Arab fund says growth will climb to 4.5% this year and 5% in 2011
Arab economies could grow by up to 4.5 per cent in 2010 and gain momentum in 2011 because of strong oil prices and fiscal measures taken by several regional nations in response to the 2008 global financial distress, the Arab world's top economist said in remarks published on Tuesday.
Jassim Al Manai, head of the Abu Dhabi-based Arab Monetary Fund (AMF), also expected banks in the region's 21 Arab nations to perform better in 2011 after most of them amassed sufficient loan loss provisions.
"The combined Arab economy is expected to grow by 4.2-4.5 per cent this year and growth could reach five per cent in 2011," he was quoted as saying by the semi-official daily Alitihad and other newspapers.
"This is because of higher oil prices and measures taken by Arab governments following the global crisis, including increasing public spending and buying shares in local banks to support their capital...I am optimistic about the Arab economy next year as the global recovery will have a positive impact on the region by boosting demand for oil."
Manai gave no figures for growth in 2009 but according to another Arab organization, the region's combined real GDP rise by around 2.4 per cent in 2009, far below the 5.09 per cent growth recorded in 2008, when oil prices rocketed to their highest average of around $95 a barrel.
The low growth in 2009 was due to lower oil prices and the repercussions of the global crisis that also hit trade in the region and other countries, according to the Kuwaiti-based Inter-Arab Investment Guarantee Corporation (IAIGC).
"Economic activity in the Arab region was adversely affected by the global downturn...but despite this decline in 2009, growth in the Arab GDP is considered good compared to most other economies as the global economy recorded negative growth of 0.6 per cent last year....performance in the industrial countries was even worse, with their combined GDP contracting by 3.16 per cent, one of the lowest levels since the 1930s," it said.
"As for 2010, projections by the World Bank and the International Monetary Fund show that the Arab GDP will rebound by around 4.5 per cent as a result of fiscal expansionary measures undertaken by most regional nations."
The report said Arab economic prospects would also be good this year and the next few years because of large projects to be carried out in most of them.
It estimated those projects at around $768 billion, more than half of which will be carried out in the six-nation Gulf Cooperation Council (GCC).
IAIGC, a key Arab League financial establishment, said all Arab countries recorded positive growth last year except Kuwait and Mauritania, with their real GDP shrinking by around 2.67 and 1.07 per cent respectively.
Qatar, the world's top LNG exporter, by far surpassed all fellow member states, with its GDP racing by nearly 9.04 per cent in 2009.
"As for Arab banks, we expect their performance in 2011 to be better than in 2009 and 2010 as many of them now have enough provisions," he said.
"This means their financial position will be better next year and they will be able to resume normal lending, which will positively impact their profitability."
© Emirates 24|7 2010
