Dubai, Kuwait to Lag Behind in Mideast Recovery, Goldman Says

Dubai and Kuwait will lag behind other Gulf Arab states as the region’s economies recover, Goldman Sachs’ economist Ahmet Akarli said.

“The hydrocarbon-heavy Saudi Arabia, Qatar and presumably Abu Dhabi, which also have exceptionally strong sovereign balance sheets, will probably recover strongly,” Akarli wrote in a report yesterday. “The overleveraged Dubai and Kuwait will be lagging behind as they struggle to iron out the financial excesses they have accumulated over the years.”

Economies of the oil-rich Gulf Arab states were hit last year as crude prices plummeted, international credit dried up and companies struggled to refinance debt. Oil producers such as Saudi Arabia say their economies are recovering after crude rose to about $75 a barrel, more than double its December low. Goldman Sachs forecasts oil at $90 in 2010 and $110 in 2011.