Gulf region's 2009 growth forecasts slashed

Standard Chartered Bank has slashed its 2009 economic growth forecasts for Gulf oil producers in view of the global downturn, revising its UAE growth forecast downward by more than 2 percentage points to 0.5 percent.

Standard Chartered's previous expectation for growth in real gross domestic product (GDP) in the UAE was 2.7 percent. The second-largest Arab economy probably expanded 6.8 percent this year, economists said in a Reuters poll last month.

"With the world economy in recession, there will be downside risks to growth," Standard Chartered said in a research note on Thursday.

"We see the first half of the year to be the most challenging, but given the strong structural positives, we expect GCC economies to start staging a moderate recovery in the second half of the year."

Saudi Arabia, the world's top oil exporter, would expand 1 percent this year and Kuwait's economy would grow 1.5 percent, the bank said.

Gulf economies are heavily reliant on oil export revenues, which constituted 87.5 percent of Saudi Arabia's total state revenue in 2007. The price of crude has slumped more than $100 a barrel since July.

Production cuts by the Organisation of Petroleum Exporting Countries will have a severe affect on regional economic growth, as would a property market correction and scores of job losses in Dubai, last month's poll showed.

In the Gulf region, real economic growth would be fastest in Qatar, the world's top exporter of liquefied natural gas, at 4.5 percent, Standard Chartered added.

It added that average inflation in the region would fall significantly this year to between 1.5 percent in Bahrain Tand 6 percent in Qatar. (Reuters)

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