(MENAFN - Arab Times) Real hydrocarbon sector's gross domestic product, or GDP, growth in the GCC is expected to decelerate from 4.5 per cent in 2012 to around one per cent in 2013 on the back of an expected slowdown in oil production, the National Bank of Abu Dhabi, or NBAD, said.
"Any pressure on oil prices will limit gains in heavyweight petrochemical stocks. However, non-oil GDP growth is forecast to remain stable in 2013 at 5.5 per cent, similar to 2012 levels, with the contribution of non-oil GDP expected to increase in the future," the bank said in its "GCC Economic Developments & Outlook 2013."
The bank has also predicted that in 2013, GCC's nominal GDP is forecast to rise to 1.61 trillion while UAE's nominal GDP is projected at 368 billion.
The Washington-based Institute for International Finance, or IIF, said in a study that the economies of the Gulf and other regional countries could decline in 2013 due to lower oil output after growing by around 5.5 per cent in 2012. "Overall growth is projected to moderate to 3.9 per cent in 2013, as crude oil production will be restrained in Saudi Arabia, Kuwait, and the UAE," it said.
IIF said firm oil prices would keep the external current account and fiscal positions in large surpluses. The surplus in the GCC as well as Iraq, Iran, Algeria and Libya could narrow from 7.5 per cent of GDP in 2012 to around 5.2 per cent in 2013 on the basis of an oil price of 110 this year.
"The aggregated current account surplus will slip from 412 billion in 2012 to 384 billion in 2013," the IFF report said.
In its report, NBAD observed that foreign portfolio investment in the region has not picked up yet. "GCC markets witnessed net foreign investment of 0.81 billion in 2012 compared with an outflow of 1.31 billion in 2011, excluding Bahrain."
The number of IPOs in the region remained low in 2012, with only nine issues, similar to 2011 but with a higher value. However, 23 companies have announced plans to go public as and when market conditions improve, the report said. NBAD said a lack of interest from 'sticky' long-term investors, such as regional and foreign institutional and domestic high net worth individuals, may continue.
"GCC markets, especially Saudi Arabia, are driven by retail investors, leading to more speculative trading and frequent profit bookings. A lack of triggers, the slow pace of market reforms, and low trading activity remain key concerns for institutional investors," the bank report said.
It predicted that most regional banks and insurance companies are likely to continue their cautious approach to equity markets in the foreseeable future. "At the same time, significant regulatory changes - such as the UAE mortgage cap and the Saudi mortgage law - are leading domestic banks to adopt a 'wait-and-see' approach."
The report said despite these concerns, GCC economies are growing at a faster rate than advanced and overall world economies, and are closely following the growth of emerging economies. The GCC is forecast to grow by 4.6 per cent in 2013, compared with 1.5 per cent for advanced economies, 3.6 per cent for broader Mena, and 5.6 per cent for emerging economies.
Global economic growth is forecast at 3.6 per cent, with 1.2 per cent for the United States and 0.2 per cent for Europe. The GCC's aggregate nominal GDP is expected to reach 1.5 trillion in 2013, having achieved a six per cent CAGR over the past five years, NBAD said.
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