3.0 4.0Inflation (yr avg) % 9.0 9.0Budget balance % GDP -10.1 -9.5

low at an estimated 3.7 months of imports, they

should improve further as the political transition is

completed and investors return.

• The fiscal position remains tenuous with the

fiscal deficit rising to 13.6% of GDP in FY 12/13.

With the government focused on security and the

political transition, addressing ballooning subsidies

remains a challenge. To be sure, the government

has taken some steps in recent months to bring

fuel subsidies under control, including introducing

a “smart card” to better target subsidies to lower

income citizens. Still, cuts in key subsidies have

been avoided. As a result, the cost of subsidies

alone rose to 11% of GDP. We expect the

government to make some progress on the fiscal

deficit in the coming months, which should help

reduce the deficit to 12.5% of GDP in FY13/14

and further to 10% in FY14/15. (Chart 71.) We

do not expect the government to face difficulties

funding the deficit for the time being, especially

with the massive GCC support and ample funding

from banks. The public debt reached 102% of GDP

in June 2013.

• Inflation accelerated substantially in 2013,

reaching 13% y/y in November, from a low of 4.3%

in December 2012. (Chart 69.) While the pound’s

depreciation was responsible for much of that rise

in the early part of 2013, it has recently picked up

again for other reasons. Part of the rise was linked

to strong seasonal increases in food prices. In

addition, recent months have seen large increases

in the price of “regulated items” including butane

cylinders (cooking fuel) and water prices. The latter

saw the first official price adjustment in nearly four

years.


25


Egypt: macro forecast charts

Chart 67. Real GDP Chart 68. Production index




(% y/y) (% y/y)

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Core Headline

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2

4

6

8

10

12

14

16

18

0

2

4

6

8

10

12

14

16

18

FY02/03 FY05/06 FY08/09 FY11/12 FY14/15

NBK f'cast

-16

-14

-12

-10

-8

-6

-4

-2

0

-16

-14

-12

-10

-8

-6

-4

-2

0

FY04/05 FY07/08 FY10/11 FY13/14

NBK f'cast

-5-4-3-2-1012345

-5-4-3-2-1012345

FY02/03 FY05/06 FY08/09 FY11/12

(% GDP)


26

Egypt: money and financeStock market recovers on improved outlook; GCC financial support helps stabilize pound…

• While political instability and slow growth

have taken their toll, financial conditions in Egypt

remain in check. New capital controls and the

decision to depreciate the pound have helped reduce

the pressure on the currency. The pound has

now stabilized, especially following the substantial

financial support pledged by GCC allies. (Chart 77.)

This has allowed the Central Bank of Egypt (CBE) to

reduce policy rates in an effort to ease pressure on

the fiscal deficit and give authorities the space to

raise rates in the event of renewed pressure.

• Money supply growth picked up considerably

after the CBE restricted the availability of foreign

currency at the start of 2013. M2 growth

accelerated to 19% y/y through October 2013

from 12% in December 2012, to reach its most

rapid pace since 2008. (Chart 73.)

• The boost in liquidity has helped alleviate

the funding pressures faced by the government,

with lending to the public sector by local banks

rising to 51% of system assets. The ratio doubled

from three years ago. As a result, the interest rate

on domestic government debt has eased to its

lowest level since Mubarak’s ouster. The 3-month

treasury bill rate fell to 11.4%, reflecting the

abundance of domestic funding. (Chart 76.)

• Credit to the private sector, meanwhile, has

suffered in tandem with the slowdown in economic

activity. Growth in lending to the private sector

was only just beginning to recover in early 2013

when it slowed once again as a result of political

uncertainty. Bank claims on the corporate sector

grew by only 7.4% y/y in October. With inflation in

the double digits, this amounts to a real growth rate

of -3%. Credit growth had picked up in the spring,

when the annualized 2-month moving average rate

of growth reached 16%. It has since slowed to a

negative 3%. (Chart 74.)

• Despite the uncertainty, the Egyptian

banking system remains robust. While the level

of nonperforming loans (NPLs) at Egyptian banks

remains elevated by international standards for

historic reasons, they have not increased since

2011. NPLs to gross loans were 9.5% in June

2013 and provisions are ample. While capitalization

has come off somewhat, the capital adequacy

ratio remains healthy at 13.4%. Meanwhile, the

increased exposure of banks to Egyptian sovereign

debt is a growing concern for banks.

• Egypt’s stock market rallied since June,

reflecting improved general sentiment felt by

investors and the feeling that the current political

transition is more likely to produce an inclusive and

more business-friendly government. The EGX30

rose by 43% between late June and mid-December

2013. However, Egypt’s market has underperformed

other regional markets in 2013, and it remains 10%

below levels pre-dating the removal of Mubarak in

early 2011. (Chart 78.)

• Still, investors remain wary of Egypt’s

elevated risks. This is particularly apparent in

the country’s credit default swap (CDS), which

continued to trade at elevated levels. At 667 basis

points in November 2013, the rate remained well

above the 393 bps level registered a year earlier.

Egypt’s 2020 USD bond issue also reflected the

heightened risk, yielding 7.4% in November 2013,

compared to 5.3% a year before.


27


Egypt: money and finance charts

Chart 73. Money supply Chart 74. Bank lending



(%)

(% y/y) (% y/y)

0

5

10

15

20

25

30

35

0

5

10

15

20

25

30

35


M1 M2

-5

0

5

10

15

20

25

30

35

-5

0

5

10

15

20

25

30

35


HouseholdCorporateTotal

-2

0

2

4

6

8

10

12

14

16

18

1000

1100

1200

1300

1400

1500

1600

1700

Jun-09 Jun-10 Jun-11 Jun-12 Jun-13

EGP bn (LHS)

% y/y (RHS)

0

2

4

6

8

10

12

14

16

18

0

2

4

6

8

10

12

14

16

18


CBE discount rate 3-month t-bill

5.0

5.5

6.0

6.5

7.0

7.540

42

44

46

48

50

52

54

56

58


Nominal Effective Exchange Rate (LHS)

EGP/USD (RHS, inverted)

0

2000

4000

6000

8000

10000

12000

14000

0

2000

4000

6000

8000

10000

12000

14000


EGX30 index


28

Regional macroeconomic data and forecasts

GCC Unit 2009 2010 2011 2012 2013 2014f 2015f

Bahrain

Nominal GDP $ bn 22.9 25.6 29.0 30.3 32.1 33.1 34.7Real GDP %y/y 2.5 4.3 2.1 3.4 3.9 2.8 2.6- Hydrocarbon sector %y/y -0.4 0.1 3.6 -8.5 8.0 2.0 1.0- Non-hydrocarbon sector %y/y 3.4 5.5 1.7 6.7 3.0 3.0 3.0Budget balance % GDP -5.2 -4.8 -0.3 -2.0 -3.0 -5.0 -5.0Current account balance % GDP 2.4 3.0 11.2 7.3 6.0 4.0 4.0Consumer prices % y/y 2.8 2.0 -0.4 2.8 3.2 3.0 3.0

Kuwait

Nominal GDP $ bn 106.0 119.9 160.6 183.4 179.0 174.2 181.9Real GDP %y/y -7.1 -2.4 10.2 8.3 0.3 -0.6 3.1- Hydrocarbon sector %y/y -12.8 0.5 14.9 11.8 -2.0 -4.0 2.0- Non-hydrocarbon sector %y/y -3.2 -4.1 4.0 3.1 4.0 4.5 4.5Budget balance (financial year) % GDP 21.1 15.4 29.8 24.8 22.0 20.0 19.0Current account balance % GDP 26.8 31.0 41.9 43.3 40.0 35.0 33.0Consumer prices % y/y 4.6 4.6 4.8 3.3 2.6 3.0 3.5

Oman

Nominal GDP $ bn 48.2 58.8 69.9 78.0 79.8 81.3 83.4Real GDP %y/y 3.9 5.0 4.0 6.0 4.4 3.6 4.2- Hydrocarbon sector %y/y 8.1 5.8 0.0 4.3 4.0 2.0 2.0- Non-hydrocarbon sector %y/y 2.3 4.6 5.7 6.6 5.0 4.0 5.0Budget balance % GDP 0.6 3.6 7.3 0.5 2.0 0.0 -2.0Current account balance % GDP -1.0 8.6 12.8 10.4 9.9 8.0 6.0Consumer prices % y/y 3.5 3.3 4.0 2.9 1.3 2.0 3.0

Qatar

Nominal GDP $ bn 97.8 127.4 171.4 192.2 207.6 215.6 229.1Real GDP %y/y 12.0 16.7 13.0 6.2 6.1 5.8 6.6- Hydrocarbon sector %y/y 4.5 28.8 15.8 1.7 0.8 0.4 0.6

- Non-hydrocarbon sector %y/y 17.6 8.6 10.7 10.0 10.2 9.7 10.5

Budget balance (financial year) % GDP 15.2 2.9 7.7 11.8 9.1 5.1 2.9Current account balance % GDP 6.1 22.8 30.4 32.4 29.3 26.4 22.9Consumer prices % y/y -4.9 -2.4 1.9 1.9 3.2 4.0 4.5

Saudi Arabia

Nominal GDP $ bn 429.1 526.8 669.5 711.0 727.7 728.1 765.6Real GDP %y/y 1.8 7.4 8.6 5.1 3.0 3.3 3.7- Hydrocarbon sector %y/y -8.8 0.2 12.4 5.7 -1.0 -2.0 0.0- Non-hydrocarbon sector %y/y 4.9 9.2 7.7 5.0 4.0 4.5 4.5Budget balance % GDP -5.4 4.4 11.6 14.0 11.0 7.0 6.0Current account balance % GDP 4.7 12.5 21.8 21.1 16.0 10.0 9.0Consumer prices % y/y 4.1 3.8 3.7 2.9 3.5 3.5 4.0

UAE

Nominal GDP $ bn 254.8 287.4 348.6 383.8 387.6 399.2 403.9Real GDP %y/y -4.8 1.7 3.9 4.4 4.7 2.4 3.7- Hydrocarbon sector %y/y -8.9 3.8 6.6 6.3 5.0 -3.0 1.0- Non-hydrocarbon sector %y/y -2.9 0.7 2.6 3.5 4.0 5.0 5.0Budget balance % GDP -12.9 -1.8 3.2 7.7 6.0 5.0 4.0Current account balance % GDP 3.1 2.5 14.6 17.3 15.0 14.0 13.0Consumer prices % y/y 1.6 0.9 0.8 0.7 1.0 2.0 3.0

MENA

Egypt (financial year)

Nominal GDP $ bn 219.4 236.3 261.3 276.1 288.0 322.9 365.4Real GDP % y/y 5.1 1.8 2.2 2.1 2.2 3.0 4.0Budget balance % GDP -8.2 -10.0 -10.6 -13.6 -12.6 -10.1 -9.5Current account balance % GDP -2.4 -2.0 -2.6 -3.9 -2.1 - -Consumer prices % y/y 11.7 11.1 8.6 6.9 10.8 9.0 9.0

International data (end year unless otherwise stated)

Brent crude oil spot price (yr avg) US $ p/b 61.5 79.5 11.2 111.6 108.9 100.0 100.0CRB commodity price index Index 421.1 520.3 482.0 484.1 457.3 - -Eur/USD 1$ = € 0.698 0.747 0.773 0.758 0.736 - -US Fed Fund Rate % 0.25 0.25 0.25 0.25 0.25 - -World MSCI stock market index Index 1,168 1,280 1,183 1,339 1,603 - -MENA real GDP (IMF, yr avg) %y/y 3.0 5.5 3.9 4.6 2.1 3.8 4.2World real GDP (IMF, yr avg) %y/y -0.4 5.2 3.9 3.2 2.9 3.6 4.0

Source: Thomson Reuters Datasteam, official sources, and NBK Economic Research. Includes some NBK estimates.

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