Egypt Forecasted GDP 1.4 % In June 2013, HSBC
Oil-rich Gulf Arab countries, led by Qatar and Saudi Arabia, are widening the wealth gap with the region’s energy importers as political turmoil from Egypt to Lebanon stifles economic growth, HSBC Holdings Plc (HSBA) said.
The economies of Saudi Arabia, Qatar and Kuwait may expand more than earlier estimated this year, HSBC said in a report published yesterday. By contrast, the London-based bank revised down forecasts for output in Egypt, Lebanon and Jordan.
“While Saudi Arabia adds $1 billion a week in savings, Egypt is now counting its remaining wheat stocks,” Dubai-based economists Simon Williams and Liz Martins wrote in the report.“Widening surplus in the Gulf Cooperation Council contrasts with painful deficit outside of it; rising growth contrasts with slowdown and contraction.”
Gulf Arab states, sheikhdoms largely ruled by absolute monarchs, have poured billions of dollars into their economies to create jobs and stave off unrest that toppled governments in Egypt, Libya and Tunisia. The disparity has undermined Egypt’s political clout, as its government grew more reliant on aid from countries such as Qatar to prevent an economic collapse.
The economy of Qatar, the world’s top liquefied natural gas exporter, may expand 6.5 percent this year, HSBC said, revising its estimate from 5.2 percent in the previous quarterly report.“Government spending remains the primary stimulus for this growth,” the economists wrote. The government plans to spend $140 billion on infrastructure projects by 2019, three years before hosting the soccer World Cup finals, Finance Minister Yousef Kamal said last month.
Neighboring Saudi Arabia, the world’s biggest oil exporter, is spending more than $500 billion on housing, roads, ports and airports. The oil windfall has also helped the central bank accumulate almost $650 billion in foreign assets, according to the most recent official data.
Saudi economic output may expand 4.8 percent this year, according to an HSBC forecast that was raised from 4.3 percent. The kingdom may record a budget surplus equivalent to 6.4 percent of gross domestic product, compared with 7.1 percent in Qatar and 31 percent in Kuwait, HSBC estimates. The growth forecast for Kuwait was raised to 4.4 percent from 3.9 percent.
Egypt may post a budget deficit of about 11 percent of GDP, HSBC said, as the economy weakens amid rising opposition to Islamist President Mohamed Morsi, delays to loan talks with the International Monetary Fund, and plunging currency reserves.
“For post-revolution Egypt, the brief window of opportunity for orderly political transition and economic stabilization appears to have snapped shut, with substantial further deterioration since our last quarterly,” Williams and Martins wrote.
The economy may grow 1.4 percent in the fiscal year ending in June, down from an earlier estimate of 2.1 percent, HSBC said. Egypt’s economy hasn’t expanded that slowly since the early 1990s, and it achieved average growth of 4.9 percent in the decade before Hosni Mubarak’s overthrow in 2011, according to the IMF.
HSBC also revised Lebanon’s growth projection down to the same level as Egypt, as the country suffers from domestic unrest and the spillover from war in neighboring Syria.
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