The Middle East is expected to rebound sharply from last year’s doldrums as rising commodity prices and increased demand for exports fuel the region’s economic growth. In addition, increased public spending and greater availability of cross-border credit are expected to support growth.
Rupert Wright spoke to Berna Bayazitoglu, a managing director of Credit Suisse in the investment banking division, based in London, for her perspective on the economic outlook. She is the head of macroeconomic research for emerging markets in eastern Europe, the Middle East and Africa.
Emerging markets show much greater growth potential than the developed world. Is this also true with regard to the Middle East this year?
The downturn in the four countries that we follow in the region – Kuwait, Saudi Arabia, Qatar and the United Arab Emirates – was not as dramatic as that seen in other emerging markets such as Russia and Turkey in 2009. Nevertheless, these four countries fared quite differently from each other: in 2009, the UAE contracted the most at an estimated 3 per cent and Kuwait by 1.3 per cent – worse than our global contraction forecast of 0.8 per cent. On the other hand, Saudi Arabia probably averted the recession and grew 0.5 per cent, while Qatar stood out with an impressive [projected] growth rate of 7.3 per cent. In 2010, these countries should benefit from the rebound in global demand and the increase in oil prices. But the recovery dynamics will be somewhat different across these four countries just as their experiences during the downturn were different from each other. We forecast growth rates in Saudi Arabia, the UAE and Kuwait to range between 2.1 per cent and 2.6 per cent this year, below Credit Suisse’s expected global growth rate of 4.3 per cent. On the other hand, we expect Qatar to nearly double its growth rate to 14.2 per cent in 2010, remaining one of the world’s fastest-growing economies. Qatar’s economy is buoyed by the expansion of its natural gas sector.
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