Most Arab countries are expected to record an average 3.6 percent economic growth this year as the price of crude oil rebounds from 2009, a United Nations economic report said on Wednesday. The report was released at ESCWA headquarters in Beirut and was read by economist Ali Al-Qadri. He added that if the prices of oil ranged between $65 to $80 a barrel then the prospects of good growth in the region would be strong. The global credit crunch brought a boom in Gulf Arab economies to a halt last year but high state spending and a resurgence in oil prices have contributed to the recovery of the world's top oil exporting region. Global oil prices had hit record highs above $145 a barrel in July 2008, but slipped to a low just above $32 a barrel during the peak of the global crisis. “As the prices of crude oil currently rebounded to about $80 per barrel, the mood in the region is shifting from pessimism to measured optimism,” said a press release about the full report, titled “World Economic Situation and Prospects 2010,” launched in Beirut. The first chapter was published in a December pre-release. “The surge in oil prices will also allow trade surpluses to increase again for oil exporting countries. However, non-oil-exporting countries are likely to witness greater trade deficits,” it said. Abu Dhabi has already said it expected its economy to grow by up to 4 percent this year, Oman's finance minister said growth would reach 6.1 percent, and Saudi banks expect growth in the kingdom to sharply pick up to about 3.8 percent in 2010. The report said economies in Western Asia, which include those of most Arab countries, had witnessed a 1.0 percent contraction in 2009, “a severe contraction after the positive economic growth of 4.6 percent in 2008.” The global recession hit Gulf oil exporters hard, particularly as oil prices fell. The countries have adopted an array of policy measures to ease tight liquidity and prop up sagging investor confidence during the crisis. The report said it expected inflation to rise moderately this year due to the possible impact on domestic prices of the weakening dollar in economies with a low currency peg. Gulf Arab countries, except for Kuwait, tie their currencies to the dollar and their central banks invest heavily in dollar-denominated assets. The global credit crunch brought a boom in Gulf Arab economies to a halt last year but high state spending and a resurgence in oil prices have contributed to the recovery of the world's top oil exporting region. World gross product (WGP) is estimated to fall by 2.2 per cent for 2009, the first actual contraction since the Second World War. Premised on a continued supportive policy stance worldwide, a mild growth of 2.4 per cent is forecast in the baseline scenario for 2010. According to this scenario, the level of world economic activity will be 7 per cent below where it might have been had pre-crisis growth continued. The report cautions that despite these more encouraging headline figures, the recovery is uneven and conditions for sustained growth remain fragile. Credit conditions are still tight in major developed economies.
