A roadmap for the licensing round

Government passes oil & gas decrees

global picture.

But there are some reports of regional relevance, just like there are a handful of fun songs about economics. As the World Bank’s regional outlook for the Middle East highlighted last month, the region-wide pace of economic growth this year is forecast to reach 3.1 percent in 2017, after having experienced – for an emerging region unsatisfactory – estimated growth of 2.7 percent for 2016. The outlook, which estimates Lebanese GDP will increase 1.8 percent in 2016 and modestly accelerate to rates of 2.2 percent this year and 2.3 percent in 2018, sees oil importers achieving the strongest gains. Specifically, Saudi Arabia is forecast to grow by a quite meager rate of 1.6 percent in 2017, but this will be an improvement in comparison to the estimate for 2016.

The factors to watch in this regard are regional developments involving friends as well as more distant neighbors and those, whether states or non-state actors, that have shown themselves as outright foes of Lebanese progress. Besides the hope for positive change from the Lebanese parliamentary elections, it seems prudent to pay careful attention to developments in the economies of the Gulf Cooperation Council countries.

Shuaa Capital observed in December that Saudi Arabia allocated SAR 890 billion to spending in its 2017 fiscal budget, above both budgetary and actual spending in 2016, and is also planning for a budget deficit of SAR 198 billion in 2017, 40 percent lower than the deficit for 2016.

Estimates by officials in the United Arab Emirates imply that Dubai’s economy will be increasingly on the mend in 2017. In a presentation at the UAE Economic Outlook 2017 event in January, the Chairman of Dubai’s Economic Development Committee Sheikh Ahmed Bin Saeed al-Maktoum said the emirate was expected to grow by 3.1 percent in 2017, after growing 2.7 percent in 2016 in real terms amid an unfriendly regional and global economic climate.

By watching Arab equities – an exercise that is not found everywhere – Credit Suisse in January spoke of “an impressive rally” in Middle East markets, whereby the region’s 17 percent gains in Q4 of 2016 marked the “by far the strongest performance by any region and allowed the Middle East to post a modestly positive return for 2016 overall.”

“After experiencing a contractionary economic environment over the past two years, economic indicators across the Middle East are beginning to show signs of improvement. The oil exporting GCC economies are set to reap the benefits of higher oil prices and progress made on subsidy reform, while Egypt has successfully initiated the politically difficult steps towards preserving its foreign exchange reserves,” wrote Fahd Iqbal, Head of Middle East research at Credit Suisse.

In other moderately encouraging news from the region’s financial industry, the annual investment banking report for the Arab region by Thomson Reuters, which was released last month, said that investment banking fees in the Middle East reached $820.8 million during 2016, an 18 percent year-on-year increase and the highest annual fee total in the region since 2008. According to Thomson Reuters’ analysis, debt issuance in the region was the highest in over 35 years and jumped year-onyear by 145 percent to almost $78 billion, bolstered by Saudi Arabia’s $17.2 billion bond sale in October of last year. On the other hand, merger and acquisition activity, as well as equity issuances in the Middle East, were described as low in comparison to other years, with values of announced M&As with regional participation at $47 billion – the lowest since 2013 – and equity and equity-related issuances at $2.6 billion, which a director at Thomson Reuters said was “a 55 percent decline year-on-year and the lowest annual issuance total in the region since 2004”.

Meanwhile, the outlook for GCC banks is mixed according to ratings agency Standard and Poor’s. S&P Global said the agency expects the financial profiles of GCC banks to “continue to weaken in 2017-2018”, but added that this expectation had been incorporated in ratings and that it considers most GCC banks to have created “sufficient capital buffers to remain resilient to their weakened operating environment”.

In this altogether complex landscape of regional assessments, global risks and more or less fearful anticipations, Lebanon will have to find its place for the best possible economic performance, as well as conduct its domestic politics and business to the best of its capacity. By consensus of many economists, it seems there are reasons, but not enough reasons, to keep on predicting doomsday in the global economy. More likely is that we will muddle along, with risks building underneath and erupting every now and then, without us being able to evade them but also without being destroyed. Same procedure as every year.