(Updates with comments, background, details)
By Ian Talley
Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- Despite a nearly $100 a barrel drop in oil prices from record highs this summer to below $50 a barrel, Gulf oil exporting countries are well placed to weather a downturn in the global economy, the Institute of International Finance forecast Wednesday.
The Gulf oil states are becoming increasingly integrated into the global economy, not only through the trade of oil and natural gas around the globe, but also through their sovereign wealth funds that have invested trillions into both mature and emerging economies.
George Abed, director of the IIF's Africa and Middle East Department, said plummeting oil prices "will clearly have a very major impact on economic performance."
But despite the difficulties of the global slowdown and financial crisis, "this region will weather the storm with perhaps some scratches but no permanent scars," he said.
The Institute expects crude demand growth next year to remain relatively flat or decline by around 300,000 barrels a day, but many of the Gulf governments will be able to continue to stimulate their economies through the global recession. At a forecast of around $56 a barrel next year, many of the economies will break even on their government budgets, while others may have to dip into oil-revenue funds.
While foreign assets owned by the Gulf oil countries, including Saudi Arabia, Bahrain, Kuwait, and Qatar, swelled to $1.5 trillion, the IIF expects only a modest gain in 2009. Other Gulf countries included in the report are the United Arab Emirates, Oman and Bahrain.
The Institute believes the Organization of petroleum Exporting Countries will cut production further at their next meeting, maintaining prices around $50 a barrel in the first quarter and slowly raising them in the following quarters to $65 a barrel by the end of 2009. Oil prices this week traded to their lowest levels since 2005, with front-month contracts hitting $46.26 a barrel.
Compared to $100 a barrel, the expected price fall will reduce the countries' current account surplus from around $320 billion in 2008 to $48 billion in 2009.
The break-even price for Saudi Arabia and Kuwait to balance their budgets is around $51 a barrel, for Qatar and the UAE it's below $40 a barrel, and Oman and Bahrain have a $70 level. That's compared to Iran's $85-$90 break-even price and Russia's mid-$70s standard.
The countries' budgets, many of which had surpluses of 20%-25% of GDP, are also expected to see those surpluses fall to around 3%-5% of GDP on average.
Abed said the economies won't head into a recession, however, because the oil-funded governments "will still have enormous resources to fund the projects they are building," especially in infrastructure and energy exploration.
The IIF forecasts the region's growth rate to fall to 3.6% next year, compared to 5.7% in 2008.
Besides petrodollars providing states the funds with which to continue their ongoing stimulus injections, the region has instituted macroeconomic reforms, "and the economies can take a shock much better than they could have...10 to 15 years ago," he said.
-By Ian Talley, Dow Jones Newswires; 202-862-9285; ian.talley@dowjones.com
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(END) Dow Jones Newswires
December 03, 2008 15:23 ET (20:23 GMT)

Publié le 03 Décembre 2008 Copyright © 2008 Dowjones