Gulf Economic Update

Gulf Economic Update

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Saudi Arabia UAE 10 8 8 6 6 4 4 2 2 0 0 -2 -2 2010 2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018 Q1-2019 Q2-2019

Non-oil contribution to growth, percentage points Q1-2019 Q2-2019 Oil contribution to growth, percentage points Non-oil contribution to growth, percentage points Oil contribution to growth, percentage points GDP growth, percent GDP growth, percent

Qatar Kuwait 6 10 8 4 6 4 2 2 0 0 -2 -4 -2 -6 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018 Q1-2019 Q2-2019 Q1-2019 Q2-2019 Non-oil contribution to growth, percentage points Non-oil contribution to growth, percentage points Oil contribution to growth, percentage points Oil contribution to growth, percentage points GDP growth, percent GDP growth, percent

Oman 10 6 8 4 6 4 2 2 0 0 -2 -2 2010 2011 2012 2013 2014 2015 2016 2017 2018 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1-2019 Q2-2019 Q1-2019 Q2-2019 Non-oil contribution to growth, percentage points Non-oil contribution to growth, percentage points Oil contribution to growth, percentage points Oil contribution to growth, percentage points GDP growth, percent GDP growth, percent

- – 2019: Difference from 2018 2018 2019: Change from 2018 2018 0.0 0.10 200 1.5 12 180 -0.2 10 0.05 160 -0.4 140 1.0 0.00 8 -0.6 120 6 -0.8 -0.05 100 0.5 -1.0 80 4 -1.2 -0.10 60 0.0 2 -1.4 -0.15 40 20 Jul Jan Sep Mar 0 May 0 -0.5

Saudi Arabia (lhs) Jul Jan Jun Apr Feb Sep UAE UAE Mar May UAE (rhs) Aug Qatar Oman Oman Kuwait Kuwait Kuwait (rhs) Bahrain Bahrain Qatar (rhs) Kuwait Bahrain Oman (rhs) Saudi Saudi Arabia

Saudi Saudi Arabia Bahrain (rhs)

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- - 12 10 8 6 4 2 0 -2 - Q1-2015 Q2-2015 Q3-2015 Q4-2015 Q1-2016 Q2-2016 Q3-2016 Q4-2016 Q1-2017 Q2-2017 Q3-2017 Q4-2017 Q1-2018 Q2-2018 Q3-2018 Q4-2018 Q1-2019 Q2-2019 Saudi Arabia UAE Qatar - Kuwait Oman Bahrain

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Residual Saudi Arabia Educ., Health, Prof. Svcs. Qatar 2.0 Public adm. & defense 1.5 1.5 Bank., ins. & real estate 1.0 Wholesale & retail trade 0.5 1.0 Transp., storage & 0.0 0.5 comm. Elect., gas, & water -0.5 0.0 Construction -1.0 -0.5 Manufacturing -1.5 -1.0 Mining and quarrying -2.0 -1.5 Agriculture -2.5 Q1-2019 Q2-2019 GDP growth yoy Q1-2019 Q2-2019

Kuwait Bahrain

2.0 3.5 3.0 1.5 2.5 1.0 2.0 0.5 1.5 1.0 0.0 0.5 -0.5 0.0 -0.5 -1.0 -1.0 -1.5 -1.5 Q1-2019 Q2-2019 Q1-2019 Q2-2019

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64 -- - 57 - 50+ = expansion 50 <50 = contraction 43 36 Jul-2015 Jul-2016 Jul-2017 Jul-2018 Jul-2019 Jan-2015 Jan-2016 Jan-2017 Jan-2018 Jan-2019 Oct-2015 Oct-2016 Oct-2017 Oct-2018 Oct-2019 Apr-2015 Apr-2016 Apr-2017 Apr-2018 Apr-2019 Saudi Arabia UAE Qatar 10 4.3 5

0 -5 -4.2 -4.7 - -10 -9.4 -15 -15.7 -20 Saudi Arabia Qatar Kuwait Oman Bahrain Fiscal balance, % GDP - - -

5 0 - -5

-10

-15 Q1-2019 Q2-2019

-- Saudi Arabia UAE Qatar Kuwait Oman

–

80 120 70 100 60 80 50 60 40 30 40

20 20 10 0 0 Bahrain Oman Qatar Saudi Arabia UAE Kuwait Saudi Arabia Qatar UAE Oman Bahrain Kuwait Q1-2015 Q2-2019 2011 2019f

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80 150 60 100 40 20 50 0 0 -20 -50 -40 -60 -100 Q1-2015 Q2-2015 Q3-2015 Q4-2015 Q1-2016 Q2-2016 Q3-2016 Q4-2016 Q1-2017 Q2-2017 Q3-2017 Q4-2017 Q1-2018 Q2-2018 Q3-2018 Q4-2018 Q1-2019 Q2-2019 Q1-2015 Q2-2015 Q3-2015 Q4-2015 Q1-2016 Q2-2016 Q3-2016 Q4-2016 Q1-2017 Q2-2017 Q3-2017 Q4-2017 Q1-2018 Q2-2018 Q3-2018 Q4-2018 Q1-2019 Q2-2019 Saudi Arabia Qatar Kuwait Oman Bahrain Qatar Oman

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80 250 60 60 200 40 40 150 20 100 20 0 50 0 -20 0 -40 -50 -20 -60 -100 -40 Q1-2015 Q2-2015 Q3-2015 Q4-2015 Q1-2016 Q2-2016 Q3-2016 Q4-2016 Q1-2017 Q2-2017 Q3-2017 Q4-2017 Q1-2018 Q2-2018 Q3-2018 Q4-2018 Q1-2019 Q2-2019 Q1-2015 Q2-2015 Q3-2015 Q4-2015 Q1-2016 Q2-2016 Q3-2016 Q4-2016 Q1-2017 Q2-2017 Q3-2017 Q4-2017 Q1-2018 Q2-2018 Q3-2018 Q4-2018 Q1-2019 Q2-2019 Saudi Arabia UAE Qatar Saudi Arabia UAE Oman Bahrain Kuwait (rhs) Qatar Kuwait Oman Bahrain

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5.0 3.5 Jul, Sep, Oct 2019: U.S. 4.0 cuts Fed rate 25 bp each 3.0 2.5 3.0 2.0 2.0 1.5

1.0 Dec 2018: U.S. raises Fed 1.0 0.0 rate 16.25 bp 0.5 0.0 Jul-2015 Jul-2016 Jul-2017 Jul-2018 Jul-2019 Jan-2015 Jan-2016 Jan-2017 Jan-2018 Jan-2019 Oct-2015 Oct-2016 Oct-2017 Oct-2018 Oct-2019 Apr-2015 Apr-2016 Apr-2017 Apr-2018 Apr-2019

Saudi Arabia UAE Qatar Jul-2015 Jul-2016 Jul-2017 Jul-2018 Jul-2019 Jan-2015 Jan-2016 Jan-2017 Jan-2018 Jan-2019 Oct-2015 Oct-2016 Oct-2017 Oct-2018 Oct-2019 Kuwait Oman Bahrain Apr-2015 Apr-2016 Apr-2017 Apr-2018 Apr-2019 U.S. SIBOR EIBOR

7.0 30 Credit growth averaged 6.7 percent yoy in Q1-Q2 2019 6.0 25 5.0 20 Compared to 4.8 percent 4.0 15 yoy in Q1-Q2 2018 3.0 10 2.0 5 1.0 0 -5 0.0 Q1-2015 Q2-2015 Q3-2015 Q4-2015 Q1-2016 Q2-2016 Q3-2016 Q4-2016 Q1-2017 Q2-2017 Q3-2017 Q4-2017 Q1-2018 Q2-2018 Q3-2018 Q4-2018 Q1-2019 Q2-2019 Q1-2019 Q2-2019 Q3-2019 Q1-2019 Q2-2019 Q1-2019 Q2-2019 Q3-2019 Q1-2019 Q2-2019 Q3-2019 Qatar Kuwait Oman Bahrain Qatar Bahrain Kuwait Lending rate, nominal Lending rate, real Oman UAE Saudi Arabia

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6 6

4 4 2 2 0 0 -2

-4 -2

-4 Oct-19 Jul-2015 Jul-2016 Jul-2017 Jul-2018 Jul-2019 Jan-2015 Jan-2016 Jan-2017 Jan-2018 Jan-2019 Oct-2015 Oct-2016 Oct-2017 Oct-2018 Apr-2015 Apr-2016 Apr-2017 Apr-2018 Apr-2019 Saudi UAE Qatar Kuwait Oman Bahrain Saudi Arabia UAE Qatar Arabia Kuwait Oman Bahrain 2017 2018 2019f 2020f 2021f

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- 8 - 4 0 -4 -8 2017 2017 2017 2017 2017 2017 2019f 2021f 2019f 2021f 2019f 2021f 2019f 2021f 2019f 2021f 2019f 2021f Saudi UAE Qatar Kuwait Oman Bahrain Arabia Net exports of goods and services Fixed investment Public consumption Private consumption GDP - - - - -- — — —- - - - - -

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5 120

0 100 Bahrain Oman 80 Saudi Arabia -5 UAE 60 Kuwait Qatar -10 40 20 -15 0 2016 2017 2018 2019f 2020f -20 Crude oil price, average Bahrain Saudi Arabia UAE Qatar Kuwait Oman Bahrain Oman Saudi Arabia 2017 2018 2019f 2020f 2021f UAE Kuwait Qatar

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– - 250 - Japan 200 -— - 150

2024 100 50

0 0 50 100 150 200 250 2017 Saudi Arabia UAE Qatar Kuwait Oman Bahrain OECD countries - - - -

20 15 10 5 0 -5 -10 -15 -20 Saudi UAE Qatar Kuwait Oman Bahrain Arabia - 2017 2018 2019f 2020f 2021f - - 120 100 - 80 - 60 40 20 0 2016 2017 2018 2019f 2020f - Crude oil price, average Bahrain Oman Saudi Arabia - Qatar Kuwait UAE

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Bahrain UAE Oman 82% (2018) 70% (2018) 59% (2018) 44% (2000) 69% (2010) 33% (2000) Saudi Arabia Qatar Kuwait – 57% (2018) 53% (2018) 48% (2018) –- 40% (2000) 43% (2000) 50% (2010) - - - -- - -

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2017 2018 2019 2020 2021 2.5 Kuwait (2.1) VAT Saudi Arabia Saudi Arabia, UAE, UAE 2.0 Oman (2.0) Qatar Bahrain (1.9) Kuwait 1.5 Oman Qatar (1.9) 1.0 Bahrain UAE (0.5) Saudi Arabia (0.4) 0.5 Excise Saudi Arabia Kuwait (0.2) Taxes UAE 0.0 Qatar Expected VAT revenue, % GDP Kuwait Oman Expected excise tax revenue, % GDP Bahrain

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6000 600 2.0 500 5000 1.5 400 4000 300 1.0 200 3000 0.5 100 2000 0 0.0 1000 UAE Saudi Kuwait Qatar Oman Bahrain Arabia 0 Biomass Wind Concentrated solar power 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Photovoltaic Saudi Arabia UAE Qatar Kuwait Oman Bahrain Share of renewables in total electricity capacity, percent (rhs)

– 80 35 Saudi Arabia 50 40 30 60 30 25 40 20 20 20 10 15 0 0 2023 2023 2030 2016 2025 2030 2035 2050 10 rev. 5 Concentrated solar power UAE Dubai

0 Wind Kuwait Oman 2020f 2025f 2030f 2035f 2040f Solar photovoltaic Bahrain

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20 12 100 10 15 8 90

10 6 80 4 5 2 70 0 0 60 Bahrain UAE Kuwait Qatar Oman Saudi Arabia 15+) past age year(%

Made digital in paymentstheMadedigital 50 Financial services - gross value added, percent of GDP, 2018 (lhs) 50 60 70 80 90 100 Average annual growth rate, 2011-18 (rhs) Have financial institution account (% age 15+) Saudi Arabia UAE Kuwait Bahrain OECD countries

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90 CHE

85 FRA

DNK y = 9.6151ln(x) - 29.468 MLT SWE R² = 0.4205 GBR 80 AUT LUX ESP DEUFIN ISL IRL NOR ITA BEL NZL NLD JPNISR AUS 75 GRC CYP PRT CAN USA SVK LTU 70 QAT TTO CZE SVN

2018 EPI Score 2018EPI SYCLVA HRV HUNURY POL EST SGP 65 BRN PAN KORKWT

60 ATG ARE CHL SAU

BHR 55

OMN

50 10,000 30,000 50,000 70,000 90,000 110,000 130,000 GDP Per Capita US$ Current

EPI 2018 Log. (EPI 2018)

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Low Medium-Low Medium-high High Very High

Bahrain UAE Qatar - Saudi Arabia Kuwait Oman -- -- MENA (excluding GCC) OECD <10% 10-20% 20-40% 40-80% >80% - Water withdrawals as % surface freshwater availability Domestic consumption (litres/person/day) Qatar UAE Kuwait Bahrain Saudi Arabia Oman

Australia - Chile Germany 0 100 200 300 400 500 600 700 -

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Emissions Intensity (Greenhouse Gases (GHG) per unit GDP, GDP per Capita, and Total Emissions, 2014 120,000

100,000

NOR

80,000

QAT 60,000 USA

CAN ARE 40,000

GDP per Capita, USD Capita, per GDP KWT

SAU BHR 20,000 CHN OMN BRA RUS MEX IRN

0 -200 0 200 400 600 800 1,000 1,200 1,400 1,600

-20,000 GHG per GDP, tons per 1$M

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0.6

0.5 of of GDP

0.4

(ton (ton CO2/1000$) 0.3 Emission Intensity Emission

0.2 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Bahrain Kuwait Oman Qatar Saudi Arabia

Export Share by Product Category 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 20132017 20132017 20132017 20132017 20132017 20132017 BHR KWT OMN QAT SAU UAE

oil and gas Emission intensive industry rest of the economy

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TOTAL WEALTH

Net Produced Human foreign Natural Capital Capital Capital assets

Machinery, Subsoil Forests, Sum of Agricultural Ocean Renewable Female/male, equipment, Urban land energy and protected employed/ assets and land accounts energy structures minerals areas self-employed liabilities

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50

Qatar 40 Brunei Darussalam

30 Algeria Suriname Kuwait Botswana Indonesia Saudi Arabia India China Norway 20 Morocco Azerbaijan Vietnam Bahrain Ecuador 10 Russian Federation Kazakhstan

2015), percent percent of 2015),GNI Chile - Mongolia 0 Kyrgyz Republic Mali Guyana Mauritania Mozambique Cameroon Ghana -10 Trinidad and Tobago Oman Lao PDR Sierra Leone Sudan -20 Zimbabwe

-30

Adjusted Net Adjusted average Saving, (2011 Togo

Liberia -40 Angola

Guinea -50

-60 0 10 20 30 40 50 60 Energy and mineral rents, average (2011-2015), percent of GNI

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Produced Capital Renewable Natural Human Capital ·High-tech cities of Neom and Masdar Capital •Human capital development ·Knowledge-intensive, non-oil-related ·Renewable energy generation (e.g., vocational training, labor sectors (e.g., digital economy, and localization market flexibility and skills- industrial equipment, precision ·Renewable-energy-based transfer programs) machinery) desalination •Improved government · Financial-sector development and ·Protection and rehabilitation accountability and fintech programs of natural landscapes (e.g., transparency ·Nature-based solutions, eco-tourism beaches, islands, nature •Increased participation of ·Investments in urban services reserves) and the prevention women in the labor market including utilities, public and clean- of desertification •Attracting foreign workers fuel transportation ·Sustainable tourism with skills in green and digital ·Private sector stimulus plans development technologies and adopting ·CCS ·Sustainable use of water new business models •Products and materials made from resources •Improving access to high- quality, affordable healthcare captured CO2 (CCU), certified recycled polymers, plastic-recycling •Reducing air, sound, water, technologies and soil pollution

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15 56 1.8

10 54 1.6

5 52 1.4

0 50 1.2

-5 48 1.0

-10 46 0.8 Jan-2015 Jan-2016 Jan-2017 Jan-2018 Jan-2019 Sep-2015 Sep-2016 Sep-2017 Sep-2018 Sep-2019 May-2015 May-2016 May-2017 May-2018 May-2019 Jul-2018 Jul-2019 Jan-2019 Jun-2019 Oct-2018 Oct-2019 Apr-2019 Sep-2018 Feb-2019 Sep-2019 Dec-2018 Aug-2018 Aug-2019 Nov-2018 Mar-2019 World trade volume (lhs) May-2019 World industrial production (lhs) Global manufacturing PMI (rhs) OPEC IEA U.S. EIA

2.0 100 30 1.5 2-year yield used as baseline 80 25 to put curves on similar scale 1.0 20 60 0.5 15 40 0.0 10 -0.5 20 5 -1.0 0 0 1 Mo 3 Mo 6 Mo 1 Yr 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr 2017 2018 May-2019 Sep-2019 Oct-2019 Dec-2019 Dec 31, 2016 Dec 31, 2017 Percent of U.S. imports from China covered by tariffs (lhs) Average tariff rate on U.S. imports from China, percent (rhs) Dec 31, 2018 Aug 27, 2019

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5 6

4 5

3 4 3 2 2 1 1 0 2017 2018 2019f 2020f 2021f 0 2017 2018 2019f 2020f 2021f World, Forecast, Oct 2019 World, Forecast, Jan 2019 Advanced economies Forecast, Oct 2019 Forecast, Jan 2019 Emerging market and developing economies

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50 75 30 10 70 -10 -30 65 -50 -70 60 -90 -110 55 -130 -150 50 Dec 16, 2019 Mar 16, 2019 Jun 15, 2020 Sep 14, 2020 2017 2018 2019f 2020f 2021f

Range Expected Forecast, Oct 2019 Forecast, Jan 2019

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