The GCC could see net
foreign assets increase to US$1.9 trillion by the end of the year and $2.1
trillion by the end of 2013 amid rising oil prices, the Institute of
International Finance (IIF) has said.
The oil-rich region’s
external current account surplus is expected to rise to a record US$358bn up
from US$327bn in 2011 as energy revenues flood the region, the global financial
services industry body said.
“The prospects for the GCC
are impressive, yet there are clearly risks. At a most general level, there is
the issue of the impact on the GCC should turbulence in other Arab countries be
prolonged,” George Abed, an IIF senior counselor and director for Africa and
the Middle East, said in a statement.
“Other risks from the
sanctions on Iran indicate ambiguous outcomes,” he added.
Net GCC foreign assets for
2011 are equivalent to 127 percent of projected GDP. Around 60 percent of the
foreign assets are managed by sovereign wealth funds, the report noted.
IIF forecast GCC economic
growth at 4.9 percent, down from “an exceptional rise” of 6.9 percent a year
Oil prices will average
around US$114 a barrel during the year with combined oil production reaching 17.2m bpd, up from 16.5m barrels in 2011.
“While for the principle oil
producers in the region break even prices remain comfortably below prevailing
market levels, the unrelenting rise in and the near irreversibility of
government spending could expose the fiscal position to undue risk because of
the historically high volatility of oil and gas prices,” said Abed.
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