The United Arab Emirates (UAE), with a predicted import bill of $149.1 billion in 2007, will lead the Arab nations that will collectively spend $632 billion on foreign purchases, according to a report by the International Monetary Fund.
The import bill of the Arab nations represents growth of 22.4% over what they imported last year — $516.6 billion, and includes foreign purchases of all Arab countries except Palestine, the Comoros, and Somalia. In total, the Arabs are going to purchase $115.9 billion more this year. The UAE, the main importer in the region, for the second year in row, is going to purchase $149.1 billion worth of foreign goods as against $123.6 billion in 2006. According to the IMF, Arab oil producers are going to account for 78% of the region's foreign purchases. "The largest share of this increase is due to purchases for infrastructure works and for the improvement of quality of life," said secretary-general of the Arab Brazilian Chamber of Commerce, Michel Alaby. "The nations that produce oil want better and better standards of living. Where there is oil, the increase in imports will be greater," he said.
Despite this predicted surge in imports, the combined current account surpluses of the GCC countries is projected to surge to $585 billion in the 2005-07 period as a result of higher export earnings. The Institute of International Finance (IIF) said GCC current account surpluses recorded a nearly tenfold increase from 2002 through 2006. The IIF's estimate of $227 billion for last year's current account surplus of the GCC countries compares with the IMF's estimated $571 billion current account surplus for all oil exporters, including Russia, Norway and Mexico. Saudi Arabia, the largest world exporter of oil, is in the second place in the list of importers in the region. The Saudis are going to buy abroad a total of $142.9 billion in products and services, with an increase of 19% over the 2006 value, which was $120.2 billion. Saudi Arabia is building industrial districts and purchasing machinery to equip them.
Saudi bank SAMBA, however, said Saudi Arabia, after recording its eighth consecutive current account surplus in 2006, which at $95.5 billion was also an all-time high, however, will see a drop this year. The bank said imports will grow at a similar rate to last year, but that oil export revenues will decline, due to the softer oil market. "As a result, merchandise imports will equal about one-half, rather than one-third, of the value of exports." The largest increase in imports, in percentage terms, will be Djibouti, an African country: 75%. The values, however, are not very significant: Djibouti will consume $700 million in imported products, against $400 million in 2006. The second greatest increase, in turn, will come from Libya, which is increasing its production of oil, and will spend $24.9 million in products and services purchased abroad, against $15.6 billion last year, with growth of 60%. The third largest increase, in percentages, will be Algeria, a large producer of gas. Algeria is going to import $36.8 billion, with growth of 40% over the $26.3 billion of last year.
According to Lehman Brothers, in the past few years the Middle East hydrocarbon exporters have joined China and the US as a major force acting on, and driving growth in, the global economy. "This has manifested itself through the extraordinary increases in the current account surpluses of the GCC and the consequent purchases of consumer goods from the outside world; the internal regional investment boom; and the capital flows from the region in direct and portfolio investment, especially in the emerging markets of South and East Asia." The UAE, according to IMF, will produce 2.9 million barrels a day, the Saudis, 9.3 million, Algeria, 1.6 million, and Libya, 1.9 million barrels a day. The Saudis and Algerians will maintain the same levels of production of oil as in 2006. "But the Emirates will increase their production by 3.5% and Libya by 36%." (khaleejtimes.com)