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Economies across the GCC have been predicted to continue growing strongly after experiencing growth at 4.6 per cent annually during 2010-2011, according to a new report by Qatar National Bank (QNB) Group
The QNB Group’s GCC Economic Insight 2012 said that if the average Brent oil prices of US$108 per barrel were maintained throughout 2012-13 the region’s GDP would reach US$1.5 trillion by 2013.
According to the report, the GDP of the GCC, which has almost quadrupled since 2001 thanks primarily to growth in the region’s hydrocarbons sector, would continue to grow and fuel continued high levels of public expenditure in government and financial services, and the non-oil sectors.
“Non-oil industrial growth of nine per cent will be driven by manufacturing, particularly heavy investments into petrochemicals, fertilisers and metals production in Qatar and Saudi Arabia, and construction,” the QNB report stated.
The report also cited strong government spending as a key factor in encouraging economic diversification, which has led to the expansion of non-oil sectors such as banking and manufacturing.
“The [region’s] banking sector is resilient, well capitalised, profitable, has a low level of non-performing loans and is favourably placed to withstand turbulence in global markets during the forecast period,” the report noted.
Despite growth in the non-oil sectors, the report noted that close to 86 per cent of the GCC’s US$1.2 trillion in total revenue for 2012-13 would come from the oil sector.
The six nations of the Gulf Cooperation Council (GCC), which have a combined nominal GDP of US$1.4 trillion and account for two per cent of global GDP, would also experience gas production growth of 4.3 per cent, added the report, which would outpace oil production growth at 0.4 per cent.
It pointed out that the GCC economies were likely to experience larger current-account surpluses than both Japan and Germany in 2012-13 as high oil prices boost exports, and that inflation would be expected to reach 3 per cent in 2012-13 due to rising rents in Saudi Arabia.
Internationally, QNB said the GCC’s business environment would remain competitive and has been ranked higher than the Eurozone in both the World Bank’s Doing Business rankings and the WEF Competitiveness rankings in 2012.