New York // The UN has issued an optimistic growth forecast for the Gulf, where high oil prices, government spending and economic diversification are cushioning the region from market trouble overseas.
The GCC is expected to see 4.9 per cent economic growth this year and a further 4.1 per cent next year, according to the UN's World Economic Situation and Prospects 2011 report.
While not as strong as the growth from 2007 (5.4 per cent) or 2008 (6.9 per cent), before the global financial crisis hit regional markets, the report offers a positive forecast of "solid performance" by Gulf economies.
"This better performance is being driven by increasing oil prices, fiscal stimulus packages introduced in GCC countries and the increased local demand brought about by increased government spending," said Simon Neaime, a senior economist from a UN office in Beirut. "Despite the financial crisis in Dubai and its repercussions in the region, we are doing better overall relative to Latin America, east Asia and other regions, with the exception of China and India, which have been really driving world growth."
Although the UAE is lagging behind its neighbours with the GCC's lowest growth forecast of 3.2 per cent this year and 3.3 per cent next year, UN forecasters say the country is pulling away from economic troubles.
Mr Neaime said that the UAE growth forecast was affected by Dubai's financial and property downturn but that support from Abu Dhabi, government spending and a long-term strategy of economic diversification were aiding the recovery.
"The UAE has been diversifying its production and export structure and it looks like it has paid off at the end of the day," he said. "The UAE services sector is booming. Tourism and manufacturing have contributed to the growth we are currently observing."
Qatar remains the regional trailblazer, with burgeoning energy and construction sectors adding to the profits from liquefied natural gas exports to yield a growth forecast of 14 per cent this year and 6.1 per cent in 2012.