DUBAI: The economies of Gulf hydrocarbon producers will grow by around eight per cent to peak at nearly $1.6 trillion in current prices this year while real growth is projected at about 3.6 per cent, according to regional forecasts.
Real GDP growth this year, despite global uncertainty, will be a result of strong oil prices and high public spending, which will spur growth in many sectors and encourage the private sector to pump more investment, said the report by the Dammam-based Federation of GCC Chambers of Commerce and Industry.
In its semi-annual report released on Sunday, the federation said any fresh Western financial crisis would have limited effects on the economic and financial system in the six-nation Gulf Cooperation Council on the grounds the regional economy has fully recovered and banks have a strong capital and liquidity base.
“GCC real GDP is expected to grow by 3.6 per cent in 2013 against 5.5 per cent in 2012 despite fears of fresh economic and financial upheavals worldwide,” the report said.
It expected actual public spending in the GCC to rise by 14 per cent this year adding that this will spur further private sector investment and boost non-oil growth.
The growth will widen inflation to around 3.5 per cent from 3.2 per cent in 2012, it said. Citing estimates by the Washington-based Institute for International Finance (IIF), the report said oil prices would average as high as $113 a barrel in 2013 and that this would again allow the GCC countries to record large current account and fiscal surpluses.
“According to IIF projections, the combined GCC economy will reach $1.6 trillion in current prices this year, an increase of eight per cent over 2012,” it said.
The report estimated the GCC’s combined exports of goods and services to slightly fall to around $832 billion in 2013 from a record high of $850 billion in 2012 but imports will likely swell to $590 billion from $578 billion, indicating a business upturn in the six members which control over 40 per cent of the world’s oil wealth.
“These indicators show that the financial and economic situation in the GCC countries have remained strong following the massive financial assets built by member states over the past few years,” the report said.
The UAE maintained its position as the second largest Arab economy in 2012 after its gross domestic product (GDP) swelled by $23 billion in current prices, according to a Western report.
The report by the Washington-based Institute for International Finance (IIF) showed the UAE has remained the second largest Arab economy after Saudi Arabia for more than 10 years because of a steady and rapid growth in its GDP as a result of high public spending, a surge in oil prices and a steady increase in private sector investment.
The report showed the UAE’s GDP grew to its highest ever level of around $375 billion in current prices last year from $352 billion in 2011, an increase of about 6.5 per cent. The 2012 GDP was more than double its level of nearly $181 billion in 2006.
IIF, which groups major banks in Western countries, said Saudi Arabia remained the largest economy in the region with a GDP of around $640 billion in 2012 mainly because of its massive oil output which reached one of its highest annual averages of 9.8 million bpd last year. The report showed the UAE’s economy accounted for more than a quarter of the GCC”s GDP of $1.482 trillion in 2012 and nearly 14 per cent of the combined GDP of MENA countries.
Egypt emerged as the third largest Arab economy with a GDP of around $257 billion, followed by Algeria with $197 billion, Qatar with $182 billion and Kuwait with around $178 billion.
Despite the massive increase in its population over the past years, the UAE maintained its position as one of the richest nations and the third in the Arab region, with its per capita reaching one of its highest levels of $45,731 in 2012, according to IIF, which ranked Qatar and Kuwait in the first and second wealthiest Arab countries.
IIF expected the UAE economy to continue its rise to reach $395 billion in 2013 and a record high of around $410 billion in 2014.