The economy in the GCC is expected to grow by almost 7 per cent in 2011, with high oil prices and a recovering world economy providing impetus, predicts the Kuwaiti investment bank Global Investment House.
The political turmoil that has toppled regimes and caused civil war in neighbouring Arab countries has boosted oil prices that were already rising due to a recovery of the global economy. Improving trade and finance conditions have also driven the regional economy forward.
“Despite the political tensions in some of the neighbouring countries, the Gulf Cooperation Council [GCC] region is returning to solid growth, underpinned by higher oil prices, robust government spending, and some normalisation of global trade and capital flows,” says a report by Kuwaiti investment company Global Investment House.
Overall GDP is expected to expand by 6.8 per cent in 2011. Oil price increases in the GCC averaged 31 per cent between December 2010 and April 2011. Money supply for the region reached $688bn as of February 2011 and is forecast to increase by 11 per cent this year. External current account surplus is estimated to increase from $136bn to $304bn, or 21.1 per cent of GDP, allowing for extensive government investment programmes.