2010 will see recovery but expect fluctuations

The year 2009 may not be fondly remembered by many because it saw the worst economic crisis since the Great Depression of the 1930s.

Indeed, 2009 was a bad year by all economic and humanitarian measurements.

Before the year started, oil prices fell to their lowest level in four years, which created a state of anticipation and hesitation in financial circles in oil-producing countries, including Gulf countries.

Yet the recovery of oil saved GCC from re-discussing measures of downscaling and rationalising, which were discussed in the mid-1980s and mid-1990s and then forgotten for more than a decade.

Although our economies did not suffer widespread bankruptcies as was the case in the US and European countries, large sectors of the society lost most of their savings in financial markets and heated speculations in the services and property sector.

Here, a positive point is scored for western countries for recovering quickly, with the Dow Jones Index crossing 10,000 points in October.

The indices of European countries followed suit, whereas the indices of Gulf and Arab markets continued to stumble with slight rises followed by sharp falls under the pressure of speculations and media defamation campaigns.

The really sad part is the increasing number of hungry and poor people in the world and the shrinkage of aid offered to them due to the global financial crisis.

The number of hungry people increased by 40 million, according to the statistics of international agencies. The number of people living below the poverty line also increased, while there was an alarming rise in unemployment rates across the world.

This sums up the dark side of 2009, which also had a bright side that we must not forget about.

Optimism

Things cannot be bleak in general, or else we could not receive the new year with optimism that calls for accepting life and enjoying its good sides. On the bright side is the collaborative effort of all countries and their cooperation to contain the repercussions of the crisis, despite their ongoing competition and conflicts.

This global cooperation led to the beginning of the recovery and the first signs of overcoming the crisis at a record speed and with the smallest possible loss, especially if compared to previous massive crises and the magnitude of the damages they caused to the economies of various countries.

More important here is that 2010 will be better than 2009, because the global economy, including GCC economy, will fully recover from the repercussions of the crisis, despite some remaining effects.

Also, millions of people will be able to find new jobs and the wheel of economic life will resume its natural cycle.

Meanwhile, a significant portion of the losses incurred in local and foreign financial markets by investors, especially small ones, will be compensated.

Nevertheless, 2010 will be the year of fluctuations in global markets, especially in the first half of the year.

Yet general indexes will be on the rise towards recovery, which requires understanding the situation and putting it within context, as well as avoiding panic in case of normal fluctuations during the recovery period to be witnesses by the global economy in the new year.

A very important lesson can be drawn from 2009, which is the changes in the financial world.

The balance of economic power has been strongly affected, with traditional heavyweights losing some of their powers as new powers emerge with capabilities that may not be ignored.

This was seen clearly during the global conferences that took place by the end of 2009, which revealed a shift of economic gravity from the Group of 8 to the Group of 20, that includes emerging countries with economic and strategic powers and ambitions.

The new year means change at many levels, whether in overcoming the crisis or the new alignment of influential global powers and their potential effect on the nature of international economic relations in the future.

This is a call for optimism as we welcome 2010.

Happy New Year!

Dr Mohammad Al Asoomi is a UAE economic expert.