It's Not over till It's Over: The Regional Economy Is on the Road to Recovery after a Tumultuous 2009. the Next Six Months Will Determine the Speed of Rebound. However, There Remain Underlying Risks to Benign Global Market Conditions That Could Still Impact the Region, Warns International Economic Analyst Moin Siddiqi

By Siddiqi, Moin | The Middle East, July 2010 | Go to article overview

It's Not over till It's Over: The Regional Economy Is on the Road to Recovery after a Tumultuous 2009. the Next Six Months Will Determine the Speed of Rebound. However, There Remain Underlying Risks to Benign Global Market Conditions That Could Still Impact the Region, Warns International Economic Analyst Moin Siddiqi


Siddiqi, Moin, The Middle East


[ILLUSTRATION OMITTED]

THE MIDDLE EAST AND NORTH AFRICA (MENA) economies are emerging from the worst global recession since the 1930s and recovering at a steady pace. Several factors are supporting the upturn, chiefly firmer oil prices (boosting production and exports), public investment programmes, especially in infrastructure, and some normalisation of global trade and capital flows. Fiscal policy has played a pivotal role in cushioning the impact of the financial crisis. Across most countries, stimulus measures alongside lower interest rates are needed to help cement the recovery. The World Bank projects growth in the MENA should reach 4.4% in 2010, edging up to 4.8% next year.

The Gulf Cooperation Council (GCC) bloc is leading this recovery, supporting domestic demand and providing intra-regional investment in non-oil countries.

The recent increases in capital spending on non-energy sectors will help diversify activity towards the manufacturing and services sectors, thereby creating new jobs and rebalancing regional growth. The 'twin surpluses'--the government budget and current account--of oil exporters are forecast to widen again thanks to increased exports. Accumulated forex reserves and other assets should enable governments to support the growth revival. The GCC's net foreign assets could total a whopping $1.2 trillion by the end of 2010.

As in other regions, growth prospects for 2010 differ markedly among MENA economies, depending on the intensity of initial impact via the three key channels through which the region is exposed to the global marketplace: the oil factor; the external sector--trade, remittances and inward investment; and the banking system. Across the Gulf, heavy doses of fiscal and monetary stimuli cushioned the slowdown. Among the fuel exporters, the strongest performer is again Qatar, where real activity is projected to expand by 18.5%, powered by large expansion in liquefied natural gas production and capital spending.

[ILLUSTRATION OMITTED]

In Saudi Arabia, GDP is expected to grow at about 4%, compared with a meagre 0.2% in 2009, supported by infrastructure development and improved business sentiment, leading to a revival in private consumption. The five-year fiscal stimulus programme, worth some $400 billion, including the building of new industrial cities and ports, has opened up opportunities in project finance, construction and manufacturing. Meanwhile, the Kuwaiti economy after contracting in 2009 should rebound to between 2.3% and 3.2%, helped by rising oil production and strengthening domestic demand. In early 2010, the National Assembly finally approved a four-year $105 billion spending package to kick-start economic activity.

Referring to Kuwait, the International Institute of Finance (IIF), a US-based association of private banks, said: "A higher level of sustained growth requires a political consensus on much-needed reforms and a shift in government spending to support increases in nonhydrocarbons productive capacity in the private sector." However, the pace of market liberalisation in Kuwait is slow compared to its peers.

In the UAE, growth is expected to achieve a moderate 2%, according to the IIF, reflecting further contraction in the property-related sector, thus more than offsetting timid upturns in trade, retail sales and tourism. Dubai's estimated $109 billion debt stock--owing to overinvestment in real estate and tourism ventures as well as leveraged buyouts (LBOs) worldwide--still overhangs the markets, although Abu Dhabi's support for bond issues worth $20 billion to support struggling Dubai-owned firms has limited contagion to the rest of the Emirate and the banking system.

The World Bank remarked: "These short-term measures are helping to contain the negative impact of these events on UAE growth. Ongoing large fiscal spending by Abu Dhabi is also expected to help the recovery and support the 'service centre approach' to integration and economic development. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

It's Not over till It's Over: The Regional Economy Is on the Road to Recovery after a Tumultuous 2009. the Next Six Months Will Determine the Speed of Rebound. However, There Remain Underlying Risks to Benign Global Market Conditions That Could Still Impact the Region, Warns International Economic Analyst Moin Siddiqi
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.