DUBAI: Growth in the oil-rich Gulf Cooperation Council states is expected to rise to 4.4 percent in 2010 and 4.7 percent in 2011, the Institute of International Finance (IFF) said in a report on Monday. "The GCC is emerging from the global recession and is recovering at a solid pace," after a near-zero growth in 2009, said the semi-annual IIF report, which was released in Dubai. The Washington-based institute attributed the projected recovery to "firmer oil prices since mid-2009 and a mild recovery in external demand," which it said have boosted production and exports. According to the report, gas-rich Qatar will lead in terms of overall growth, forecast at 13.9 percent in 2010 and 10.2 percent in 2011. Qatar's hydrocarbon real growth could reach 22 percent because of increased gas production, the report said. The once-booming United Arab Emirates is forecast to lag behind its Gulf neighbors at two percent growth in 2010 and 3.1 percent the following year in what the report described as a "sluggish recovery." However, the report said that the UAE's "growth could reach 2.7 percent in 2010 and 4.2 percent in 2011" if debt-laden Dubai successfully resolves its debt issues and accelerates reforms. After contracting by 3.5 percent in 2009, Dubai's economy could contract by 0.7 percent in 2010, the report said. "Dubai's debt crisis has punctured market confidence," George Abed, senior counselor and director of the IIF's Middle East and North Africa department, told reporters. "The need for greater transparency... has become urgent," he said, adding that greater support from neighboring oil-rich Abu Dhabi is needed to resolve Dubai's debt crisis. "Depending on how the debt is managed in Dubai, foreigners will decide whether or not they will invest in the United Arab Emirates," Abed said. Dubai's state-owned construction firms borrowed heavily to finance massive construction projects during the city's property boom, which ground to a halt after the emirate was hit by the global financial crisis. Dubai rocked global financial markets late last November when it said it might need to freeze debt payments by its largest conglomerate, Dubai World, stoking fears of a state default over sovereign debt. The emirate's debt is estimated at between $80 and $100 billion, but some say it may owe as much as $170 billion. In other GCC countries, the IIF expected the Saudi economy to grow at 3.4 percent in 2010 and four percent in 2011 on the back of "sizable government infrastructure investment." Saudi Arabia's oil production capacity will reach 15 million barrels per day by the end of 2012, the IIF report said. The institute forecast Kuwait's economic growth at 3.2 percent in 2010 and 4.5 percent in 2011, calling for "political consensus on much needed reforms" as well as "a shift in government spending to support increases" in non-hydrocarbon sectors. The report praised non-OPEC member Oman for being "able to weather the global recession" because of "sound economic policies and a timely increase in oil production." It forecast Oman's economy to grow by 7.8 percent and 5.0 percent in 2010 and 2011 respectively. The IIF projected a three-percent rise in oil output in Kuwait, Saudi Arabia and the UAE in 2010. The IIF report also projected that growth in GCC's non-hydrocarbon sector, which employs more than 95 percent or the region's workers, will be 3.3 percent in 2010, and will reach 4.4 percent in 2011. "The GCC's real estate markets have come under pressure," following the global economic crunch, it said. After a peak in mid-2008, average house prices fell by 50 percent in Dubai, 25 percent in Kuwait and 10 percent in Qatar. However, the same markets remained stable in Abu Dhabi, Oman and Saudi Arabia, it added.
