GCC Economies & their Role in the World Economy

Categories: World

GCC Economies & A ; their Role in the World Economy

Part 1

Introduction

The intent of this paper is to develop sound cognition sing the Gulf cooperation council and its operations and the general function it plays in the planetary economic system. The Gulf cooperation council economic systems have designed an effectual system of trading, transforming of currency with fixed nominal rates, free capital motion and big labour influxs both skilled and unskilled. Furthermore the GCC ‘s advanced fiscal systems have acted as a psyche channel for heightening their trade procedure into the universe.

Assuming that by this assignment I will be showing accomplishments that would fix me for the following degree of understanding about the function and the effects the gulf cooperation council implies worldwide to several other economic systems ( Arouri, & A ; Rault, 2010 ) .

The GCC stands for The Gulf Cooperation Council and its chief intent is the fulfilment of regional cooperation agreements created to beef up links in between the developing societies.

The Gulf Cooperation Council consists of six member provinces or states which are Saudi Arabia, Kuwait, Bahrain, the United Arab Emirates, Oman and Qatar ( Espinoza, & A ; Prasad, 2010 ) .They are benefitted by the GCC through common purposes and aims such as using similar Torahs and regulations in different Fieldss like, finance, spiritual imposts, touristry, statute law, trade, disposal etc, developing scientific research centres, doing up joint ventures, incorporate military presence, promoting cooperation of the private sector, powering ties between their peoples, and utilizing a common currency ( Peeters, 2010 ) .

The non oil sector of the GCC

Collaborative operations at province degree to obtain national ends have become a of import characteristic of developing countries’ international dealingss.

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The major GCC economic systems and their economic advancement are as follows:

  • Bahrain’s population is around 1.2 million people who retains a GDP per capita of $ 40,500 and Its economic system expanded with a rate of 4.5 % in 2010 ( Peeters, 2010 ) .
  • Kuwaithas twice every bit much population as Bahrain. They have a GDP per capita of $ 48,900 per individual. The state holds 9 % of the world’s oil militias ( Abuaˆ?Qarn, & A ; Abuaˆ?Bader, 2008 ) .
  • Omanhas low sum of oil militias means it relies more on touristry to supply for its population of 3 million ( Peeters, 2010 ) .
  • Qatarwith a GDP per capita of $ 179,000 and population of 848,000 occupants. It has 25 billion barrels of oil militias and 14 % of the universe ‘s natural gas militias ( Peeters, 2010 ) .
  • Saudi Arabia- The largest of the GCC states holding about 26 million people and has 20 % of the universe ‘s oil militias. Its GDP per capita is merely $ 24,200 ( Arouri, & A ; Rault, 2010 ) .
  • The United Arab Emirates has a population of approx 5.1 million people has a per capita GDP of $ 49,600 ( Arouri, & A ; Rault, 2010 ) .

The GCC related states has experienced tripled in size during 2002 to 2008. The entire GDP of the GCC members raised at the highest of all time rate of 28.9 % to $ 1076.8 billion in 2008 in comparing 14.2 % to $ 835.6 billion to 2007 ( Peeters, 2010 ) . The acceleration of economic public presentation is due to the strong planetary oil demand, better political environment, rapid enlargement in denationalization operations and enlargement in the assortment of assets of cardinal Bankss ( Peeters, 2010 ) . A lessening -19.3 % to $ 868.5 billion was observed in 2009 because of the planetary fiscal and economic crisis, and the universe oil market prostration ( Peeters, 2010 ) . But the nominal GDP bounced back in 2013, turning by a rate of 17.6 % and 9.5 % to $ 1021.3 billion and $ 1118.2 billion in 2010 because of the expected planetary economic recovery ( Arouri, Lahiani, & A ; Nguyen, 2011 ) . The economic system of the GCC members grew by 6.4 % in 2008 in comparing to a rate of 5.1 % in 2007, but fell neglible to 0.5 % in 2009 ( Peeters, 2010 ) . Real GDP was to resile back and grew at the rates of 4.2 % and 4.7 % in 2010 and 2011 ( Peeters, 2010 ) .

http://www.gulfbase.com/GccCharts/AboutGcc/Gcc-1.gif

http://www.qnb.com.qa/cs/Satellite?blobcol=urldata&blobkey=id&blobtable=MungoBlobs&blobwhere=1355478086729&ssbinary=true

Saudi Arabia is the biggest GCC member, holding about 47 % of the members GDP portion. Real growing was even sheerer in the Saudi Arabia’s non-oil sector in 2012 at the rate of 7.2 % ( Abuaˆ?Qarn, & A ; Abuaˆ?Bader, 2008 ) . Major investing undertakings helped enormously in the growing of the sectors like building, which grew by 10.3 % in 2012 ( Abuaˆ?Qarn, & A ; Abuaˆ?Bader, 2008 ) .

The UAE is the 2nd largest member of the GCC, specifying 23 % of GDP. UAE existent GDP growing for 2012 is estimated at 4.0 % ( Espinoza, & A ; Prasad, 2010 ) . The UAE is more varied in comparing to the other GCC members with the services sector making an of import function in the economic system ( Espinoza, & A ; Prasad, 2010 ) .

Qatar comes 3rd in the GCC members, explicating for the 12 % of entire members GDP. Growth is still powerful at 6.1 % in 2012 due to the non oil sector ( Arouri, Lahiani, & A ; Nguyen, 2011 ) . The non oil industrial and services sectors are about experient strong growing of 10.1 % and 9.1 % . This accounts to merely 2.1 % for the oil and gas sector ( Espinoza, & A ; Prasad, 2010 ) .

Kuwait holds 11 % of the GDP in the GCC. GDP growing is assumable at 6.3 % in 2012, chiefly due to a 12.1 % addition in oil production at 3 million barrels/day in the initial 9 months of 2012 ( Arouri, Lahiani, & A ; Nguyen, 2011 ) . Non oil growing should besides be strong, aided by passing on undertakings. The 2012/13 budget mounted to $ 75bn, an addition of 9.3 % on the old budget ( Peeters, 2010 ) .

Oman, who defines the 5 % of GDP in the GCC, was assumed to stay equal at estimated 5.0 % , harmonizing to the IMF, due to the soft rise oil production and specific growing in the crude oil sector. However it is estimated 8.3 % in 2012 ( Arouri, & A ; Rault, 2010 ) .

Bahrain which is the 2 % of GDP in the GCC, have merely been to 2.0 % in 2012. Bahrain’s economic system is more disorderly than the other GCC members as it has a strong non oil sector, in which fiscal services histories for 18 % of GDP and has got limited oil militias ( Espinoza, & A ; Prasad, 2010 ) .

en_RealGDP_Graph

http://reportgraphics.euromonitor.com/reportgraphics%5CArticles%5C8f945366-b078-45f0-aa45-5ad95291c1db.gif

The participants of the Gulf Cooperation Council experienced major economic transmutations late. The most of import purpose of the economic policies set into topographic point was to go their economic systems off from the oil sector. This was due to the uncertainness of the non renewable resources oil militias in the hereafter ( Espinoza, & A ; Prasad, 2010 ) .

Non oil sectors made a immense impact on economic growing of all the GCC members as non oil sector were by far the most uninterrupted changing sector, with the growing rate of 2.8 % ( Abuaˆ?Qarn, & A ; Abuaˆ?Bader, 2008 ) . The enlargement of the non oil sector has been seen at a rapid rate since the stat of the 21stcentury, particularly in Qatar who experienced an addition of 6.2 % and Bahrain a rise of 5.3 % ( Abuaˆ?Qarn, & A ; Abuaˆ?Bader, 2008 ) . Most of the non oil related activities are related with the populace sector, other than UAE and Bahrain who specializes in supplying services such as trade and touristry. Major attempts were observed in making and updating new sectors which have high growing factor for illustration touristry cordial reception, existent estate, air power and concern services and besides the sweetenings and publicities of latest green engineering epoch ( Abuaˆ?Qarn, & A ; Abuaˆ?Bader, 2008 ) .

OPEC and the planetary oil market

OPEC stands for Organization of the gasoline exporting states the intent of organizing OPEC was to do equal and consistent crude oil policies of its member Countries as portion of its attempts to carry through the members common involvements, members of the brotherhood who shall work as one to anticipate stable monetary values of oil, do sufficient returns to oil bring forthing members and investors in the oil industry and assure a uninterrupted supply to the client associated to the brotherhood ( Arouri, Lahiani, & A ; Nguyen, 2011 ) . Algeria, Angola, Iran, Ecuador, Iraq, Kuwait, Libya. Nigeria, Qatar, Saudi Arabia, United Arab Emirates, Venezuela are its current members who portion the same docket and are benefitted every bit by being the member of the OPEC ( Peeters, 2010 ) .

The major purpose of OPEC is to name all the states together with similar involvements in the crude oil industry. OPEC member members extract big Numberss of petroleum oil, OPEC seems to keep a strong consequence to the planetary oil market, specifically to the oil monetary value. OPEC is focused to accomplish ascents and economic development in the development states and besides guaranting peace amongst each other. The homogeneous statute laws enforced across the OPEC’s members makes 100 % confidence to the people who invest in the oil industry are traveling to have true returns in regard to their investing ( Abuaˆ?Qarn, & A ; Abuaˆ?Bader, 2008 ) . OPEC is besides assures market stableness through safe supply of crude oil elements and at the right monetary value. It aids in keeping sufficient figure of trim oil barrels that can be used as buffer stock when the market faces a ruin in supply ( Peeters, 2010 ) .

OPEC share of world crude oil reserves 2013

World crude oil reserves: Cumulative production versus net additionsOil is the world’s most of import trade good, OPEC seems to keep a significant clasp in the oil market but economic surveies look intoing OPEC’s market impact experienced trouble happening conclusive grounds. In existent OPEC seems to hold disappeared for a piece and most people are merely get downing to take notice. The brotherhood has non commanded the petroleum oil monetary values for at least the last 7 to 8 old ages doing its place are falling fast ( Espinoza, & A ; Prasad, 2010 ) .

Iran made it really clear that it plans to force its bounds in the production more than its current degree of 2.8 million barrels/day, and accomplishing an purpose of 4 million barrels a twenty-four hours ( Espinoza, & A ; Prasad, 2010 ) . The Saudis are the far most superior which hold the biggest place in the OPEC is now in the place either of back uping a rise in the quota and the bead in monetary values or cutting its ain production to confront Persian new policies ( Arouri, & A ; Rault, 2010 ) .

And the other brotherhood members have shown the little lifting gradient of the status to cut production because their countries’ economic systems which depend on petroleum oil exports. Libya and Nigeria, want to increase their import which merely increases the force per unit area on the remainder of the union’s members. OPEC’s merely staying purchase on oil markets is the power to command the Numberss of its production. The members can exchange on or off the oil war more easy than the United States, Canada or Russia. But if they restrict the flow of rough oil, they may put on the line a autumn in their net incomes which whom most of them depend on ( Abuaˆ?Qarn, & A ; Abuaˆ?Bader, 2008 ) .

Decision

By making this assignment I have gained sound cognition sing the gulf cooperation council and its activities and operations and besides Is have learned sing the organisation of gasoline exporting states and its member and the statistics sing the production and exports of oil and how its operations effects the planetary oil market and what portion does the OPEC members hold in the planetary market.

Part 2

UAE amongst the whole Arab part excessively enjoys the grosss generated from oil trade but it seems to be more concerned to put on other sectors to bring forth grosss from alternatively from its chief oil-sector industries as its certain in the coevalss to come UAE will run out of the non renewable resource or oil ( Dawodu, et, Al, 2008 ) . UAE has shown much sum of involvement in developing their travel and touristry industries. In add-on it provides platform for people to come in the dramatic metropoliss of United Arab Emirates therefore making a more diversified civilization and tradition therefore will look to hike occupation handiness and criterions to it and therefore bettering and coming up with better work force lending to the well being of UAE ( Al-Tamimi, 2010 ) .

Over the whole part of the United Arab Emirates ( UAE ) provinces and metropoliss are concentrating on an odd epoch of investing and development to raise the capacity boundaries, better substructures and turn tourer Numberss and the sum of net incomes earned from them ( Dawodu, et, Al, 2008 ) . United Arab Emirates hereafter seems to be predicted and that in the approaching 20 old ages, about a heavy amount of 3 trillion dollars is traveling straight into leisure and touristry and in the upgradtion of substructure all over UAE ( Dawodu, et, Al, 2008 ) . By the proclaimed undertakings which are to be completed by 2020 UAE will construct airdrome capacity for 300M excess riders, and will construct more than 200 new hotels and are anticipating a growing in visitants, estimated 150million, and an addition the size UAE aircraft fleet by 150 % boulder clay 2025 ( Dawodu, et, Al, 2008 ) .

UAE has so much in its pocket right now to dominate the depletion of its chief beginning of net incomes through its oil industry as its crucial for UAE to guarantee a the same sum of success and din its sing this really twenty-four hours. UAE already has developed a platform stable plenty entertain the people worldwide ( Al-Tamimi, 2010 ) .

Mentions

Arouri, M. E. H. , & A ; Rault, C. ( 2010 ) . Oil monetary values and stock markets: What drives what in the gulf corporation council states? . hypertext transfer protocol: //www.econstor.eu/bitstream/10419/30732/1/620105267.pdf

Abuaˆ?Qarn, A. S. , & A ; Abuaˆ?Bader, S. ( 2008 ) . On the optimality of a GCC pecuniary brotherhood: structural VAR, common tendencies, and common rhythms grounds. The universe economic system, 31 ( 5 ) , 612-630. hypertext transfer protocol: //mpra.ub.uni-muenchen.de/971/1/MPRA_paper_971.pdf

Peeters, M. ( 2010 ) . The altering form in international trade and capital flows of the Gulf cooperation council states in comparing with other oil-exporting states. hypertext transfer protocol: //mpra.ub.uni-muenchen.de/23539/1/MPRA_paper_23539.pdf

Espinoza, R. A. , & A ; Prasad, A. ( 2010 ) . Nonperforming loans in the GCC banking system and their macroeconomic effects. International Monetary Fund. hypertext transfer protocol: //core.kmi.open.ac.uk/download/pdf/6544833.pdf

Arouri, M. E. H. , Lahiani, A. , & A ; Nguyen, D. K. ( 2011 ) . Return and volatility transmittal between universe oil monetary values and stock markets of the GCC states. Economic Modelling, 28 ( 4 ) , 1815-1825. hypertext transfer protocol: //ecomod.net/system/files/Paper_VolatilityTransmission.pdf

Al-Tamimi, H. ( 2010 ) . Factors act uponing public presentation of the UAE Islamic and conventional national Bankss. Global Journal of Business Research, 4 ( 2 ) , 1-9. hypertext transfer protocol: //www.researchgate.net/publication/228201551_Factors_Influencing_Performance_of_the_UAE_Islamic_and_Conventional_National_Banks/file/e0b495262d7679282b.pdf

Dawodu, A. , Bener, A. , Koutouby, G. A. , Varady, E. , & A ; Abdulrazzaq, Y. ( 2008 ) . Size at birth in a quickly developing economic system: intrauterine growing form of UAE babies. Annalss of human biological science, 35 ( 6 ) , 615-623. hypertext transfer protocol: //informahealthcare.com/doi/abs/10.1080/03014460802385439

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GCC Economies & their Role in the World Economy. (2020, Jun 02). Retrieved from http://studymoose.com/gcc-economies-their-role-in-the-world-economy-new-essay

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