According to a key Western financial Centre, strong oil prices will ally with high public spending to boost the UAE’s real GDP by around 4.4% in 2011 while its fiscal and current account balance will record large surpluses.
The Washington based Institute for International Finance said that growth this year is higher than the 3.2% increase in the GDP of the second largest Arab economy but growth is projected to slow down to around 3.1% in 2012 as a result of an expected fall in crude prices.
Releasing its semi annual report on Arab economies, the IIF forecast a 6.7 per cent growth in the combined GDP of the 6 nation Gulf Cooperation Council in 2011. But it expected a contraction in Arab oil importing nations.
The report put growth for all Arab oil exporters at 6.5% this year but it excluded conflict battered Libya which could see a massive decline of nearly 56% in its GDP because of the disruption in its oil supplies. The divide in economic prospects between oil exporting and non oil exporting Arab countries continues to increase.
While the oil exporters are likely to see average growth of 6.5% this year, the Arab oil importing countries will see their economies contract on average by 0.4% the transitions from authoritarian regimes as a result of the ‘Arab Spring’ are proving to be most difficult for some countries.
The report said the better economic performance in hydrocarbon exporting countries is due to higher oil and gas production and large increases in government spending. It expected that higher oil prices and production levels would help lift the budget revenues from hydrocarbon exports from USD 554 billion in 2010 to USD 793 billion in 2011 before slipping to around USD 725 billion in 2012.
The combined external current account surplus is projected to rise from USD 170 billion in 2010 to USD 322 billion in 2011 but then decline to USD 225 billion in 2012. Gross foreign assets of the GCC are projected to rise to about USD 1.9 trillion against foreign liabilities of USD 0.4 trillion.
(Sourced from www.emiratesbusiness24/7.com)
