The economic crisis is far from over and could turn much deeper than is commonly believed, says Dr Henry Azzam, CEO Middle East and North Africa of Deutsche Bank. Speaking at the Arabian Hotel Investment Conference today, Azzam said that even if the economy has hit bottom, it will look more like a 'U' shape in its life cycle, which means no quick recovery.
In the near term, the biggest threat to the economy in the Middle East is deflation, which would lead to protectionism and weaken oil prices, he warned.
On the positive side, there have been some glimmers of hope, based on the fact that oil prices have stabilised at around $50 a barrel and some stock markets in the region have done well in recent months, including Saudi Arabia, which is up 17% so far this year, and Abu Dhabi, which has risen 5.7%.
Azzam noted that there will be a 'convincing' recovery only when confidence returns to the international financial markets and the US economy turns around to the point when it can 'pull everyone else behind it'.
For 2009, Azzam predicts negative growth for Saudi Arabia and Kuwait and positive growth for the UAE, Bahrain, Oman, and Qatar, which will be the only country in the Gulf that will see double digit growth this year. END
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