Inter-Arab trade volumes have risen from 7% in 2005 to 14% in early 2008, according to a report by the General Union of Arab Chambers. Presented Tuesday in Cairo at a meeting devoted to the examination of how to tap into the European experience in the process of Arab economic integration, the report forecasts the evolution of this rate to 25% in the next few years if the barriers that hamper inter-Arab trade are, as it says, ironed out. However, this rate remains far from the European trade volume, which reached 70% in early 2008, the report added.

Qatar Islamic Bank, the fifth-largest GCC Sharia-compliant lender by market value, is currently performing feasibility studies on three Egyptian banks, ahead of acquiring one of them and restructuring it into an Islamic bank, local media reported on Wednesday. Egypt is not awarding any new banking licenses, part of its medium term plan to trim the banking sector down to a maximum of 30 banks from current 57 operating banks. Therefore regional and foreign banks seeking to expand into the Arab world’s most populous country usually acquire a majority stake or 100% of an already established entity. According to media reports QIB will launch Islamic banking operation in Egypt within the next six to twelve months.

The growing demand from Muslims for investments that comply with the Sharia has spurred several global banking institutions to tap this lucrative market and the Egyptian market offers bright potential for such industry. Moreover, the current credit crunch has in someway benefited the Islamic banking industry which is currently seen as a safe haven with solid and virtually risk-free fundamentals, mainly when it comes to raising funds and issuing bonds. Sukuk are Islamic bonds - generally backed by physical assets - that pay holders rent or a share of profit, though they are priced like conventional bonds.

Dubai-based property developer Limitless on Wednesday unveiled details of its SAR 45bn (USD 12bn) Al Wasl project to be built near the Saudi capital Riyadh. The 1,411-hectare project, which will have 50 mosques, eight shopping complexes, offices, several hotels, one university, health and educational facilities, and 300 hectares of green, open space, will create 55,000 homes for 200,000 people, Saeed Ahmad Saeed, CEO of Limitless, said in a statement. Work on the landscape project is expected to begin by H2/08, with the construction schedule spread over seven years. Al Wasl is the first of several projects in the pipeline for Limitless in Saudi Arabia, where 50,000 new homes are needed each year, according to industry forecasts. Earlier this month, Limitless has successfully concluded a 2-year USD 1.2bn Sharia-compliant syndicated loan with 18 banks from the Middle East, Asia and Europe to finance regional property development projects.

In a long anticipated move following months of political bickering, which has delayed amongst other things crucial economic reforms, between the cabinet and the opposition-controlled assembly; the country’s Emir Sabah Al Ahmad Al Sabah on Wednesday dissolved parliament, citing "irresponsible conduct" and called for early elections on May 17. This is the fifth dissolution of parliament since the house was set up in 1963. Kuwait dived into crisis when all 14 cabinet members on Monday submitted their resignations, claiming that lawmakers were "interfering" in their work and preventing them from carrying out their duties.

Both parties were at odds over many issues, mainly concerning a basket of economic reforms, including a pay hike for civil servants which the government objects to, claiming it has already “given them enough” of a raise. The cabinet has also rejected a parliamentary bill that requires the state to pay off the consumer debts of private citizens incurred from shopping sprees. Kuwait is currently suffering from record inflation levels, which reached 6.68% y/y in Nov 07, down from a peak 7.3% y/y in Oct, the highest in a decade. Like its regional neighbours, Kuwait has undertaken a USD 4bn social welfare program which includes food subsidies, wages and pension hikes and other socio-economic benefits.

Kuwait is seeking to diversify its heavily oil-dependent economy to emulate the success of its neighbours Dubai and Bahrain, which have become regional financial centres. However, a bill to set up a financial regulator and open up the stock market to more foreign investment has been stalled in parliament. On Wednesday, the stock market rallied to an all-time high on investor hopes that a new assembly would endorse economic reform plans. Economic reforms may well be an important part of the long-standing Kuwaiti phenomena. However, another veiled issue also exists and should not be overruled.

The current parliament has been witnessing strong rise in support for Islamists, who have repeatedly criticized the government’s alliance with the US and its stance on the Middle East, including on Iraq and Palestine. Moreover, in the wake of Hizbullah chief Imad Mognieh’s assassination, several Shiaa Kuwaiti deputies held mourning ceremonies and publicly attacked Kuwait’s foreign policy, which triggered a crackdown by the authorities. The new parliamentary elections may well witness the cloning of the previous political groups, a “boomerang” effect that would lead nowhere.

The Iraqi cabinet is expected to ink USD 2.5bn in technical support deals with BP, Royal Dutch Shell, Exxon Mobil, Chevron and Total that would add 500,000 bpd to current production of 2.27mn bpd, Iraq's PM energy adviser Thamir Ghadhban said on Wednesday, adding that he expects the contracts to be signed by early next month. Ghadhban revealed that Iraqi representatives had met with company officials last week in Jordan, to discuss final details of the contracts, including whether payment would be by cash or by oil. The two-year contracts could be extended for an extra year. Shell is negotiating for the northern Kirkuk oilfield and is also in talks, along with BHP Billiton, for the development of the Maysan fields. BP is targeting Iraq's southern Rumaila field, while Exxon wants the contract for the Zubair oil field in Basra.

Iraq's oil exports grew 9.2% in 2007, underpinned by a relative improvement in the security situation in the northern regions, thus allowing additional oil shipments from the 330,000-bpd pipeline linking Kirkuk oil fields to Turkey's Ceyhan terminal on the Mediterranean Sea. Total oil exports in 2007 reached nearly 600mn barrels. Despite the absence of the new oil law, Iraq is forging ahead with plans to lure new foreign oil groups with over 70 companies already submitting applications to take part in the forthcoming exploration and production tenders.

Lebanon's Price Index Committee, composed of representatives of the government, private sector and trade unions, is expected to reach a final agreement on a new minimum wage on March 27, resigned Labor Minister Trade Hamadeh said on Wednesday. Hamadeh told reporters that all of the representatives agreed in principle that the minimum wage should be adjusted. But the Finance Ministry did not send its representative to the meeting on Wednesday, in a move that raised questions about the ability of the committee to enforce any new decisions on the minimum wage. However, sources close to the government said that the ruling coalition will insist that Hamadeh first recognize the legitimacy of the cabinet and start attending meetings again before any new salary increases can be discussed. Lebanon's minimum wage has remained at LBP 300,000 since 1996, with prices of basic commodities up since then by 55%. The General Labour Confederation (GLC) has repeatedly demanded that the minimum wage be raised to LBP 960,000 a suggestion strongly rejected by the government. But well-informed sources, quoted by the Daily Star, said that the GLC and representatives of the private sector may agree on raising the minimum wage to between LBP 450,000 and LBP 550,000.

Morocco’s industrial producers price index PPI increased by 4.7% y/y in Q4/07, according to a release of the Statistical Department (HCP). This increase was ascribed to an increase in prices of the traditional clothing and furs industry, which expanded by 16.2% y/y in Q4, the tobacco industry (+14.5y/y), wood industry (+8.8), publishing and printing products (+17.7% y/y), rubber and plastics industry (+31.2) and non-metallic products (+3.2). The most significant increase in prices was recorded by the car industry, which saw prices augment by 38.6% y/y in Q4/07. The price increase could be mainly attributed to rising prices of input and energy costs, having most pronounced effects in the energy intensive industries such as car manufacturing and plastics production. However, the HCP highlighted that in spite of rising producer prices output of textile industry declined by -3.3% y/y in Q4/07 while the paper and paperboard industry saw a -2.7% y/y drop in production as well as the radio, television and communication equipments (-9.6) and in medical instruments (-3.7).

Morocco's public debt dropped USD 136.4mn in 2007 to USD 44.9bn at end of 2007 from USD 45.1bn at end of 2006, Director of Treasury and External Finance of the Ministry of Economy and Finance, Zouhair Chorfi, said at a press conference. Chorfi underlined that public debt currently represents 54% of GDP, declining by 3 pps last year. The official underlined that the repayment of the debt has contributed to slashing the budget deficit to 3.2% of GDP, noting that debt payments accounted to 12% of GDP in 2007 against 14% in 2005 and 2006. The decline in public debt can be mainly attributed to a drop in domestic debt, which accounts for 80% the total public debt. Domestic debt has dropped some USD 258.9mn to stand at USD 35.9bn at end of 2007 and represents 44% of GDP, the minister said. Nevertheless, Morocco’s external debt has increased by 5.5% y/y in 2007 to USD 16.6bn, Chorfi added, attributing this performance to a sharp increase in foreign backers' funding, although inadequate to offset the domestic debt decline.