Signs of recovery are seen throughout the region.
The collective GDP (gross domestic product) of the six Gulf states should hit $983 billion (Dh 3.610 trillion) by the close of this year, according to a report released this week. Those figures would result in a 4.4 per cent increase over the 2009 figures.
The forecast was in an annual report issued by the GCC (Gulf Cooperation Council) Federation of Chambers that said the six GCC nations have a major role in the steadiness of the oil market.
As stated in the report, the GCC group owns around 40 per cent of the known oil reserves worldwide and around 23 per cent of the global natural gas reserves.
The six nations together also represent around 25 per cent of global oil exports.
According to the report, the economies of the GCC nations are showing strong indications of their recovering economies that are headed into growth on the backs of climbing oil prices, higher production and heavier government spending.
Private sectors in the GCC have been working through the results of the global financial crisis that brought about a cutback in opportunities for business at the same time as foreign competition heated up.
The report noted that the GCC nations should be implementing incentive packages for the economy designed to assist the private sector as it faces these new challenges. Examples such as bank guarantees for private industry facilities were suggested.
It was reported that the stock exchanges of each GCC country recorded gains in the opening quarter of 2010, with Saudi Arabia leading the way.
Rising oil prices, gains on large company shares and improving macro-economies are what is behind the exchange gains, according to the report. The monetary markets of the GCC nations hit $761.08 billion during the 2010 opening quarter.
The total of investment flows into the region is expected to increase from the 2009 total of $48 billion to hit $66.4 billion this year and $81.3 billion next year. Investments in private properties will contribute the majority of those increases, as it is expected to increase from the 2009 total of $50.7 billion to $55.9 billion this year and $68 billion next year.
It is expected that a majority of those investments (valuing $52.2 billion this year and $61.5 billion next year) will come from direct investments.
Portfolio investments will stay below $3.7 billion this year and $6.4 billion next year. Also, project values are forecasted to be lower due to restructuring policies, falling from $2.4 billion in 2008 to $2.1 billion last year and only $2 billion for this year.
The report stated that the global economic crisis was to blame for the drop in a variety of commodity prices and raw materials last year, such as foods and building materials. The imported inflation rate did subside, allowing the GCC central banks the chance to respond as each priority emerged.
The report noted that moderate policies of spending, steady demands for both housing and building materials and decreases in prices internationally should result in steady levels of inflation in the GCC region. Saudi Arabia recorded 4.9 per cent inflation in 2010, while the UAE saw only 0.8 per cent, Kuwait recorded 4.4 per cent, and Qatar saw 0.4 per cent inflation. Oman’s rate was at 3.4 per cent and Bahrain saw 2.8 per cent inflation.
It was noted in the report that deficiencies in global financial systems such a weak risk management were discovered because of the economic crisis.Paul Holdsworth, Staff Writer, Gulf Jobs Market News