Standard & Poor's revises Ras Al Khaimah outlook to positive - Al Khaleej Newspaper
building tourism projects, including the island of Wyn Musandam.
The agency also forecasts that Ras Al Khaimah's mining operations, as well as free economic zones, real estate and ports, will benefit from strong non-oil growth and infrastructure investment in the UAE, GCC and peninsular India.
The revised forecasts also confirm our assessment that Ras Al Khaimah will continue to show strong financial performance, such as the net government asset position and the financial surpluses it held during the pandemic.
The agency forecasts that real GDP growth will average around 4% over the next four years, up from 2.6% between 2012 and 2021.
Sector''The hotel industry accounts for only 4% of the total GDP, but this share is expected to increase with the launch of new projects. Some 22 new hotels are planned to open in the next five to six years, leading to an estimated 90% increase in hotel room capacity.
The Win Musandam project is the largest tourism project. It is expected to open in early 2027 and will include the first theme park in the Gulf region. The 5.6 million square foot project on Musandam Island is expected to cost $3.9 billion or about 30% of Ras Al Khaimah's GDP.
In addition to the variety of tourism offerings in Ras Al Khaimah, it is also expected to increase government revenues''and will have a widespread impact on local companies that supply construction materials, as well as the real estate sector, ports, airports and free economic zones.
In September, the UAE federal government set up an organization to regulate the gaming industry, and Ras Al Khaimah is expected to receive the first gaming license under Win.
The agency also forecasts a more favorable outlook for the mining sector in Ras Al Khaimah. Accelerating construction projects in the UAE, Kuwait, India and Bangladesh are contributing to strong demand for mining products in the medium term.
Stevin Rock, one of the largest limestone mining companies in the world, 100% owned''s Ras Al Khaimah government, is supplying rocks for major projects in the UAE.
The major contracts include the construction of artificial islands for the Ghasha gas project owned by Abu Dhabi National Oil Company, the construction of a railroad from the Al Ghail quarry owned by Stevin Rock in Ras Al Khaimah to Abu Dhabi as part of the UAE's national railroad, and real estate development on Dibba Jebel Ali Island in Dubai.
The agency views Ras Al Khaimah's economy as more diverse than most of its neighbors in the Gulf Cooperation Council. There is no one sector that significantly determines economic activity, as this includes manufacturing, wholesale and retail trade, a''also construction/real estate and mining, which together account for about 50% of total GDP.
In addition, the agency notes that Ras Al Khaimah has historically maintained a conservative financial policy characterized by recurring financial surpluses and net assets. The agency expects the emirate to achieve a government financial surplus of 1% of GDP by 2023.
This financial strength may be tested in the period leading up to the development of Musandam Island and the opening of Wyn Resort, however, due to large capital expenditures. Major development projects include housing, roads and other infrastructure not covered by federal''funding, information technology and the expansion of the Ras Al Khaimah Free Economic Zone.
We currently expect much of this expenditure to be financed through the sale of land on Musandam Island, which will affect revenues where the property bonds will be transferred over two or three years in the next three years. Thus, we expect the government to maintain a small fiscal surplus of around 0.7% of total GDP over the period from 2023 to 2026, compared to an average of 2.0% over the past five years.
We also expect economic expansion to continue to boost value-added tax (VAT) revenues, indirect taxes and stock returns''state-owned enterprises (SOEs). Dividend payments from public investments are expected to remain stable over the forecast period, averaging about 0.6 percent of total GDP, equivalent to 7 percent of total financial income.
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