GCC economy to pick up 5.9% in 2011

The combined economy of six Gulf oil producers swelled by around 4.5 per cent in 2010 and is projected to rebound by 5.9 per cent this year because of high oil prices, according to a regional report.

The surge in oil export earnings will also widen the collective current account surplus in the Gulf Cooperation Council (GCC) to 6.9 per cent of GDP this year from around four per cent in 2010, said the report by the Federation of the GCC chambers of commerce and industry (FGCCI).

“This means that the GCC countries will have additional means to stimulate private sector demand,” said the annual report by the Dammam-based FGCCI, sent to Emirates 24/7 on Tuesday.

“As inflationary pressures remain low, the main challenge facing the GCC’s monetary policy will be how to stimulate domestic credit while striving to avert fresh inflationary pressures….GCC countries also need to develop new sources to achieve sustainable growth in their economies.”

Citing estimates by the International Monetary Fund, the report said the GCC’s oil production would rise from around 15.1 million barrels per day in 2010 to 15.7 million bpd in 2011. It said the rise would be coupled by a surge in average oil prices, citing the recent sharp price increase to nearly $120 a barrel because of fighting in OPEC-member Libya.

“In the medium term, most of the oil production increase will come from the GCC countries…it should be noted that Saudi Arabia is planning to raise its crude output capacity from around 12.5 million bpd in 2010 to 15 million bpd in 2012…the GCC’s gas output will also rise from 4.3 million equivalent barrels of oil per day (ebpd) in 2008 to 6.3 million ebpd in 2011.”