The (P)GCC will see a real GDP growth of 2.8 percent in 2015, slowing from 4 percent in 2014 on account of flattish hydrocarbon production and softer non-hydrocarbon sector activity, a report said.
Real GDP growth in Saudi Arabia will be 2.5 percent, while UAE and Qatar will see real GDP growths of 2.9 percent and 4.8 percent, respectively, added the BofA Merrill Lynch (BofAML) Global Research titled “BofA Macro Monthly – Doveman”, TradeArabia reported.
“We would expect capital expenditures to bear the brunt of the adjustment, based on historical experience. We would expect (P)GCC governments to attempt to maintain current spending programs. This should slow down investment growth and support consumption on a relative basis, in our view,” the report said.
“Saudi Arabia’s real GDP outturn in the fourth quarter of 2014 at 2 percent highlights the dynamics we expect to prevail this year.
“Details suggest the slowdown is due to flat oil sector growth and weaker non-oil sector growth due to a weaker impulse from the government non-oil sector. The 2015 Saudi budget likely assumed oil at $60-65 per barrel, suggesting increased fiscal room in current market conditions. Still, the S&P outlook revision suggests potential downgrade within two years if oil prices stay low,” the report highlighted.
“Tightening regional liquidity would make Dubai refinancing more challenging, but the imbalances are less pronounced than pre-2008, in our view,” said BofAML in the report.
