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WEIGHED DOWN BY OIL SECTOR

GCC economic activity drops 30pc

DUBAI, July 3, 2015

The economic activity in the Gulf Cooperation Council (GCC) fell by just under 30 per cent during the first half of the year, according to three key metrics.

The value of contracts awarded during the first half of the year in the Gulf Cooperation Council (GCC) fell 26 per cent, when compared with the same period last year, according to the latest data from regional projects tracker MEED Projects

The awards during the period was $75 billion, down from $102 billion during the comparable period last year.

MEED reported in May that the projects market was underperforming in 2015 when compared with 2014.

The report also noted that there were two other data points that showed a similar decline in economic activity.

The total mergers and acquisitions (M&A) activity targeting the region dropped 19.4 per cent to $18.9 billion in the first half of the year.

Meanwhile, the value of deals was the lowest since 2009, signalling a lack of confidence in the home markets. The domestic activity also fell 52 per cent to $9.1 billion, said the data from UK-based Mergermarket.

The expectations for earning on the Saudi Stock Exchange (Tadawul) also suggested a near 30 per cent drop in economic activity.

The local Al-Rajhi Capital Research anticipated earnings for the companies it covers to dip 27 per cent year-on-year for the second quarter of the year.

The firm said the market has been weighed down by the petrochemicals sector, which is expected to report near 34 per cent lower earnings on account of weak product prices and shutdowns at various operations.

The three metrics have outperformed oil prices. According to the US’ Energy Information Administration, the average daily spot price for Brent Crude was $57.82 a barrel during H1, down 46.9 per cent on the average daily price of $108.93 during H1 last year. - TradeArabia News Service




Tags: Meed | project | contract | deal | M&A |

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