Saudi Arabia, the largest Arab economy, is likely to be the second fastest growing GDP in the Gulf Cooperation Council (GCC) region this year, National Commercial Bank (NCB) said in a new study on the GCC economies. "We expect the GCC region as a whole to grow by some six percent this year and by some five per cent next year," the report said. NCB, Saudi Arabia's largest bank, has posted 10.9 percent increase in net income for the first half of 2011 at SR2,927 million compared to SR2,640 million for the same period of the previous year. NCB Chairman Abdullah Bahamdan said the bank's total assets grew significantly to reach SR314 billion compared to SR263 billion at the end of the same period of the previous year, an increase of 19.2 percent. Total shareholders' equity reached SR33.3 billion compared to SR30.7 billion of the same period last year, an increase of 8.5 percent. NCB said in the report that it projected growth of 5.3 percent in the Kingdom for this year, far higher than the 3.7 percent growth recorded in 2010. Much of this expansion will be driven by strong growth in the oil economy thanks to the prospect of high prices and significant increases in production, the report noted. Growth in the GCC in 2011 will be led by Qatar which is at the final stages of its natural gas investment boo, the report said. "This is likely to result in real GDP growth of approximately 20 percent this year, up from 16.3 percent in 2010. The growth is likely to be driven above all by the hydrocarbons sector where the pace of expansion is projected to accelerate to 29.5 from 22.2 percent in 2010." The UAE, the second largest Arab economy, is also back on track thanks to high oil prices and Dubai's recovery, it added. "We foresee real GDP growth of 3.7 percent in the UAE this year, up from the official estimate of 1.4 percent in 2010," it said. "Nonetheless, this will be an uneven. While Abu Dhabi will benefit from strong growth in the hydrocarbons sector, Dubai remains vulnerable to financial market uncertainty and is yet to see a convincing turnaround in the real estate sector. The contagion in housing markets is also felt…but Dubai is reaping the benefits from an ongoing strong recovery in international trade. Moreover, the UAE the main beneficiary from redirection of tourist flows from the crisis-hit regional countries, most notably Egypt." The study said Bahrain stands out as the only GCC economy whose growth outlook appears to have been significantly hit by the crisis. "With crude prices at historically high levels and in turn supporting a plethora of new government spending commitments, the GCC has seen a clear improvement in its near-term growth prospects…..as a result, we expect a marked increase in the region's headline growth figures this year, led by Saudi Arabia and Qatar. But even the UAE is set for a rebound thanks to its success in addressing pressure points linked to its sovereign and quasi-sovereign debts as well as signs of normalization in the battered real estate sector." Brent crude oil jumped 1 percent to top $118 in light trade Friday, buoyed by Europe's latest agreement to bail out Greece and by spread buying which widened the gap between London and US crude. Brent futures contract for September rose $1.16 to settle at $118.67 a barrel. US crude rose for a fourth straight session, settling up 74 cents at $99.87 a barrel, its highest close in six weeks. Its forecasts for prices showed they could average around $95 a barrel for Saudi Arabia light crude in 2011, almost equivalent to the 2008 peak price. The NCB report further said "the uncertainty caused by the recent bout of regional political turmoil appears to have largely lifted in the GCC region. Even as regional stress points remain in Libya, Syria, and Yemen, the GCC economies have generally managed to overcome investor concerns through a combination policy initiatives and, until recently, positive momentum in the oil price."
