By Gordon Platt
Economic growth for the Gulf Cooperation Council (GCC) will reach 5.2% next year on the back of rising oil revenues, the International Monetary Fund forecasts. A year ago the IMF forecast 2009 GCC growth at 5.1%, but the latest outlook for the six Gulf Arab states has been pared to a mere 0.7% for this year.
Part of the reason for the sharply lower 2009 number was that oil prices fell from a record $147 a barrel in July 2008 to just above $32 a barrel last December, before recovering to $78 on October 15, 2009. The strengthening of oil prices means that expansionary policies of countries in the region can now be accommodated much more comfortably and sustained into 2010, says Howard Handy, chief economist at Riyadh-based Samba Financial Group. Although liquidity conditions have improved, bank lending to the private sector remains weak, he says. Many banks are focusing on lending to projects with strong government backing, rather than to the private sector, he adds.
In Dubai, the world’s tallest tower, the 162-story Burj Dubai, is scheduled to open on December 2, the United Arab Emirates’ 38th National Day. About 12,000 people are working on the building to meet the planned opening date. All units in the 2,684-foot-tall building were sold out more than three years ago, before the global recession and Dubai property-sector slump hit.
Meanwhile, Yemen’s $4.5 billion liquefied natural gas plant in Balhaf, on the Gulf of Aden, began production on October 15. The first LNG shipment was allocated to Korea Gas, according to France-based Total, the main shareholder in the Yemen LNG project. Total holds a 39.6% interest in Yemen LNG, followed by US-based Hunt Oil, with a 17.2% stake, and state-owned Yemen Gas, which holds 16.7%. Other shareholders include SK Energy, Korea Gas and Hyundai, all based in South Korea, and the Yemen General Authority for Social Security and Pensions.
Franco-Belgian utility GDF Suez, which signed a 20-year purchase agreement with Yemen LNG in 2005, is seeking to divert some of its cargoes to India instead of selling them in the US, due to market conditions.