High times for GCC economies thanks to oil

Plenty of evidence supports the suggestion that Gulf Cooperation Council (GCC) economies are experiencing happy times. The proof entails appreciation of assets in international markets as well as growth of the gross national product (GDP) of the six-nation grouping.

The net foreign assets of GCC countries rose handsomely in 2011 by $456 billion (Dh1.6 trillion).

The source of the statistics is a qualified one, the Washington-based Institute for International Finance (IIF).

Still, IIF projects the value of GCC assets will rise another $300 billion to $1.9 trillion by the end of this year.

And the figure could cross $2 trillion for the first time by 2013 assuming oil prices remain relatively high.

Not surprisingly, Saudi Arabia and the UAE each controlled more than $500 billion.

Alternatively, the two countries boast the largest economies in terms monetary value within the GCC and Arab world at large.

In addition, the effects of oil prices can clearly be seen on GDP. The collective GDP of the GCC countries is estimated at a record $1.4 trillion in current terms or market prices.

This is a sizable amount by virtue of comprising around 2 per cent of global GNP.

Suffice to say that the economy of Saudi Arabia alone ranks number 20 worldwide and ahead of several European economies including those of Sweden, Poland, Belgium, Norway and Austria, to name a few.

Also, at $358 billion in current prices, the size of GDP of the UAE is the second highest among Arab countries.

Steady prices

Undoubtedly, credit ought to be given where it is due, and in this case steady oil prices.

Rightly or wrongly the petroleum sector plays a significant role in GCC economies by virtue of accounting for more than one-third of GDP activities and two thirds of treasury income and exports.

Still, GCC economies enjoy many other promising qualities such as controlling about 30 per cent of proven oil reserves in the world and 40 per cent of discovered gas reserves.

Against this backdrop it is no wonder that Saudi Arabia and Qatar are recognised as the largest global exporters of crude oil and liquefied natural gas (LNG), respectively.

Astonishing figure

According to the authoritative BP Statistical Review of World Energy, Saudi Arabia controls some 19 per cent of proven crude oil reserves, more than any other country.

This is an astonishing figure given the importance of petroleum products for the well-being of the global economy such as driving cars and flying aircraft, things taken for granted.

For its part, Qatar controls around 14 per cent of known gas reserves in the world, the third highest after Russia and Iran.

However, Qatar stands out for making inroads in the field on the back of production and sharing agreements with international oil firms.

Moreover, GCC economies are increasingly playing in other areas, not least the global aviation industry.

In fact, Dubai International Airport alone is expected to become the second largest in the world in terms of passenger throughput in the next few years, second only to London's Heathrow Airport.

Already, Dubai airport was ranked the fourth busiest in the world in 2011 after Heathrow, Paris's Charles de Gaulle and Hong Kong.

According to statistics released by Airports Council International, Dubai airport has overtaken Frankfurt and Amsterdam in passenger traffic in the past three years.

All told, the significance of the GCC economies to the prosperity of the global economy continues to be grow unabated.

The writer is a Member of Parliament in Bahrain