GCC recovery predicted, 3% growth seen in 2010

GCC nations are on course for recovery from the global economic crisis and are predicted to see a three percent growth in its combined gross domestic product (GDP) for 2010, Merrill Lynch has said.

A new report from Bank of America Merrill Lynch Global Research has also said that the UAE was the best positioned in the Gulf to benefit from a recovery in global economic activity and higher oil prices, followed by Saudi Arabia.

The report added that the region had lagged behind an overall global rally in summer but looked set to capitalise on opportunities in the future.

“As trading volumes are picking up with the end of the Ramadan, we believe the positive global picture will become the dominating theme. Besides, attempts to restructure Saad/Al Gosaibi debt in Saudi Arabia, as well as officials ensuring announcements in the UAE on debt service of Dubai Inc. companies are all good news,” said the report.

Latest predictions from Merrill Lynch sees the GDP of Qatar, the world's largest liquefied natural gas producer, growing by eight percent in 2010, more than two percent better than its expected 2009 performance.

The report says the UAE's economy is expected to contract by one percent this year as its real estate and construction sectors continue to be hit by the global downturn but will grow by two percent in 2010.

Economies in both Kuwait (-1.9 percent) and Saudi Arabia (-0.2 percent) are seen contracting this year but Merrill Lynch says both will resume GDP growth in 2010 with two percent and 3.1 percent growth respectively.

"We've been arguing for some time that the GCC is well positioned for a recovery and the gradual improvement in the global macro backdrop, higher oil prices and recovering credit maket make our case even stronger," the report added.

"With a budget breakeven oil price of roughly $65 a barrel a higher oil price means that the GCC will start saving again in 2010...we forecast the GCC budget balance to move back to a surplus of 5.6 percent of GDP, from a deficit of 0.8 percent of GDP in 2009."