US slowdown yet to trouble GCC nations

The Arab Petroleum Investments Corporation (Apicorp) says in its latest economic commentary, that despite signs of the US economy slipping towards recession and global growth slowing further, the Arab region is set to continue to benefit from sustained high oil prices, even though the US dollar is widely projected to remain weak.

But if the outlook for global growth deteriorates beyond expectations, the resulting reduced demand for Arab petroleum products may well compromise the region’s energy investment programmes.

Apicorp says the strong expansion in the emerging markets and the growth momentum in China and India would not be sufficient to offset slower growth in the US and other key OECD countries. “As a result growth is expected to decelerate from 4.9 per cent in 2007 to 4.1 per cent in 2008,” says the report.

Apicorp, an affiliate of the Organisation of Arab Petroleum Exporting Countries (Oapec), says the extent to which the Arab region would continue to be sheltered against the deteriorating external environment remained “uncertain”.

“So far, the prudent macro-economic policies pursued by governments in the region have laid the foundation for a fairly strong macroeconomic performance,” the survey adds. The region as a whole has recorded an average growth of 6.4 per cent over the last five years, it says, noting though moderating slightly, this trend is expected to continue in 2008 as growth should average 5.9 per cent.

“In this context, Apicorp’s shareholding-countries, whose economic growth is still largely founded on petroleum revenues, have slightly outperformed the rest of the region.”