Current Economic Outlook
The onset of the financial crisis and regional slowdown has exposed the divergences across GCC countries in terms of growth patterns and financial vulnerabilities. Despite a regional reliance on hydrocarbon exports, GCC countries varied in their depth of economic diversification, their exposure to international capital markets and their financial and economic buffers. The GCC should be well placed as the global economy recovers, particularly if demand from emerging markets contributes to an increase in demand for oil and oil products. At a price of US$70 per barrel, all countries should be able to balance their budgets and the region as a whole should run a small surplus. As global conditions improve and the demand for exports and commodities picks up, the region’s surpluses will mount again with the rising oil price. With Qatar’s new natural gas pipeline set to open, gas exports are expected to increase by more than 50%. However, surpluses will not be as large as in 2006 and 2007 as more funds are being absorbed domestically. Greater spending on infrastructure will support longer‐term growth.
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