GCC may witness moderate growth

The combined economy of the GCC stood at around $323 billion in 2001 and is expected to record a modest growth this year mainly because of lower crude oil production and prices, according to independent forecasts.

After a real growth of 4.6 per cent in 2000 and 2.3 per cent in 2001, the GDP of the group is projected to grow by around 1.9 per cent this year, showed figures by London-based Economic Intelligence Unit and Al Shaal Centre, Kuwait's main stocks brokerage house.

A current account surplus triggered by a surge in oil prices in 2000 was maintained in 2001 and will be extended this year, albeit lower.

Growth in the UAE was forecast at around 1.7 per cent but was projected to pick up to 4.1 per cent in 2003.

In Saudi Arabia, the GDP stood at around $178 billion in 2001 and is expected to grow only 0.6 per cent this year but by 3.8 per cent in 2003.

In Kuwait, the economy was predicted to recede by around 0.9 per cent this year, but would largely recover to 3.9 per cent in 2003.

Oman is expected to reap the fruit of its large-scale reform programme and major gas projects to record a growth of 3.5 per cent this year and five per cent in 2003.

Gas projects are also paying off in Qatar, which is set to become the biggest exporter of liquefied natural gas in the world when mega projects at its giant North Field are completed. Real growth was forecast at 3.2 per cent this year and 5.5 per cent in 2003.

Bahrain, which has limited oil resources, will also record relatively high growth rates of around 3.8 per cent and 4.4 per cent in the same period.

Experts expect oil prices to be slightly lower this year, ranging between $21-23 a barrel compared with $23.5 in 2001 and as high as $27 in 2000.

The GCC's combined average crude output is also expected to decline to around 13.2 million barrels per day in 2002 from 13.7 million bpd in 2001 and more than 14 million bpd in 2000 following a decision to curb supplies in line with an Opec agreement with other producers to support prices.

"Initial indications show that the performance of the oil sector in the GCC will be lower than last year...this will have a negative impact on the overall economy," said a study by the United Nations Economic and Social Commission for West Asia.

Estimates by London-based Centre for Global Energy Studies showed that lower oil output and prices would depress the GCC's oil revenues to around $90 billion this year from $106 billion in 2001 and more than $127 billion in 2000.

But current account would remain in surplus although some members might record a small budget deficit.