Arab states upbeat on economic revival
Abu Dhabi, September 29, 2009
Gulf powerhouse Saudi Arabia and some other Arab countries voiced cautious optimism that economies were on the mend, with the UAE seeing an improvement in lending conditions and liquidity.
Oil producers in the Gulf region have boosted spending with Saudi Arabia, the biggest Arab economy, alone committing more than $400 billion to underpin growth, according to a report in our sister newspaper Gulf Daily News.
Saudi central bank governor Mohammad Al Jasser said there were no signs of contraction in the local economy.
Forecasts by several banks predict a fall of around one per cent for the G20 member this year.
'There is no contraction in the local economic indicators,' he said on the sidelines of a meeting of Arab central bank officials in Abu Dhabi.
The UAE said lending conditions and liquidity were improving but conditions remained fragile.
'The gap between loans and deposits is narrowing because liquidity is steadily improving but I think the economic situation in the UAE and other countries is fragile,' central bank governor Sultan Nasser Al Suweidi said.
The UAE economy might shrink or grow slightly this year, Al Suweidi said.
'Growth will be small if there is any,' he said, adding that banks' third and fourth quarter earnings could be lower due to the provisions as well as the global crisis.
Kuwait said no local banks or investment firms needed financial help due to the economic crisis after it had to rescue major lender Gulf Bank a year ago.
'At the moment there are no banks, no investment houses that need help according to law,' Central Bank governor Shaikh Salem Abdul Aziz Al Sabah said.
Meanwhile, Libya said its gross domestic product would be above two per cent this year, sounding more optimistic than the International Monetary Fund which predicted in June that growth will slow to 1.1 per cent from 6.7 per cent last year.
Sudan's economy is expected to post growth of between 5 per cent and 6 per cent this year and next.
Iraqi central bank governor Sinan Al Shibibi said he would like interest rates to be lower after the oil exporter cut its policy interest rate to 7 per cent from 9 per cent in June.
High up on the agenda of the meeting of central bank officials of 22 states at the Arab Monetary Fund's annual meeting was the set up of an 'early warning system' for financial institutions.