Gulf set to slow as oil boom fades

Growth in the Gulf is set to slow over the next couple of years as the past decade’s oil boom starts to fade. At the same time, oil prices are likely to fall too. This is unlikely to pose a serious threat to budget or current account positions. But it does mean the rapid expansion of government spending that has supported growth over the past five years will probably slow. All told, we expect the Gulf to grow by around 3.0-3.5% in 2013-15, compared to an average of 6% a year over the past decade. Outside the Gulf, political problems continue to cast a shadow over the prospects for growth – most notably in Egypt. It goes without saying that the “second revolution” has made the outlook highly uncertain here. But crucially the economy is now more fragile than at any point since the Arab Spring revolution.