MANAMA: Economic growth in Oman, Qatar and Bahrain will fall sharply in 2009, their central banks said yesterday, as the financial crisis that has slowed economies across the world’s biggest oil-exporting region takes its toll.
Oman’s central bank governor, Hamood Al-Zadjali, told Reuters on the sidelines of a banking conference that real growth in gross domestic product would fall by at least half to between 1 and 3 percent in 2009, from 6-8 percent last year.
Bahraini Central Bank Governor Rasheed Al-Maraj said economic growth in the small Gulf Arab oil producer would also halve to around 3 percent this year.
“I think we will grow but at a modest rate, at a lower rate,” Al-Maraj told reporters. “It is obvious a slowdown in growth is going to be with us this year.” Gulf states have taken a slew of measures to defrost credit markets, cutting interest rates, guaranteeing bank deposits and offering extra liquidity to banks in an effort to keep economies moving as oil revenues fall and world trade flows decline.
Oil prices have collapsed from a high near $150 a barrel in July to around $53 a barrel on Tuesday, hitting revenues around the Gulf Arab region and ending a six-year oil-fueled boom.
The oil-price rally had enabled Gulf states to pour windfall revenues into projects designed to reduce their reliance on the volatile commodity, but oil and gas revenues still comprise at least three quarters of Gulf state revenues.
A Reuters poll this month found that real growth in all Gulf oil exporters except Qatar could slow to about 2 percent.
Even Qatar, the world’s top exporter of liquefied natural gas and one of the richest countries in the world by per capita income, expects real GDP growth to slip to 7-9 percent this year from 16 percent in 2008, its central bank governor said.
Having amassed surplus revenues from oil exports while prices were high, Gulf countries have pledged to keep public spending up, even if it means posting budget deficits this year.
Despite the collapse in oil prices, Oman’s foreign assets were more than adequate to finance the fiscal deficit, Al-Zadjali said, adding that credit growth was expected to ease.
“Given the unchanged economic fundamentals, financing the deficit in the fiscal and balance of payments positions will be the key macro level challenge for us and foreign assets accumulated during the last favorable oil price cycle will be more than adequate to do that,” Al-Zadjali told Reuters.
“I think credit growth this year will be around 20 percent,” he said, explaining there would be less corporate and consumer borrowing because of the slowdown in economic activity and banks would be more conservative in their lending.