MACRO WATCH – Middle East & Africa: Despite the crises that have hit the world’s economies lately, GCC countries have always been seen as the world’s glowing economic bloc with high oil revenues and strong fiscal balances. Since 2010, they have recovered from the 2008 financial crisis and achieved perceptible growth of 5.94% compared to 1.33% in 2009, mainly driven by Qatar, the world’s fastest growing economy, with 16.64% GDP YoY.
GCC Countries Growth Rates & OPEC Crude Oil Price
Chart provided by: CEIC
In 2011, the slow-paced global recovery was characterized by Japan’s earthquake and tsunami, U.S. and EU crises, as well as MENA region political unrest. GCC countries were only slightly affected compared to their peers, as the slow recovery deferred the implementation of long-term development plans that largely target privatization and diversification. Despite unrest in Bahrain since early 2011 and protests in Kuwait since November, GCC countries achieved an average growth for 2011 of 6.68% according to the IMF, mostly driven by Qatar’s growth (18.74%).
Because GCC countries are dominant oil exporters, the main driver of GCC growth is the high oil prices that increased from 77.4 USD/barrel in 2010 to 107.44 USD/barrel in 2011. Other growth drivers were the increased public spending from the applied expansionary fiscal policies. In 2012, according to IMF forecasts, regional growth will shrink to 4.18% due to a considerable expected drop in oil prices because of a possible slump in the global outlook, along with an expected decline in GCC oil supply in 2012.
By Mai Thabet in Egypt – CEIC Analyst