Higher crude prices spur GCC markets
Manama, August 13, 2013
Sustained high oil prices, expansive fiscal and accommodative monetary policies led to a strong rally in the first half of 2013 in GCC markets, according to research by Kuwait Financial Centre Markaz.
All the GCC markets gained amply in the first half of 2013, reacting positively to high fiscal surpluses and infrastructure expenditures, a strong comeback in the real estate market and improvement in tourism sectors, the Gulf Daily News quoted the report.
"The GCC countries continued to invest heavily in the non-hydrocarbon sectors in a bid to diversify their economies," the report said.
"In the construction and transport sector, contracts worth over $39 billion have been awarded for projects in the GCC, in the first half of 2013.
"A surge in lending and strong economic performance in hydrocarbon producing GCC countries, led to record performance in the banking sector in the first half of the year," the report added.
At the beginning of 2013, Markaz's report noted that the bleak global outlook would lead to a sluggish demand for oil.
Brent Crude lost eight per cent in the first half of the year, due to a slowdown in emerging markets and uncertainty in developed markets.
Subdued demand for oil globally and the resultant slowdown in production levels, is expected to further slow down real GDP growth for the GCC to 3.7 per cent in 2013.
A prolonged recession in the euro zone, weak recovery in the US, and a slowdown in emerging market economies will lower commodity prices.
The report expects growth to be moderate in the region.
Inflation in GCC is also expected to be moderate in 2013, due to the weak global economy.
Expansionary fiscal policy in the form of large scale infrastructure projects, generous subsidies and state sponsored welfare schemes are expected to bring down the fiscal surpluses in GCC countries. – TradeArabia News Service