Lower oil production and prices will result in slower growth for the GCC, says Abu Dhabi bank
Economic growth in the GCC will fall from 7.4 per cent in 2011 to 4 per cent in 2012 as lower oil prices and production levels lead to a slower economic expansion, according to National Bank of Abu Dhabi chief economist, Giyas Gokkent.
The potential fallout from slowing global economic growth and the Eurozone debt crisis will also weigh on the regional economy.
Although the fiscal and current account balance of the GCC countries look positive, Gokkent warns that rising government spending is pushing up breakeven oil prices, making them vulnerable to a fall in energy prices.
Non-oil sector activity is expected to “remain at a similar level to that in 2011”, according to Gokkent.
Real economic growth in 2012 is forecast by Gokkent to be 4.1 per cent in Saudi Arabia, 3 per cent in the UAE, 4.57 per cent in Kuwait, 5.6 per cent in Qatar, 4.93 per cent in Oman and 3.79 per cent in Bahrain.