BRICS UAE, Saudi Expansion Marks Biggest Challenge to the US Dollar in the 21st Century…

BRICS UAE, Saudi Expansion Marks Biggest Challenge to the US Dollar in the 21st Century…

UAE News:

Dubai PMI rose to a 16-month high of 57.7 in December (Novemver: 56.8), supported by the wholesale & retail sector’s strong “upturn in sales” alongside the travel & tourism sector’s “rapid” growth. New order growth was the second-fastest recorded since June 2019 and job creation rose to a 4-month high. Selling prices declined at the fastest pace since June, as firms opted to stay competitive.

Dubai’s ruler approved AED 5.5bn (USD 1.49bn) worth of projects that fall under Dubai Social Agenda 33: this includes the allocation of 3,500 plots of land to be distributed among citizens in Dubai and 2,300 ready-to-move-in houses among others.

Abu Dhabi wealth fund ADQ acquired a 40.5% stake in Egypt’s ICON, with the deal including the acquisition of a stake in seven iconic heritage hotels currently owned by the Egyptian government (through ICON). Financial details were not provided.

UAE tops the list of countries that recorded the highest increase in property prices last year, according to the IMF citing BIS data. The UAE posted a 10.4% increase last year and 14.15% rise since pre-pandemic.

Dubai launched the annual “world’s coolest winter” tourism campaign: during the campaign last year, tourist numbers rose 8% to 1.4mn. These projects will help Dubai achieve its aim of tourism contributing AED 450bn towards GDP by 2031.

MENA News:

The World Bank forecasts growth in the GCC to rise to 3.6% in 2024 and 3.8% next year, in its latest Global Economic Prospects report, thanks to an uptick in oil sector activity. UAE and Saudi Arabia are projected to grow by 3.7% and 4.1% this year while growth in the wider MENA region is estimated at 3.5% in 2024 and 2025.

Ship traffic in Egypt’s Suez Canal declined by 30% (to 544 ships) and dollar revenues down 40% in the period from 1st to 11th January compared to a year ago, disclosed the canal authority head.

The IMF approved a new USD 1.2bn, 4-year loan program to support Jordan’s economic reforms: this replaces the previous program (which was due to expire in March 2024) and allows the country to access an initial disbursement of USD 190mn.

Oman and India free trade talks have seen duty concessions on petrochemicals emerging as a sticking point: polypropylene and polyethylene, key raw materials for plastics, are currently charged an import tax of 7.5% in addition to an 18% integrated goods and services tax in India. Bilateral trade touched USD 12.4bn in 2022-23 (from USD 5.4bn in 2020-21) and Oman is the 3rd largest export market for India in the GCC. The third round of negotiations are underway this week.

Foreign reserves of the Qatar Central Bank grew by 6.9% to QAR 245.928bn at end-2023. Gold reserves rose by QAR 4.781bn to QAR 24.372bn as of end of last year.

The MENA region saw a 33% YoY increase in VC funding to regional startups to USD 2.6bn in 2023, according to MAGNiTT data, while investment deals fell to 477 (2022: 718). Valued at USD 1.38bn, Saudi Arabia secured 52% of the total last year, an increase from the 31% share in 2022 while UAE and Egypt raised USD 691mn and USD 378mn respectively.

Saudi Arabia launched five new “Premium Residency” programs to attract investment and skilled personnel. The categories include special talent, gifted, investor, entrepreneur, and real estate owner; after obtaining residency, the persons can conduct business, own real estate and obtain work permits for holders and family.

SAMA data showed that the total value of loans to micro-, small and medium-sized enterprises (MSMEs) in Saudi Arabia grew by 17.8% YoY to SAR 268.6bn in Q3. Total credit allocated to MSMEs was 8.3% of the total in Q3 vs 7.7% in 2022 and 5.8% in 2018.

Saudi Arabia established a USD 182mn mineral exploration incentive programme as the country expands its mining sector, to “de-risk investments in exploration, securing to enable new commodities, green field projects and junior miners”, according to the Minister of Industry and Mineral Resources.

Saudi Arabia’s Royal Commission for Jubail and Yanbu signed a MoU with Brazilian mining company Vale for the development of an iron ore briquettes project in Saudi.

Saudi Arabia’s Quality of Life Program signed 20 agreements and strategic partnerships with government and private sector entities last year, leading to marketing and implementation of investment opportunities worth SAR 800mn (USD 213mn) in various sectors.

Total employees in Saudi private sector rose to 10.9mn in December 2023, with 2.32mn of them Saudi citizens, according to the National Labour Observatory. Close to 45k citizen joined the labour market for the first time in the private sector.

The long-anticipated expansion of the BRICS bloc to include countries like the UAE and Saudi Arabia will take its economic and political clout to new heights, but also points to increasing momentum behind potential efforts to challenge the US dollar’s dominance in global trade.

Global News:

A mixed picture across global equity markets: S&P posted a weekly gain of 1.8%, the highest since mid-December, while STOXX posted slight gains (in a week which witnessed a 3-day losing streak). Kuwait posted the largest gains among regional markets, supported by optimism in the new government, while others gained ahead of the publication of US inflation data; even though UAE markets posted weekly gains, Friday saw shares dip given the US and UK air and sea strikes on Houthi targets and higher geopolitical risks affecting regional economies and markets. This, and diversion of oil tankers away from the Red Sea, also led to an increase in oil prices though prices ended lower on a weekly basis. Gold price rose on expectations of a Fed rate cut and due to the uptick in Middle East tensions.