GCC set for 3.6% GDP growth in 2002

The continuation and further growth of high oil prices is flooding the GCC with money. Indeed, an additional USD245m is pouring into Gulf treasuries every day, according to Saudi American Bank.

Its chief economist Brad Bourland told the International Islamic Forum in Dubai that the GCC was enjoying strong liquidity for the second year in a row. He noted that oil prices are presently USD36 a barrel compared with USD20 a year ago.

Thus the bank's forecast is that the GDP of the six GCC states will grow by 3.6% this year, ahead of earlier forecasts.

The UAE and Bahrain will come top with 4.5% growth in 2002, followed by Qatar at 4%, Saudi Arabia 3.9%, Oman 3% and Kuwait 2%. But Mr Bourland, an ex-US diplomat and long-time Saudi resident, warned that such liquidity tended to hide the real problems of the GCC economies.

'The economies are still growing slower than their populations and labour forces,' he said. 'Only Bahrain's GDP grew faster than its workforce in 2002. That means high and rising unemployment rates'.

Samba estimates show that the UAE has the lowest unemployment in the GCC at 2.6%, while Oman is highest at 17.2%, followed by Saudi Arabia 13%, Kuwait 7.1%, Qatar 5.1% and Bahrain 3.1%.

'In Saudi Arabia there is almost full employment in the 30 plus age group, but the challenge is coming down the road because the economy is not creating enough jobs for the millions of males aged 0-19 years old. This kind of youth bulge profile is common throughout the Arab world and is very worrisome'.

He also warned that localisation is not the answer: 'If you replace an expatriate with a national you are simply swapping one worker for another. You are not creating new jobs. There is a danger that a well intentioned policy could destroy more jobs that it creates by introducing rigidity into the labour market'.