Japanese firm feels oil prices drop may hit Gulf states' current account & fiscal surpluses.
Gulf Arab economic growth will slow to 1.2 percent in 2009 from an average of 6.8 percent in the past six years as the region's export revenues are halved and investment plans suffer, Nomura said.
"We do not see the so-called 'wealth cushion' as an effective line of defence against a sharp fall in export earnings and the global liquidity crunch," Nomura said in a research note dated Feb. 20.
"The decline in oil prices is set to wipe out the Gulf countries' current account and fiscal surpluses and make it more difficult for the private sector to borrow from international markets."
Saudi Arabia and five of its neighbours in the world's biggest oil-exporting region amassed more than two trillion dollars in the past six years - more than twice as much as their combined gross domestic product, Nomura said.
But with oil prices slumping to under $40 a barrel, Gulf states will suffer a decline in export revenues of about 50 percent, or $425bn, this year, thus prompting them to scale back investment plans, it said.
Hundreds of billions of dollars of expansion projects in the United Arab Emirates have already been put on hold or cancelled.
"Contagion effects mean that it is probably no longer possible to continue with large and elaborate investment projects," Nomura said.
"Every country should experience a sharp slowdown, but some, like Kuwait and the UAE, look more vulnerable than others." (Reuters)
