The economies of oil rich Gulf Cooperation Council region are likely to expand by 4.4 per cent this year and by 4.7 per cent in 2011, a report has said.
The report by the Institute of International Finance said that the growth bounce comes on the heels of an estimated 0.3 contraction in economies of GCC region during 2009. The region had posted an economic growth of 7 per cent in 2008.
The report, which was launched in Dubai yesterday, said the latest growth forecast was supported by higher oil prices, robust government spending and some normalisation of global trade and capital flows.
However, the region's financial sector will continue to be weighed down by some problem loans and non performing assets on balance sheets, said George Abed, director of IIF's Africa and Middle East department.
"A further rise in non-provisioned loans and the need for higher provisioning suggest that bank balance sheets are likely to remain constrained," the report forecast.
Abed also said credit problems at Saad Group and Ahmad Hamad al Gosaibi & Brothers in Saudi Arabia, as well as Dubai World's debt crisis, have been a "wake-up call for policy makers in the region".
The Gulf Cooperation Council is a political and economic union of six Arab states -- Kuwait, Bahrain, Saudi Arabia, Qatar, United Arab Emirates and Oman.