GCC economies looking good for 2013
GCC economies are set to have a good 2013, buoyed by high oil prices
The GCC countries are expected to grow about five per cent in 2013 on a non-oil real GDP basis while oil prices will stay close to $100 per barrel keeping these countries budget finances in surplus, a report said.
In a context similar to the previous two years, GCC economies will remain relatively buffered and to continue to benefit from their very strong balance sheets that allow government spending on both workers benefits and on infrastructure spending, added the latest Economic Brief released by the National Bank of Kuwait (NBK).
As investors prepare for 2013, a new year it shall be, though the overall environment will be little changed, the report said. Internationally, Greece will remain in the headlines, though fears of its consequences have faded and its latest “bailout” package or payment is on the way, the brief predicts.
The EU continues to schedule almost monthly summits, where progress is made but at painstaking pace, most recently on banking union. Growth continues to hang tough in China where we seem to have avoided a hard landing, and where growth is expected to top 7.5 per cent in 2013.
The US is described as “better than the EU”, the latter being currently in recession and expected to post further negative or flat growth in 2013. The general assessment is that the emerging markets/economies will outperform, and that their currencies and bonds will as well. The advanced economies ought to grow 1.5 per cent, with a “flat” Europe and a near-2.0 per cent US, though the latter estimate ignores the risk of the fiscal cliff.
The IMF expects Asia to grow 5.8 per cent, the Mena region 3.6 per cent, though again all these numbers presume no major crisis gets out of the hand in the year, according to the brief. The risks are, in 2013, primarily on the downside, especially before the fiscal cliff issues in the US are resolved (or postponed long enough), according to NBK.
Going over the cliff itself, i.e. if nothing is done on the matter by January 1, could subtract almost $600 billion from the US economy over a short period of time and guarantee a recession during the first half of 2013, if not longer. Six-hundred billion dollars is the average annual addition to GDP in the past 3 years.
The hope is that some agreement, at least partial, on taxes and cuts, would reduce the hit to GDP from 4 per cent ($600 billion) to something under 2 per cent, which combined with the good news of a longer-term solution would prevent a recession, the report said.