GCC economy expected to triple in 2008

Strong oil prices and a surge in public and private spending will boost the combined economy of the six-nation Gulf Co-operation Council (GCC) by nearly $300 billion (Dh1.1 trillion) this year, more than triple its level in 2000, according to official and independent figures.

The gross domestic product (GDP) of the six members, which control nearly 45 per cent of the world's recoverable oil deposits, is projected to peak at an all-time high of $1.1trn in nominal terms in 2008 compared with around $810bn in 2007.

The forecast economy for 2008 is more than triple the 2000 GDP of $340bn and nearly five times the 1995 GDP of $239bn, showed the figures by the Gulf Finance House (GFH) and the Abu Dhabi-based Arab Monetary Fund (AMF).

Another report confirmed the GCC's GDP would surpass $1trn this year to exceed the economy of South Korea and approach India's GDP for the first time.

"The six GCC members are enjoying a spectacular economic boom – one that we expect to continue over the medium term. The GCC economy is set to surge past $1trn in nominal terms in 2008, marking a three-fold increase in only five years," the Saudi American Bank said in a study this week.

The projections for 2008 mean the GCC economy will leap by at least 35 per cent in current prices over the previous year, one of the highest growth rates since the UAE, Saudi Arabia, Kuwait, Bahrain, Qatar and Oman created their alliance in 1981.

The reports gave no breakdown but national data showed the UAE GDP would surge to an all-time high of Dh800bn this year from Dh697bn in 2007. Saudi Arabia's GDP, the largest in the Arab world, is projected to peak at SR1.76trn (Dh1.74trn) while Qatar's GDP would swell to a record QR268.4bn (Dh271bn). Kuwait's GDP was put at KD51.8bn (Dh420bn) and is forecast to surge by at least 20 per cent this year.

The economies of the Bahrain and Oman are also projected to make similar leaps in 2008.

Despite their high population growth, the surge in the GDP sharply boosted the per capita income of the GCC countries, standing at an average $30,000 in 2008, one of its highest levels.

But taken individually, the level is far higher in some members, estimated at as high as $75,00 in Qatar and $50,00 in the UAE.

Besides high growth, strong oil prices also boosted the GCC's current account surplus to a record $225bn in 2007 from $200bn in 2006. the surplus is expected to top $250bn this year, its highest level.