JEDDAH, 13 March 2005 — The new increase in oil prices which is now selling at $55.65 per barrel has further fueled the already growing economies of the Middle East in general and the GCC countries in particular.
Poping up on top of the board of successful countries whose economies have made a mark in the recent past is tiny Kuwait. It has registered an increase of 20 percent in nominal terms and about 5 percent in real terms compared to 16 percent achieved in 2003. National Bank of Kuwait (NBK), in its report, indicated that the gross domestic product (GDP) reached KD12.4 billion ($42 billion) in 2003.
“The pace of growth picked up in 2004 on higher oil revenues, increasing government spending and a fairly active private sector.” the NBK report said. The oil sector is expected to grow in 2005 also maintaining the same tempo given the new higher range in oil prices. Against the backdrop of increased government spending and growing public and private domestic investment, the private sector is also destined to grow remarkably.
Oil receipts accounted for 92 percent of budget revenues indicating the budget surplus in fiscal year 2004-2005 (ending this month) could possibly be double of the previous year’s KD1.41 billion ($4.8 billion). As yet the economy has shown tremendous growth during the past 9 months of 2004-2005 during which the country’s revenues have jumped to KD6.60 billion ($22.6 billion) registering an increase of 29 percent over the same period last year.
The sound state of the economy can be further gauged against the fact that the state expenditure had increased moderately by 5 percent to KD3.27 billion leaving aside a fat surplus of KD2.67 after 10 percent allocation of revenues for the Reserve Fund for Future Generations (RFFG).
A member of OPEC, Kuwait controls nearly 10 percent of global oil reserves and its crude output averaged 2.4 million barrels per day (mbd) during the current year.
The NBK report also indicated that except for miscellaneous revenues and fees, non-oil revenues rose by 12 percent, more than half of which had channeled from customs fees that alone had risen by KD28.5 million.
This rise in trade is against the backdrop that Kuwait’s population of 2.75 million grew at 8.1 percent last year as did the inward flow of expatriates who presently constitute 65 percent of the total population of the country.
Yet one more country of the bloc which has witnessed continuously tremendous growth all along during the last 10 years is the United Arab Emirates (UAE). Backed by political stability and conducive investment climate, the Emirates’ GDP has gone up from 141.9 billion dirhams in 1994 to 337 billion dirhams in 2004.
Striving unceasingly to reduce its dependence on oil revenues, the UAE also managed to get its non-oil GDP increased from 97 billion dirhams in 1994 to 253 billion dirhams in 2004. Otherwise as an OPEC (Organization of Petroleum Exporting Countries) nation, the UAE possesses 10 percent of world’s proven oil reserves and fourth largest gas reserves.
During the same decade of affluence, fixed investments in the Emirates also grew at stunningly fast pace from 41 billion dirhams to 66 billion dirhams paving way for the launch of large scale projects in the manufacturing, transport and tourism; communications, water, electricity and construction as also real estate sectors.
Though smallest in size in the fraternity of GCC members, Bahrain is making larger than life strides into the world of trade and investment. Bahrain is aggressively seeking to achieve an annual GDP of BD10 billion ($26.5 billion) over the next ten years. Also on the government agenda is a proposal to increase the per capita income of nationals from BD5,000 a year to BD12,000 by 2015.
Though a non-GCC member but existing within the Gulf region, Iran registered 6.7 percent expansion in its economy in the year to March 19, 2004 and 7.5 percent in the year before. The second highest oil producer in the OPEC, Iran recorded - during the 9-month period to December 2004 - $2.7 billion current account surplus compared to $973 million a year before. Higher oil revenues have further strengthened Iran’s economy which is as yet State controlled. Statistics showed that Iran has managed to cause unemployment rate to slip to 10.3 percent in the 3rd quarter of its annual calendar which started on March 20, 2004. As for non-oil sector, the country achieved a growth rate of just 4.3 percent in the 2nd quarter, compared to 6.6 percent growth a year before.
With an element of instability creeping into the Levant region following the assassination of ex-prime minister, Rafik Hariri, Lebanon is the only exception where economy (in terms of growth) is at its lowest ebb and the country’s gigantic debt has exceeded $35 billion. Timely elections in May and subsequent installation of a stable government might be in a position to arrest the downward slide.
