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Mon 2 Mar 2009 10:07 AM

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GCC could follow world into recession - oil expert

Former OPEC official warns of negative growth for GCC if crisis lasts 'couple of years'. 

The GCC ecomony could fall into recession if the current global economic crisis lasts for more than a “couple of years”, the former acting secretary general of OPEC has warned.In an interview with the Kuwait news agency KUNA, Dr Adnan Shihab Eldin said the Gulf countries were being spared the worst of the financial crisis for the time being.

The region would enjoy on-going positive economic growth of between two and three percent for 2009, although lower than the seven and or eight percent the region has been used to.

However, if the global crisis continued the Gulf region would also suffer negative growth, he warned.

"For the time being, we are spared the negative growth that other regions are suffering. But, if this global recession continues for another couple of years, we cannot be spared," Dr Shihab Eldin from Kuwait said.

Dr Shihab Eldin, who currently serves as senior advisor and consultant to a number of public organisations in Kuwait, was speaking in Brussels last week on the sidelines of a two day conference on GCC and European Union ties.

The conference was called after 18 years worth of talks on a free trade agreement between the regions were suspended last year, after the two sides failed to agree on political issues linked to the deal.

EU calls for a resumption of negotiations on the free trade was a positive move, Dr Shihab Eldin told the news agency.  

"We in the Gulf seriously consider that it is in our interest to have a free-trade agreement. We worked so hard. Maybe with this recognition and call from the EU to go back to the talks we can still find a way to close it before another two or three years pass," he added.

The outlook for the Gulf in terms of oil revenue was “uncertain” because it was linked to the global recession. But the price would rise again, it was just a matter of when, he said.

"We have uncertainty (as to) how deep is this recession. There is uncertainty how much demand on oil we are going to lose.”