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Arab Economy Rebounds in 2010

Middle East : 14 July 2011


Four Arab nations recorded growth of between seven and 16 per cent while growth in five others was around five per cent and the rest at below four per cent, said the Kuwaiti-based IAIGC, a key Arab League organization.

Despite the recovery in 2010, it was the first time in nearly 10 years that growth in the combined Arab GDP was below the average growth in other developing nations. “But last year’s growth reflects a real improvement in the Arab economies as all of them grew at a higher rate compared with 2009.”

The report gave no breakdown but Qatar is believed to have maintained its double digit growth because of its soaring gas exports. Real GDP in Qatar, the world’s top LNG supplier, leaped by more than 15 per cent in 2010 to maintain its position as having one of the world’s fastest growing economies.

Saudi Arabia’s GDP, the largest in the Arab world, rebounded by around 3.8 per cent last year from 0.2 per cent in 2009 while the UAE economy, the second largest, rebounded by nearly two per cent after shrinking by 1.1 per cent in 2009.

Oil prices gained nearly $15 in 2010 while the combined Arab crude output edged up to nearly 21.21 million bpd from about 21.11 million bpd.

Gulf oil producers were the main victim of lower crude prices in 2009 given their heavy reliance on hydrocarbon exports.

According to the Abu Dhabi-based Arab Monetary Fund, another key Arab League institution, lower crude prices in 2009 depressed the combined Arab economy by nearly $231 billion after a steady rise in the previous few years and the bulk of the decline was in the Gulf oil producers.

From a record high of around $1,930 billion in 2008, the combined Arab GDP slumped to nearly $1,699 billion in current prices in 2009.

Almost half the decline in the Arab GDP in 2009 was in Saudi Arabia, the largest Arab economy and the world’s dominant oil power.

Its nominal GDP plummeted to nearly $369.1 billion in 2009 from around $475 billion in 2008, when it peaked at an all-time high after oil prices shot up to their highest average of nearly $95 a barrel.

Kuwait suffered from the second largest loss when its GDP dived to around $109.4 billion from $148.9 billion, a drop of about 39.5 billion. The UAE’s GDP tumbled by $26 billion to $225.6 billion from $251.8 billion, the figures showed.

The IAIGC report showed higher oil prices in 2010 boosted the collective Arab foreign currency reserves by around five per cent to $958 billion at the end of the year from nearly $910 billion at the end of 2009.

Foreign director investment (FDI) flow into the Arab region also swelled by about 10 per cent to $88 billion from $79.2 billion.

“The increase in FDI inflow was a result of the recovery in the advanced economies since they constitute a key source of capital export to the Arab world…other factors include the recovery in Arab economies and the increase in the region’s oil export earnings, mainly in the Gulf countries, as such an increase normally gives rise to mergers and acquisitions among Arab nations.”

The report showed higher oil prices also boosted Arab exports of goods and services by around 17.5 per cent to $1.02 trillion in 2010 from $853 billion in 2000. Imports also grew by 10.7 per cent to around $869 billion from $785 billion.

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