GCC on course for 8.3% economic surplus

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The drop in international oil prices to more-than-one-year lows will not have any near term effect on GCC fiscal surplus and net foreign assets that are correspondingly expected to be at 8.3% of the locality’s gross domestic product and $2.34 trillion.

GCC on course for 8.3% economic surplus

GCC on course for 8.3% economic surplus

The UAE, irrespective of a projected slight drop in value of oil exports, is well on target to record a fiscal surplus of 8.8% of GDP in 2014, on the top of GCC average, as its net foreign assets are approximated to strike $510 billion, the second highest in the region after Saudi Arabia’s estimated at $1.06 trillion.

In a current report had said that supposing average Brent oil price of $105 each barrel in 2014, the GCC’s external present account surplus, even as declining, is projected to continue large at $287 billion in 2014. As a result, the worth of hydrocarbon exports from the GCC is estimated to improve further to $693 billion in 2014. Lower hydrocarbon export receipts have also intended lower fiscal profits, estimated at 41% of GDP in 2014.

Recent estimates presume GCC crude oil output will stabilize at around 17 million barrels each day through 2016 on the assumptions of a stable rise in Libyan production and further development in non-Opec supply.

Nevertheless, after years of robust spending progress, authorities across the GCC have moved to strap in government expenses. Governmental expenditure is approximated to climb by 4.8% in 2014, as compared with a yearly upsurge of 8.2% in the past two years.

Since average oil prices have been well above the breakeven prices of oil for the GCC, excess spending has been contentedly met from optimistic oil receipts. GCC economies have sustained to record reasonably large finances and present account surpluses.

Energy specialists think that GCC’s fiscal manage oil prices have grown considerably in the last decade, elevating vulnerabilities in the occasion of a sharp and continued slump in the energy markets.

Mohamed Dekkak