(ANIKA) Budhwar Peth Call Girls Just Call 7001035870 [ Cash on Delivery ] Pun...
GCC Capital Expenditure Expected to Rise in 2013
1. Weekly Commentary
QNB Economics
economics@qnb.com.qa
29 September 2013
Disclaimer and Copyright Notice: QNB Group accepts no liability whatsoever for any direct or indirect losses arising from use of this report.
Where an opinion is expressed, unless otherwise provided, it is that of the analyst or author only. Any investment decision should depend on the individual
circumstances of the investor and be based on specifically engaged investment advice. The report is distributed on a complimentary basis. It may not be
reproduced in whole or in part without permission from QNB Group.
GCC Capital Expenditure Expected to Rise in 2013
Gulf Cooperation Council (GCC) governments
are investing heavily in infrastructure, and
spent an estimated USD112bn on capital
projects in 2012, according to their budget
outturns. Not only is this high in absolute terms,
it also represented 7.1% of the GCC region’s
GDP, up from just 4.2% in 2004.. In 2013, QNB
Group forecasts that GCC capital expenditure
will rise further to 8.2% as more projects get
underway. This will be the second highest share
on record (after 2009 which was distorted
because low oil prices that year reduced regional
GDP by 19%, but most capital projects
continued on schedule). Rail schemes such as
the Doha, Riyadh and Abu Dhabi metros and the
high speed inter-city rail network under
construction in Saudi Arabia, will all boost GCC
capital spending going forward.
GCC Public Capital Expenditure (2004-12)
(USDbn, % of GDP)
Source: IMF, GCC ministries of finance, QNB Group
forecasts
Effective public capital expenditure in the GCC
is even larger than the budget data suggests.
This is because government agencies
sometimes spend off budget and because of the
usage of public private partnerships for some
megaprojects. These partnerships are
particularly used for power stations, such as the
Al-Zour North plant recently contracted in
Kuwait, and the private sector finances
construction under a long term service
agreement with the state. Although the private
sector finances the capital expenditure, it is
originated by the state and only made possible
by virtue of the public-private contract.
In addition, a broad framework to guide capital
investment has been provided by vision
statements with a time horizon of decades, such
as the Abu Dhabi Economic Vision 2030, which
have been developed by most GCC states.
Increasingly they are also utilising more detailed
medium-term plans, such as the Qatar National
Development Strategy (QNDS) 2011-16, to help
implement these ambitious visions.
There are significant differences in relative
spending levels between states, however, the
data requires some interpretation in order to
compare like-with-like. Although Oman ranks
first in terms of capital expenditure as a share of
GDP (14.6% in 2012), this is largely because it
includes investment in oil and gas within the
budget. In other GCC states the accounts of the
national oil companies, including their capital
expenditures, are not consolidated into the
overall budget. Non-oil capital expenditure in
Oman was still high, around 9.8% of GDP, equal
with Saudi Arabia.
0
50
100
9%
6%
3%
0
12
7.1%
112
11
118
10
92
09
8.9%
85
08
68
07
56
06
35
05
32
2004
4.2%
22
% GDP (Right axis)
USDbn (Left axis)
2. Weekly Commentary
QNB Economics
economics@qnb.com.qa
29 September 2013
Conversely, the UAE appears to rank at the
bottom regionally, spending just 2.1% of GDP on
budgeted development projects, according to
the IMF’s estimated consolidated federal
accounts. However, this is likely to be an
underestimate, as capital expenditure is
dispersed widely across governmental and
quasi-governmental agencies in the seven
emirates. In reality, spending in the UAE is
likely to be closer to the regional average.
Meanwhile, Kuwait was a laggard, spending just
3.5% of GDP. This is because of repeated hurdles
to the implementation of its 2010-14
Development Plan. However, capital
expenditure in Kuwait is likely to pick up as
contracts have now been awarded for a number
of significant megaprojects such as the Sheikh
Jaber Bridge over Kuwait Bay.
Qatar spent the second largest amount in 2012
(USD13.5bn). This is because of both the major
infrastructure projects underway in the run up
to the 2022 World Cup and the significant
investments in health and education to meet
the human development goals of Qatar’s
National Vision 2030 and the QNDS 2011-16.
Looking ahead, QNB Group expects that
government capital expenditure, both direct and
through public-private partnerships, will remain
high throughout the GCC over at least the next
decade. Common themes across the region
include rail networks to relieve congestion in
major cities and connect the Gulf’s major
coastal hubs. Also further expansions are
planned in power and water desalination
capacity plus social spending on schools,
hospitals and housing. Many GCC countries
have medium term spending plans running into
hundreds of billions of dollars. For example,
Saudi Arabia committed in 2011 to invest
USD67bn on housing alone, to build half a
million new homes. Meanwhile, Abu Dhabi has
committed to USD90bn in capital expenditure
between 2013-17.
Public Capital Expenditure by Country (2012)
(USDbn, % of GDP)
Source: GCC ministries of finance; *Includes investment in
the oil sector; **IMF estimate
2
0
20
40
60
80 15%
12%
9%
6%
3%
0
Saudi
Arabia
9.8%
70
Oman*
14.6%
12
UAE**
2.1%
8
Kuwait
3.5%
6
Bahrain
6.5%
Qatar
7.0%
14
% GDP (Right axis)
US$bn (Left axis)