The combined Arab economy grew by 6.4 per cent in real terms in 2008 to emerge as the best performer in the world despite a sharp slowdown in the second half of the year, official figures reveal.
The highest growth was recorded in the UAE and other GCC members, which had been through the second oil boom period before ending with the global fiscal crisis. The real gross domestic product of the Arab states recorded a high growth of about 6.23 per cent in 2007 and it maintained that trend in 2008 to rise slightly to about 6.4 per cent, thanks to strong crude prices.
Growth was mainly fuelled during the first half of the year as the economies of most Arab League members suffered from a slowdown in the second half because of the collapse in crude prices from a record high of $146 (Dh535) a barrel in late July to less than $40 towards the end of the year, the Inter-Arab Investment Guarantee Corporation (IAIGC) said in a study.
A breakdown showed all Arab countries except Mauritania recorded above-world average growth, with Qatar topping the list at as high as 16.4 per cent.
Growth in Iraq was put at 9.78 per cent while it stood at 8.5 per cent in Lebanon, 7.4 per cent in the UAE, and 7.16 per cent in Egypt.
Taken as a group, the GCC countries recorded the world's highest real growth of around 7.7 per cent in 2008 as a result of a sharp increase in their oil income, higher public spending and a rise in private investment.
IAIGC said the situation was expected to reverse in 2009, when the Arab economies will sharply slow down in line with the global downturn. It attributed this to the plunge in crude prices and lower Arab oil output as per Opec agreements to trim supplies to keep prices firm.
"According to projections by the International Monetary Fund, the Arab real GDP growth could dip to 2.5 per cent this year despite the measures taken by many regional governments to cushion the effects of the global crisis," IAIGC said.
"This is because of a steep decline in oil prices and production by regional states as well as tightening international credit and a decline in demand for exports of Arab countries, mainly non-oil members. The economic slowdown in the Arab region will affect both oil and non-oil member states."
The surge in crude prices last year because of a strong global demand boosted the collective Arab oil income to an all-time high of nearly $618bn from $408bn in 2007. The income is projected to dip below $400bn in 2009 because of lower prices and a cut of nearly 2.5 million bpd in oil supply.
In nominal terms, the surge in oil revenues boosted the GCC's GDP by nearly 30 per cent to its highest level of about $1.03 trillion in 2008.
But it is expected to tumble by nearly 23 per cent to about $800bn this year.Global Arab NetworkNadim Kawach, Copyright Emirates Business 24|7