Economic Background

In 2009 the combined economies of the GCC countries will witness a real growth rate of 2.4%, despite the world economic crisis and the fall of oil prices, according to Global Investment House. Among the GCC peers, Qatar is likely to remain insulated with a staggering 9.4% real GDP growth rate in 2009, according to World Bank reports.

The Financial Times estimates that the present crisis may be the making of the Gulf’s chemicals industry. Chiefly this is because of easy and cut-price access to oil and gas. Seeking to capitalize on this advantage, governments have thrown cash at their petrochemical industries in recent years, expanding total output to €46bn ($59.6bn) and an annual growth rate of more than 9% since 1997, according to Financial Times.

The GCC countries have accumulated huge financial surpluses during the past years, when prices of oil reached record highs. Furthermore, the financials crisis is prompting many investors to turn away from real estate and stock markets and invest rather in industry.

In the Middle East, $79bn of investments in petrochemicals is planned for the 2007- 11 period, according to KPMG. Abu Dhabi is building a $20bn chemicals city called Chemaweyaat, and Saudi Arabia plans a $26bn refinery and petrochemical complex at Ras Tanura. Both states, along with Qatar, have identified the industry as an integral component in diversifying their economies and creating jobs, confirms Financial Times.

A further 53 new plants are due to come online in the Middle East by 2012, and the regional industry will grow nearly 10% a year until 2020, more than twice the average, according to KPMG. The Gulf focuses mostly on basic petrochemicals such as ethylene, poly-olefins, polypropylene, but will soon be able to produce a wider array of chemical products. It is already a leading manufacturer of fertilizers.