Friday 29 March 2024
 
»
 
»
Story

Gulf growth outlook improves slightly

Dubai, September 29, 2010

The growth outlook for most Gulf economies has improved slightly over the past three months on expected higher oil output and as concerns about Dubai debt restructuring eased, a Reuters poll showed on Wednesday.   

Generous government spending should also keep supporting growth in the six Gulf countries, although lending remains slow across the world's top oil exporting region, with banks weighed down by exposure to a weak real-estate sector.

'The Opec quota compliance debate and continued robust oil prices may reflect in modest oil sector output increases, which would contribute to the real GDP growth figures,' said Giyas Gokkent, head of research at the National Bank of Abu Dhabi.

Lower compliance is expected to be a key topic at Opec's meeting on October 14, which several officials have said is unlikely to change the output target.

Oil is trading within the $70-$80 range Opec has said is acceptable for consumers and producers. Benchmark US crude prices are expected to average $77.48 a barrel in the fourth quarter, a separate Reuters poll showed.

Qatar remains the Gulf region's leader with real gross domestic product growth seen at 15.5 percent in 2010, according to a median forecast of 14 economists polled by Reuters from Sept 15 to 28, below 16.1 percent seen in June.   

Saudi Arabia, the world's top oil exporter, is seen growing by 3.8 percent this year, a tad above June's forecast and up from 0.6 percent in 2009, helped by a robust fiscal spending.   

Fellow Opec member Kuwait should grow by 3.1 percent in 2010, a more pessimistic forecast than the central bank's 4-5 percent but a big improvement from a 4.6 percent fall last year.

Non-Opec Oman and Bahrain should see GDP up 4.3 percent and 3.5 percent in 2010, respectively, above June forecasts.

The outlook for the United Arab Emirates improved with GDP growth seen at 2.4 percent this year, up from 2.1 percent seen in June, although it is still lagging its Gulf peers with analysts seeing further challenges ahead for debt-laden Dubai.

'Until the day the real estate market picks up again in Dubai, we believe that the banks' balance sheets are going to be under pressure, credit is going to be scarce, and GREs (government-related entities) and the corporate sector is going to deleverage as well,' said Turker Hamzaoglu, Mena economist at BofA ML in London.

Concerns over debt restructuring in Dubai subsided partly this month after the emirate's flagship conglomerate Dubai World reached a deal to restructure almost $25 billion of liabilities.

Analysts raised their 2010 inflation forecasts for Saudi Arabia, Kuwait and Oman, while UAE price growth is seen lower with Qatar revised sharply to show continued deflation.   

'Inflation is going to be fairly moderate, still reflecting the fact that the global inflation situation is benign,' said Andrew Gilmour, senior economist at Samba Financial Group, adding price growth may become an issue for Saudi policymakers.
Saudi and Kuwait central bankers voiced their worries about rising price pressures this week with advancing global food prices becoming a concern.

However, inflation is driven by factors such as food beyond the reach of regional central banks, most of whom are already limited by US dollar currency pegs. Overall price growth is seen staying well below the record double-digit peaks seen in 2008.

Saudi Arabia should see the highest average inflation in the Gulf at 5.3 percent in 2010, up sharply from 4.7 percent predicted in the June poll.

Government spending is expected to remain strong in the Gulf unlike in the rest of the world, although Saudi Arabia has indicated it would not overspend its plan as in the past to avoid fuelling inflationary pressures further. - Reuters




Tags: Dubai | Oil | Gulf | Opec | Economic Growth | Debt restructure |

More Economy Stories

calendarCalendar of Events

Ads