Guest post: turmoil laps around the Gulf, but prospects remain bright – beyondbrics - Blogs - FT.com:
"Gaza, Iraq, Syria, Libya, Yemen, Egypt are all part of a region which has been consumed by anarchy, violence and destruction since 2011. But there is another part of the Middle East which is a striking contrast to all that: the Gulf. Many outsiders think it’s only a matter of time before the turmoil that has swept other Arab countries also engulfs the rulers of the Arab Gulf. They’ve been thinking that for close to a century.
The economies of the Gulf oil exporters are expanding. Over the last decade vast wealth has been accumulated which affords the Gulf countries a level of resilience that few in the emerging markets can match. Gulf currencies which are pegged to the greenback have offered additional stability. The elevated level of oil prices – at above $100 per barrel – is providing oil producing countries with a fiscal cushion. Thus, even as many other emerging markets try to find an equilibrium, Gulf countries will continue to do well and accumulate more reserves while sustaining high spending.
Many outsiders have an image of a country frozen in time. The great giant of the emerging markets has finally awakened. Saudi Arabia’s recent announcement of the partial opening its $550bn stock-market to foreign institutional investors by the first half of 2015 is a key emerging market play over the next few years. Strong growth in domestic demand, firm macroeconomic fundamentals and ongoing economic reforms would allow for growth of the middle class. According to the OECD, the total middle class population is forecast to grow from less than 20m today to 40m by 2050. With reserves at around 90 per cent of the country’s $750bn GDP and public debt that is less than 3 per cent of its economic size, Saudi Arabia is well placed to weather regional political turmoil and a prolonged correction in oil prices."
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