Dubai: Economies in the developed world may be slowing but the outlook for emerging markets and major oil-producing countries is still positive, experts said on Monday.
Countries like Qatar, the UAE and Saudi Arabia are showing some resilience and look fairly decoupled from the global economy.
Brad Bourland, chief economist at Jadwa Investment, said that while the West is struggling with sovereign debt and bank troubles, emerging market countries including the Middle East are enjoying higher economic growth.
"I'd like to say it's a world that is two by six, where you have the developed economies, Europe, United States and Japan — if you put them together — generally growing two per cent and having a hard time growing faster than that. Then the emerging market countries including the Middle East, if you put them together, are growing consistently about six per cent and enjoying higher growth," Bourland said on the second day of the 5th Annual Mena Investments Management Forum.
Revised predictions
Although it has revised its economic forecast, the International Monetary Fund last month predicted that by 2012, emerging market and Middle East economies will grow 6.1 per cent and 3.6 per cent respectively.
Advanced economies, however, are forecast to grow 1.9 per cent.
The United States is expected to grow 1.8 per cent, the Eurozone 1.1 per cent and Japan 2.3 per cent.
"It's very much a story of two different worlds," Bourland added. The Greek economy is pretty much on "life support" where the population is frustrated by the deep austerity measures, while Germany and France are experiencing "bailout fatigue".
The United States is also plagued by high unemployment and a weak real estate market. All these signs point to slow recovery and low growth, he said.
Arab Spring effect
"At the same time, this part of the world, and the Far East, look fairly decoupled. We're experiencing high growth in Qatar.. strong growth everywhere," Bourland said.
However, countries in the region that have had some domestic turmoil are expected to see some curtailed growth as a result of the Arab Spring. These include Bahrain, Egypt, Jordan, Lebanon and Tunisia. "But in the major oil producing countries like Qatar, Saudi Arabia, you have different speed limits of growth," he added.
Structural pointers
Scott Crawshaw, portfolio manager, investment division at Russell Investments, said that the longer term structural growth in the emerging markets looks fairly positive.
"The development that we've seen over a number of years and the resilience through the crisis period have shown how far emerging markets have come," he told Gulf News.
"And that's probably more evident in terms of improvement in the likes of Brazil and Latin America where they had huge risks and huge volatility from the economic standpoint. They're managing themselves much better there."
He brushed aside decoupling theories, saying that there are emerging market elements that have just never really converged fully, so domestic trends still dominate.
IMF appraisal
In its June 17 report, the IMF said that while growth in many advanced economies is still weak considering the depth of the recession, the financial environment in emerging and developing economies remains "quite accommodative".
"Capital inflows have been fickle, probably reflecting the increased downside risks to the global economy and domestic policy concerns such as inflation," the IMF said.
"Some of the larger economies are experiencing rapid credit growth, propelled by accommodative macroeconomic conditions and buoyant capital flows. In others, credit growth has decelerated with a persistent tightening of monetary policy."
