StanChart cuts Gulf GDP forecast

Dubai: Standard Chartered Bank has slashed its 2009 economic growth forecasts for Gulf oil producers in view of the global downturn, revising its UAE growth forecast downward by more than 2 percentage points to 0.5 per cent.

Standard Chartered's previous expectation for growth in real gross domestic product (GDP) in the UAE was 2.7 per cent. The second-largest Arab economy probably expanded 6.8 per cent this year, economists said in a Reuters poll last month.

"With the world economy in recession, there will be downside risks to growth," Standard Chartered said in a research note yesterday.

"We see the first half of the year to be the most challenging, but given the strong structural positives, we expect GCC economies to start staging a moderate recovery in the second half of the year."

Saudi Arabia, the world's top oil exporter, would expand 1 per cent this year and Kuwait's economy would grow 1.5 per cent, the bank said.

Gulf economies are heavily reliant on oil export revenues, which constituted 87.5 per cent of Saudi Arabia's total state revenue in 2007. The price of crude has slumped more than $100 a barrel since July.

Production cuts by the Opec will have a severe affect on regional economic growth, as would a property market correction last month's poll showed.