Published: March 12, 2013
Ratings agency trims growth forecast for Gulf Cooperation Council.
Ratings agency Fitch has cut its 2013 economic growth forecast for the Gulf Cooperation Council (GCC) countries due to an unexpectedly large cut in oil production. Nevertheless, strong oil prices and increasingly positive market sentiment should see a good performance overall, the firm adds.
With Saudi Arabia deciding to cut back sharply on oil production and other countries reaching capacity, growth will be somewhat constrained, Fitch concludes. This will be tempered, however, by a forecast rise in oil prices (to US$105 per barrel in 2013) and improved business sentiment, which should encourage strong growth in oil and non-oil-related sectors.
Spending by GCC governments is expected to be high this year with Saudi Arabia and Oman, in particular, looking to implement expansionary policies. The UAE is set to see impressive growth buoyed by the performance of Dubai’s non-oil sector where, according to Fitch, “trade, tourism and logistics are close to record highs”.
The ratings agency forecasts fiscal- and current-account surpluses for all countries in the GCC except for Bahrain, where political and civil instability is likely to impact economic performance.