Gulf Cooperation Council (GCC'S). Economic Indicators Article

Gulf Cooperation Council (GCC'S). Economic Indicators - Article Example The countries that are member of this council are as follows: †¢ Saudi Arabia †¢ Kuwait †¢ Bahrain †¢ Qatar †¢ United Arab Emirates †¢ Sultanate of Oman (Sheikh Mohammed, 2012) GCC being an oil-based region is provided with several opportunities to enhance its profit ratio and to play an essential and pivotal role in providing the world with oil. With the largest crude oil reserves in GCC (486.6 billion barrels), the member countries play the leading role in the world. In addition, GCC is the largest producer and exporter of petroleum due to which the region enjoyed fascinating and spectacular economic boom from the year 2002 to 2008 (The Economist Intelligence, 2011). The dominant role of the GCC countries in the world provided the region with an opportunity to increase the economy to $1.1 trillion (triple in size) during the same years. GCC region is the largest producer and exporter of oil and petroleum due to which the GCC countries account for almost 52 percent of the total OPEC oil reserves. 3. GDP GROWTH RATE The growth rate of the GCC region relies highly on the production and export of oil and petroleum to countries across the globe. The GDP growth rate of the GCC has been fascinating and outstanding from 2002-2008 and even after 2012 (IMF, 2012). Throughout 2002 to 2008 the region was provided with an opportunity to increase its economy threefold (Fox, 2011). The GCC countries enhanced its GDP from 400,000 (Mn US$) in the year 2003 to more than 1,100,000 (Mn US$) in the year 2008. ... Meanwhile, the region witnessed a growth rate of 14.2 percent in the year 2007 (Fox, 2011). Such an increase in the growth rate in the year 2002-2008 was highly dependent on the strongly increasing oil demand in the world (Fox, 2011). Some of the factors that contributed to such an extensive performance include better geo-political environment, boost in privatization of activities, increase in the Central Bank’s assets along with the strengthening of the GCC’s corporate sector. On the other hand, the GCC region has witnessed a decline in the growth rate due to the rising financial and economic crisis (Bachellerie, 2012). As a result, the oil market in the countries across the globe turned from cash cow to dog. The financial and economic crisis led to the decline in nominal GDP by -19.3 percent. Meanwhile, the real GDP declined from 6.4 percent to 0.5 percent in the years 2008 and 2009 respectively. With the global recovery of the oil market, the GCC region once again wi tnessed promising growth rate. The forecasted nominal GDP of the GCC was 380.5 (USD bn) in the year 2012 whereas the Real GDP (forecasted) for the same year was 5.3 (% y/y). Figure 1: GDP of GCC Countries Source: Gulf Investment Corporation, 2011) Figure 2: GCC’s GDP Growth Source: Haque, 2012 4. Inflation Rate The inflation rate in the GCC was quite low from 2002 to 2003 due to the prudent monetary and fiscal policies. Moreover, the access and availability of the goods and services in the region ensured low inflation rate. This could be witnessed by the 0.2 percent inflation rate which increased to 2.1 percent during 2001-2004. The inflation rate was 6.7 percent in the year 2007 which reached 10.7 percent in the year 2008 (IMF, 2011). The increase in inflation rate was a