GCC growth expected to improve this year
MANAMA: Growth is expected to improve in 2017 across the GCC states, says a report, after a sharp slowdown in 2016 amidst public sector spending cuts, tightening liquidity and investor uncertainty.
According to the global and regional economic outlook and sector analysis of Coface, a leader in trade credit management solutions and risk information services, all GCC countries except Kuwait had seen economic contraction in 2016.
The Coface analysis shows that UAE growth will pick up in 2017 to 2.5 per cent from 2.3pc in 2016 because it is more diversified than its neighbours.
Saudi Arabia’s economic growth is expected to accelerate to 1.8pc in 2017 from 1.3pc in 2016, whereas Bahrain’s economy is seen growing at 1.7pc in 2017 as against 2pc last year.
The report says growth in Oman will also dip slightly to 1.7pc in 2017 from 1.8pc in 2016.
Kuwait’s economy is expected to grow at 2.6pc this year, while Qatar’s growth forecast is 3.3pc up from 2.6pc in 2016.
Coface Middle East chief executive Massimo Falcioni said, “Abu Dhabi, being the most oil-dependent emirate will continue to see a slowdown in 2017. Dubai should be more resilient but some non-oil economic activities could still falter. Overall, the country’s growth will be driven by the tourism and financial sectors, while difficulties in the construction sector will remain.”
Liquidity also remains an issue. In the UAE, there was a 4pc rise in delay of payments, because of a lack of bank lending and a liquidity crunch.
“Notifications of overdue have increased in key sectors of the UAE’s economy. Comparing figures of third quarter 2016 from the previous quarter of the same year, the highest increase of overdue notifications in the UAE was registered from the metal traders and building materials or construction sector (+26pc), followed by the general trading sector (+22pc),” said Mr Falcioni.
Based on Coface’s monitoring activities of 23,000 companies in the UAE and Saudi Arabia, a total of 814 runaway cases of UAE-based businesses were registered from Q3 2015 to Q4 2016 (six quarters), yielding a 200pc increase from the previous year.
More than half (55pc) of the runaway cases were businesses in the general trading sector.
“Oil prices are not expected to return to the previous high levels immediately, that is why public spending in the GCC will remain cautious. A wide range of factors that would impact regional and global consumption patterns calls for greater measures to protect business assets,” said Mr Falcioni.
Source: http://www.gdnonline.com/Details/168766/GCC-growth-expected-to-improve-this-year
