Bahrainís Deficit will Reach 12% in 2015
2015-05-08 - 3:06 am
Bahrain Mirror: The outlook for most of the rich Gulf Arab economies has dimmed for this year and next as oil prices have remained relatively low, according to a Reuters poll published on Wednesday. It revealed that Bahrain deficit will reach 12% of its GDP for this year.
Based on the poll, published on Wednesday, April 29, 2015, the financial reserves of Oman, projected to run a fiscal deficit of 11.7 percent of GDP this year, and Bahrain, with a forecast deficit of 12.0 percent, are much smaller than other Gulf countries. They may be forced into painful spending cuts in coming years if oil prices stay below $70 a barrel.
According to Al-Wasat newspaper, the survey mentioned that heavy state spending and strong private consumption are cushioning the impact of a plunge in oil export revenues. Nevertheless, some construction and economic development projects are being suspended, cooling economic growth.
But Monica Malik, chief economist at Abu Dhabi Commercial Bank, said growth forecasts for the region might still be lowered again later this year as cheap oil slowed more development projects.
"If there is no greater recovery of the oil price, there may be more downside risk in the medium term," Monica said.
Five of the six GCC states are projected to record budget deficits this year and next.
The forecast for Saudi Arabia's fiscal deficit this year has been raised to a massive 14.8 percent of GDP from 11percent predicted in the last poll, while next year's deficit is expected to be 10.6 percent of GDP.
The UAE is forecast to run a deficit of 4.1 percent this year and Kuwait of 5.0 percent. Only Qatar is seen staying in the black, with a surplus of 1.8 percent.
Saudi Arabia has already started running down its financial reserves stored abroad to cover its budget deficit. Its reserves are so huge that it could continue to do this for years; the UAE and Kuwait are in similarly fortunate positions.
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