GCC economic growth to reach 4% this year, UAE to grow 3.5% in 2013 and 4% in 2014: Euler Hermes:

Global economic trends, trade development and the key role played by the Gulf Cooperation Council (GCC) countries in the international markets, were highlighted yesterday by Euler Hermes during the inaugural Trade Credit Insurance Summit underway in Dubai, UAE. Presenting preliminary results of the Euler Hermes International Trade Observatory, focused on Mediterranean and GCC country economies, Ludovic Subran, Euler Hermes chief economist, highlighted several key themes. "World GDP growth by year-end will be lower than earlier forecast -- at +2.2% -- due to Eurozone contractions (-0.5%). There will be moderate growth in emerging countries (+4.4%). GCC countries, having experienced two years of sustained economic growth, are expected to slow to +4.0% in 2013 mainly due to the global demand slowdown (+2.2% in 2013). A global and delayed recovery is expected in 2014 (+3.1%). However, the overall growth deceleration will increase the momentum of global insolvencies (+8% in 2013; +2% in 2014)," he said. According to Subran, in 2011 and 2012, the GCC (Gulf Cooperation Council) countries posted strong economic growth (respectively 7.2% and 6.0%), but the pace is expected to slow in 2013 (+4.0%) and 2014 (4.3%). Saudi Arabia and the United Arab Emirates (UAE) - the two main contributors - are expected to grow by 4.0% and 3.5% respectively in 2013, and 4.5% and 4.0% respectively in 2014. He noted that the financial fundamentals, including current account surplus, fiscal balance and large foreign exchange reserves, remain satisfactory. GCC countries, with a strategic position as major global oil exporters, benefit from a strong commercial and budgetary position. The expected oil production decline in 2013, driven by lower U.S. demand due to the development of shale gas and China's slowing growth, will involve a slight budget surplus decrease, which should be partially offset by an increase in non-oil exports. Pro-active policies by GCC states support growth. In Saudi Arabia, public spending will underpin 2013 and 2014 economic growth. The current five-year plan (2010-2014) aims at developing and improving infrastructure and investing in human capital through education and training. In addition, following the Arab Spring events of 2011, the Government announced two major programs to support housing and job creation. In the UAE, significant progress has already been made in infrastructure development and improved business climate, but much remains to be done in education. Euler Hermes also cited the on-going of the diversification of the GCC economies and business partners. For over a decade GCC countries have made significant efforts to diversify their economies to reduce dependence on petroleum products. Saudi Arabia's share related to oil in total GDP decreased from 34% in 2000 to 21% in 2012, and declined from 47 % to 33% in the UAE. Dubai became the region's leading service centre and Abu Dhabi is now based on manufacturing, petrochemicals and renewable energy. Similarly, these countries have diversified their trading partners by focusing increasingly on Asian markets, reducing the share of oil exports to developed countries and increasing non- oil exports. Considering the weakened Asian market forecast, opportunities may emerge from neighbouring North African countries via Morocco and Turkey, whose prospects are expected to grow. Southern Europe should also represent solid opportunities for non-oil exports. – Emirates News Agency, WAM