JEDDAH – Foreign assets of the GCC countries would reach about $1.9 trillion by the end of this year, equivalent to 127 percent of projected GDP, and then rising to around $2.1 trillion by the end of 2013, the Institute of International Finance (IIF) said Wednesday.
It noted that about 60 percent of the foreign assets of the region are managed by sovereign wealth funds.
Moreover, the region has a spare oil production capacity of 2.5 to 3 million barrels per day, and are positioned to meet any possible shortfall in supplies to world markets as Iranian exports decline amid sanctions, it said.
IIF expects average oil prices around $114 per barrel through 2012 as GCC produces 17.3 million barrels of oil a day, from 16.5 million in 2011.
GCC’s external current account surplus is forecast to rise to a new record of $358 billion this year, up from an estimated $327 billion in 2011, IIF said.
Dr. George T. Abed, IIF Senior Counselor and IIF Director for Africa and the Middle East, said “the prospects for the GCC are impressive, yet there are clearly risks. At a most general level, there is the issue of the impact on the GCC should turbulence in other Arab countries be prolonged.”
The report also said GCC banks remain well-capitalized and profitable. The average capital adequacy ratio is above 15 percent for every banking system in the region, it noted. – SG