Standard Chartered gets crystal ball out
Standard Chartered Bank has this week released its latest research report, which sets out the bank’s predictions for the coming year. Kipp takes a quick look at the main bits.
December 13, 2010 2:55 by Samuel Potter
- GCC growth is set to rely on infrastructure spending and the private sector, and of course hydrocarbons.
- Hydrocarbons. OPEC quotas mean no increase in production, “so the direct impact of the oil sector on real growth should be moderate.” Standard Chartered sees GDP growth at 3.8 percent for the GCC in 2011, against inflation of 2.7 (in contrast, the IMF predicts growth of 5.1 percent and inflation at 3.7).
- Infrastructure. Abu Dhabi, Qatar and Saudi are seen as progressing the most significant investments, with Saudi setting another record.
- Private sector. An easing of credit should help smaller businesses expand.
- UAE and Qatar shouldn’t suffer too badly from inflation, as depressed real estate markets will keep cost of living down. Saudi Arabia, on the other hand, could suffer badly because there is such a shortage of homes.
- Qatar will be the fastest growing country in the GCC, with an 8 percent expansion on the cards. But a lack of housing demand will put the brakes on inflation.
- UAE growth to be 4 percent.
- Saudi growth to be 4 percent.
- Bahrain growth to be 4 percent.
- Oman growth to be 4.5 percent.
- Kuwait growth to be 3.5 percent.
- Saudi is consuming more and more of its own oil, which could eventually have a significant negative impact on hydrocarbon revenues.
- The UAE recorded inflation this year but the calculation is thought to be flawed as the deflationary impact of the housing market could be underestimated.
- Dubai still has a shed load of debt maturing in 2011; we can expect further bond issues from governments in the GCC, but they should prove attractive to the market. Low interest rates worldwide will also prove useful for the Emirate as it deals with debt.
- Dubai’s growth will be less driven by trade and re-export, as this industry will not sustain its huge rebound in 2010, though it should continue to grow.
And finally, the report says (Kipp clears its throat): “It is important for GCC countries to invest further in the quality of their institutions and to improve governance standards and transparency.”
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