Economic growth in key Gulf states will slow markedly next year because of a sluggish global economy but remain well above recessionary levels. Gross domestic product in Saudi Arabia is expected to expand 4.5 percent in 2012 after 6.2 percent this year, according to the median forecast of 16 analysts surveyed between Sept. 14 and 27. Saudi Arabian Monetary Agency governor reined in his expectations for growth Wednesday, saying he was "optimistic" that the economy would grow at an annual rate of up to 5 percent this year and next compared to a previous forecast for this year of around 6 percent. Abu Dhabi-based Arab Monetary Fund (AMF) has said high oil prices and production is expected to boost Saudi Arabia's real economy by nearly 7.5 percent this year, higher than the 6.5 percent projection by the International Monetary Fund (IMF) and above all local forecasts. The projected growth rate will be one of the highest rates in the kingdom's history and more than 37 times the growth of 0.2 percent recorded in 2009. However, analysts in the Reuters poll lifted their forecast for Saudi growth in 2011 by 0.5 percentage point from the last poll taken in June. That was because of the surprising resilience of oil prices this year. "The real GDP growth figures in 2011 are higher than we thought earlier. But in 2012, because these countries will not increase oil production, you will see the oil sector's contribution to overall GDP flat," said Giyas Gokkent, chief economist at National Bank of Abu Dhabi. Growth in Qatar is expected to plunge to 7.7 percent in 2012 from 18.9 percent this year, as the benefits of most of its increase in gas production have already been booked this year. The June poll predicted 7.8 percent growth for 2012. The UAE, the second largest Arab economy, is likely to grow at 3.8 percent next year instead of the 4.0 percent forecast in the June poll. "The GCC (Gulf Cooperation Council) economies can easily weather the storm because the price of oil still trades above $80 per barrel, and hence the region's export accounts are very healthy," said Farah Ahmed Hersi, senior economist at Masraf Al Rayan in Doha. However, Bahrain's growth outlook was slashed for the third time in a row in the latest poll to 2.0 percent in 2011, from 2.7 percent forecast previously. Its GDP growth is forecast to rebound modestly to 3.2 percent next year. Oman, hit this year by more limited protests demanding jobs and an end to corruption, should see its economy expand by 4.2 percent in 2012, the poll found. In the UAE, inflation is seen accelerating to 3.0 percent in 2012 from 2.0 percent this year. All Gulf countries except for Bahrain are expected to remain in surplus. Because of high oil prices, Saudi Arabia's fiscal surplus this year is now forecast at 11.0 percent of GDP, up from the June forecast of 6.9 percent. Next year, the surplus is predicted to stay extremely high at 9.2 percent, even though the kingdom has pledged to spend an estimated $130 billion, or around 30 percent of its annual economic output, over several years on new houses, creating jobs and other areas. The oil price at which it can balance its budget this year is now estimated at $73 per barrel, the poll showed, down from $80 predicted previously. Bahrain is the only state projected to see a budget deficit in 2011, of 1.1 percent of GDP, although that is slightly narrower than the previous forecast of 1.4 percent of GDP. The deficit is expected to shrink to 0.4 percent in 2012. Analysts now estimate the overall debt burden of Dubai and its state-owned companies at around $111 billion, or 137 percent of last year's GDP, the poll showed. This is slightly less than the June poll's estimate of $113 billion.
