Monday, May 30, 2016
Funds crunch hits Gulf nations' projects; Is Opec relevant anymore?; A male majority in Sweden
1 Funds crunch hits Gulf nations’ projects (Babu Das Augustine in Gulf News) Lower oil prices will constrain the amount of funding available to GCC governments to finance capital and infrastructure projects which will force them to look at alternate solutions according to audit, consulting and financial advisory firm Deloitte.
“Spending in the region will need to be better prioritised in order to ensure it meets social and economic development. Governments will have to seek for the private sector involvement, innovate and find alternative funding sources to fund their project requirements,” said Cynthia Corby, Audit partner and Middle East Infrastructure and Capital Projects leader at Deloitte.
Shrinking banking sector liquidity and rising funding costs are expected to increase cost of bank funding for projects across the GCC. Overall bank liquidity in the Gulf region started to weaken visibly from the second half of 2015, and the trend is expected to continue this year.
According to Deloitte’s Middle East Powers of Construction report, the announced country budgets for 2016 outline cuts on spending imposed by low oil prices, but in a measured way, as well as the introduction of new income sources. Saudi Arabia is planning to reduce spending by 11 per cent this year to$227 billion.
The UAE, the most diversified economy among the GCC countries, is set to register the first current account deficit in decades, which is expected to widen to Dh129 billion this year. The IMF has urged the UAE to pursue growth-enhancing reforms and advance economic diversification. In 2015, fuel subsidies were eliminated which has produced significant savings.
Kuwait introduced a new PPP law in March 2015 while Oman is preparing regulations to enable the use of PPPs to develop major infrastructure and housing projects. In Qatar, the potential for PPPs is significant, considering its $125 billion infrastructure investment program to support its National Vision 2030 economic development plan.
2 Is Opec relevant anymore? (Debbie Carlson in The Guardian) As the Organization of Petroleum Exporting Countries (Opec) meets on 2 June, questions are rising about the oil cartel’s continuing relevance. Many Opec members have suffered as the oil price has collapsed and countries, most notably Saudi Arabia and Iran, have fought to retain market share rather than set prices by adjusting production.
Crude-oil prices briefly fell under $30 a barrel for both Brent and West Texas Intermediate earlier this year, but have rebounded, with values touching $50 for Brent last week. Unarguably the price war has hurt the US shale industry as many Opec members had wanted. Increased demand because of the low prices is adding to their optimism that the price war has worked. The higher prices mean oil producers can breathe a little easier, although even at $50 those prices aren’t making money.
The lack of consensus has many in the oil market questioning whether Opec remains relevant any more, especially as non-Opec producers like the US are a big part of the global oil market now. John England, vice-chairman, US and Americas oil and gas leader for Deloitte, said the global oil surplus created by Opec overproduction and US shale output left Opec in a tricky position.
“Suppliers have more power in times of scarcity. Right now we’re perceived to be in a time of abundance in terms of oil supply. The inability to reach consensus has limited their ability to impact the market the way they have in the past. So I think they’ve been less relevant,” England said.
But Opec is not dead, he adds, noting they have weathered commodity cycles before. Carsten Fritsch, commodities analyst at Commerzbank, agreed that for now the cartel seems obsolete, but when total supply and demand become balanced, Opec may become important again.
3 A male majority in Sweden (San Francisco Chronicle) Famous for its efforts to put women on an equal footing with men, Sweden is experiencing a gender balance shift that has caught the country by surprise: For the first time since record-keeping began in 1749, it now has more men than women.
Swedes don't quite know what to make of this sudden male surplus, which is highly unusual in the West, where women historically have been in the majority in almost every country. But it may be a sign of things to come in Europe as changes in life expectancy and migration transform demographics.
Despite a natural birth rate of about 105 boys born for every 100 girls, European women have historically outnumbered men because they live longer. An Associated Press analysis of national and European Union population statistics suggests women will remain in the majority in most European countries for decades to come. But the number of men per 100 women, known as the sex ratio, is increasing, slowly in Europe as a whole and quickly in some northern and central European countries.
Norway swung to a male surplus in 2011, four years before Sweden, while Denmark and Switzerland are nearing a sex ratio of 100. Germany, which had an unnatural deficit of men after two world wars, has seen its sex ratio jump from 87 in 1960 to 96 last year. Meanwhile, Britain's sex ratio rose from 93 to 97 in the same period. British statistics officials project that men will be in the majority by 2050.
Last year there were 12 million more women than men in the EU, which has a population of just over 500 million people. That gap is projected to narrow in coming decades "mainly because of the decreasing gap in life expectancy," said Eurostat spokeswoman Baiba Grandovska.
Experts say men, particularly in western Europe, are living healthier lives than their fathers, drinking and smoking less, and benefiting from better treatment of heart disease. In wealthy countries, men have moved away from mining and other dangerous occupations to safer white-collar jobs.