Inflation to rise only slightly in GCC

By Ribal Dayekh in Dubai
For Al-Shorfa.com
2010-02-13

[KARIM SAHIB/AFP/Getty Images] Weak domestic demand for items like cars will help keep inflation low in the Gulf.

A report published on January 26th by the Institute of International Finance indicated that following a lower inflation rate of 2% in 2009, compared to 11% in 2008, GCC countries will have an inflation rate of 3% this year, a relatively low increase. The inflation will be accompanied by a wave of pressure on the real estate sector as well as a drop in prices.

"Weak domestic demand, the correction in housing-related prices and the fall in global commodity prices have brought down the 12-month inflation rate from over 13 per cent in July 2008 to three per cent in July 2009. Continued slack in the GCC economies will dampen domestically driven inflation pressures in 2010," the IIF report said.

The United Nations Economic and Social Commission for Western Asia (UN-ESCWA) issued a report on January 24th in which it predicted inflation rates for this year to reach 4.2% in the UAE, 4% in Saudi Arabia, 3.2% in Oman, 4.7% in Bahrain, 4.1% in Qatar and 4.7% in Kuwait. These figures are considered to be much lower than rates recorded in 2008.

In the UAE, DOMOTEX Middle East, an exhibitor specializing in carpets and floor coverings in the Middle East and North Africa, whose trade fair will be held in the Dubai International Convention and Exhibition Centre from May 10-12, issued a statement saying that the GCC countries spent around $22 billion during 2009-2010 period on interior design and furnishing. The UAE spent two-thirds of that amount.

In Saudi Arabia, the Second Business Forum for the Management of Infrastructure and IT Services, which was held this week in Riyadh, issued a report indicating that more than 7 billion Saudi riyals was spent on infrastructure projects last year, which makes Saudi Arabia the second highest spending country on infrastructure in the Arab world.

The forum indicated that the GCC countries' expenditure on IT products amounts to 23% of the total amount spent in the Middle East.

The Banker magazine, a reference for classification of international banks, issued its yearly report on February 1st on the 500 most popular brands among banks, and the top 100 banks did not include any Arab or Gulf banks.

he rankings of Saudi banks ranged from 149 to 277 on an international scale. Al Rajihi ranked second among the Arab banks and 149th in the world, moving up 16 places from its 2008 ranking. Samba Financial Group ranked in eighth place among Arab banks and 225th internationally, losing three places from its 2008 position. SABB occupied ninth place among Arab banks and the 246th place internationally, losing three places from its ranking in 2008.

In Lebanon, the Central Bank’s statistical report published this week gave a positive review of Lebanese banks, showing that the cumulative budgets of the banking sector until December 31st, 2009 reached $115.2 billion, compared to $94.2 billion in the same period in the year 2008, amounting to an increase of $20.988 billion, a 22% increase.

The total commercial bank deposits until December 31st, 2009 reached $95.7 billion, compared to $77.8 billion in 2008, representing a 23% increase.

The total bank deposits increased to reach $103 billion, which includes deposits from the public sector ($1.06 billion), deposits from banks that provide medium-term loans ($3.58 billion) and credit deposits ($6.2 billion).

The growth of bank deposits is linked to the rate of economic growth, which has not been definitively announced yet, but is believed to be above 7.5%.

In Doha, the General Index of the Qatar Stock Exchange went up by 62 points last Wednesday (February 10th), equivalent to an increase of 0.92%, to close at 6,824 points. The value of shares traded was 295 million riyals, representing a total of 8,295 million shares traded in 5,012 transactions.

The session of the Doha exchange experienced a rise in all sectors, particularly the services sector with an increase of 2%, gaining 92 points and closing at 4,715 points. It was followed by the manufacturing sector which rose by 0.86%, gaining 56 points and closing at 6,646 points. The stock capitalization of the Exchange was valued at 375 billion riyals.

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