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Discuss this article (0 Comments)UAE infrastructure projects worth $300 billion
by WAM on Wednesday, 09 May 2007
The UAE accounts for the bulk of the ongoing and planned infrastructure projects in the GCC countries, amounting to an estimated $1.3 trillion of investments over the 2007-2012 period, the Dubai-based Khaleej Times quotes economists as saying.
"As of early April 2007, there were over 2,000 infrastructure projects", the paper quotes Edward Morse, Lehman Brothers' Chief Energy Economist as saying.
The core of these, over $300 billion, are in the UAE, mostly in Abu Dhabi and Dubai, he said.
Projects in Saudi Arabia have doubled over the past 18 months, and are now tracked at over $280 billion. Kuwaiti projects exceed $215 billion and the development costs for projects in Qatar are estimated at some $130 billion.
Quoting Middle East Economic Digest, which tracks these projects, he said that the total value of these projects might have risen by $300 billion since the start of this year, reflecting the rapid rate at which new projects are being added as well as cost escalation.
"Although most of these expenditures are in the hydrocarbon sector, well over $100 billion is in power generation, with the GCC's annual average power consumption growing by 9 per cent per annum, more than three times the global average. More than $50 billion of the GCC's capital projects are in the industrial sector," said Morse in his report entitled "Beyond petrodollars: Globalisation and sustainable development in the Middle East," published yesterday by the global investment bank.
The report concludes that the development of the Middle East hydrocarbon exporters as a major force in the world economy, manifested in the current account surpluses of the GCC and the consequent purchase of consumer goods from the outside world, is likely to continue at least until the end of the decade. However, in an effort to avoid the stagnation from which they suffered between 1985 and 2002 recurring once the current oil boom is over, the economies of the GCC are heavily investing to develop their infrastructure and economic base.
"The six GCC countries could be on the verge of overcoming oil dependency. Having seen nominal GDP growth hovering near 20 per cent for the past four years, and given our forecast of sustained high oil prices, we expect these growth levels to continue through this decade. If the investment off the back of this is sustained, then I expect to see a new Middle East that is a critical engine of global growth," said Morse.
One note of warning is that the significant near-term threats to the scenario outlined lie in terrorist acts or regional conflict rather than factors emanating from either the oil market or from lower global economic growth.
GDP growth in the GCC countries is underpinned by large increases in oil export revenues, the report said. In 2004-06, oil export revenues grew an average of 36.5 per cent in the GCC. (Oil export revenues grew 32.7 per cent in Iran and 38.7 per cent in Venezuela.) The oil price boom has spurred 2004-06 real average annual GDP growth in Saudi Arabia of about 5.4 per cent, while Kuwait, Qatar and the UAE notched average gains of 8.9 per cent, 7.4 per cent and 8.0 per cent, respectively.
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