Arqaam Capital predicts moderate surge to be witnessed by all GCC economies during 2020 with the stiffness to ease down

With the support of a Dh50 billion economic stimulus package Ghadan 21, Abu Dhabi will surely witness one of the largest spending surges next year.

   According to Arqaam Capital, with the crude oil prices becoming more stable, and as well as fiscal harshness getting slowing down for the GCC and hydrocarbon abundant economies, they will be gradually surging spending which will support moderate growth next year as GCC economies are expected to grow on an average 2 percent and Egypt North Africa’s largest economy, will expand at approximately 6 percent as stated by the Dubai Investment Bank in a recent research note.

  Jaap Meijer, head of equity research at Arqaam stated that “All the native governments, except that of Bahrain and Oman, will progress for having the capacity for stimulation of their respective economies. As well as in most of the countries, the authorities have by themselves “largely addressed their fiscal positions.”

  He also meanwhile added that there might be a “restrained downside risk to oil prices on deeper supply cuts [As agreed by Opec+].”

   The biggest disbursement surge can come back from United Arab Emirates’s capital through its Dh50 billion information package, Ghadan 21.

In Dubai, Arqaam expects “restraint once it eases a number of years of Expo-related spending”.

Mr. Meijer stated that Meanwhile, Kingdom of Saudi Arabia, the most important and largest Arab economy, has projected a 3 percent contraction in budgeted disbursement for 2020, though “they expect additional disbursement to return off-budget through the PIF [Public Investment Fund], significantly from the payoff of the Aramco IPO.”

Dubai’s Expo 2020 ought to lead to a short boost to the economy, generating regarding $9 billion (Dh33bn) of progressive tourer disbursement, comparable to a pair of percent of the UAE’s gross domestic product and regarding 7.5 percent of Dubai’s economy, according to per Arqaam.

Mr. Meijer stated that “We might see up to an 88 percent surge in touring visits. They tend to don’t expect [the Expo 2020 site] to become a white elephant following the event, with the buildings to be remodeled into a brand new residential and city district.”

In terms of regional equity markets, Arqaam continues to examine political science risk subsiding in 2020. Collective Gulf markets underperformed the broader rising, frontier and developing markets over the past year, given disparate growth across totally different markets, with index flows continued to drive trade.

“We expect performance to still be driven by index flows going into 2020, with the Kuwaiti market the simplest positioned prior to the expected MSCI EM upgrade in could,” per Arqaam.

“We see an area to play the gradual FOL [foreign possession limits] gap up within the UAE, likewise because of the fifth part of Saudi Arabia’s FTSE inclusion that ought to herald another $1.5bn of passive inflows.”

The oil market outlook conjointly remains stable in 2020, due to AN extension and deepening of the Opec+ provide cuts, whereas the United States oil production is ready to slow next year and flatten in 2021 on lower investments and depletion at the simplest drilling locations, Arqaam stated. Mr. Meijer also stated that “They expect oil costs to stay at regarding $60 to $65 per barrel versus $63 per barrel this year … that ought to additional or less balance financial and external accounts for the GCC.”