DOHA: With a projected 6.5 percent growth rate, Qatar is expected to lead the GCC in 2013. The country is also expected to go in front in terms of growth rate with a projected 6.8 percent in 2014, QNB Group analysis noted yesterday.
GCC countries will continue their drive to diversify from the hydrocarbon sector through infrastructure investment and a growing service sector, notwithstanding lower commodity prices. According to the latest World Economic Outlook (WEO) forecasts, growth in the region will pick up from 3.3 percent in 2013 to 4.4 percent in 2014. QNB Group forecasts somewhat higher growth of 4.5-5 percent in 2014, with Qatar leading the region in 2013 and 2014.
Overall, the horizon of the global economy is clouded by the likely stagnation in advanced economies and a slowdown in emerging markets in 2013-14. QNB Group predicts that the engines of global economic growth are likely to be China, Sub-Saharan Africa and the GCC countries, led by Qatar. Downside risks, however, abound to this scenario, which may lead to a few thunderstorms. It may be worthwhile to be prepared with an umbrella at hand.
The QNB analysts noted that the annual meetings of the International Monetary Fund (IMF) and the World Bank in Washington, D C last week highlighted the clouds on the horizon for the global economy. The US economy continues to underperform, the euro area is slowly coming out of a long recession and emerging markets (EMs) have suddenly lost their golden lustre. Where is the global economy heading, one may ask? According to QNB Group, the weaker economic outlook and several risk factors point to stagnation in the advanced economies and a slowdown in EMs, with China, Sub-Saharan Africa (SSA), and the GCC countries being the few bright spots on the horizon.
The IMF published its latest WEO on October 8. According to the latest WEO forecast, the US economy will only grow by 1.6 percent in 2013 and 2.6 percent in 2014. This performance remains well below the average growth rate of 3.1 percent in the decade prior to the Great Recession of 2008-09. It is also unlikely to reduce unemployment significantly.
The euro area is slowly recovering from a prolonged recession. According to the WEO forecast, real GDP growth in the European currency block will still be negative (-0.4 percent) this year and marginally positive in 2014 (1.0 percent) under the assumption of a more benign global environment. If stronger export markets fail to materialise, though, flat domestic demand is likely to lead to lower European growth in 2014. Accordingly, QNB Group forecasts somewhat lower growth for the euro area in 2014 in the range of 0 percent-0.5 percent.
QNB Group foresees a more long-term structural problem in countries like Brazil, India, Indonesia and South Africa, related to their dependence on commodity prices and capital inflows to finance their growth.
Notwithstanding the recent liquidity crunch this year, China will manage to grow 7.6 percent this year and 7.3 percent in 2014, according to the WEO forecast.