JEDDAH, 15 June — The Gulf Arab economies are set to slow down in real terms this year because of an expected decline in average oil prices and the decision to cut crude production in line with a global agreement to support prices, according to a United Nations report.
From around $251.6 billion in 2001, the combined gross domestic product (GDP) of the six GCC states will increase by nearly 0.8 percent in real terms to $253.5 billion in 2002, the UN Economic and Social Commission for West Asia (ESCWA) said in a report.
The level is far lower than the real growth of more than 2 percent recorded in 2001 and as high as 5.1 percent in 2000, the report showed.
Individually, economic performance is expected to remain strong in Qatar, with a forecast real growth of 5.5 percent, the highest in the 21-year-old economic, defense and political group. It will also be above one per cent in the UAE and Bahrain.
In Kuwait, the GDP is projected to decline this year by around 0.6 percent while in the Kingdom will record a modest real growth of 0.5 percent.
“Because Saudi Arabia has by far the largest economy in the region, the slow growth in its GDP is the main factor in the low growth in the GCC’s combined GDP this year,” said the report, quoted by the UAE daily Gulf News.
The report blamed lower oil prices and output cuts by most GCC states within a collective agreement by OPEC and other producers to tighten supplies to bolster prices.
Oil analysts expect the combined oil production of the six GCC countries, of which four are OPEC members, to decline by at least 700,000 bpd over last year’s average output.
Prices could be around $2 below their 2001 average of nearly $23.5 and this means the GCC’s total oil export earning could dip by more than 10 percent to around $90 billion this year from nearly $101 billion in 2001 and as high as $130 billion in 2000.
High prices and production in 2000 allowed the GCC to record one of their highest nominal growth rates in their economies, exceeding 15 percent in some members.
Qatar has grabbed the highest growth level in the GCC over the past four years and is set to maintain its leading position given its surging liquefied natural gas exports.
Economists in the region predict that Qatar’s economy will remain galloping at one of the highest rates in the world in the coming years as the tiny Gulf producer is pushing ahead with mega projects to turn itself into the top LNG exporter in the world.
Its targeted production is 30 million tons in 2010, much higher than Indonesia’s number one output.
“The impact of the decline in the oil sector will be stronger on the GCC economies than the economies of other ESCWA members, which are expected to record real growth of around 3.9 percent this year, with the exception of Iraq,” said ESCWA.
Kuwait scraps port fees: Kuwait Ports Authority has cancelled all port fees levied on commercial vessels in an attempt to revive the nation’s stagnant shipping sector, Al-Qabas daily reported yesterday.
Kuwait is now the only state in the GCC that does not collect commercial fees from foreign shipping companies, the paper said.
Kuwait hopes the measure will help enable it to regain its lost status as a vital commercial and shipping center in the region
The scrapped tariffs averaged about three times higher than fees currently levied on ships by other GCC ports.
The Kuwait Chamber of Commerce was instrumental in pressuring the government into dropping the fees, it said.
During the 1970s and 1980s Kuwait ranked as the biggest re-export country in the region, with a lively shipping trade, but eventually lost that status to Dubai in the United Arab Emirates as well as other regional ports.
After the 1991 Gulf war, commercial shippers to Kuwait declined to route vessel traffic to Kuwait because of the stiff port tariffs, high insurance charges to sail through the northern Gulf, and overall risk.