Exports will grow by an annual average of 8.4% in 2011-12, reaching US$8.6bn in 2012, as recovering demand in Asia and increased re-export trade with Iraq make up for sluggish demand in the US. Having fallen by almost 20% in 2009 on the back of lower oil prices and the resumption of discounted oil supplies from Iraq, the import bill began to grow once more in 2010 as commodity prices recovered, and will continue growing in 2011-12, rising by around 7% a year. But it is highly unlikely to replicate the sharp rises witnessed in 2007-08, and could even fall once more if the supply of discounted Iraqi crude is stepped up-at present around 10,000 barrels/day (b/d) are being trucked over from Iraq, but the plan is for this to reach 30,000 b/d. The growth in exports will offset the rise in imports in 2011-12, and the trade deficit will stay relatively flat in the second half of the forecast period, averaging around US$6.9bn in 2013-15, as exports are boosted by strengthening global demand, in line with the global economic recovery.

On the invisibles side, workers' remittances are likely to rise slowly, having fallen back in 2009 following the downturn of the Gulf Arab economies. Tourism receipts are also expected to grow, albeit less quickly than before the global recession, though the industry could be affected by recent regional popular demonstrations. Overall, we forecast that the current-account deficit will narrow gradually, from an estimated US$975m (4.3% of GDP) in 2010 to an annual average of about US$552m in 2011-12. We expect the current-account position to improve over the forecast period, moving into surplus in 2015.