The combined gross national product (GDP) of the Gulf Cooperation Council (GCC) is likely to cross the $1 trillion level this year. This will be only the second time in as many years that the monetary value of economic activities of the six-nation group have achieved the $1 trillion milestone.
A recently released report by the International Monetary Fund (IMF) projects the nominal gross domestic product of Saudi Arabia, the UAE, Qatar, Kuwait, Oman and Bahrain as amounting to $1.02 trillion in 2010.
GDP is projected to increase to $1.11 trillion in 2011. According to the report, the GDP of the GCC countries amounted to $1.07 trillion in 2008, but fell to $869 billion in 2009.
Saudi Arabia
In fact, the nominal GDP of Saudi Arabia alone fell by more than 20 per cent in 2009 to $375 billion due to unfavourable conditions in the oil market. On a rather positive note, Saudi authorities openly admitted that GDP plunged while releasing closing accounts for fiscal year 2009.
In reality, Saudi Arabia's economy accounts for a hefty 40 per cent of GDP of the GCC, and thus has a material effect on the growth of regional economies.
According to World Bank statistics, Saudi Arabia's GDP ranks 23rd globally, ahead of numerous European countries, including Norway, Austria and Finland.
Changing GDP value reflects improving conditions of GCC economies, in turn caused by firm oil prices in the international market. The petroleum sector is uniquely vital to the GCC economies since it accounts for more than two-thirds of treasury income and three quarters of exports.
Oil prices
In retrospect, oil prices reached a record $147 per barrel in July 2008 only to fall to around $40 in the first quarter of 2009.
This sharp drop reflected adverse consequences of the global financial downturn, which among other things created a crisis of confidence in credit markets.
However, oil prices have since seen an upswing and remained strong on signs of improving global economic prospects thanks to G20 initiatives. Measures undertaken by the G20 include pumping money into domestic economies in order to kickstart demand.
Correctly, the IMF mainly attributes improved economic prospects in the GCC economies to the outstanding growth of the Qatari economy.
Qatari GDP is projected to grow 18.5 per cent in 2010 and 14.3 per cent in 2011. Among other things, the extraordinary development of the Qatari economy is testimony to the sustained expansion of the gas sector.
In fact, Qatar continues to consolidate its position as the largest exporter of liquefied natural gas (LNG).
Qatar's gas output
Latest available statistics put output at 54 million tonnes, up from 38 million tonnes a year only three years ago. Yet non-stop efforts are being exerted to reach the goal of 77 million tonnes a year of LNG by 2012.
To be sure, the GDP of the GCC countries accounts for less than 2 per cent of the world's total. Certainly, the lower GDP value in 2009 reduced the GCC's share of the global economy.
However, GCC states are particularly noted for controlling substantial oil and gas statistics. Together, the GCC countries account for 23 per cent of global oil production.
Saudi Arabia is the largest oil exporter in the world.
Still, the GCC states account for 41 per cent of the world's proven oil reserves. Again Saudi Arabia alone accounts for 21 per cent of proven oil reserves.
At the same time, the GCC countries account for 23 per cent of proven gas reserves in the world. Qatar ranks number three among countries with the largest gas reserves after Russia and Iran.
Clearly, the GCC states are offering the world a lot in terms of oil and gas, both of which are essential for sustaining modern day economies.
The writer is a Member of Parliament in Bahrain.
