Gulf economies maintain growth rates
Middle East and North Africa (Mena) region’s resource-poor economies are set for another tough year
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The Gulf economies are likely to grow on average at 3 per cent this year, which is close to the historical trend, a research by the London-based Capital Economics Ltd shows.
“The Gulf economies are on course to outperform the rest of the region over the next year or so. Admittedly, weak oil production will act as a drag on growth. But increased government spending should help to offset this,” Capital Economics said in its analysis, a copy of which was received by Gulf News.
Capital Economics said in Saudi Arabia, weak oil production will act as a drag on growth this year. But renewed fiscal stimulus should mean that the economy is one of the best performers in the region this year.
“In the UAE, the fragile banking sector and Dubai’s overhanging debt problems will keep growth subdued by recent standards. Elsewhere in the Gulf, lack lustre global energy demand means that hydrocarbon output will slow in Kuwait, Qatar, Bahrain and Oman this year. Qatar should be a relative outperformer, although the days of double-digit growth rates are now over.”
“By contrast, ongoing political tensions mean that Bahrain and Kuwait are likely to be the weakest Gulf economies this year,” it added.
The research showed the Middle East and North Africa (Mena) region’s resource-poor economies are set for another tough year.
“Heightened political tensions and substantial external financing risks mean that growth will remain extremely sluggish. We have pencilled in growth of 2.0 per cent this year, well below their potential growth of 5 per cent or more. Most vulnerable is Egypt where ongoing delays to securing an IMF deal have pushed the economy to the brink of a full-blown crisis. For now, we think further bilateral funds should stave off a worst-case scenario,” said Capital Economics.
Reinforcing Capital Economics’ Gulf economic outlook, Mark McFarland, Chief Investment Strategist at Emirates NBD said in latest research note : “Within our non-G7 allocation, we have increased weights for Frontier Markets (GCC) as we believe that growth’s rebound appears to be gathering pace across the region.”
Meanwhile, the Abu Dhabi Securities Exchange (ADX) said in a statement its general index has increased by 14.99 per cent in the first quarter of 2013, representing the highest increase among all Mena stock markets.
The ADX general index increased on Sunday, March 31, by 0.25 per cent, closing higher at 3,025.33 points.
“Stock market participants always prefer political stability when investing, which makes the UAE a perfect place for doing investments. Through what the UAE government and its policies have achieved, we can clearly see confidence in its fullest tenure by investors,” said Rashed Al Beloushi, ADX’s chief executive.
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