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Sunday, 22 March 2009

Dubai, New York and Paris leave London in the shade

Dealers were jittery as the third Art Dubai got under way on Tuesday in the Madinat Arena resort. On top of Dubai's well-documented financial troubles, newspapers had portrayed the once-booming emirate as a "ghost town" dotted with luxury cars abandoned by jobless expats.

The reality is far less dramatic, and the 68 dealers at the fair were pleased by the enthusiastic opening turnout. The glamorous patrons' preview saw visitors from 80 museums, including Tate, the Serpentine, the Maison Rouge in Paris and Denver, as well a group of private Chinese collectors. And while the exhibitor count was down, due to last-minute drop-outs, replacements were of high quality, including London's Lisson Gallery and New York's photography specialist Edwynn Houk. "We feel that this region brings new challenges and a possible new market, and things are so bad in London that we decided to give Dubai a try," said Jackie Haliday of London's Gimpel Fils.

This year's fair is very different from the first. Back then, exhibitors were trying to work out what would sell in the emirate and brought a mixed bag from blue-chips such as Warhol and Picasso to Middle Eastern and Pakistani artists such Rachid Rana. This year, it is emerging as the fair for Middle Eastern artists. "The quality of the fair has really improved," said the Iranian-Lebanese curator Rosa Issa.

GCC economy will grow 4.5% annually to reach $2trn by 2020

The GCC economy is set to grow steadily between now and 2020 but at a faster rate than the global average, according to a new report by the Economist Intelligence Unit.

The Gulf states will achieve average annual growth of 4.5 per cent compared with the aggregate global rate of 3.3 per cent.

And the report – The GCC in 2020: Outlook for the Gulf and the Global Economy – predicted that the region's economy will be worth $2 trillion (Dh7.2trn) in the next 11 years.

Bahraini economy to face sharp slowdown this year

Bahrain's economy is expected to sharply slow down this year because of the global financial crisis after years of a fiscal euphoria caused by strong crude prices, according to a Kuwait-based investment bank.

The gross domestic product (GDP) of the Gulf island, which is far less reliant on crude exports than its neighbours, could slacken to around three per cent in 2009 and growth could decline further if oil prices remain weak, Global Investment House said in a 70-page study on Bahrain.

The bank said Bahrain had recorded exceptionally high growth during the past few years, with the nominal GDP galloping by double digits since 2003. Higher oil prices and huge liquidity in the region also helped Bahrain to record robust performance.

Banks boost capital to meet adequacy limits

UAE banks are pushing ahead with a drive to increase their capital to meet a fresh ruling by the Central Bank to raise their adequacy to at least 11 per cent by the end of June, according to official figures.

Although the combined capital adequacy of the country's 24 national banks and 28 foreign units is already far above the Central Bank's limit, banks are steadily expanding shareholders' equity, which comprises their capital and reserves, according to figures released by the Central Bank.

In nearly seven months, the banks' collective capital and reserves shot up by Dh26 billion and bankers expect the level to continue rising in the next months despite slower growth in net profits by most banks.

Saudi businesses sceptical over GCC currency union plan

Saudi businessmen appear to be still in doubt about plans by their country and its Gulf neighbours to create a landmark monetary union on time despite approval of the project by their heads of state in late 2008.

According to an opinion poll conducted by a key Saudi bank, the majority of the business community does not see a full currency union materialising by 2012.

Most of the nearly 750 company managers and other national businessmen polled by the Saudi British Bank (Saab) also said they did not expect any imminent plans by the world's dominant oil supplier to revalue its currency, the riyal.

Kuwait's Gulf Bank posts Q4 loss as crisis bites

Kuwait's troubled Gulf Bank today posted a fourth-quarter loss of 445.5 million dinars (Dh5.7 billion), citing losses on derivatives transactions as it was hit by the global financial crisis.

Kuwait's fourth-largest bank by market value said it made a full-year net loss of 359.5m dinars, compared with a net profit of 130.4m dinars the previous year.

Gulf Bank did not provide quarterly data, which has been calculated from nine-month financial statements showing a profit of 86m dinars in the first nine months of 2008. In 2007, the bank made a fourth-quarter net profit of 25.35m dinars.

Economy faces new challenges

Despite having spent huge sums of money combating the global financial crisis, governments and policy makers in the Gulf face new challenges as the threat of weak or even negative economic growth looms.

In the UAE, a total of Dh120bn (US32.67bn) in aid, in the form of deposits and loans, has been extended to banks. In Abu Dhabi, five banks last month received Dh16bn as part of a recapitalisation plan. Also last month, Dubai sold $10bn in bonds to the Central Bank as part of a $20bn bond programme aimed at helping the emirate meet its financial obligations.

These efforts, along with similar measures elsewhere in the Gulf, have helped bring down the interest rates banks charge each other on short-term loans. They have also left banks with stronger balance sheets.