Gulf feels chill from Europe’s debt storm

The Gulf may be eyeing a strengthening economic recovery, boosted by heavy, oil-fuelled government spending, but the region is not immune to the turmoil in Europe, economists and bankers say.

In spite of company earnings showing signs of recovery from the lows of 2009, Gulf bourses remain affected by global sentiment, which has been spooked by fears over the indebtedness of several European Union countries – Greece in particular.

Shuaa Capital says its Gulf investor sentiment index fell in April, partially over worries about Greece’s sovereign debt crisis. And MSCI Barra’s main Gulf index has shed more than 5 per cent since hitting a 19-month high on April 12.