US slowdown to hit Gulf growth

Abu Dhabi: The US economic slowdown will cause a moderation in the surging growth rates in the Gulf countries for the next five years, the UAE Central Bank Governor said on Monday.

"Up to 2012, the GCC countries will grow at an average annual rate of 6.6 per cent, taking into account the impact of the US recession. This will be more severe on countries with large volumes of exports to the US," Sultan Bin Nasser Al Suwaidi said at the Abu Dhabi Corporate Leadership Forum on Monday.

Higher international oil prices will continue as a result of accelerated global growth and growing demand from China and India.

Accordingly, higher revenues necessary to fuel the growth in GCC countries will remain.

Diversification

The GCC economies have been able to successfully move away from total reliance on oil revenues, as evident in the higher growth rate of the non-oil and gas sector relative to the total GDP growth rates.

"Over the past ten years, the average annual growth rate of the non-oil and gas GDP was about nine to 10 per cent, and this trend will continue up to 2012," Al Suwaidi said.

The moderate growth will also be apparent in the banking sector, where the total assets of the GCC's banking sector will grow to $1.333 trillion by 2012 from less than $500 billion in 2004.

"Bank profits will continue to grow, and high profitability is expected to continue, though not much higher, as we do not expect similar conditions to occur again in the near future, such as the development of a new country like China," he said.