GULF WEEKLY: Saudi & Qatar Q3 BoP, Dubai budget, Saudi activist sentenced
A skimmable summary of key developments, overlaid with our analysis and links to further information. Headlines include:
* Saudi’s Q3 current account returned to a 1.3% of GDP surplus, from a -12% deficit in Q2.
* Qatar’s Q3 current deficit narrowed slightly to -7% of GDP as remittances rebounded.
* Both Saudi and Qatar saw sharp declines in new portfolio investments abroad.
* Kuwait aims to vaccinate 80% by Q3, and Bahrain has already vaccinated 4%.
* Qatar’s emir has been invited to the Gulf Summit in Saudi Arabia next week.
* Saudi activist Loujain al-Hathloul was sentenced to 6 years but could be released in March.
* Dubai’s 2021 budget sees an 18% spending increase and a $1.3bn deficit.
* More detailed Dubai Q3 GDP data was published, including a -16% q/q decline in construction.
* Oman halved the annual increment for the 35% of public sector workers earning over $28k.
* Aden airport was attacked shortly after Yemen’s new Saudi-backed unity government formed.
* Iran has reduced gas exports to Iraq over $2.7bn in payment arrears.
Cross-cutting themes
Coronavirus:
* The UAE saw a new record of 1,723 daily cases, and there has been a modest rebound in cases in Bahrain (to a daily average of about 230 cases) but other Gulf states saw continued declines.
* Bloomberg’s vaccine tracker puts Bahrain in second place globally with 3.9% of the population vaccinated already, although its data for the Gulf is only partial.
* Oman and Kuwait are lifting their temporary bans on flights, implemented in response to the UK variant, but Saudi Arabia has extended its ban on incoming passengers by another week (GB).
* Sinopharm said its vaccine is 79% effective, slightly less than the 86% previously announced by the UAE which conducted Phase 3 trials and is using it for its vaccination campaign, alongside Bahrain (WSJ).
* Iran has secured a US sanctions waiver to transfer $244m to pay for vaccines under the global COVAX program; Iran has also begun trials for a domestically developed vaccine (Rt).
* Kuwait aims to vaccinate 80% of the population by September (BB), Dubai aims for 70% vaccination by end-2021 (BB). We expect rollout will be even quicker.
* Saudi crown prince MBS was vaccinated (AN).
Gulf rift:
* Qatar’s Emir received a formal invite from the Saudi King, delivered by the GCC Secretary-General, to the GCC Summit in al-Ula, Saudi Arabia, amidst hopes for a breakthrough in the rift. Al Jazeera writes that it “is not clear” if he will attend, which is likely a necessary, but not sufficient, condition for progress on resolving the Gulf rift. Attendance is only likely to be confirmed on the day and if Qatar’s Emir is persuaded to board a plane to Riyadh the chances of some kind of progress, such as an easing in the airspace blockade, are around 50%, but far lower if he concludes it isn’t worth going. Kuwait’s cabinet has expressed optimism (KT).
* There are rumors Egypt’s President Sisi, another participant in the rift, has been invited which, if correct, would also be a positive sign (TNA).
* However, it looks likely that Dubai’s ruler will represent UAE at the summit, which is problematic because Abu Dhabi’s crown prince is the decision-maker (SG).
* Renewed Bahrain-Qatar tensions over maritime and airspace border violations are also a concern (NB). Bahrain also complained this week about an Al Jazeera report on prison conditions (NB). However, at a virtual gathering of foreign ministers on Sunday, Bahrain expressed confidence in Saudi Arabia's “ability to find a solution to the dispute” (Rt).
GCC sovereign bonds ended the year with high-quality issuers at near-record-low yields, and even Oman and Bahrain were nearly back to pre-crisis yields. Kamco has a summary of issuance by country and sector, noting a wall of maturities to refinance in the next six years.
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