ABU DHABI. May 4; Arab economies are headed for an upturn as the oil-rich Gul? states recover from the war over Kuwait and other members of the Arab League press ahead with reforms, an official report said, reports AFP.

The report, released by the Abu Dhabi-based Arab Monetary Fund, classified league members into two groups. The first group included Libya, Algeria, Iraq and the six-nation Gulf Cooperation Council (GCC) and the second comprised the remaining members of the 21-nation Arab league.

It said the first group, especially the GCC, had started to spend more on develop-

ment after meeting their financial commitments to the Gulf War while the second introduced more reforms and was expected to cut its debt.

"It is expected that economic growth rates will Improve in the first group from 1992 and in the second group from 1993," said the Arab League's 1992 report about economic and social developments in the region.

"Inflation rates are also expected to decline in the first group while the decline in the second group needs more attention to financial rationalisation." '

After a recovery of four years. Arab economies deterio-

rated again in 1990 due to the Gulf War that cost around 676 billion dollar. In real terms, the Gross Domestic Product (GDP) dropped by 1.3 per cent in 1990 and seven per cent in 1991 compared with an average growth of three per cent since 1986.

The 1986-1989 recovery followed a sharp recession in the region because of the 1980-1988 Iran-Iraq war and a fall in oil prices. This pushed down the Arab GDP by an average 5.5 per cent during 1980-1985 compared with a growth of 9.6 per cent during the oil boom between 1975 and 1980, according to the report.

GCC states—Saudi Arabia,

Bahrain. Kuwait, Oman, Qatar, and the United Arab Emirates (UAE)—and the other members of the first group suffered most from the Gulf War. with their GDP in current prices falling by 13 per cent In 1991 to 307 billion dollar.

Iraq and Kuwait alone lost 97 billion dollar tn GDPs the war crippled their economies after the damage of their key facilities.

The second group was less affected by the Gulf War as Its real GDP declined by 2.5 per cent in 1991." the report said. "But such a decline was difficult for its members given their low income.”