Gulf Economies To Contract, Says IMF.

"The Gulf's largest economies are expected to contract this year as Opec-mandated cuts in oil production and declining petroleum revenue erode growth. The International Monetary Fund (IMF) said Sunday that real gross domestic product in Saudi Arabia, the United Arab Emirates and Kuwait would shrink after a slump in oil prices spurred the cartel to reduce output.... 'The bottom line is that nearly all countries in the region will be seriously affected by the global crisis in important but different ways,' the IMF said in its MENA Regional Economic Outlook...." [Financial Times (5/11)/Factiva]

However, AP adds that "...IMF Mideast and Central Asia Department Director Masood Ahmed said the region as a whole was likely to weather the financial crisis better than other parts of the world because of 'prudent financial and economic management' and the ability of oil-exporting countries to draw upon hefty cash stockpiles accumulated during boom times.... Non-exporting countries are at greater risk, particularly if the recession dragging on the economies of trading partners in the West and elsewhere proves lengthy. A drawn-out global downturn could lead to significantly higher levels of unemployment and poverty, Ahmed added...." [Associated Press (5/10)/Factiva]

Reuters reports that "...while Gulf banks are financially sound, indicators 'may not fully capture risks posed by high credit growth and concentration in real estate', the IMF said, adding any sharp deterioration in bank balance sheets could delay recovery...." [Reuters (5/10)/Factiva]