Qatar, Saudi Arabia to lead Gulf growth this year

"We expect the GCC region as a whole to grow by some 6 per cent this year and by some 5 per cent next year," the report said.

The Cooperation Council for the Arab States of the Gulf, also known as the Gulf Cooperation Council, is a political and economic union of the Arab states constituting the Arabian Peninsula, namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

NCB, Saudi Arabia's largest bank, posted a 10.9 per cent increase in net income for the first half of 2011 to 2,927 million Saudi riyals, compared to 2,640 million Saudi riyals in the same period last year.

NCB Chairman Abdullah Bahamdan said the bank's total assets grew significantly to reach 314 billion Saudi riyals in the first half, compared to 263 billion Saudi riyals at the end of the same period of the previous year, an increase of 19.2 per cent.

Total shareholders' equity reached 33.3 billion Saudi riyals compared to 30.7 billion Saudi riyals in the same period last year, an increase of 8.5 per cent.

The NCB said in the report that it projected a growth of 5.3 per cent in the Kingdom for this year, far higher than the 3.7 per cent growth rate recorded in 2010.

Much of this expansion will be driven by strong growth in the oil economy, thanks to the prospect of high prices and significant increases in production, the report noted.

Growth in the GCC in 2011 will be led by Qatar, which is in the final stages of an ambitious plan to ramp up natural gas production, the report said.

"This is likely to result in real GDP growth of approximately 20 per cent this year, up from 16.3 per cent in 2010. The growth is likely to be driven above all by the hydrocarbons sector, where the pace of expansion is projected to accelerate to 29.5 per cent from 22.2 per cent in 2010," the report said.

The UAE, the second largest Arab economy, is also back on track, thanks to high oil prices and Dubai's recovery, it added.

"We foresee real GDP growth of 3.7 per cent in the UAE this year, up from the official estimate of 1.4 per cent in 2010," it said.

"Nonetheless, this will be uneven. While Abu Dhabi will benefit from strong growth in the hydrocarbons sector, Dubai remains vulnerable to financial market uncertainty and is yet to see a convincing turnaround in the real estate sector, the report said.

"The contagion in housing markets is also felt... but Dubai is reaping the benefits from an ongoing strong recovery in international trade. Moreover, the UAE is the main beneficiary from redirection of tourist flows from crisis-hit regional countries, most notably Egypt," it said.

The study said Bahrain stands out as the only GCC economy whose growth outlook appears to have been significantly hit by the crisis.