Tuesday, August 10, 2004

Iran Expected To Record Growth In Excess Of 7% In 2004

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Iran Expected To Record Growth In Excess Of 7% In 2004


DUBAI (Khaleej Times) -- The immediate outlook for Middle East economies is upbeat. Last year the region posted its highest growth performance in a decade. This year is likely to be even stronger, experts say.

According to the latest economic report from Standard Chartered, while Iraq and regional security concerns may dominate the international agenda, the local focus is resolutely on the current economic boom.

"Although the region's political risks should not be downplayed, they need to be put in context. Last year, despite the war in Iraq, the AGCC expanded by 6.8 per cent and Iran by seven per cent. Amongst the non-oil producers, even the Lebanese economy has enjoyed something of a renaissance," Gill James, Standard Chartered's regional head of research, explained in the report.

"We expect the AGCC and Iran to record growth in excess of seven per cent in 2004. While Jordan, for example, is likely to post growth of at least six per cent this year, its best performance since 1995," he said.

High oil prices underpin the boom. Supply concerns and strong global demand have pushed oil prices to twenty year highs. To match demand the Persian Gulf is now close to producing oil at full capacity. Standard Chartered expects oil prices to remain high and volatile, with OPEC's benchmark oil price forecast to average $35 in this year.

Record oil prices are leading to record government revenues. The combined net oil exports of the Persian Gulf Co-operation Council are on course to exceed $180 billion in this year, a jump of $35 billion from 2003, the report said.

The region still faces long term challenges, in particular in terms of job creation and economic diversification. But the current boom and windfall oil revenues offer an opportunity to reform from a position of strength. Embracing further reform will be key for making current growth levels sustainable, it said."

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