(MENAFN) The Gulf Cooperation Council (GCC) economic growth is expected to cool in 2013 due to an expected moderation in oil production growth, ratings agency Fitch said in a report.
High oil prices, nevertheless, will help those economies for another year of solid non-oil growth, the 'GCC Sovereign Credit Overview' report added.
GCC economies will remain heavily dependent on global oil markets, Fitch said. With conditions tight (low global spare capacity and little new output coming on-stream), Fitch expects Brent crude to average around USD100 per barrel in 2013 despite the weak outlook for demand.
GCC governments will continue to use high oil revenues to boost their economies, the report said.
Fitch expects a fiscal and current account surpluses in all GCC countries except for Bahrain, further strengthening sovereign balance sheets and external positions.
Fitch expects the benign global inflationary environment to be sufficient to offset most domestically-driven price pressures and keep inflation in the region relatively subdued.
On the other hand, GCC economies could be threatened by external risks, Fitch noted. The US fiscal cliff poses the largest short-term risk. A slowdown in China and an intensification of the eurozone crisis would also hurt the region, it said.
The GCC remains also vulnerable to fluctuations of oil prices, Fitch added.
Given the fiscal policy space in most of the GCC, Fitch anticipates that these risks should be manageable in 2013, the report said.