Thursday 27 June 2019

Gulf equipped to weather financial storm

Dubai, November 4, 2008

From banks, to developers to oil firms, Gulf Arab companies told Reuters on Monday they were hit by the global financial crisis and falling oil prices, but robust growth and spare liquidity would help them weather the storm.

Top executives told Reuters Middle East Investment Summit that Gulf economies might see more consolidation and a slowdown in the real estate boom as confidence falters, but would probably emerge less battered than their Western counterparts.

'The two economies that can ride the storm are GCC and China.

'The GCC can cover their internal needs unless they are forced to commit their assets elsewhere,' said Shuaa Securities CEO Mohammed Ali Yasin, referring to the six-member Gulf Cooperation Council, a loose political and economic bloc.

'You need to give those countries time to assess their environment, but if you try to get them to commit their extra liquidity then you're adding more pressure than they can handle, and you're just dragging them down.'

Governments and investors from the world's top oil exporting region have faced growing calls to pour more of their cash into troubled US and European firms and to boost the International Monetary Fund (IMF) that just a few weeks ago was busy imposing transparency conditions on their sovereign wealth funds (SWFs).

But Gulf Arab SWFs that have lost billions of dollars with their stakes in top Wall Street firms are also under growing pressure to inject liquidity into their own financial sectors and keep their economies growing until the worst is over.

'Governments of the region are earning billions a day from oil production but there are confidence concerns with banks not lending each other,' Majid Jafar, executive director of the United Arab Emirates' Crescent Petroleum, told Reuters.

'I think it is a temporary effect...there will be tempered exuberance and a flight to quality. Maybe we will not see as many huge projects announced as frequently as before but the majority will happen.' - Reuters

Tags: Gulf Arab | global financial crisis | Middle East Investment Summit |

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