Dubai: BlackRock, described as the world's largest asset manager with more than $3 trillion (Dh11 trillion) in assets in its management portfolio, said it expected the Gulf economies and emerging markets to lead the global economic recovery.
Stephen Hull, Director and Investment Strategist for BlackRock's Multi-Asset Client Solutions Group said: "The contribution of leading emerging markets such as Brazil, Russia, India and China are very significant in the global recovery".
"The demographics, budget surpluses and productivity trends in the peripheral emerging economies from the Gulf region are very supportive of the recovery trends," Hull said.
According to BlackRock's Emerging Markets Equity team, the GCC is compelling from a valuation perspective. Demographic trends are excellent across the region and countries such as Qatar and Saudi Arabia possess large budget surpluses.
Qatar is one of the world's fastest growing economies with stronger annual Gross Domestic Product growth than China, and is a leading producer of liquefied natural gas.
BlackRock analysts said they believed that surging infrastructure investments in countries such as Saudi Arabia, Libya, and Algeria, would stimulate the domestic economies. For the global economy as a whole, BlackRock warned of a further slowdown but ruled out the possibility of a double-dip recession.
Fiscal drag
The US economy is expected to face the fiscal drag from the last quarter of this year as the impact of stimulus measures such as cash-for-clunkers, personal tax credit schemes, and the government's discretionary spending programme come to a close. In Europe, sovereign debt issues combined with cut in fiscal spending is likely to hold back recovery.
"We do not believe that we are slipping back into recession but we do expect the global economy to grow at a meaningfully slower pace in the second half of 2010," said Hull. In the developed world, BlacRock said it saw a ray of hope in US corporate performance.
In the past two years the net cash positions of US firms had improved nearly 30 per cent. Recent surveys of US companies indicated that the build-up of cash on corporate balance sheets pointed to potential improvement in capital expenditure and hiring. BlackRock said it viewed the emerging market bonds and stocks as asset classes that had a maximum growth potential in the current economic environment.
"There are certainly pockets of opportunities in the developed world asset universe, particularly in stocks," Hull said. "But clearly emerging market fundamentals are supported by many positive long-term factors, including demographics, productivity and rising incomes to support domestic demand."
BlackRock has been offering investment management, risk management and advisory services for institutional and retail clients across the Middle East region for the past 20 years.
