DUBAI, (AFP) — Oil-rich Gulf economies are expected to see better-than-expected budgets in 2009 despite the economic slowdown, thanks to higher world crude prices, an economic report said.
“The strengthening in oil prices will be extremely positive for the hydrocarbon-dependant GCC (Gulf Cooperation Council) countries, which will see high oil revenues,” EFG-Hermes investment bank said in a report received Monday by AFP.
“We have revised upward our GCC macro forecasts in line with the changes in our oil price forecasts. The majority of the headline figures, including nominal GDP (gross domestic product), and the fiscal and current account, will see an improvement,” the Dubai-based bank said.
Saudi Arabia, the world’s largest oil exporter, is expected to register a small budget surplus equivalent to 0.6 percent of GDP, the bank said, after initially forecasting a deficit of 4.8 percent compared with a 33.6 percent surplus last year.
The Saudi budget’s break-even oil price is set at below 60 dollars a barrel, which is the EFG-Hermes forecast crude price for this year.
Kuwait, Qatar and the United Arab Emirates are already projected to register fiscal surpluses this year as their budget price was set below 50 dollars, the bank said.
Crude prices tumbled from around 140 dollars a barrel in July last year to below 40 dollars by the end of 2008, and are currently around 70 dollars.
Bahrain and Oman, which have dwindling oil resources, are still expected to register deficits as their budgets are set to break even at 70 dollars.
Oil-rich Gulf governments have boosted spending to stimulate their economies amid the global financial crisis which has triggered a shortage of credit to the private sector.