DOHA: Higher oil prices coupled with improved global economic conditions are expected to support growth momentum of the GCC countries.
This was highlighted by Seltem Iyigun (pictured), Coface Economist for Middle East & Turkey, during her presentation on “GCC Economic Outlook” at the recent Key Broker Event organised by CofaceCredit Insurance GCC. Coface is a world leader in credit insuranceproviding cover to its clients in more than 200 countries.
Iyigun said real GDP growth rates in the GCC are expected to grow to around 2.3 percent compared to 0.6 percent in 2017. However, growth will remain below pre-2014 levels due to volatile energy prices and geopolitical uncertainties.
“We see a slight recovery in the growth momentum of GCC nations’ GDP on rising oil prices. The recent extension in oil production cut is a positive sign for oil price outlook in the near term, but prices remain volatile,” she said.
Oil prices have averaged $54 a barrel in 2017, up from $46 in 2016, and is expected to average at $57 in 2018. In December 2016, 12 Opec countries agreed its first production curbs in a decade. Later, 11 non-Opec producer nations led by Russia, joined the decision. Last November, they decided to extend the oil output cuts until the end of 2018.
Iyigun said that tighter liquidity conditions will remain in the region following the recent US Federal Reserve rate hike because regional currencies are pegged with the US dollar. However, loan growth is not expected in the next three years compared to 2012-2016 period.
