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Economies of GCC to grow despite drop in oil revenue


Feb 1, 2013
Saudi Arabia
DUBAI – Gulf states are likely to see their oil and gas revenues drop next year but heavy government spending and increasingly energetic private sectors will keep economic growth robust, a Reuters poll showed.

Global oil prices are expected to fall moderately in 2014 as new supply comes on line from the United States, Iraq and other countries. Futures markets indicate lower prices next year. This will probably push down hydrocarbon export revenues throughout the Gulf. “The decline in the oil price will weigh on the external and fiscal surpluses in the region,” said Giyas Gokkent, chief economist at National Bank of Abu Dhabi.

Nevertheless, with the exception of tiny Bahrain, state finances in the six countries of the Gulf Cooperation Council are expected to remain healthy enough for governments to boost spending if that proves necessary to support growth.

Saudi Arabia’s fiscal surplus is projected to fall from a median estimate of 8.1 percent of gross domestic product this year to a still-high 5.2 percent in 2014.

Meanwhile, consumer spending booms and governments’ efforts to stimulate private sector business mean Gulf economies can keep some of their momentum even if their state-run oil sectors slow.

“Growth in the non-oil sector remains solid, with the improvement in private sector activity looking increasingly broad-based,” said Daniel Kaye, head of macroeconomic research at National Bank of Kuwait. — Reuters
Saudi Gazette - Economies of GCC to grow despite drop in oil revenue

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