GCC states face abrupt decline in surpluses
Reuters - 19 November, 2008
www.gulfinthemedia.com/index.php?id=442518&news_type=Economy&lang=en

Gulf Arab countries could witness an abrupt decline in external surpluses
next year if oil prices average $ 50 a barrel, with the emirate of Dubai
being most vulnerable to a downturn, Citigroup said yesterday.

With oil at $ 50, Saudi Arabia, the United Arab Emirates and Qatar would all
post external trade deficits in 2009, Citigroup said in a research note.

"In effect, this means the members of the GCC will have to dig into their
overseas wealth to keep their economies moving," the bank said.

Oil stood near $ 56 a barrel yesterday, down more than 50 percent since
hitting a record above $ 147 in July.

Citigroup said Saudi Arabia's deficit could hit 28 percent of the gross
domestic product, compared with a surplus of 30 percent this year, when oil
prices should average $ 99 a barrel.

Kuwait would be the only member of the Gulf Cooperation Council (GCC) to
post an external surplus, it said.

Dubai, the commercial and retail hub of the Gulf region, would be "most
vulnerable" to a downturn, Citigroup added.

"Two specific concerns are Dubai's real estate sector and how it will
refinance the debt it has built up in recent years," the bank said, adding
it expected a correction in Dubai real estate prices and consolidation of
its companies.

A Gulf plan to launch a single currency "are even less likely now than they
were six months ago," Citigroup added.