Bloomberg/Dubai

The plunge in oil prices prompted HSBC Holdings to cut this year’s economic outlook for 13 crude exporters across central,

Eastern Europe and the Middle East, while singling out Turkey as the biggest winner from the slump.
Economic growth in the grouping will slow to 1.8%, compared with an estimate of 2.6% in October, the London- based bank said in a

report on Monday. Russia’s gross domestic product may shrink 3.5%, compared with an October forecast of a 1% contraction, the

bank said.
“With the lower oil price, we are looking for an across-the-board squeeze,” Simon Williams, chief CEEMEA economist, said in a

phone interview from London. “Oil-funded public spending will slow, public and private investment will moderate, and consumption

will ease as confidence falls. Governments as borrowers rather than creditors will also put pressure on liquidity.”
Oil exporters in the region, especially in the six-nation Gulf Cooperation Council, have used oil wealth over the past decade to

transform their cities, building finance centres, airports and ports that turned the Arabian Gulf region into a banking and

travel hub. Crude sank almost 50% last year as the US pumped oil at the fastest rate in more than three decades while the

Organisation of Petroleum Exporting Countries resisted calls to cut supply. Saudi Arabia, the world’s biggest oil exporter, may

post a budget deficit at 11% of gross domestic product this year, HSBC said. In October, the bank projected that the kingdom

would post a surplus.
The Saudi economy may grow 2.8% this year, HSBC said, the slowest pace since 2009. Economic growth in the UAE, the second-biggest

Arab economy, will slow to 3.1% this year from an estimated 4.9% in 2014.
The bank doesn’t expect a repeat of the recession in 2008 that sent Dubai to the brink of default a year later. “We don’t have

the same excesses, particularly in the credit market and especially in the GCC,” Williams said.
Saudi Arabia’s Tadawul All Share Index for equities has declined 13% in the past six months, while Dubai’s gauge has dropped 16%.
HSBC’s forecasts are based on an average oil price “in the low $60s” this year and next, Williams said.
Of oil importers in eastern Europe and the Middle East, Turkey is the biggest beneficiary “in the short term,” Williams said. “It

is benefiting from lower energy prices, which means a lower current account deficit and lower inflationary pressures,” he said.
Turkey’s consumer inflation rate may fall below 6% by the end of the year from 8.2% last month, Finance Minister Mehmet Simsek

said on January 7. HSBC expects Turkey’s inflation to be 6.2% this year, compared with a forecast of 7.2% in its October report.

Oil exporters in the Gulf have used oil wealth over the past decade to transform their cities, building finance centres, airports

and ports that turned the Arabian Gulf region into a banking and travel hub.