GCC nominal GDP reached about US$ 1.56 trillion in 2012, up from US$ 1.44 trillion in 2011; UAE economy to grow by 3.2% in 2013
2012 was a record year in many respects. It was the second consecutive year with the average price of oil above US$ 100 per barrel. The average price of crude oil (Dubai, spot) was the highest ever at US$ 109.1 per barrel and up from US$ 105.5 per barrel in 2011. Oil production by the GCC region was also at a record level, with crude oil output averaging about 17 million barrels per day. GCC region nominal GDP also reached a new record high at about US$ 1.56 trillion, up from US$ 1.44 trillion in 2011. In aggregate, the GCC region continued its climb and became the 12th largest economy in the world, behind 11th ranked Canada. Saudi Arabia accounted for 47% of the GCC economy, while the UAE accounted for 23%. Qatar and Kuwait accounted for 12% and 11% of the GCC economy, respectively. Oman and Bahrain accounted for about 5% and 2%. GCC real GDP growth rate slowed from an estimated 7.4% in 2011 to 5.3% in 2012. Saudi Arabia accounted for about 48% of the GCC real GDP growth rate, while the UAE accounted for 25%.
For the first time ever, GCC value of exports reached US$ 1 trillion, up from US$ 932 billion in 2011. This is almost double the 2009 level of US$ 526 billion. UAE value of exports accounted for about a third of the GCC total. Value of oil and related exports rose to a new record high of US$ 692 billion, up from US$ 644 billion in 2011. GCC is estimated to have registered a trade surplus of US$ 558 billion in 2012 (up from US$ 529 billion in 2011), again a new record. Services account remained in deficit, while workers’ remittances were a record US$ 77 billion culminating in an aggregate current account surplus of US$ 346 billion, equivalent to 22.3% of GDP. Saudi Arabia accounted for 52% of the GCC current account surplus with US$ 178.5 billion. UAE current account surplus is estimated at US$ 32 billion (8.8% of GDP) in the same period.
GCC budgetary expenditures rose to a record US$ 491 billion, up from US$ 467 billion in 2011. Nevertheless, the aggregate budget surplus was substantial at US$ 222 billion, equivalent to 14.3% of GDP reflecting the buoyancy of hydrocarbon revenues. UAE economy is estimated to have registered a consolidated fiscal surplus equivalent to 7.8% of GDP, the best performance since 2008.
In 2013, real GDP growth rate in the GCC region is expected to slow to the slowest pace since 2009 at about 3.8%. UAE economy is forecast to grow by 3.2% year-on-year. The main culprit for the slowdown is expected to be a flattening in hydrocarbon sector growth. The crude oil output of the four GCC OPEC members rose to 16.3 million bpd in August 2012, but has since declined every month and stood at 15.2 million bpd in January 2013. Saudi Arabia accounted for about 73% of the decline in output amongst the GCC OPEC members in that period.
The price of oil has been resilient and high in historical terms, but stopped its steady climb since 2009. The average oil price in the January to mid-February 2013 was essentially unchanged from the same period in 2012. US Energy information Administration is forecasting a decline in the Brent crude oil spot price to an average of US$ 105 per barrel in 2013 and US$ 99 per barrel in 2014. This compares with an average price of US$ 112 in 2012. The driver for lower oil prices is expected to be a rise in supply from non-OPEC sources, particularly from North America. Our estimates are currently based on an average oil price of about US$ 103 per barrel in 2013 and slightly higher in 2014 on the assumption that OPEC will curtail output to maintain breach of its comfort level.
Non-oil sectors are forecast to grow by a healthy 5.4% y-o-y in 2013, spearheading overall economic activity given the slowdown in hydrocarbon activity. GCC nominal GDP is forecast to rise to US$ 1.61 trillion in 2013. UAE nominal GDP is projected at US$ 368 billion.
GCC trade surplus is forecast to ease to US$ 492 billion, while the current account surplus is estimated at US$ 270 billion (16.8% of GDP). The fiscal surplus is forecast to ease to US$ 171 billion (10.6% of GDP). UAE is forecast to register surpluses in its current account and budget equivalent to about 8.5% and 6.8% of GDP, respectively. Oil prices at these levels will continue to allow GCC to accumulate international assets and retain their usual role of being capital exporters.
