MANAMA: The GCC economy, with an estimated size of $1.1 trillion, is likely to see significantly slow growth of about 1.5 percent in 2009 as low hydrocarbon prices will impact the region, according to StanChart Middle East report.
“GDP growth rates in the GCC have been impressive for more than eight years. In the period from 2000-04, the UAE’s annual growth rate averaged 7.7 percent, while Qatar’s averaged 8.9 percent, Saudi Arabia’s 3.7 percent, Oman’s 4.6 percent, Kuwait’s 13.4 percent, and Bahrain’s 5.6 percent,” the report released yesterday said. “In 2009, we estimate that growth will slow significantly to 1.5 percent for the GCC region as a whole. We expect 0.5 percent growth in the UAE, 1 percent in Saudi Arabia, 2 percent in Oman and Bahrain and zero percent in Kuwait. The main exception will be Qatar, which we expect to grow by 8.5 percent, thanks to an increase of about 50 percent in its liquefied natural gas (LNG) exports,” it added.
The region’s economy, the report added, in terms of size ($1.1 trillion) is comparable with economies like Korea and India.
“During 2007 and most of 2008, a boom was fuelled by ample liquidity and a massive rally in the housing market. These factors can no longer drive the UAE economy. High market interest rates are a clear indication of this. Even though the UAE central bank has followed the interest rate cuts of the US Federal Reserve, deposit rates are still relatively high. The most vulnerable sectors will be SMEs, which have been starved of credit.
The report referred to the defining factors of GCC economies as the three D’s: demographics, diversification, and the dollar.
