MENA shipping industry displays resilient growth backed by oil exports, according to a recent study by Kuwait-based Global Investment House. It said robust growth in international trade over the last decade and increasing freight rates are driving the gains in the shipping industry. Freight rates are driven by the interplay of demand for commodities and supply of carrier vessels. Increased demand for energy from BRIC (Brazil, Russia, India and China) economies is expected to drive the demand for crude oil upwards despite deceleration in the western economies' growth. The International Energy Agency (IEA) has estimated a 1.5 percent year-on-year (YoY)increase of in world energy consumption in 2007 and further forecasted a YoY increase of 2.4 percent in 2008. Accordingly, the worldwide oil consumption is expected to increase from 85.9 million barrels per day in 2007 to 87.9 million barrels per day in 2008. The population projections for the period up to 2030 indicates the growth in population of the OECD countries at a 22 year (2008-2030) CAGR of 0.4 percent from the current 1.2 billion to 1.3 billion, whereas that of the non-OECD countries should increase at a 22 year (2008-2030) CAGR of 1.4 percent from 4.9 billion to 6.6 billion. As a result, the world demand is set to grow to 118 million barrels per day by 2030. This increase in demand necessitates the transport of oil and redistribution of shipping movements to cater to the ever-increasing consumption. Continued demand for oil and dry bulk transportation from emerging and developing countries is linked to strong demand in raw commodities (such as oil, iron ore and coal). The short supply of capacities help increase the freight rates through 2010, the report said. Moreover, port and docking infrastructure remains a contributor to congestion, however although congestion is decreasing, freight rates rise. The IMF expects that the Middle East and Central Asia Department (MCD) region is expected to remain comparatively resilient to global uncertainty. The IMF said the short-term outlook remains favorable and has changed little compared with its projections in the October 2007 Regional Economic Outlook In oil exporting countries, growth is expected to remain at about 6.3 percent, with a pickup in oil production compensating for a moderate slowdown in the non-oil sectors. Large investments made in previous years should support productivity gains and sustain high growth. In the GCC countries, given the comfortable foreign asset position, government-planned investment programs are likely to be maintained even if oil prices decline. But the global credit squeeze could affect the pace of project implementation.
