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Gulf states set for return to solid growth but risks remain, says IIF
Source: BI-ME and Reuters , Author: BI-ME staff
Posted: Sat October 3, 2009 8:17 pm
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INTERNATIONAL.  Gulf Arab economies are seen returning to solid growth in 2010, with Qatar and Oman soaring on rising oil and gas output, but "corporate distress" remains a risk, the Institute of International Finance (IFF) said in report.

Real gross domestic product (GDP) in Kuwait, Saudi Arabia, and the United Arab Emirates was expected to grow 4 percent, 3.5 percent and 3.4 percent respectively in 2010, driven mainly by a rebound in oil production, the IIF said in its report.

This follows estimated contractions in Kuwait of 1.9%, 1.2% in Saudi Arabia and 1.5% in the UAE in 2009, according to the IIF.

Banks across the Gulf Arab region have had to take provisions for their exposure to Saad and Ahmad Hamad Algosaibi and Bros Co (AHAB), two Saudi conglomerates that defaulted on debts, with some bankers warning the total cost of writedowns may hit $22 billion and affect around 120 banks.

"Investors (in Saudi Arabia) have been unsettled by the revelations of corporate debt problems," Saudi-based bank Samba Financial Group said in a separate report.

"A paucity of data means that it is impossible to diagnose the extent or severity of debt problems within the Saudi corporate sector."

Qatar's economy was set to surge 35.5% next year, according to the IIF, having posted growth estimated at 9.3% in 2009 as the world's largest liquefied natural gas exporter completes a number of LNG expansion projects.

The Omani economy was seen growing 9.7% in 2010, compared to an expected 5.2% expansion this year, the report said.

Gulf Arab governments' current account and fiscal surpluses were likely to remain "sizeable", the IIF said, but would track a decline and then recovery in the region's oil revenues, the IIF said in its report.

Oil revenues across the six countries in the Gulf Cooperation Council, Saudi Arabia, Bahrain, Oman, Qatar, Kuwait and the UAE, are expected decline to US$327 billion in 2009 from US$575 billion in 2008, before recovering to US$421 billion in 2010, the IIF said.

The current account surplus will shrink to US$49 billion in 2009 from US$268 billion in 2008, before rebounding to US$122 billion in 2010, it said.

Foreign assets of the GCC would rise to around US$1.55 trillion by end-2010, excluding asset valuation changes, the IIF said.

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

date:Posted: February 9, 2010
UAE. Location and quality are driving apartment prices; while average prices decreased, select communities, including Palm Jumeirah and Downtown Burj Dubai, experienced slight increases according to Landmark Advisory's latest quarterly report.
date:Posted: February 8, 2010
INTERNATIONAL. Trying to achieve financial goals by pouring all of one's assets into emerging markets today, telecommunications tomorrow, and Japanese small-cap stocks next week is not a guarantee for achieving a sound financial plan.
date:Posted: February 8, 2010
INTERNATIONAL. The latest survey shows 46% of respondents expect their business travel to increase, marking a rise by 22 points compared with figures of the same period in 2009.
UAE. Location and quality are driving apartment prices; while average prices decreased, select communities, including Palm Jumeirah and Downtown Burj Dubai, experienced slight increases according to Landmark Advisory's latest quarterly report.