Growth to accelerate in three states
Economic growth in Saudi Arabia, Kuwait and Qatar will probably accelerate in 2008, a Reuters poll of economists showed.

The growth forecast is underpinned by greater oil and gas output, and expansion of non-oil businesses such as finance.
Growth in the UAE — the second-largest Arab economy — and Oman will stay relatively high in 2008 at 7.8 per cent and 5.7 per cent respectively as non-oil industries expand, according to the average of a poll of 12 economists.
“Oil production numbers are a big part of growth and oil production will be positive in 2008 after recording negative growth in 2007,” said Caroline Grady, regional economist at Deutsche Bank, who took part in the December 9-12 poll.
Growth in Saudi Arabia may rise to 5.3 per cent in 2008 from an estimated 4.1 per cent in 2007 as the world’s biggest oil exporter and Opec’s largest producer ramps up output, according to the poll.
The Organisation of Petroleum Exporting Countries agreed to a rise in output in 2007, a 500,000 barrel-per-day increase that went into effect on November 1. The group cut output by a total 1.7 million barrels per day in November 2006 and February 2007.
At 9.9 per cent, growth will probably be the fastest in Qatar, holder of the world’s third-largest natural gas reserves, the poll showed. That compares with an estimated 8.7 per cent this year.
Qatar plans to boost output of liquefied natural gas — gas that is cooled to a liquid for export by ship — to 77 million tonnes per year in 2010, from 31 million tonnes now. A near five-fold increase in oil prices since 2002 has generated a windfall for Gulf Arab governments and companies, which are investing in infrastructure, tourism and real estate. Oil prices almost hit $100 a barrel recently.
“The liquidity spill-over from high oil prices is being invested in other parts of the economy,” Grady said. Investment in real estate, finance and infrastructure is spurring growth in the UAE, which hit a 10-year high of 12.4 per cent in 2000. Dubai, the second biggest member of the UAE federation, aims to grow its economy by 11 per cent per year through 2015, expanding its trade, transport, tourism and financial services business, its ruler, Mohammed bin Rashid al-Maktoum, said in February.
“The oil and hydrocarbon sector is important but the diversification of these economies will ensure that growth will continue,” said Marios Maratheftis, regional head of research at Standard Chartered. He also took part in the poll.
In Kuwait, the Middle East’s fourth-largest oil exporter, gross domestic product could accelerate to 5.1 per cent from 4.5 per cent. Oman’s economy may expand 5.6 per cent in 2007 and 5.7 per cent in 2008, the poll showed.
Still, growth in Saudi Arabia — the largest Arab economy — has slowed since hitting a 12-year high of 7.66 per cent in 2003. The Ministry of Finance said growth would slip to 3.5 per cent in 2007, compared with 4.3 per cent in 2006.

Inflation outlook bleak
Saudi Arabia alone among Gulf Arab oil producers faces accelerating inflation in 2008 with prices rising twice as fast as they did in 2007, spurred by rents and a dollar-pegged currency, a Reuters poll showed.
Inflation in Saudi Arabia’s five Gulf neighbours will ease only slightly in 2008, mostly from near record highs, with the region’s central banks constrained in the battle to contain rising prices by the need to maintain links to the weak dollar.
“The inflation outlook is bleak for the entire region,” said Marios Maratheftis, regional head of research at Standard Chartered Bank, one of 12 economists polled by the news agency between December 9 and12.
“Capacity constraints from the housing market will begin to ease slightly in 2008, but even where inflation is easing in Qatar and the United Arab Emirates, it is easing from a high base,” he said.
Average inflation in Saudi Arabia, the world’s largest oil exporter, will rise to 4.1 per cent in 2008, a 13-year high, from 3.8 per cent in 2007, according to the poll. Inflation was 2.21 per cent in 2006.
Saudi Arabia’s King Abdullah ordered subsidies on imported rice and baby milk to cushion consumers from inflation. Some of the king’s advisers recommended a national wage hike in October.
Subsidies may not be enough to keep Saudi Arabia from going the way of Qatar and the United Arab Emirates, where rents have soared because builders could not make homes fast enough to keep pace with economic and population growth.
With more homes coming on to the market, pressure on rents will ease in both Qatar and the UAE in 2008.
UAE inflation will accelerate to 10.1 per cent in 2007 before easing to 8.9 per cent in 2008, the poll showed. Prices rose 9.3 per cent in 2006, the fastest pace in 19 years.
Qatar will still have the Gulf’s highest inflation rate, although it will slip from a record 12.2 per cent in 2007, to 10.7 per cent next year. “You won’t see the answer to inflationary pressures from monetary policy because of the pressure of the dollar pegs,” said Maratheftis. “Monetary policy tightening needs to take place,” he said.

Saudi budget forecast
Saudi Arabia has forecast a 2008 budget surplus of $10.7 billion.
Revenues were set at SR450 billion against spending of SR410 billion, a finance ministry statement was quoted as saying in a report. It said the kingdom will post a surplus of SR178.5 billion in 2007, higher than a projected $5.3 billion.
Revenues in 2007 reached SR621.5 billion while expenditure was SR443 billion.
The kingdom has posted a budget surplus in each of the past five years.
The ministry said the kingdom’s GDP is estimated to reach SR1.414 trillion in 2007 showing a nominal growth rate of 7.1 per cent over 2006.
Trade surplus is expected to reach $148.2 billion by the end of 2007, up 1.1 per cent from 2006, the ministry said.

Qatar heading for landmark
Qatar’s population may rise above 1 million during the next few months, from 900,000 now, as more foreign workers enter the country, sustaining demand for housing, a report said.
“Such a large influx of people will keep the demand for housing units and commodities at a high level,” a Doha newspaper quoted an unidentified demographic specialist as saying.
The specialist based his projection on National Health Authority data showing that the number of foreigners doing a mandatory health test to gain their residency permits rose 23.6 per cent to 46,730 in November.