Gulf hydrocarbon producers basked in a massive current account surplus of nearly $322 billion in 2011 because of a sharp rise in their oil exports due to strong crude prices, according to a bank study.
The surplus accounted for as high as 23 per cent of the combined GDP of the six-nation Gulf Cooperation Council (GCC) and is projected to remain large through 2012 and 2013 as crude prices are expected to remain firm, said the study by Qatar National Bank (QNB).
The surge in the current account last year followed a sharp rise in the group’s trade surplus, the largest in the world, the report said.
“This is because the foreign exchange it earns from hydrocarbon exports far outweighs both payments for imports of goods and services and payments by foreign companies and workers repatriating their income,” it said.
It said the GCC, sitting atop more than 40 per cent of the world’s oil wealth, has achieved a current account surplus for every year since 1998, adding that low crude prices during the 1990s resulted in deficits for most member states.
The surplus has widened substantially in recent years, except for a brief narrowing during the 2009 global recession, it said.
“Oil prices are forecast to remain high in 2012-2013, resulting in continued strong current-account surpluses around 20 per cent of GDP.”
The report showed the GCC’s trade surplus, the world’s largest, is the predominant reason for its current account surplus given the group’s large crude oil production, estimated at around 16 million barrels per day last year.
In 2011, Saudi Arabia is estimated to have had the world’s largest trade surplus of around $245 billion, just ahead of China, and the GCC regional balance was more than double that size, $520 billion (38 per cent of GDP).
Qatar had the largest relative surplus, at 45 per cent of GDP, and Kuwait, Saudi Arabia and Oman were close behind. Bahrain and UAE had the lowest relative balances, at 16 and 23 per cent of GDP respectively in 2011.
The trade surplus is forecast to remain high during 2012-2013, averaging around $493 billion, based on forecast average oil prices of $106 for the period.
The report showed that within the GCC, Saudi Arabia had the lion’s share of the group’s current account surplus, accounting for about 49 per cent of the total in 2011, as it is the largest exporter of hydrocarbons in the region.
The main structural change over the last five years is that Qatar’s share has grown from just five per cent in 2007 to nearly 12 per cent in 2011, as a result of large expansions in its gas exports.
Kuwait’s surpluses are the largest in relative terms, equal to an estimated 35 per cent of its GDP in 2011. Kuwait benefits from a strong income surplus in addition to its trade surplus from hydrocarbon exports.
The UAE has the smallest surplus, at 14 per cent of GDP as its economy is less dependent on oil exports, with a large services component to its GDP.
“However, in absolute terms the UAE’s current account surplus is still second in the region,” the report said, adding that very few other countries come close to the surpluses of GCC countries in relative terms.