GCC economic growth to slow this year
Dubai, September 23, 2013
The economic growth in Gulf Cooperation Council countries is expected to slow to 4 per cent this year and 4.3 per cent next year after two years of sustained expansion, according to a report by Euler Hermes.
The GCC posted strong economic growth of 7.2 per cent and 6 per cent in 2011 and 2012, Euler Hermes chief economist Ludovic Subran was quoted as saying during the inaugural Trade Credit Insurance Summit under way in Dubai, by Wam news agency.
Saudi Arabia and the United Arab Emirates - the two big main contributors - are expected to grow by 4 per cent and 3.5 per cent respectively in 2013, and 4.5 per cent and 4 per cent respectively in 2014, he said.
He noted that the financial fundamentals, including current account surplus, fiscal balance and large foreign exchange reserves, remain satisfactory for the region.
GCC countries, with a strategic position as major global oil exporters, benefit from a strong commercial and budgetary position. The expected oil production decline in 2013, driven by lower US demand due to the development of shale gas and China's slowing growth, will involve a slight budget surplus decrease, which should be partially offset by an increase in non-oil exports, he said.
Pro-active policies by GCC states support growth. In Saudi Arabia, public spending will underpin 2013 and 2014 economic growth. The current five-year plan (2010-2014) aims at developing and improving infrastructure and investing in human capital through education and training. In addition, following the Arab Spring events of 2011, the government announced two major programs to support housing and job creation.
In the UAE, significant progress has already been made in infrastructure development and improved business climate, but much remains to be done in education, the report said.
Euler Hermes also cited the ongoing of the diversification of the GCC economies and business partners.