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Poll shows GCC growth expected to slow in 2012
Economic growth in key Gulf Arab states will slow markedly next year because of a sluggish global economy but remain well above recessionary levels.
October 1, 2011 1:26 by Reuters
…row in the latest poll to 2.0 percent in 2011, from 2.7 percent forecast previously. Political tensions and economic uncertainty persist in the island kingdom following its worst civil unrest since the 1990s. Its GDP growth is forecast to rebound modestly to 3.2 percent next year.
Oman, hit this year by more limited protests demanding jobs and an end to corruption, should see its economy expand by 4.2 percent in 2012, the poll found.
Saudi Arabia and Kuwait are likely to see the highest levels of inflation in the Gulf next year, with rates of 5.0 percent, the poll showed. However, the forecast for Saudi Arabia was cut from 5.7 percent in the previous poll.
In the UAE, inflation is seen accelerating to 3.0 percent in 2012 from 2.0 percent this year.
Increased government spending on social issues is pressuring governments’ fiscal balances this year, but all Gulf countries except for Bahrain are expected to remain in surplus.
Because of high oil prices, Saudi Arabia’s fiscal surplus this year is now forecast at 11.0 percent of GDP, up from the June forecast of 6.9 percent. Next year, the surplus is predicted to stay extremely high at 9.2 percent, even though the kingdom has pledged to spend an estimated $130 billion, or around 30 percent of its annual economic output, over several years on new houses, creating jobs and other areas.
The oil price at which it can balance its budget this year is now estimated at $73 per barrel, the poll showed, down from $80 predicted previously.
Bahrain is the only state projected to see a budget deficit in 2011, of 1.1 percent of GDP, although that is slightly narrower than the previous forecast of 1.4 percent of GDP. The deficit is expected to shrink to 0.4 percent in 2012.
Analysts now estimate the overall debt burden of Dubai and its state-owned companies at around $111 billion, or 137 percent of last year’s GDP, the poll showed. This is slightly less than the June poll’s estimate of $113 billion.
“Dubai should be able to roll over debt that is maturing in 2012.”
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