Weekly Economic Update Sunday, 13 January 2013 1
2010-Q4 2011-Q1 2011-Q2 2011-Q3 2011-Q4 2012-Q1 2012-Q2 2012-Q3 % Weekly Economic Update Sunday, 13 January 2013 Recent Macroeconomic Developments GLOBAL Eurozone s economic woes set to continue as ECB keeps interest rates unchanged The Eurozone economy, which is currently in recession, will continue to contract during the first half of 2013, as debt-laden countries continue to implement tough austerity measures and sluggish growth in Germany, the richest country in the region, weighs down on the bloc s overall economic performance. Germany s economy slowed down during 2012, with economic output estimated to have grown by a mere 0.8% for the whole year, compared with 4.2% and 3.0% in 2010 and 2011 respectively. Being the biggest economy in Europe, Germany has for years kept Eurozone s economy afloat, but its recent economic slowdown suggests that there may not be light at the end of the region s economic tunnel soon. This sentiment has been echoed by the ECB president last week when he argued that: "The economic weakness in the euro area is expected to extend into 2013," adding that "In particular, necessary balance sheet adjustments in financial and non-financial sectors and persistent uncertainty will continue to weigh on economic activity. The ECB, however, expects economic activity in the region to gradually recover later in 2013. The ECB has therefore left Eurozone s interest rates unchanged at 0.75% for the sixth consecutive month since July 2012 when interest rates were hovering at 1%. 5 4 3 2 1 0 Germany and Euro Area Growth Rates (y/y) Germany Euro Area -1 Source: Thomson Reuters 2
Weekly Economic Update Sunday, 13 January 2013 Recent Macroeconomic Developments GCC Gross Domestic Product (GDP) in GCC exceeds US$1.5 Trillion Combined GDP for the six GCC countries was estimated to have reached $1.56 trillion in 2012, equivalent to 2.2% of global GDP, according a recent report by Qatar National Bank. In real terms, gross domestic product in the GCC region grew by 5.7% last year, much lower than the 7.8% growth recorded in 2011. Saudi Arabia is the largest economy in the GCC, accounting for nearly 47% of regional GDP, followed by UAE (23%), Qatar (12%), Kuwait (11%), Oman (5%), and Bahrain (2%). Non-oil sector now accounts for 50% of GDP in the GCC region, primarily due to the overwhelming contribution of the sector in Bahrain (64% of GDP), UAE (62%), and Oman (51%). In Saudi Arabia, the non-oil sector accounts for 48% of GDP while in Qatar and Kuwait it accounts for 44% and 36% respectively. Although the economies of the region are heavily dependent on hydrocarbon, the non-oil sector is growing rapidly as greater efforts are being made towards economic diversification. For instance, in Saudi Arabia, non-oil GDP grew by 7.2% in 2012, compared with 5.5% for the oil sector. Saudi Arabia s Real GDP Growth Rates (%) Nominal GDP in GCC Countries, 2012 (US$ Billion, % of GDP) 4.8 8.5 6.8 4.2 10.4 8.7 5.5 5.2 5.6 6.2 6.3 UAE, 358.8, 23% Qatar, 187.2, 12% 0.1 0.9 Total Oil Sector -1.5 Non-Oil sector KSA, 733.2, 47% Kuwait, 171.6, 11% -7.8 Oman, 78, 5% Source: Jadwa report, January 2013 2009 2010 2011 20012 2013f Bahrain, 31.2, 2% 3
Weekly Economic Update 10-Dec-12 12-Dec-12 14-Dec-12 16-Dec-12 18-Dec-12 20-Dec-12 22-Dec-12 24-Dec-12 26-Dec-12 28-Dec-12 30-Dec-12 01-Jan-13 10-Dec-12 12-Dec-12 14-Dec-12 16-Dec-12 18-Dec-12 20-Dec-12 22-Dec-12 24-Dec-12 26-Dec-12 28-Dec-12 30-Dec-12 01-Jan-13 Sunday, 13 January 2013 COMMODITIES 115 Brent Oil Price (US$/barrel) 1720 Gold Price (US$/ounce) 114 1710 113 112 111 110 109 1700 1690 1680 1670 1660 1650 108 1640 As January 11 (US$) Current Week Ago Weekly Change Brent Oil (barrel) 110.95 113.93-2.62 Gold (ounce) 1662.44 1656.24 0.37 Silver (ounce) 30.48 30.30 0.59 Copper (pound) 3.68 3.69-0.22 Aluminium (kilo) 2.07 2.11-1.71 Source: Thomson Reuters 4
Weekly Economic Update Sunday, 13 January 2013 11-Dec-12 12-Dec-12 13-Dec-12 14-Dec-12 15-Dec-12 16-Dec-12 17-Dec-12 18-Dec-12 19-Dec-12 20-Dec-12 21-Dec-12 22-Dec-12 23-Dec-12 24-Dec-12 25-Dec-12 26-Dec-12 27-Dec-12 28-Dec-12 29-Dec-12 30-Dec-12 31-Dec-12 01-Jan-13 11-Dec-12 12-Dec-12 13-Dec-12 14-Dec-12 15-Dec-12 16-Dec-12 17-Dec-12 18-Dec-12 19-Dec-12 20-Dec-12 21-Dec-12 22-Dec-12 23-Dec-12 24-Dec-12 25-Dec-12 26-Dec-12 27-Dec-12 28-Dec-12 29-Dec-12 30-Dec-12 31-Dec-12 01-Jan-13 Currencies Current ( 11 Jan 2012) Week Ago Weekly Change International $1 $1 (%) Euro 0.749 0.765-2.092 GBP 0.620 0.622-0.322 Yen 89.170 88.120 1.192 CNY 6.216 6.230-0.225 INR 54.860 54.930-0.127 CHF 0.913 0.924-1.190 GCC AED 3.670 3.670 0.000 BHD 0.380 0.380 0.000 KWD 0.281 0.280 0.357 OMR 0.390 0.390 0.000 QAR 3.640 3.640 0.000 SAR 3.750 3.750 0.000 0.83 0.80 0.77 0.74 0.71 0.68 0.65 0.62 0.59 82 81 80 79 Euro, Yen & Pound vs. Dollar Euro (LHS) Pound (LHS) Yen (RHS) The Dollar Index 89.0 87.5 86.0 84.5 83.0 81.5 80.0 78.5 77.0 75.5 74.0 Source: Thomson Reuters 5
Weekly Economic Update Sunday, 13 January 2013 Stock markets DowJones 0.40% 13480 13,488 13450 13420 13390 13360 13330 13300 CAC40 0.64% 3730 3,706 3720 3130 3125 3120 3115 3110 3105 3100 3095 3090 3085 6170 6140 NASDAQ FTSE100 0.52% 0.77% 3,126 6,122 1490 1480 1470 1460 1450 10880 10810 10740 S&P500 0.38% 1,472 Nikkei225 1.06% 10,802 3710 3700 3690 6110 6080 6050 6020 10670 10600 10530 10460 10390 Source: Thomson Reuters 6
01-Jan-13 Weekly Economic Update Sunday, 13 January 2013 Stock markets 2740 2730 2720 2710 2700 2690 2680 2670 2660 6077 6067 6057 6047 6037 6027 6017 6007 5997 5987 Abu Dhabi 1.57% 2,728 Kuwait 1.06% 6,068 8820 8780 8740 8700 8660 8620 8580 8540 8500 8460 8420 5830 5820 5810 5800 5790 5780 5770 5760 Doha 2.48% 8,782 Muscat 0.63% 5,819 1780 1760 1740 1720 1700 1680 1660 1640 7180 7130 7080 7030 6980 6930 6880 6830 Dubai 4.43% 1,756 Saudi 2.69% 7,127 Source: Zawya 7 (C) Copyrights 2013. Gulf One Investment Bank B.S.C.(c). Please refer to Disclaimer at the end of this document.
Weekly Economic Update Sunday, 13 January 2013 Stock markets Stock Exchange Current A Week Ago Weekly Change (11 Jan) (%) Dow Jones (US) 13,488 13,435 0.40 Nasdaq (US) 3,126 3,102 0.77 S&P500 (US) 1,472 1,466 0.38 CAC40 (FR) 3,706 3,730-0.64 FTSE100 (UK) 6,122 6,090 0.52 Nikkei225 (JP) 10,802 10,688 1.06 Abu Dhabi 2,728 2,686 1.57 Bahrain 1,062 1,062-0.05 Doha 8,782 8,569 2.48 Dubai 1,756 1,682 4.43 Kuwait 6,068 6,004 1.06 Muscat 5,819 5,782 0.63 Saudi Arabia 7,127 6,940 2.69 Source: Thomson Reuters and Zawya (C) Copyrights 2013. Gulf One Investment Bank B.S.C.(c). Please refer to Disclaimer at the end of this document. 8
Weekly Economic Update Sunday, 13 January 2013 Miscellaneous GULF projects Projects planned or under way Projects planned or under way Change on week (%) Projects planned or under way Change on year (%) 31-Dec-12 10-Jan-12 ($m) ($m) ($m) Bahrain 63,925 63,815 0.17 62,907 1.62 Kuwait 206,439 206,406 0.02 176,761 16.79 Oman 123,196 123,196 0.00 117,091 5.21 Qatar 223,387 224,004-0.28 217,576 2.67 Saudi Arabia 782,262 781,281 0.13 710,105 10.16 UAE 646,798 646,835-0.01 566,911 14.09 GCC 2,046,007 2,045,537 0.02 1,851,351 10.51 Iran 287,290 288,690-0.48 300,377-4.36 Iraq 282,129 282,129 0.00 334,109-15.56 Gulf Total 2,615,426 2,616,356-0.04 2,485,837 5.21 Source: MEED (C) Copyrights 2013. Gulf One Investment Bank B.S.C.(c). Please refer to Disclaimer at the end of this document. 9
Weekly Economic Update Sunday, 13 January 2013 Gulf One Investment Bank B.S.C. (c)(gulf One) is a leading knowledge-based investment bank that is focused on providing professional and high-quality infrastructure related investments for the MENA (Middle East and North Africa) region. Its mission is to mobilise local and global capital to accelerate the realisation of infrastructure projects and corporatisation through innovative financial solutions. Gulf One was jointly founded in 2006 by Dr. Nahed Taher, Chief Executive Officer (CEO), and Mr. Ziyad Omar, Chief Investment Officer (CIO). Headquartered in Bahrain, Gulf One operates under a conventional wholesale banking licence granted by the Central Bank of Bahrain (CBB), CR 62199. www.gulf1bank.com. This Weekly Economic Update has been prepared by staff in the Research Department of Gulf One under the general direction of Dr. Nahed Taher. The Research team comprises: Dr. Mohammed Salisu Chief Economist Gulf One Investment Bank m.salisu@gulf1bank.com Ms. Lobna Bousrih Research Analyst Gulf One Investment Bank l.bousrih@gulf1bank.com Ms. Sana Harrabi Research Analyst Gulf One Investment Bank s.harrabi@gulf1bank.com All comments and enquiries about this Weekly Economic Update should be sent to Dr. Mohammed Salisu at the above e-mail address. Disclaimer This Weekly Economic Update was prepared by Gulf One Investment Bank B.S.C.(c)(Gulf One) and is of a general nature and is not intended to provide specific advice on any matter, nor is it intended to be comprehensive or to address the circumstances of any particular individual or entity. This material is based on current public information that we consider reliable at the time of publication, but it does not provide tailored investment advice or recommendations. It has been prepared without regard to the financial circumstances and objectives of persons and/or organisations who receive it. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. In addition, the views expressed in this Economic Update do not necessarily represent the views of the Management or Board of Directors of Gulf One. This Weekly Economic Update or any portion hereof may not be reprinted, sold or redistributed without the prior written consent of Gulf One. 10 (C) Copyrights 2013. Gulf One Investment Bank B.S.C.(c).