Saudi spending and Dubai Expo to help Gulf economy up speed

The 2020 Dubai Expo, with the venue currently under construction in the emirate, is one of a number of factors generating growth in the Gulf region, despite a slower 12 month period for countries like Kuwait and Oman. (Shutterstock)
Short Url
Updated 23 January 2020

Saudi spending and Dubai Expo to help Gulf economy up speed

  • Oil output cuts and geopolitical tensions continue to hamper region, with neighboring countries’ growth sluggish

DUBAI: Economic growth in the Gulf will pick up this year and next, helped by Saudi Arabia’s investment program and Expo 2020 in Dubai, although the region will continue to feel the impact of oil output cuts, a Reuters poll showed on Wednesday.

OPEC and non-OPEC allies agreed in December to deepen output cuts, coming in addition to previously agreed curbs of 1.2 million barrels per day (bpd), and will represent about 1.7 percent of global oil output.

Saudi Arabia’s economy grew 0.3 percent in 2019, and is expected to grow 2 percent in 2020 and 2.2 percent in 2021, the poll of 26 economists, conducted January 7-21, projected. A similar poll three months ago gave the same forecasts for 2020 and 2021 but estimated 0.7 percent growth in 2019.

“Saudi Arabia’s third quarter gross domestic product (GDP) data, showing a fall of 0.5 percent year-on-year, was broadly as expected, with OPEC+ cuts constraining the contribution of the oil sector to economic growth,” Oxford Economics wrote in a research note. But diversification efforts “show signs of feedthrough,” it said.

Monica Malik, chief economist at Abu Dhabi Commercial Bank, said a stronger non-oil sector would help Saudi Arabia.

“Real GDP growth in Saudi should benefit from stronger non-oil activity as the investment program gains momentum. The drag from the oil sector should moderate in 2020 following a sharp reduction in oil output in 2019,” she said.

Median forecasts for growth in Oman, a relatively small Gulf crude producer, were significantly slashed. Analysts saw 1 percent growth in 2019, 1.7 percent in 2020 and 2.3 percent in 2021. Three months ago, Oman’s GDP was set to grow 1.3 percent in 2019, 3.2 percent in 2020 and 3 percent in 2021.

Maya Senussi, senior economist at Oxford Economics, said deeper oil production cuts agreed by OPEC and allies in December, and prospects for non-oil activity remaining weak, have weighed on Oman’s outlook.

Analysts forecast growth of 1.7 percent in 2019 for the UAE, down from 2.2 percent in the poll three months ago. Its 2020 and 2021 estimates were unchanged.

The governments of Dubai and Abu Dhabi, the country’s two main emirates, have boosted spending to provide stimulus to their economies.

Dubai, which will host Expo 2020 this year, announced a record budget of around $18 billion this year, a 17 percent increase year on year, while Abu Dhabi announced in 2018 a three-year package of $13.6 billion.

Kuwait, which said last week it expects a budget deficit of 9.2 billion dinars ($30.3 billion) in the fiscal year starting on April 1, was forecast to see 0.5 percent economic growth in 2019, down from the 1 percent expected three months ago.

Kuwait’s GDP growth was revised down to 1.9 percent in 2020 from 2.2 percent three months earlier. Expectations for its 2021 growth, however, have risen to 2.6 percent from 2.3 percent.

GDP growth for Qatar, the world’s largest exporter of liquefied natural gas, was revised down to 0.9 percent in 2019 from 2 percent three months ago. Its 2020 forecast was cut to 2.1 percent from 2.4 percent, while its 2021 estimate was lifted to 2.5 percent from 2.3 percent.


A homegrown UAE brand bets on date’s heritage appeal

Updated 29 February 2020

A homegrown UAE brand bets on date’s heritage appeal

  • Dates are locally sourced by The Date Room from around 20 farms in the Al Ain oasis area of Abu Dhabi
  • UAE farms grow about 475,000 tons of dates a year, a significant percentage of which is exported

DUBAI: When you can answer the classic business question about a unique selling proposition (USP) in six different ways, you likely have a successful product on your hands.

Thankfully, when you are dealing with dates, unusual product features are not a problem.

There are more than 3,000 date varieties around the world, but Emirati brand The Date Room is approaching the sticky business of breaking into an established market with just half a dozen local cultivars.

From the buttery, caramel notes of the golden Kholas date to the lower-carbohydrate Razaiz type, their flavors offer a change from the more commonly available Medjool and Deglet Noor varieties.

Being locally sourced from about 20 farms in the Al-Ain oasis area of Abu Dhabi, they are also introducing UAE residents to the nation’s heritage.

“Emirati dates are unique because they’re generally much richer in taste and texture than others on the market — although they can be smaller in size,” said Tony N. Al-Saiegh, executive director of The Date Room.

The Date Room launched with two luxury boutiques in the UAE last November after founder Ahmed Mohamed bin Salem spotted a gap for local fruit in a market dominated by produce from Saudi farms.

While official market share by origin data is not available, Saudi dates may control close to 90 percent of the UAE’s retail market.

Yet, with an annual production of 755,000 tons, Saudi Arabia trails Egypt, Iran and Algeria, all of which produce in excess of a million tons each year, according to the UN Food and Agriculture Organization.

By contrast, UAE farms grow about 475,000 tons, a significant percentage of which is exported.

Dates are among the world’s oldest cultivated crops. The palm is native to the Middle East, North Africa and South Asia, with origins that go back more than 5,000 years to what is modern-day Iraq.

The appeal of dates has grown considerably in recent years. Their high fiber and mineral profile have led to their classification as a superfood, they have been used for their high natural sugar content in healthy natural alternatives to processed candy bars.

“The Date Room’s main initial motive was the fact that our own farms produce a superior quality of date in every way,” Al-Saiegh said.

“Our families have been enjoying these dates with every meal and occasion for generations, so why not introduce it to the market in a way that makes them available to everyone but also promotes the unique culture of the UAE?”

The company’s annual production runs to about 160 tons.

For now, distribution is restricted to the UAE, but Al-Saiegh says his team is in talks with distributors in India and Indonesia.

With farmers everywhere agonizing over the impact of climate change, what are the challenges facing date farmers, accustomed as their crops are to heat and aridity?

Scientists expect 2019 to be the second-hottest year on record after 2016, and they forecast that by 2070, today’s major producers will suffer from a markedly unsuitable climate.

Despite palm trees being able to tolerate the heat for hundreds of years, Al-Saiegh says his farms are already feeling the impact.

“As the weather gets hotter and the summers get longer, it’s drying out farms and (arable) land. This means more water is required because a lack of water affects the size and texture of the fruit,” he explains.

While the full impact of those changes is some years away, the Abu Dhabi government has focused on conserving the UNESCO World Heritage oasis where the UAE’s dates are grown.

On the other hand, given the way technology has transformed the local agricultural sector with solutions such as vertical, indoor and soilless farms, Al-Saiegh may soon be able to add another distinguishing feature to The Date Room’s USP.

• This report is being published by Arab News as a partner of the Middle East Exchange, which was launched by the Mohammed bin Rashid Al Maktoum Global Initiatives and the Bill and Melinda Gates Foundation to reflect the vision of the UAE prime minister and ruler of Dubai to explore the possibility of changing the status of the Arab region.