Most Gulf States growth rates will climb in 2010

By Raabal Daikh in Dubai
For Al-Shorfa.com
2010-01-29

[TIM SLOAN/AFP/Getty Images] The IMF predicts positive growth in Abu Dhabi.

A survey conducted by the Reuters news agency found that most Arab Gulf states, bolstered by the global economic recovery, will have higher growth rates this year compared with 2009. However, the UAE debt crisis will affect forecasts.

The survey, conducted January 14-25 and reported on Tuesday (January 26), predicted that Qatar would remain a regional leader with 16.1 % growth in gross domestic product (GDP) in 2010 thanks to a strong expansion of its natural gas facilities, according to economists' estimates.

The survey also predicted economic growth in Saudi Arabia, the largest Arab economy, at a rate of 3.8 % for 2010. That is up from 0.2 % in 2009, thanks to the continuation of large government expenditures and a rebound in private consumption.

Kuwait, a member of OPEC, is expected to emerge from its economic downturn and achieve a growth rate of 3.4 %, slightly surpassing that of Bahrain. Meanwhile, Oman is expected to see a growth rate of 4 % in 2010.

The report said Saudi Arabia would see the highest inflation rate, possibly reaching 4.4 % in 2010, while the UAE could see the lowest rate at 2.5 %, down significantly from last year's average of 10 % in most Gulf countries.

The report predicted that the UAE economy would grow by 2.5 % in 2010, the slowest rate in the Gulf region and down from forecasts in November that showed a 2.9 % growth rate. But growth in the world's third-largest oil exporter would still mark an improvement over the estimated 1.4 % in 2009.

On Tuesday (January 26th) Masood Ahmed, director of the International Monetary Fund (IMF) Middle East and Asia Bureau, offered a more sobering outlook. He said that the UAE economy will likely grow between zero and one percent this year, as Dubai's debt restructuring plans continued to affect the country's performance.

Ahmed said that the IMF predicts virtually flat overall GDP growth in 2010, and within that framework, they expect continuing contraction in Dubai and positive growth in Abu Dhabi.

However, Emirates NBD, the largest Gulf lender in terms of assets, predicted this week that GCC economies would achieve a gradual recovery this year, driven by the growth of the oil and gas sector and a rise in energy prices.

The bank said the increase in oil prices would play an ongoing role in the recovery of Gulf economies in the short term along with increasing demand from outside the region on non-oil sectors and a continued rise in energy prices. Moreover, the results of companies in the region for 2009 are likely stronger than expected, concurrent with the gradual growth in GDP throughout the region.

A report by Global Investment House said that among the 135 companies listed on the Saudi stock market, 127 announced their complete annual results at the end of the grace period on January 20th, 2010. Among those companies, 46 experienced growth in annual profits, 47 companies saw smaller profits than the previous year and 34 companies recorded losses.

The gross profits of Saudi companies listed on the stock market declined for the second consecutive year, falling 24.5 % by year-end 2009, compared with the corresponding period of the previous year, reflecting continuing fallout from the financial crisis that has shaken the global economy.

Data from the Central Bank of Jordan showed that the country's foreign currency reserves hit a record $10.9 billion at the end of 2009, up 41.5 % from 2008.

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