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Gulf economies to soar 35% on oil windfall
Gulf Arab economies expected to surge 35 per cent this year on an oil price windfall, raising its average economic growth forecast for the six oil producers from 10 per cent in February.
- Reuters
- Published: 00:06 July 18, 2008
- The average price of oil so far this year is almost $114 a barrel, compared with a 2007 average of $72.36 a barrel.
- Image Credit: Gulf News Archive
Dubai: Gulf Arab economies will surge 35 per cent this year on an oil price windfall, ING said on Thursday, drastically raising its average economic growth forecast for the six oil producers from 10 per cent in February.
Top global oil exporter Saudi Arabia should witness nominal gross domestic product growth of 30.8 per cent this year, compared with 6.7 per cent last year, ING said in a note. Its previous forecast for Saudi economic growth was 5.8 per cent.
"We updated our forecast for the Gulf countries in light of a substantial upward revision in our oil projections," ING said, raising its estimate for 2008 oil prices to an average $119.6 a barrel from $74 a barrel.
Staggering growth in the world's biggest oil-exporting region is underpinned by a near seven-fold rise in oil prices since 2002. The average price of oil so far this year is almost $114 a barrel, compared with a 2007 average of $72.36 a barrel.
Gulf Arab governments have been investing windfall oil revenues in diversifying their economies away from oil, partly to reduce the impact of oil price fluctuations on their budgets.
In Kuwait, the world's seventh-biggest oil exporter, the economy could surge 50.6 per cent this year - the fastest rate in the region, ING said, raising its forecast from 13.1 per cent.
The UAE economy will likely swell 32.3 per cent this year, compared with 16.8 per cent last year, while in top LNG-exporter Qatar, where nominal GDP growth was 25 per cent in 2007, GDP growth should hit 38.4 per cent, ING said.
Inflation in the Gulf will probably average 9.8 per cent this year, ING said, raising its forecast from 6 per cent in February.
Inflation likely to slow in 2009
Dubai: Inflation in the six Gulf Cooperation Council states, including Saudi Arabia and the UAE, may slow in 2009 as the supply of new housing improves and the cost of oil and food falls.
Consumer prices in the six-nation bloc will rise an average 8.4 per cent in 2009, compared with 10.2 per cent in 2008, according to the median estimate of four analysts surveyed by Bloomberg News this month.
Inflation has accelerated to records across the Gulf as oil-fuelled economic growth creates shortages of housing and services, while the weaker US dollar and higher global food prices have made imports more expensive. The pick-up in inflation has prompted calls for the Gulf states to end their currency pegs to the dollar.
"Current higher inflation should be regarded as a spike that is short term in nature," said Giyas Gokkent, head of research at National Bank of Abu Dhabi, the emirate's largest bank by market value, in an e-mail. "A similar episode occurred in the 1970s energy boom."
Inflation in Saudi Arabia will slow to 7.1 per cent in 2009 from 9.7 per cent this year, according to the survey. In the UAE, consumer prices will rise 10 per cent in 2009, compared with 12 per cent in 2008.
Qatar will continue to experience the fastest inflation in the region at 11.5 per cent in 2009, compared with 14 per cent this year, the economists said.
- Bloomberg
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