Business | Oil & Gas
Gulf states' oil wealth begins to percolate into wider region
Rising oil prices are benefiting non-oil-exporting countries in the Middle East and North Africa (Mena) region because oil exporters, particularly the GCC countries, are directing an increasing share of their foreign investments to the region, according to IMF's regional outlook.
- By Babu Das Augustine, Banking Editor
- Published: 00:03 May 13, 2008
- Investments in Mena during 2002-06 estimated at $60b.
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Dubai: Rising oil prices are benefiting non-oil-exporting countries in the Middle East and North Africa (Mena) region because oil exporters, particularly the GCC countries, are directing an increasing share of their foreign investments to the region, according to IMF's regional outlook.
A significant majority of intra-regional fund flows are foreign direct investments (FDI), often linked to privatisations, but large infrastructure and new equity investments are also on the rise, the IMF report said.
The accumulation of fin-ancial wealth and the search for higher yields have led GCC investors to diversify their investment strategy, geographically and across asset classes.
As a result, an increased share of GCC funds is flowing to other emerging market econ-omies in the region.
GCC investments into the broader Mena region during 2002-06 are estimated at $60 billion, or 11 per cent of estimated total GCC capital outflows during the period, and about one fifth of the amount GCC countries invested in the United States.
FDI constitutes the bulk of GCC investment in Algeria, Egypt, Jordan, Morocco, and Tunisia. While the FDI inflows from GCC countries have significantly increased during the past few years, their level remains relatively modest so far, the IMF report said
In addition to FDI, the broader Mena region has also benefited from foreigners purchasing equity in private companies listed on stock exchanges.
Although portfolio flows are increasing in several countries, they remain relatively modest and their sources are not easily amenable to geographical classification.
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