Magazine article Global Finance

This Boom Is Different

Magazine article Global Finance

This Boom Is Different

Article excerpt

By now it is no secret that the economies of the Gulf Cooperation Council (GCC) are booming, creating exciting environments for doing business. The GCC includes Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates, and Oman. Growth has been accelerating in our region since January 2003. oil prices then surpassed $30 per barrel and haven't looked back since.

But despite four years of high growth, one living and doing business in the region can't help but have the feeling that this boom is still just getting underway, and this makes it very different from past periods of high growth, which tended to last only a few years when oil prices spiked due to one crisis or another.

The difference this time is the apparent sustainability of the boom. Here's why I think the best of these golden years are still ahead of us:

* Oil prices the past few years have been pulled upward by strong growth in global oil demand, not by a cutoff of supplies. This is not likely to be reversed anytime soon, as this mainly reflects the growth miracle of China and strong economic performance globally. Even in the Middle East itself, we will be the third largest source of growth in global demand for oil in 2007, after the US and China. oil prices above $50 are probably with us for a long time.

* Even with the strong oil story, our prosperity this time is not just about oil. Dubai is a tourism and real estate story. Qatar is an oil and natural gas story, and Saudi Arabia has grown a vast petrochemicals industry, which is an important driver of business growth currently.

* Clearly apparent in this boom is the strong inward bias to investment. …

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