GCC in line for current account surplus

The combined current account in the six-nation GCC will record a surplus for the third consecutive year in 2002 while the economy will grow in real terms despite an expected decline in oil exports, according to official and independent estimates.

Except Bahrain, which has limited crude resources, the UAE and four other GCC countries will enjoy another surplus in their current account this year, and experts said this would support their drive to replenish their overseas reserves.

The UAE is projected to record the highest surplus of around $5.2 billion but in terms of economic growth, Qatar will be far ahead other members as the tiny Gulf nation is pushing on with mega projects to become the world's top exporter of liquefied natural gas.

Bahrain, which relies more on taxes and aluminium exports, is expected to record a small deficit of around $200 million in its current account, although it will enjoy a surplus in its trade balance of nearly $1.1 billion, figures by the Arab Monetary Fund showed.

The Abu Dhabi-based Fund gave no estimates for the UAE and Kuwait but forecasts by the London-based Economist Intelligence Unit (EIU) showed they would record surpluses in their 2002 current account of around $5.2 billion and $4.5 billion respectively.

Saudi Arabia, the world's oil powerhouse, is expected to see a tiny surplus of $200 million while it is projected at $2.6 billion in Qatar and $2.1 billion in Oman.

"As a combined current account in the GCC, it is expected to remain in surplus for the third year running this year," said Jassim AL Saadoun, a Kuwaiti economist.

"But it will be much lower than in 2001 and 2000, when it recorded its highest level in more than 15 years."

Surpluses in those years allowed most GCC states to consolidate their financial reserves which have sharply eroded since the end of the oil boom.

Such reserves have nearly doubled in the UAE and Saudi Arabia over the past five years, reaching around $14 billion and $17 billion respectively at the end of March.

The current account surplus in the GCC states is expected to be lower this year because of a drop in their crude supplies and prices over the previous year, growth in imports of goods and services, and high remittances, mainly by their dominant foreign labour.

Lower oil sales are also expected to stifle their economies as crude exports account for more than 70 percent of their total income and nearly a third of GDP.

But all members are predicted to record real growth in their (GDP) this year. Qatar is projected to record the highest growth rate of 4.3 percent, followed by Bahrain at around 3.8 percent and Oman at 3.5 percent.

It if forecast at 1.5 percent in Kuwait, 1.4 percent in the UAE, and around 0.6 percent in Saudi Arabia.

The GCC earned as high as $130 billion from oil exports in 2000 and nearly $102 billion in 20001. Revenues are projected to slide below $100 billion this year.