Gulf states' GDP expected to touch $983b this year

Riyadh: The gross domestic product (GDP) of the six Gulf countries will reach $983 billion (Dh3.610 trillion) by the end of the year, an increase of 4.4 per cent over 2009, a report released on Wednesday said.

"The six GCC [Gulf Cooperation Council] countries are playing a vital role in the stability of the oil market," said the annual report of the GCC Federation of Chambers.

According to the report, which Gulf News has acquired, the GCC countries own about 40 per cent of the world's discovered oil reserves and 23 per cent of the natural gas.

"The six countries together make about 25 per cent of the world's oil exports," it added.

The report said indicators have shown that the economies of the GCC states are on the recovery path and on the way to a return to powerful growth thanks to rising oil prices, increasing production and expanded government spending.

"The private sector in the GCC countries is presently taking measures to end the implications of the world economic crisis which coincided with a drop in business opportunities and a rise in foreign competition," it said.

The report asked the GCC countries to implement "economic incentive programmes" in order to help the private sector face the current challenges including provision of guarantees to the banks in order to give facilities to the private sector.

According to the report, the stock exchanges in the six countries, led by the Saudi market, have realised various gains during the first quarter of the year.

"This has resulted from the rise in oil prices, the improvement of the macro-economy and the rise in the shares of some big companies," the report said, adding that the market value of GCC monetary markets reached $761.08 billion in the first quarter of the year.

It also said the total investment flows will rise from $48 billion in 2009 to $66.4 billion in 2010 and to $81.3 billion in 2011. "Most of the investments will come from the private properties which will rise from $50.7 billion in 2009 to $55.9 billion in 2010 and to $68 billion in 2011," it added.

The report noted that most of these investments will be direct investments at the value of $52.2 billion in 2010 and $61.5 billion in 2011.

"However, the investments through portfolios will not exceed $3.7 billion in 2010 and $6.4 billion in 2011," it added. On restructuring policies, the report expected the value of projects to come down to $2 billion in 2010 from $2.1 billion in 2009 and $2.4 billion in 2008.

It held the world financial crisis responsible for the reduction of many commodities and raw materials in 2009 including foodstuffs and building materials and said the rate of imported inflation had subsided, enabling the central banks to respond to emerging priorities.

Policies

It hoped that moderate spending, strong demand for housing and building materials and the decline of international prices would lead to reasonable inflation rates in the GCC countries. In 2010 they reached 4.9 per cent in Saudi Arabia, 0.8 per cent in the UAE, 4.4 per cent in Kuwait, 0.4 per cent in Qatar, 3.4 per cent in Oman and 2.8 per cent Bahrain.

The report said the financial crisis had uncovered a number of shortcomings in the financial systems including a weakness in managing risk.