Bahrain-based investment bank Securities & Investment Company (SICO) said there has been a mild revival in the global economy since the first quarter of the year.

In an investment report, SICO says it sees an improvement in global business confidence. "This has triggered significant overall reductions in bank borrowing costs, improvement in liquidity and an increase in investor risk appetite, which has and is likely to continue to augment interest in equity markets."

Nevertheless, it still believes that the recessionary fears and their potential effects are far from over, albeit the unprecedented stimulus packages and concerted efforts seem to have succeeded in averting further weakness in the global economy.

"Consequent to the improvement in the global economic outlook, oil prices have more than doubled after touching a low of $33 a barrel in December," the report said.

"The price rise of hydrocarbons alleviated concerns about budget deficits, liquidity, government support, and major slow-downs in development activities by regional governments," according to SICO.

"Each dollar increment in average oil price will result in more than $5 billion in additional annual revenues for the Gulf countries."

However the report does underline the volatility of oil prices, which it says could fall to $50 to $60 for the next quarter.

SICO argues that the regional equity markets are yet to price in the additional liquidity emanating into the region driven by the higher oil prices.

The note views higher oil price levels seen during the recent months, a period of uncertainty and economic slowdown, as a good support to the long-term prospects of the region.

At the same time, the uncertainty surrounding the impact of corporate debt defaults in the region will continue to have a negative impact on the short-term prospects, it added.-TradeArabia News Service