Business | Economy
Gulf economies are becoming asset-driven
The Gulf countries' international reserves have quadrupled from $90.5 billion in 2003 to $365 billion in 2007 and are forecast to touch $455 billion by 2008, according to Saidi.
- By Babu Das Augustine, Banking Editor
- Published: 23:41 February 5, 2008
Dubai: The strong economic growth experienced by the Gulf region during the past five years combined with the prudent investment strategies of the governments are fast transforming Gulf economies to asset-driven rather than oil-driven, said Dr. Nasser H. Saidi, chief economist at the Dubai International Financial Centre (DIFC).
The Gulf countries' international reserves have quadrupled from $90.5 billion in 2003 to $365 billion in 2007 and are forecast to touch $455 billion by 2008, according to Saidi.
"The future of these economies lies in managing their assets rather than producing more oil and gas. Efforts will be focused on how to generate high returns on the existing wealth," he said.
The cumulative current account surpluses for the GCC countries are expected to grow to $954.6 billion by 2008. Currently, Gulf countries are recycling surpluses back into the region, leading to greater diversification of local econ-omies and regional econ-omic integration.
The GCC is forecast to grow close to six per cent in 2008. Allaying fears of a potential US recession impacting the regional econ-omies, Saidi said: "Our region is proving resilient to uncertainty and volatility in the US and European financial markets.
"The GCC countries are projected to grow at 5.8 to six per cent, with the UAE expected to grow at 7.8 to eight per cent".
The current period of the above-trend growth is partly a reflection of the persisting strength in oil and gas prices and large capital inflows and pegged exchange rates.
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