Frontera's Research and Intelligence Marketplace (RIM) https://research.fronteranews.com Research & Intelligence Marketplace Fri, 14 Jul 2017 15:13:00 +0000 en-US hourly 1 A Look Ahead at the Middle East in 2017 – Frontera Research And Intelligence Marketplace https://research.fronteranews.com/press/look-ahead-middle-east-2017-frontera-research-intelligence-marketplace/ Tue, 21 Feb 2017 12:05:59 +0000 https://research.fronteranews.com/?p=3189 The Frontera Research and Intelligence Marketplace (RIM) has recently announced the addition of a series of reports to their online research marketplace which analyze infrastructure project opportunities across various Middle East markets including Iran, Saudi Arabia, Oman, Qatar, Bahrain, and Kuwait. The reports, published by Whispering Bell, a risk management firm specializing in MENASA region, […]

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The Frontera Research and Intelligence Marketplace (RIM) has recently announced the addition of a series of reports to their online research marketplace which analyze infrastructure project opportunities across various Middle East markets including Iran, Saudi Arabia, Oman, Qatar, Bahrain, and Kuwait.

The reports, published by Whispering Bell, a risk management firm specializing in MENASA region, provide a comprehensive analysis of major infrastructure investment opportunities currently available in the region.

In conjunction with the new reports, Whispering Bell has compiled the following summary of major events of note and projections for the Middle East region in 2017.

Projections:

Major state-owned enterprises in oil producing countries across the Middle East and North Africa will likely experience a wave of restructuring to compensate for the current price of oil. Despite OPEC’s agreement to cut oil production to stabilize worldwide oil prices, countries in the region will be forced to operate within a new paradigm and implement critical economic reforms to balance their budgets. This may include reducing the workforce of state-owned companies, selling off assets, and engaging in strategic mergers within prominent industries.   These changes in the state-owned enterprise sector will likely be in evidence broadly across the region, not just in the GCC, but also in places like Iraq and Jordan. There is already more attention being paid to transparency and efficiency. This could provide opportunities for companies that can help with advice or process outsourcing, but also can be a down-side as the overall performance of the economy is likely to continue in the slow lane given the overall slowing of expenditures because of the low oil price.

As part of the broader effort to reform economies in the Middle East, governments are exploring ways to increase revenues and reduce expenditures. Facing new financial pressures from the price of oil and military action for some (Saudi/Iraq), governments in the Middle East cannot tap into foreign reserves indefinitely to make up for their budget deficits. The UAE already has plans underway to implement a value added tax beginning in January 2018, potentially along with the rest of the GCC. Meanwhile, Saudi Arabia set an emerging market record with a USD 17.5 billion-bond sale in October 2016. Countries in the region will also likely attempt to push more of their citizens into the private sector, rather than maintaining them on government payrolls.   This will of course drive pressure into the government sector, where I would be watching the signs of the social impact over 2017.

The relevance of the Islamic State as a conventional threat is likely to diminish over the coming year. Their franchise in Libya has been defeated and the Iraqi Army continues to advance on their positions in Mosul. The fight is likely to continue in the coming months, resulting in heavy casualties, but the territory they hold has been steadily declining. Still, the Islamic State’s unconventional threat will persist as individuals move to other countries, including their home countries, where they can carry out new terror attacks.

The exception to broad macroeconomic shrinkage will likely be Iran, which could have continued investment and oil revenue as it builds out its sanctions-depleted economy with newly recovered oil cash flows. The wildcard here is the new president in the US, who may or may not pursue actualizing his heated anti-Iran rhetoric. We would tend to think it won’t be as strong in actuality, as the US might find that it can’t count on so many allies joining it in walking away from Iran; and for the fact that it would likely only miss out on the commercial opportunities there. Instead, we would expect Trump’s actions to be mostly symbolic while the general trend on the commercial side will be towards normalization, barring some black swan event like a military confrontation.

In oil and gas, it looks like the OPEC deal should mostly hold (cheating on the deal among most countries is not atypical), but it may be the demand side of oil that is more important. China and Europe are in the doldrums, while recoveries in Japan and the US are still in low gear. With oil supply exceeding demand today, and some of the producers questionable or exempted in the commitments, like Libya, Nigeria, Iran and Iraq, supply could easily and simply move into balance with demand. The other wildcard is that US supply seems to be picking up as fracking rig counts have started to grow in the latter half of 2016, which means that supply should start to follow. So while the OPEC deal will be constructive, supporting the price of oil, we would not expect much of a rise above $60 and nowhere near the triple digits of the past. This of course has implications for the oil economy.  As such, we expect growth to remain around 2.8% in 2017 (from an average 2.6% in 2016). Emerging countries in the region should continue to implement sore austerity measures in order to contain their large fiscal gaps, which should reduce the level of government support needed for some economies. We should also expect more debt issuance especially from Saudi, Qatar and Iraq, to help finance their deficits, as well as more private sector contribution and private-public partnerships to help finance major infrastructure projects.

For more information on each of the new reports visit:

Saudi Arabia

https://research.fronteranews.com/market/saudi-arabia-economic-overview-infrastructure-projects/

Oman

https://research.fronteranews.com/market/oman-economic-overview-infrastructure-projects/

Kuwait

https://research.fronteranews.com/market/kuwait-economic-overview-infrastructure-projects/

Iran

https://research.fronteranews.com/market/iran-economic-overview-and-infrastructure-projects/

Qatar

https://research.fronteranews.com/market/2022-fifa-world-cup-qatar-business-framework-opportunities/

Bahrain

https://research.fronteranews.com/market/bahrain-economic-overview-infrastructure-projects/

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