Strong oil prices will ally with higher crude output to boost the combined nominal economy of Gulf hydrocarbon exporters by nearly $133 billion in 2010 and the GDP could swell further in 2011, according to a key Western institution.
From around $877 billion in 2009, the nominal GDP of the six-nation Gulf Cooperation Council (GCC) is projected to rise to about $1,010bn in 2010, the Washington-based Institute of International Finance (IIF) said in its quarterly economic report, sent to 'Emirates 24|7' this week.
The GDP is expected to gain a further $81bn in 2011 to swell to its highest ever level and exceed the previous record of $1076bn set in 2008, when the six members pumped much more oil and crude prices climbed to their highest ever average of nearly $95 a barrel.
A breakdown showed the GDP of all GCC countries is projected to expand this year, with that of Saudi Arabia, the largest economy in the Arab world, increasing from around $373bn in 2009 to around $440bn in 2010 and nearly $472bn in 2011, its highest nominal level.
The UAE’s GDP, the second largest in the Arab region, is predicted to rise from around $230.2bn to $250.9bn and $267.8bn inthe same period.
IIF expected Kuwait’s economy to swell from around $109.5bn to $124.8bn and a record high of nearly $134.8bn.
Qatar’s economy, which is heavily reliant on oil and gas, is expected to grow from around $98.3bn to $117.2bn and nearly $133.6bn, almost equivalent to the Kuwaiti GDP for the first time.
Oman’s nominal GDP is projected to rise from around $46.1bn to $53.5bn and $58.1bn while that of Bahrain, the smallest GCC economy, is expected to grow from $21bn to $23bn and $24bn.
The report showed the bulk of the increase in the GCC’s nominal GDP would be in the oil sector as crude prices and production are set to be higher this year and next year, driven by rebounding demand as a result of the global recovery.
From around $179bn in 2009, Saudi Arabia’s oil sector is projected to climb to nearly $227bn in 2010 and around $238bn in 2011.
IIF figures showed the UAE’s hydrocarbon sector would swell from around $55.1bn to $73.3bn and nearly $78.4bn in the same period.
Qatar’s hydrocarbon sector is expected to soar from around $45.4bn to $61bn and $71bn after a sharp rise in the country’s LNG exports, which are expected to top 77 million tonnes in 2011 to maintain its position as the world’s largest LNG exporter and third in natural gas reserves. The report showed there was expansion in the oil and gas sector in the other members.
It attributed the improvement to a rise in oil prices from around $62 in 2009 to an expected $79 in 2010 and 2011. The GCC’s combined crude output is also expected to climb from around 14.4 million barrels per day in 2009 to nearly 14.7 million bpd in 2010 and 15 million bpd in 2011, according to IIF.
As for real GDP, IIF said it had maintained its previous forecast about a four per cent growth in the combined GCC economy in 2010.
“Real GDP is projected to expand at four per cent in 2010 and 4.6 per cent in 2011… underpinning this recovery are several factors,” it said. It said those factors include the higher contribution of the oil sector to the GDP because of increasing prices and production and the expansionary fiscal policy adopted by the six members in the aftermath of the 2008 global financial crisis.
“The fourth factor is that the normalisation of global trade and capital flows has provided added lift to growth prospects especially through the more globalised sectors of petrochemicals, mainly in Saudi Arabia, airline and port activity in the UAE and services more generally.”