Growth in Gulf Countries to Rebound in 2018-2019

Economic growth for the GCC region is expected to reach 2 percent in 2018.                            Photo credit: World Bank Group

A sustained increase in oil prices over the past two years has driven an economic recovery in the Gulf Cooperation Council (GCC) countries, but government-led reforms need to continue to keep up the momentum, according to the World Bank’s biannual Gulf Economic Monitor released on Tuesday in Riyadh. 

Economic growth for the GCC region is expected to reach 2 percent in 2018, up from negative 0.3 percent in 2017, thanks in part to higher oil production and a slower pace of fiscal consolidation.   

With fiscal and external imbalances narrowing, the region has remained largely immune to the financial volatility that beset other emerging market economies in mid-2018. The World Bank expects economic growth for the region to strengthen gradually in the medium term to 2.7 percent by 2020 as high energy prices and rising government spending lift output and sentiment. 

Growth in Saudi Arabia is expected to rebound to around 2 percent in 2018-2019 from a contraction in 2017, and to strengthen similarly across the GCC countries. External and fiscal imbalances are also expected to narrow, with Saudi Arabia and the UAE achieving near fiscal balance by 2020 and, along with Qatar and Kuwait, returning to current account surpluses during 2018-20.

“Gulf countries have implemented some notable reforms in recent years, including the rolling back of costly and distortionary subsidies, the implementation of a VAT, and business environment and labor market reforms,” said Issam Abousleiman, World Bank Country Director for the GCC. “But it is critical that GCC countries stay the course, not least because any loss in momentum could hinder their ability to draw in long-term investors, that are crucial for diversification efforts.” 

Looking forward, there are several downside risks to the regional economic outlook. Global trade tensions, global financial volatility, and geo-political tensions could dampen global demand and trade, affect access to and cost of financing and weigh down hydrocarbon prices. A key domestic risk for the GCC region is a slowing in the pace of reforms due to higher oil prices.

The Gulf Economic Monitor focuses the reform lens on four key areas where further progress is needed. On the fiscal front, GCC countries have yet to systematically explore public wage bill and employment reforms as a strategy to anchor longer term fiscal sustainability and to improve service delivery. Governments should also note that spending better rather than spending more will likely be the key to unlocking productivity gains from infrastructure spending. Business environment and labor market reforms are needed to increase private investment, to foster job creation, and to ensure that Gulf nationals have the skills required by the private sector.  

The Monitor also draws attention to a separate but critical aspect of long term sustainability, namely the management of water resources in the region, as GCC countries have some of the highest levels of water consumption globally and are highly dependent on energy-intensive water desalination. Because the management of water resources is a cross-sectoral issue, governments will need to ensure that policies and strategies are integrated and applied consistently across these sectors. Governments would need to prioritize water conservation, management of aquifers, recycling, desalination, agricultural use and coastal management.

Cambodia Continues to Grow Despite Global Economic Challenges: World Bank

Cambodia’s growth rate is expected to be marginally higher than last year

While global economic prospects continue to moderate, and risks have heightened, Cambodia continues to grow, according to the latest edition of the World Bank’s Cambodia Economic Update report, released on Wednesday.

The growth rate is expected to be marginally higher than last year, reaching 7.1 percent in 2018, driven primarily by domestic consumption and exports.

Following a gradual recovery in the second half of 2017, Cambodia’s exports surged, supported largely by strong demand in the United States and the European Union. Cambodia is among few countries in the East Asia and Pacific region expected to experience marginal improvements in growth.

Risks in the financial sector continue to grow, with large exposure to the construction and real estate sector. External risks include the potential withdrawal of Everything But Arms preferences for Cambodia and the unpredictable spill-over effects of US-China trade disputes.

“Priorities for Cambodia include safeguarding the health of the financial sector, while building up reserves, strengthening competitiveness and preventing rapid real exchange rate appreciation, given the recent surge in imports,” said Sodeth Ly, World Bank Senior Economist for Cambodia.

While the longer-term outlook remains positive, Cambodia needs to develop its physical and human capital to attain higher income status in the long term.

“To achieve its upper middle-income country aspirations, Cambodia needs to increase its investment in human capital and infrastructure and adopt reforms that enable sustained and inclusive growth. Mobilizing significant domestic savings to boost investment is critical to attain what high-performing Asian economies have achieved,”said Inguna Dobraja, World Bank Country Manager for Cambodia.

The report also calls for further bridging the infrastructure deficit to absorb rising foreign direct investment in manufacturing and agro-processing, as well as continued improvements to the business environment.

The Cambodia Economic Update is a biannual report that provides up-to-date information on short and medium term macroeconomic developments in Cambodia.

US Airlift Targets 70,000 Afghans Displaced by Drought

The United States Agency for International Development (USAID) Office of US Foreign Disaster Assistance (OFDA) is responding to the Afghan crisis with a major airlift of aid, including plastic sheeting, blankets and kitchen sets, to help 10,000 families or 70,000 individuals.

US Ambassador John Bass, Afghan and IOM officials welcome the first of three flights carrying US aid to drought victims in Herat, western Afghanistan. Photo: IOM 

IOM is organizing warehousing of the aid and its distribution in Herat and Badghis over the next three weeks.

The first of three C-17 aircraft carrying the aid landed in Herat on Saturday (17/11). Two more aircraft are scheduled to arrive in the coming days.

Ambassador John Bass, speaking at Herat airport, welcomed the airlift. “The United States confirms its continuous support to the Afghan people, and we thank IOM for cooperating with USAID/OFDA in helping thousands of displaced Afghan families,” he said. 

Deputy Governor of Badghis Malikzada also welcomed the aid but said that more would need to be done to alleviate suffering caused by the drought. “Assistance also needs to be provided in places of origin through investment in the agricultural sector, so that people can sustain themselves in their places of origin. We do not want to establish camps in urban centres and create subsidized communities that permanently rely on aid for survival,” he said.

So far, 8,341 families have received non-food relief items, including blankets and household items, and 5,031 have received emergency shelter. The assistance was distributed by IOM, UNHCR, IFRC, DRC, IRC and NRC. UNICEF has committed to cover the needs of an additional 3,000 families. 

 3.5 million people are in need of humanitarian assistance in 20 of the most drought-affected provinces in Afghanistan, UN World Food Programme reported last week.

Afghanistan is currently facing its worst drought in decades. The Afghanistan National Disaster Management Authority (ANDMA) and humanitarian partners have so far identified 35,549 families (223,100 individuals) displaced in the western provinces of Herat, Badghis and Ghor between January and October 2018.

Of these, 44 per cent or close to 100,000 individuals are children below the age of 18, and 19 per cent are below the age of five. More than half of the displaced have settled in Herat city, 39 per cent are in and around Qala-e-Naw, the provincial capital of Badghis, and the remaining two per cent in other provinces.

The displaced population is desperately poor and lack access to food, water, shelter and health services. Many are living in tents or in the open air with the onset of freezing winter temperatures. 

National Energy Services Reunited Corp. signs an Agreement with Dhahran Techno Valley Company to open a Research Center in Saudi Arabia

The signing ceremony was held at the KFUPM’s headquarters in Dhahran, Saudi Arabia

National Energy Services Reunited Corp. (“NESR”) (NASDAQ: NESR) (NASDAQ: NESRW) (www.NESR.com), a national, industry-leading provider of integrated energy services in the Middle East and North Africa (“MENA”) region, through its subsidiary, National Oil Technology Company, on Monday signed an agreement with Dhahran Techno Valley Company (“DTVC”), a wholly owned subsidiary of King Fahd University of Petroleum (“KFUPM”). The agreement calls for the creation of a global center for the development of scientific research in DTVC.

The agreement was signed by Prof. Dr. Sahel N. Abduljauwad, Acting Rector of King Fahd University of Petroleum and Minerals, and Chairman of the Board of Directors of Dhahran Techno Valley Company, and Sherif Foda, CEO and Chairman of NESR, in the presence of senior management of Saudi Aramco led by Dr. Mohammed Y. Al-Qahtani, Senior Vice President for Upstream, Saudi Aramco and Chairman of the DTVC Advisory Committee. The signing ceremony was held at the KFUPM’s headquarters in Dhahran, Saudi Arabia.

Prof. Dr. Abduljauwad stated, “We are very proud to have NESR join Dhahran Techno Valley and I am very pleased to see this level of investment from NESR to promote scientific research and local content in the energy sector in Saudi Arabia. I am confident that NESR will add significant value to Dhahran Techno Valley and the Saudi oil and gas industry with this investment and commitment.”

Prof. Dr. Abduljauwad added, “Dhahran Techno Valley brings together the largest number of national and international energy companies in one place and is now the largest of its kind in the world. Techno Valley provides the necessary infrastructure, services, and the appropriate climate to incubate the development of new technologies as part of the implementation of the Saudi Vision 2030. The Saudi Vision 2030 emphasizes the importance of strengthening the technology sector in general, and energy technologies in particular, in order to support the knowledge-based economy.”

Dr. Qahtani stated, “We are very pleased to see NESR as the first company from this region investing at such a scale. I also believe that NESR’s approach to create an open platform for innovative technology companies to come to the Kingdom is a unique approach and will be beneficial to the Saudi oil and gas industry. I look forward to seeing the results of their efforts and wish them the best for the future.”

Sherif Foda commented, “We are very excited to partner with Techno Valley and KFUPM. We strongly believe that with this investment, we are taking an important step to develop fit-for-purpose techniques and technologies for Saudi Arabia as well as the whole region. This is a key milestone for NESR and we plan to also bring our technical partners from North America to this center, which will allow them to customize and develop technologies in Saudi Arabia for the local industry. This will also be a great opportunity to provide high-end technical opportunities for Saudi engineers and researchers and an important vehicle for partnership between the Saudi academic and industrial sectors.”

Mr. Foda added, “I would like to take this opportunity to thank Prof. Dr. Abduljauwad and Dr. Qahtani and the management of Saudi Aramco, KFUPM and DTVC for their support and guidance in this endeavor.”

Founded in 2017, NESR (www.NESR.com) is one of the largest national oilfield services providers in the MENA and Asia Pacific regions. With over 3,200 employees, representing more than 40 nationalities in over 14 countries, the Company helps its customers unlock the full potential of their reservoirs by providing Production Services such as Cementing, Coiled Tubing, Filtration, Completions, Stimulation and Fracturing, and Nitrogen Services. The Company also helps its customers to access the reservoirs in a smarter and faster manner by providing Drilling and Evaluation services like Drilling Downhole Tools, Directional Drilling Fishing Tools, Testing Services, Wireline, Slickline, Fluids and Rig Services.

Haiti’s security situation remains ‘fragile’: UN representative

UN Photo/Marco Dormino An officer from the Indian Formed Police Unit (FPU), working with Brazilian UN peacekeepers, helps to secure the perimeter of a bank in downtown Port-au-Prince, Haiti.

Haitian authorities must do more to prepare the Caribbean island nation for the planned withdrawal of the country’s UN peacekeeping mission, Bintou Keita, Assistant Secretary-General for Peacekeeping Operations, told the Security Council on Thursday.

Ms. Keita was presenting the Secretary-General’s report, a review of the work of The UN Mission for Justice Support in Haiti (MINUJUSTH), the Government, and the UN country team and external partners, as the country prepares for the transition withouta UN peacekeeping presence, scheduled to take place in October 2019.

Ms. Keita told the Security Council that several challenges remain, and dedicated action must take place to ensure the transition is a success.

These challenges, she said, include the violent protests that took place in July. These were sparked by a Government announcement of fuel price increases, and included widespread looting in the capital, Port-au-Prince, as well as in other cities.

In that instance, MINUJUSTH assisted the Haitian National Police in protecting the civilian population, and the crisis was quickly overcome. But the outbreak of violence, the worst seen in Haiti for several years, demonstrates the current volatility of the security situation, she intimated.

In addition, at a time when armed gangs continue to pose a threat, the number of police officers per 1,000 citizens has dropped to 1.32, and dedicated intervention is needed if the development plan of the Haitian National Police is fully implemented.

Several targets have not been met: a national action plan for human rights has not been implemented, a Permanent Electoral Council has not been nominated, and women are not represented in key state institutions. Ms. Keita added that progress hinges on the adoption and promulgation of key rule of law legislation, including the criminal code, and that these problems must be addressed by a fully-functioning Government.

MINUJUSTH, briefed Ms. Keita, has outlined a clear political strategy for the transition, working in close cooperation with international partners. Given the October deadline for the end of the UN’s peacekeeping role in Haiti, she stressed that the Mission, country team, Government and other partners, will need to “redouble their efforts” to make up for the time lost because of challenges that emerged from the July incidents, and expressed her hope that the Security Council will continue to provide strong support.

UNHCR and IOM Chiefs Call for More Support as the Outflow of Venezuelans Rises Across the Region

The UN High Commissioner for Refugees Filippo Grandi and the Director General of the United Nations Migration Agency, IOM, William Lacy Swing appealed for greater support from the international community to the countries and communities in the region receiving a growing number of refugees and migrants from Venezuela.

IOM is supporting the relocation of Venezuelans from Boa Vista to Sao Paulo and Manaus, Brazil. Photo: IOM

With an estimated 2.3 million Venezuelans living abroad, more than 1.6 million have left the country since 2015, 90 per cent of them to countries within South America.

Grandi and Swing commended States in the region for generously hosting Venezuelan nationals arriving at their borders. They nonetheless expressed concern over several recent developments affecting refugees and migrants from Venezuela. These include new passport and border entry requirements in Ecuador and Peru, as well as changes to the temporary stay permits for Venezuelans in Peru.

“We recognise the growing challenges associated with the large scale arrival of Venezuelans. It remains critical that any new measures continue to allow those in need of international protection to access safety and seek asylum,” stressed Grandi.

“We commend the efforts already made by receiving countries to provide Venezuelans with security, support and assistance. We trust that these demonstrations of solidarity will continue in the future,” said IOM´s Director General, Ambassador Swing, in Geneva Thursday.

Of particular concern are the most vulnerable—such as adolescent boys and girls, women, people trying to reunite with their families and unaccompanied and separated children who are unlikely to be able to meet documentation requirements and will therefore be placed at further risk of exploitation, trafficking and violence.

UNHCR, IOM, UN agencies and other partners are working in support of national responses by governments in the region to this complex human mobility and protection situation. This current situation underlines the urgent need to increase international engagement and solidarity in support of the governments’ response plans and addressing the most pressing humanitarian needs, in order to assure that those are met, safe transit is guaranteed and social and economic integration can be provided in line with larger development strategies.

Following the commitments of the New York Declaration for Refugees and Migrants, timely and predictable support by the international community is needed for fairer sharing of responsibilities and to complement the efforts of host countries.

UN Agencies, Government Distribute LPG Stoves to Rohingya Refugees, Bangladeshi Villagers to Save Remaining Forests

A major environmental project to provide around 250,000 families with liquid petroleum gas (LPG) stoves and gas cylinders has been launched by UN agencies and the government in Cox’s Bazar, Bangladesh, to help prevent further deforestation linked to the Rohingya refugee crisis.

UN agencies and Bangladesh government launch alternative fuel project in Cox’s Bazar to help reduce deforestation linked to Rohingya crisis. Photos: Patrick Shepherd FAO/IOM

At the official launch of phase one of the project yesterday (16/08), over 300 local villagers identified by local officials as extremely vulnerable and in need of support were the first to receive stove and gas sets. Thousands more will be distributed to Rohingya refugees and other host community families over the coming months.

The alternative fuel initiative is being organized by the UN Migration Agency (IOM), UN Food and Agriculture Organisation (FAO), World Food Programme (WFP) and UN Refugee Agency (UNHCR), working closely with Bangladesh’s Ministry of Disaster Management and Relief (MODMR) and Commissioner for Refugee Repatriation and Relief (RRRC).

The launch was attended by senior Bangladeshi officials including Commissioner for Refugee Repatriation and Relief Mohammad Abul Kalam, Divisional Commissioner for Chittagong Mohammad Abdul Mannan, and Deputy Commissioner for Cox’s Bazar Mohammad Kamal Hossain.

Cox’s Bazar was home to significant areas of protected forest and an important wildlife habitat. But the arrival of over 700,000 Rohingya refugees fleeing violence in Myanmar over the past year led to massive deforestation as desperate families cut down trees and cleared land to make space for makeshift shelters.

With refugees and many local villagers almost entirely reliant on firewood for cooking, that damage has continued, and forest is being cleared at a rate of 700 metric tonnes – the equivalent of around four football fields of trees – each day. If cutting continues at the current rate, the area’s forest will be completely destroyed by the end of 2019, according to UN estimates.

“This is a vitally important project which will not only help mitigate and redress deforestation and environmental damage but will also play an important role in improving health and safety in the local and refugee communities,” said Sanjukta Sahany, head of IOM’s transition and recovery team in Cox’s Bazar.

Smoke from firewood being burned in homes and shelters without proper ventilation is a significant cause of health problems, particularly among women and young children, who spend much of their time indoors.

The reliance on firewood has also raised protection concerns, with most wood collection being carried out by children, who have had to venture further from homes to find wood, as the forest has been cut back. Competition for this increasingly rare resource is also a growing source of conflict between the refugees and local communities.

“By curbing the extraction of firewood from the remaining forests, it allows us to protect, re-enter and replant,” explained Peter Agnew, FAO’s emergency response coordinator in Cox’s Bazar. He noted that the alternative fuel project is part of the wider SAFE Plus project, which is designed to improve economic livelihoods for host communities, and in turn overall food security, as well as the resilience of the refugees, by empowering them through skills development.

“Over the next three years, several thousand people from the local and refugee communities will have livelihood opportunities working on forest rehabilitation with the SAFE Plus project, in coordination with the forestry department,” he said.