Gulf economies feeling the oil boost

The recently-released activity data from Saudi Arabia, the UAE, Qatar, and Bahrain confirmed that strong hydrocarbon production supported rapid economic growth at the start of this year. And strong growth is likely to be sustained over the coming quarters. Higher energy production and prices will result in all Gulf economies running twin budget and current account surpluses this year, providing scope for more fiscal support. Indeed, governments in Saudi and the UAE recently announced relief packages in the first firm evidence of a shift towards looser fiscal policy that will support non-oil GDP growth further. All this feeds into our above-consensus GDP growth forecasts for the Gulf economies for both this year and next.