GCC economies won't slip on falling oil price
Abu Dhabi - Higher output to serve as cushion from crude shock.
GCC economies are expected to be less affected by plunging oil prices due to higher output in 2015, a report has revealed.
Also, there would be a positive impact of counter-cyclical fiscal policies adopted to support economic activities, the Arab Monetary Fund's "Arab Economic Outlook Report" said, which contains updated forecasts of economic growth and inflation for Arab countries in 2015 and 2016.
The report said growth rate of GCC economies is forecasted at three per cent in 2015 compared to 3.4 per cent in 2014.
On the other hand, GDP of other Arab oil-exporting countries except Algeria is anticipated to contract in 2015, reflecting the impact of declining oil prices on the economies of these countries, which will be compounded by the effects of internal developments.
"As for Arab oil-importing countries, that have witnessed unfavourable economic developments in the recent years, they are likely to benefit from relatively stable conditions, the positive impact of recent economic reforms and the declining trend of oil prices," the report said.
"Growth rate of this group of countries is expected to increase to 3.4 per cent for 2015 compared to 2.5 per cent for growth achieved last year," it further said.
Forecasting for 2016, the report expects economic activities to improve in both Arab oil-exporting countries and Arab oil-importing countries. The AMF expects Arab economies to achieve a relatively higher growth rate at around 3.5 per cent next year.
Higher oil prices anticipated in 2016 will reflect positively on levels of economic activity in oil-exporting countries.
Growth rate of Arab oil-exporting countries is estimated to rise to 3.4 per cent in 2016 supported by rising GCC growth rate. The GCC economies are expected to grow by 3.7 per cent next year in light of higher hydrocarbon revenues and the acceleration of implementation process of some large investment projects under plans being implemented to increase economic diversification. Arab oil-importing countries are forecasted to record growth rate of around four per cent next year due to the positive impact of improved global demand, which will support production of goods and services and create more job opportunities.
However, this group of countries could be negatively affected by the higher oil prices which, will add more pressures on public budget and lead to lower levels of social and capital spending.
The report noted that the world economic activity has not improved markedly during the first half of the year, contrary to what was anticipated by international organisations earlier this year.
The modest economic performance is mainly attributed to several factors, including the less-than-expected performance of US economy, the continuation of worries about the eurozone's economic recovery, the contraction of economic activities in Commonwealth of Independent States due to geopolitical risks and the slowdown of economic growth in many developing and emerging market economies, notably China and oil-exporting countries. As a result, growth rate of world economy has been revised down to 3.3 per cent in 2015. On the other hand, international organisations expect world economic growth to increase to 3.8 per cent in 2016 due to improved economic prospects in both developed and developing economies.
International trade is expected to grow by 4.1 and 4.6 per cent in 2015 and 2016, respectively.